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Organization
What Is Strategy?
A plan of action that channels an organizations
resources so that it can effectively differentiate itself
from competitors, accomplish distinctive goals, and
achieve superior performance.
Managers develop strategies based on the
organizations strengths and weaknesses, and
evaluation of opportunities and threats.
Managers primarily make decisions about the firms
production and marketing activities, and the
development and allocation of resources devoted to
these.
International Business: Strategy, Management, and the New Realities2
Global Integration
A characteristic of global industries in which
firms coordinate their value-chain activities
across many countries in order to maximize
efficiency, effectiveness, flexibility, and
learning.
Global integration promotes learning and
cross-fertilization, as well as reduction of
wasteful duplication (redundancy), across
the firms operations worldwide.
International Business: Strategy, Management, and the New Realities7
Local Responsiveness
A characteristic of multidomestic industries in
which firms attempt to meet the specific needs of
buyers in individual countries, as well as adapt to
the local competitive environment and distribution
structure.
Although most firms prefer a global integration
approach, some degree of local responsiveness is
necessary due to differences in individual markets.
For example, given distinctive local conditions,
Wal-Mart store managers in Mexico had to adjust
store hours, the merchandise mix, marketing
approaches, and employee training.
International Business: Strategy, Management, and the New Realities9
Multidomestic Strategy
(aka Multi-Local Strategy)
Headquarters delegates much autonomy to each
country manager, allowing him/her to operate
independently and pursue local responsiveness.
The managers substantially adapt products and
practices to suit local conditions.
The managers function independently, with little
incentive to share knowledge with managers
elsewhere.
The firm ends up with a collection of disconnected
markets, with no coordination or integration of
national markets.
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Global Strategy
Headquarters pursues global integration, seeking to
control country operations in order to minimize
duplication, and maximize efficiency, effectiveness,
and learning worldwide.
Emphasizes centralized coordination and control of
R&D, production, marketing, and after-sales service
Management views the world as one large
marketplace.
The firm offers standardized products, using
standardized marketing
Main advantages: lower costs; easier to manage
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Transnational Strategy
A tug of war the firm attempts to strike some
ideal balance between global and multidomestic
strategies.
Combines the major advantages of
multidomestic and global strategies, while
minimizing their disadvantages.
Applies the model standardize whenever
possible; adapt when necessary.
Organizational Structure
The reporting relationships inside the firm
the boxes and lines that specify the linkages
among people, functions, and processes that
allow the firm to carry out its operations.
In larger international firms, organizational
structure includes subsidiaries, affiliates,
suppliers, and various other partners.
A fundamental issue concerns the choice
between centralization and decentralization
of decision-making and value-chain activities.
International Business: Strategy, Management, and the New Realities19
n MNE Network
Subsidiary Level Network
S: Suppliers R: Regulatory institutions
B: Buyers C: Customers
RD
SA
RE
E
RA
RB
BD
CF
BF
RF
SB
CD
SF
SE
CE
BA
CA
SD
BE
BB
RC
H
SC
CB
BC
C
CC
A : Home plant
H: Headquarters
B F: Subsidiaries
Organizational Culture
The pattern of shared values, norms of behavior,
systems, policies, and procedures that
employees learn and adopt. The personality of
the firm.
Leading MNEs attempt to instill a global culture
in the firms operations worldwide, by
emphasizing a borderless mindset, developing
internationally sophisticated managers, and
emphasizing the firms global performance. E.g.,
Nestle, Nissan, Schlumberger, Unilever
International Business: Strategy, Management, and the New Realities32
Organizational Processes
Managerial routines, mechanisms, and
technologies that allow the firm to function as
intended.
Examples
GE digitizes all key documents and uses
intranets and the Internet to automate many
activities and reduce operating costs.
Schlumberger keeps a huge database of skilled
individuals within the firm available to all
subsidiaries on the corporate intranet.
International Business: Strategy, Management, and the New Realities33