Generic Global Business Strategies

Generic Global Business Strategies - Generic Global...

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Unformatted text preview: Generic Global Strategies Generic Generic Global Generic Strategies Strategies Multidomestic strategy Global strategy Choice -- Global versus Multidomestic Transition -- Multidomestic to Global Transnational strategy MOR 492: Global Strategy 1 Generic Global Strategies Generic FOUR BASIC FOUR STRATEGIES STRATEGIES GLOBAL TRANSNATIONAL Efficiency benefits from global integration INTERNATIONAL MULTIDOMESTIC Benefits from national responsiveness MOR 492: Global Strategy 2 Location and Coordination Issues Issues LOCATION COORDINATION Generic Global Strategies Generic Production facilities Product line, market selection Location of service organization Number and location of R&D centers Location of purchasing function s Networking of Networking international plants international Commonality of brand Commonality name, similarity of channels etc. channels Similarity of service Similarity standards Coordination of pricing Coordination of Coordination suppliers suppliers 3 s s s s MOR 492: Global Strategy Generic Global Strategies Generic PRESSURES: NATIONAL RESPONSIVENESS Differences in consumer preferences differences demands limitations 4 Infra-structural Government New manufacturing technology resistance Organizational Managerial MOR 492: Global Strategy Generic Global Strategies Generic MULTIDOMESTIC MULTIDOMESTIC STRATEGY STRATEGY Customized Countries product -- selected on their standalone potential independent Units Low Few coordination; high dispersion inter-subsidiary transfers 5 MOR 492: Global Strategy Generic Global Strategies Generic MULTIDOMESTIC MULTIDOMESTIC STRATEGY STRATEGY Unit 1 HQ Unit 2 Unit 3 MOR 492: Global Strategy 6 Generic Global Strategies Generic Competitive advantage from Local MULTIDOMESTIC MULTIDOMESTIC STRATEGY STRATEGY responsiveness Goodwill Lower Quick -- local government, customers costs -- avoiding shipping costs and tariffs 7 response to local market MOR 492: Global Strategy situations INDUSTRY GLOBALIZATION INDUSTRY POTENTIAL POTENTIAL MARKET DRIVERS Generic Global Strategies Generic COST DRIVERS COMPETITIVE DRIVERS Industry Globalization Potential GOVERNMENT DRIVERS MOR 492: Global Strategy 8 Generic Global Strategies Generic COST DRIVERS x x x x x PRESSURES: GLOBAL PRESSURES: INTEGRATION INTEGRATION Economies of scale Economies of scope Decreased transportation costs Learning and experience Lower communication costs Reduced tariffs, quotas Compatible technical standards 9 GOVERNMENT DRIVERS x x MOR 492: Global Strategy Generic Global Strategies Generic PRESSURES: GLOBAL INTEGRATION MARKET DRIVERS Homogenization of product needs x Global customers x Improved product quality x Reduced adaptation costs x COMPETITIVE DRIVERS Global competitors x Increased formation of global alliances x MOR 492: Global Strategy 10 Generic Global Strategies Generic GLOBAL STRATEGY Central control over country operations Central surveillance of resource allocation and performance Standardized products Extensive transshipments Cross-subsidization Activities located in country(ies) providing comparative advantage 11 MOR 492: Global Strategy Generic Global Strategies Generic GLOBAL STRATEGY Unit 1 HQ Unit 2 Unit 3 MOR 492: Global Strategy 12 Generic Global Strategies Generic Competitive advantage from GLOBAL STRATEGY GLOBAL x x x Lower cost structure Economies of scale Less duplication of activities Lower inventories Improved quality Increased competitive leverage Greater bargaining power Quick response -- R&D concentration MOR 492: Global Strategy 13 Generic Global Strategies Generic TRANSITION: MULTIDOMESTIC TO TRANSITION: GLOBAL GLOBAL Determine where the benefits of globalization lie Establish mandate for each subsidiary Reduce strategic autonomy of subsidiaries Rotate country managers to help them develop a global vision Change reward and evaluation system to fit the mandate 14 MOR 492: Global Strategy MULTIDOMESTIC AND GLOBAL Global Strategies MULTIDOMESTIC Generic Generic STRATEGIES STRATEGIES MULTIDOMESTIC GLOBAL Strategic Arena Business Strategy Product-line strategy Production Strategy s Selected Target Countries Custom strategies; little coordination Adapted to local needs Plants scattered across many host countries Suppliers in host country preferred s Most countries which constitute critical markets Same basic strategy worldwide Standardized products Plants located on the basis of competitive advantage Attractive suppliers from anywhere Worldwide coordination; minor adaptation Central control 15 s s s s s s s Sources of supply Marketing Organization s s s Adapted to local practices and culture Autonomy s s MOR 492: Global Strategy Generic Global Strategies Generic CONSUMER ELECTRONICS Matsushita lobal tegration Philips General Electric Local Responsiveness MOR 492: Global Strategy 16 Generic Global Strategies Generic “You want to be able to optimize a business globally -- to specialize in the production of components, to drive economies of scale as far as you can ....But you also want to have deep local roots everywhere you operate ... If you build such an organization, you create a business advantage that’s damn difficult to copy.” Percy Barnevik, CEO, ABB MOR 492: Global Strategy 17 CONSUMER ELECTRONICS: CONSUMER TRANSITION TO TRANSNATIONALITY TRANSNATIONALITY Matsushita Generic Global Strategies Generic Global Integration Philips MOR 492: Global Strategy Local Responsiveness 18 Generic Global Strategies Generic TRANSNATIONAL TRANSNATIONAL STRATEGY STRATEGY Greater emphasis on differentiated products than in “pure” global industries Greater demand for global efficiency and lower costs than in “pure” multidomestic industries Greater sensitivity to governmental demands Units coordinate activities with HQ and with one another Units may adapt to special circumstances only they face 19 MOR 492: Global Strategy Generic Global Strategies Generic TRANSNATIONAL TRANSNATIONAL STRATEGY STRATEGY Unit 1 HQ Unit 2 Unit 3 MOR 492: Global Strategy 20 Generic Global Strategies Generic Each national unit is a source of ideas and competencies that can be harnessed for the benefit of the corporation National units achieve global scale by making them the company’s world source for particular product, component or activity New, highly-complex managing roles which coordinates relationships between units in a flexible way 21 TRANSNATIONAL TRANSNATIONAL CORPORATION CORPORATION MOR 492: Global Strategy Generic Global Strategies Generic FOUR BASIC FOUR STRATEGIES STRATEGIES GLOBAL TRANSNATIONAL Efficiency benefits from global integration INTERNATIONAL MULTIDOMESTIC Benefits from national responsiveness MOR 492: Global Strategy 22 ...
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