CHAPTER - CHAPTER ELEVEN: STRATEGIC MANAGEMENT OF THE...

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CHAPTER ELEVEN: STRATEGIC MANAGEMENT OF THE MULTINATIONAL ENTERPRISE This chapter introduces the different types of strategies companies employ to achieve their international business objectives. The combination of both national and international environments complicates the formulation and execution of strategies. To overcome these obstacles, companies formulate international, multinational, global or translational strategies. They support this general approach to the market with appropriate corporate, business, and department-level strategies. For strategies to be implemented successfully, a company must select an appropriate organizational structure . Issues that affect organizational structure include centralized vs. decentralized decision making and the need for coordination and flexibility.
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The basic framework for analyzing which strategy is appropriate is the cost/local responsiveness framework . Where pressures for cost containment and local responsiveness are low, an international strategy can be employed. While this is an older strategy, fading in use due to globalization, what happens is that firms internationally leverage core technological competencies across international markets . Classic cases are when U.S. auto firms would dump their aging model vehicles on markets such as Brazil which were once very behind the world in development and were happy with old models. Other examples include cash register companies selling old, machine-run cash machines to very underdeveloped countries while the developed countries would use modern laser scanning technology. Such international strategies did not contain costs and did not differentiate their products to local needs, since their was no pressure to do
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so. They operated in a very ethnocentric fashion concerning HR and were very centralized in their operations. A modern example which could be considered to fit the international strategy would be Microsoft. Where pressures for local responsiveness are very high, overwhelming any pressures for cost containment (cost presssures are low), firms can use multinational strategies with horizontal FDI, recreating multiple VACs in each market where they do business . .. very locally responsive but very expensive and firms cannot capture learning and scalar economies. Control is decentralized to the multiple national subsidiaries. Pressures for local responsiveness
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CHAPTER - CHAPTER ELEVEN: STRATEGIC MANAGEMENT OF THE...

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