Chapter 12 outline - Chapter 12 Strategizing, Structuring,...

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Chapter 12 – Strategizing, Structuring, and Learning Around the World Multinational Strategies and Structures Pressures for Cost Reduction and Local Responsiveness Two sets of pressures: Cost reduction o Calls for global integration Local responsiveness o Pushes MNEs to adapt locally These are dealt with in the integration-responsiveness framework An MNE management framework for simultaneously dealing with the pressures for both global integration and local responsiveness In international competition, there is the pressure for local responsiveness The need to be responsive to different customer preferences around the world Theodore Levitt: “The Globalization of Markets” Worldwide consumer tastes are converging o Sales of Coke classic, Levi Strauss jeans, Sony color TVs are all successful worldwide o This convergence would characterize most product markets in the future Four Strategic Choices Exhibit 12.1, page 175 o Home-replication strategy Duplicate the home-country-based competencies in foreign countries Manufacturing: exporting Services: licensing and franchising Relatively easy to implement, the first one to adopted when firms venture abroad Lacks local responsiveness due to focus on home country o Localization (multidomestic) strategy Focuses on a number of foreign countries/regions, each of which is regarded as a stand-alone local/domestic market worthy of significant attention and adaptation Maximizes local responsiveness High costs due to duplication of efforts in multiple countries too much local autonomy o Global standardization strategy Relies on the development and distribution of standardized products worldwide to reap the maximum benefits from low-cost advantages Leverages low cost advantages Lack of local responsiveness Too much centralized control Not limited to its major operations at home Centers of excellence – MNE subsidiary explicitly recognized as a source of important capabilities that can be leveraged by and/or disseminated to other subsidiaries
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Chapter 12 outline - Chapter 12 Strategizing, Structuring,...

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