MGNT 4670 CHAPTER 13 Strategy in Intl Bus. 2013

Centralizeproductdevelopmentfunctionsathome

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Unformatted text preview: Localization Strategy: “Act local” Localization Strategy: ► ► ► ► ► ► Main aim is maximum local responsiveness Customize product offering, market strategy (including production and R&D) according to national conditions; compete through localization of products, no standardization Generally unable to realize value from experience curve effects and location economies Possess high cost structure due to decentralization Strategy effective if firm faces strong pressures for local responsive and weak pressures for cost reductions Examples: many branded processed food and personal care products, small appliances, any product or service that is culturally bound e.g. Johnson and Johnson, Black & Decker Transnational Strategy: “Be cost­ Transnational Strategy: effective and act local” ► ► To meet competition firms aim to reduce costs, transfer core competencies while paying attention to pressures for local responsiveness. (Bartlett and Ghoshal) Strategy effective if firm faces strong pressures for local responsiveness and strong pressures for cost reductions Global learning is critical to meet competitive demands Valuable skills can develop in any of the firm’s world wide operations Transfer of knowledge from foreign subsidiary to home country, to other foreign subsidiaries ► Transnational strategy difficult task due to contradictory demands placed on the organization Example : Caterpillar, Mal­Mart (evolving into) International Strategy: “Here it is” International Strategy: ► Create value by transferring valuable core competencies to foreign markets that indigenous competitors lack ► Centralize product development functions at home ► Establish manufacturing and marketing functio...
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