o Given a worldwideglobal mandate Charter to be responsible for one MNE

O given a worldwideglobal mandate charter to be

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o Given a worldwide/global mandate Charter to be responsible for one MNE function throughout the world E.g. Huawei’s Sweden sub has worldwide mandate in network consulting This strategy makes great sense in industries where pressures for cost reductions are paramount and pressures for local responsiveness are relatively minor
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Particularly commodity industries such as semiconductors and tires o Transnational strategy Aims to capture the best of both worlds by endeavoring to be both cost efficient and locally responsive In addition to cost efficiency and local responsiveness, a third hallmark is global learning and diffusion of innovations Traditionally diffusion of innovations in MNEs is a one-way flow from the home country to various host countries o Underpinning this is the assumption that the home country is the best location for generating innovations o But no guarantee that home country will generate highest quality innovations MNE’s with this strategy promote global learning and diffusion of innovations in multiple ways Innovations flow from home country to host, but also flow from host countries to home and flow among subs in multiple host countries Disadvantage organizationally complex and difficult to implement Large amount of knowledge sharing and coordination may slow down decision making Trying to achieve cost efficiencies, local responsiveness and global learning simultaneously places contradictory demands on MNEs Four Organizational Structures: o International Division Typically used when firms initially expand abroad, often engaging in a home replication strategy E.g. Starbucks: Starbucks has international division and the four divisions that primarily focus on the US This structure leads to two problems: Foreign sub managers (whose input is channeled through int’l division) are not given sufficient voice relative to the heads of domestic divisions Int’l division serves as a silo whose activities are not coordinated with rest of the firm (which is focusing on domestic activities) Many firms phase out this structure after their initial stage of overseas expansion o Geographic area structure Organizes the MNE according to different geographic areas (countries and regions) Most appropriate structure for localization strategy Usually area can be country or region led by a country/regional manager Each area largely stand-alone Country/regional managers carry a great deal of weight in a geographic area structure (in contrast to international division structure) Both the strengths and weakness found in its local responsiveness Being locally responsive can be a virtue, also encourages the fragmentations of the MNE into fiefdoms.
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o Global Product Division Structure Opposite of geographic area structure Supports global standardization strategy by assigning global responsibilities to each product division This structure treats each product division as a stand-alone entity with full worldwide responsibilities
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