o good for when pressures for global integration and local responsiveness are

O good for when pressures for global integration and

This preview shows page 43 - 46 out of 55 pages.

o good for when pressures for global integration and local responsiveness are low o usually companies with distinctive capabilities together with strong reputation and brand names o [Google centralizes R&D in California] o Downside is that the home country view limits the view of the business with risks of skilled local competitors getting ahead.
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- Multi-Domestic strategy maximizes local responsiveness. It is based on different product or service offerings and operations in each country depending on local market conditions and customer preferences. o Each country manager has considerable autonomy o Loosely coordinated internationally o Collection of independent units with value chain specific to the country o Good when strong benefits to adapting to local needs and when there are limited efficiency gains from integration. o Common in food and consumer products and marketing driven companies o Downside is manufacturing inefficiencies, costly product and service variations and risks towards brand and reputation if become too diverse - Global strategy maximizes global integration. The world is seen as one marketplace with standard products and services that fully exploit integration and efficiency in operations. o focus is capturing scale economics and exploiting location economies worldwide o exact opposite of multi-domestic strategy o most beneficial when there are substantial cost or quality efficiency benefits from standardization or when customer needs are homogenous across countries. o Common for commodity or commodity like products - Transnational Strategy is the most complex strategy that tries to maximize both responsiveness and integration. Aim is to unite key advantages of the multi- domestic and global strategies while minimizing their disadvantages. It also maximizes learning and knowledge exchange between units. Products and services and operational activities are, subject to minimum efficiency standards, adapted to local conditions in each country. o the value chain includes centralized manufacturing to increase efficiency combined with distributed assembly and local adaptations. o Coordination encourages knowledge flows from wherever ideas and innovation come from o [General electric] Key methods for expansion are mergers, acquisitions and alliances. A merger is the combination of two previously separate organizations in order to form a new company. An acquisition is when an acquirer takes control by purchasing a majority of shares in a target company. M&As aim to improve the competitive advantage of the companies involved by: - Extension: extending a firm’s reach in terms of geography, products or markets. o [FB buys WhatsApp to capture new products and markets] - Consolidation: bringing together two competitors can have 3 benefits
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o Increases market power by reducing competition Might allow to raise prices o Combination can improve efficiency by reducing surplus capacity or sharing resources o The greater scale may increase production efficiency or increase bargaining power with suppliers forcing them to reduce prices.
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  • Fall '18
  • Krishna Venkitachalam
  • o Industries

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