Global Strategies

Global Strategy
Global Strategy
Strategy:
the action managers take to attain the

goals of a firm
General purpose: maximize/make profit
Differentiate products, increase price: add
value, features, quality, service
Achieve low cost
Key means: allocation of scarce resources to
attain goals
Activity Value Chain

Firm
as a chain of discrete value creating

activities
Primary
upstream activities, manufacturing
downstream activities: marketing, sales, after
sales service
Support
infrastructure (general and administrative)
human resources
research and development
Global Expansion Benefits
Earn greater return from distinctive skills, core competences

Inimitable or difficult to imitate skills in value chain
Realize location economies
Choice of FDI location
Create multinational network of activities (global web)
Realize greater experience curve economies, which reduce the cost of
value creation
Learning effects, economies of scale
Unit costs
Experience curve
B
A
Accumulated output
Pressures for Global Integration

& Local Responsiveness
High
Cost Reduction
(Global Integration)
Pressures
Low
Low
Local
Responsiveness
Pressures
Ball bearings,
wheat
Cosmetics, food,
household goods
High
Differences in
- consumer tastes/preferences
- infrastructure/practices
- distribution channels
- host government needs/requirements
Strategic Choice
High
Cost Reduction
(Global Integration)
Pressures
Global
Strategy
Transnational
Strategy
International
Strategy
Multidomestic
Strategy
Low
Low
Local Responsiveness Pressures
High
Multidomestic MNC
HK
UK
USA
Chile
India
Japan
Mexico
Decentralized Federation - Many key assets, responsibilities

and decisions localized
Personal Control - Informal HQ-Sub relationship, simple financial controls
Multidomestic Mentality - Management sees overseas operations as
portfolio of independent businesses
International MNC
HK
UK
USA
Chile
India
Japan
Mexico
Coordinated Federation - Key assets, responsibilities decisions localized

Administrative Control - Centralized HQ control, formal planning and
control, tight HQ-Sub linkage
International Mentality - Management sees overseas operations as
appendages to a domestic operation
Global MNC
HK
UK
Chile
USA
India
Japan
Mexico
Centralized Hub - Most strategic assets, resources, responsibilities

and decisions centralized
Operational Control - Tight HQ control of decisions, resources, information
Global Mentality - Management sees overseas operations as delivery
pipelines to a unified global market
Transnational MNC
HK
Chile
UK
USA
Japan
India
Mexico
Networked Organization - Distributed, specialized resources and capabilities

Interdependent Units - large flows of components, products, resources,
people, and information
Transnational Mentality - Complex process of coordination and
cooperation in an environment of shared decision making
International Strategic Alliances
Cooperative agreements between competitors from

different countries
Advantages
Facilitate entry into a foreign country
Allow fixed costs of new products and processes to be shared
Bring together complementary skills and assets
Help establish industry standards in technology
Allow reduction of operating costs,e.g., shared training,

purchasing
Disadvantages
Give competitors a low cost route to new technology / markets
Disproportional benefit accrual to partners
Making alliances work which partner?
A suitable partner
Helps achieve strategic goals
Adds needed, valuable capabilities

Shares the firms vision for purpose of the alliance
Is not likely to exploit the alliance to its own ends
Steps to select a partner

Thorough background check via public sources
Advice from third parties who have personal
experience with likely partner(s)

A lot of face-to-face time with likely partner(s) in their
environment
Making alliances work - What Structure?

Protect
technology/know-how that is not intended

to be transferred
Draw
a solid contract with safeguards against

opportunism
Achieve
equitable gain through agreed swaps of

technology the other wants
Seek
creditable, clearly articulated commitment

to partner behavior a-priori
Making alliances work - How to manage?
Show sensitivity to cultural differences that

explain different managerial styles
Build trust
Set up framework for formal and informal face-
to-face meetings to create a common value system

Build informal network of personal relationships
Learn from partners

Apply the knowledge within your own
organization
Brief your employees on partner strengths

Global Strategies

Uploaded by

Copyright:

Available Formats

Global Strategies

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Global Strategies

Uploaded by

Copyright:

Available Formats

Global Strategy

the action managers take to attain the

Activity Value Chain

as a chain of discrete value creating

Global Expansion Benefits

Earn greater return from distinctive skills, core competences

Pressures for Global Integration

Local Responsiveness Pressures

Decentralized Federation - Many key assets, responsibilities

Coordinated Federation - Key assets, responsibilities decisions localized

Centralized Hub - Most strategic assets, resources, responsibilities

Networked Organization - Distributed, specialized resources and capabilities

International Strategic Alliances

Cooperative agreements between competitors from

Facilitate entry into a foreign country

Allow fixed costs of new products and processes to be shared

Bring together complementary skills and assets

Help establish industry standards in technology

Allow reduction of operating costs,e.g., shared training,

Give competitors a low cost route to new technology / markets

Disproportional benefit accrual to partners

Making alliances work which partner?

Adds needed, valuable capabilities

Steps to select a partner

experience with likely partner(s)

Making alliances work - What Structure?

technology/know-how that is not intended

a solid contract with safeguards against

equitable gain through agreed swaps of

creditable, clearly articulated commitment

Making alliances work - How to manage?

Show sensitivity to cultural differences that

to-face meetings to create a common value system

Learn from partners

You might also like