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III. Macro-Perspective Outside The Organization, Increasing levels of…
III. Macro-Perspective Outside The Organization
2. Strategic Organizing for International Business II
2.1 International Strategy
Trade-off between..
Global Integration
National Responsiveness
Levels of International Strategy
Level 1
: Export
Level 2
: Partner
Level 3:
Geographic
Geographical Division
Home country transfers its resources, product development and capabilities to subsiadiries
2.2 Geographic Organization
Geographic Designs
Standardization
(+) Simpler Management
(+) Mobility of Resources
(-) Size of Country
(-) Complexity of Business
Cluster
Important for large geographical structure
Requires regional directors
Leverage assets on similar markets
Rationale
Proximity
Common Market
Development Level
Customer Profile
Business Life Cycle Stage
Country Autonomy
Rationale
Cross-Border Coordination
Cultural Distance
Portfolio Diversity
Level 4
: Multi-Dimensional Network
Strategy
Coordination: Subs and HQ connected by lateral mechanisms
Challenge: Development of cross-unit coordination capabilities
Structure
Portfolio Diversity
Consistency of Markets
Customer Buying Patterns
Transportability
Host Government
Control Systems
Personal Control
Bureaucratic Control
Output Control
Cultural Control
Level 5
: Transnational
Assets and resources dispersed worldwide
Structures are flexible and ever-changing
Subs manager initiate strategy
STAR-Model
1. Strategic Organizing for International Business I
1.1 Internationalization
Patterns
Methods
Trade
Foreign Direct Investment (FDI)
Sheltered Industries
Multidomestic Industries
Trading Industries
Global Industries
Competitive Advantages
Firm Resources and Capabiilties
Industry Environment
Industry Structure
Barriers to Entry
Internal Rivalry
Buyer Power
Competition
Profitability
National Environment
Theory of Comparative Advantage
Resource Endowment
Human Skills
Relative Production Efficiency
Porter's National Diamond
Factor Conditions
Related and Supporting Industries
Demand Conditions
Strategy, Structure and Rivalry
1.2 Determinants of Geographical Location
National Resource Availability
Firm-Specific Advantages
Tradability Issues
Comparative Advantage Through Division of Activities
Where to Locate Activity X?
Consideration of..
Input Costs & Availability
Government Incentives / Penalties
Internal Resources and Capabilities
Links between X and other activities of firm ..
Firm's Business Strategy
Coordination Benefits
1.3 Determinants of Foreign Market Entry
Modes of Foreign Market Entry (Strategies)
Transactions
Exporting
Licensing
Direct Investment
Joint Venture & Alliances
Benefits
Combination of resources
Learning from other
Risk sharing
Problems
Management differences
Conflict when partners are also competitors
Wholly Owned Subsidiary
Depends on..
Sources of competitive advantages
Barriers to trade
Transaction costs involved
Multinational Strategies
Globalization
Pro
Economies of Scale
Global Customers
Location-Specific Knowledge
Exposure and New Knowledge
Drivers
Market Drivers
Common customer needs
Cost Drivers
National resource availabilty
Competitive Drivers
Cross-subsidization of markets
National Differentiation
Drivers
Government Drivers
Regulations
Market Drivers
Different Customer Preference / Cultural Difference
Cost Drivers
Transportation Cost
Culture
Hofstede's Cultural Dimensions
Power Distance
Individualism
Masculinity
Uncertainty Avoidance
Long-Term Orientation
Indulgence
Evolution of Multinational Strategies
a. European:
Decentralized Federations
Characteristics
Self-sufficient and autonomous national subsidiaries
Parent control through appointment of subs
Forces
Highly differentiated markets
Adaption to distinct market distinctions
Challenge of integration
b. American
: Coordinated Federations
Fairly autonomous subsidiaries
Dominant role of parent
Ability to transfer knowledge, technology parent/subs
c. Japan
: Centralized Hubs
Technology, strategy and manufacture concentrated at home
Efficiency of global production and development
Challenge of integration to other countries
d. Transnational Corporation
Tight complex controls and coordination
National subs become sources for particular products, components and activities
Integrated network of interdependent resources and capabilities
3. Strategic Organizing for Multibusiness Firm (M-Form)
3.1 Multibusiness Holdings vs. Multidvisional Firms
Multdivisional Firms
Structure (Theory of M-Form)
Disadvantages
Constraints of Decentralization
Accountability of Divisional Managers
Operational and Strategic Issues (Performance)
Standardization of Divisional Management
Uniformity Across Divisions
Managing Divisional Inter-Relationships
Complex Structures Required
Advantages
Adresses Bounded Rationality by...
Allocation of Decision-Making
High-Frequency
: Divisional Level
Low-Frequency
: Corporate Level
Reducing Costs of Communication
Prevent Info-Overload
Reduced Decision-Making of TM
Avoiding Goal Conflicts
Divisional Managers more aligned with corporate goals
Objectives of Corporate Management (Value Creation)
a. Managing Corporate Portfolio
b. Managing Linkages Between Businesses
Basis of Business Linkages
Corporate Level:
Common Corporate Services
Centralized Provision of Corporate Fucntions
3 more items...
Centralized Provision of Business Services
2 more items...
Business Level:
Sharing and Transferring Resources and Capabilities
Portfolio Management
Restructuring
Transferring Skills
Sharing Activities
d. Managing Individual Business
c. Managing Change and Development
Value Creation by Restructuring
a. Acquisition of undervalued companies
b. Revitalization
Evaluation of Individual Busienss
Review of Overall Business Portfolio
c. Increasing Market Value by Corporate Restructuring
McK Pentagon Framework
5 more items...
Corporate Parenting
Surplus value added > Costs of Corporate Overlay
Strategic Planning Techniques
Strategic Business Units
Portfolio Planning Frameworks
3 more items...
Holding Companies
Increasing levels of internationalization and diversification