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Chapter 11 International Strategy and Organization.

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Presentation on theme: "Chapter 11 International Strategy and Organization."— Presentation transcript:

1 Chapter 11 International Strategy and Organization

2 International Business 4e Chapter © Prentice Hall, 2008 Chapter Preview Define core competency and value-chain analysis Explain multinational and global strategies Describe the four corporate-level strategies Discuss the three business-level strategies Identify what influences organizational structure Describe each type of international organizational structure

3 International Business 4e Chapter © Prentice Hall, 2008 Planning and Strategy PlanningStrategy Identifying and selecting objectives and deciding how to achieve those objectives Set of planned actions that managers take to help a company meet its objectives

4 International Business 4e Chapter © Prentice Hall, 2008 Strategy-Formulation Process

5 International Business 4e Chapter © Prentice Hall, 2008 Identify Mission and Goals Mission statements must consider: Company activities Business objectives Stakeholders Stockholders Customers Residents Environment and much more…

6 International Business 4e Chapter © Prentice Hall, 2008 Identify Core Competency Special ability of a company that competitors find extremely difficult or impossible to equal Coordination of multiple skills Lengthy period to develop Difficult to teach

7 International Business 4e Chapter © Prentice Hall, 2008 Value-Chain Analysis Each activity is a source of either strength or weakness Insights gained are fed into the strategy formulation process Divide company activities into primary and support activities and identify those that create value for customers

8 Chapter © Prentice Hall, 2008 Value Chain Components

9 International Business 4e Chapter © Prentice Hall, 2008 Business Environment National differences are inherent in analyzing a company’s unique abilities  Cultural differences  Political processes  Legal matters  Economic systems  Labor issues  Consumer forces and much more…

10 International Business 4e Chapter © Prentice Hall, 2008 Small Firm Strategy Be sure company is ready to go international Thoroughly understand your product Examine your company’s internal activities Ask important questions of strategy Finally, create the strategic plan

11 International Business 4e Chapter © Prentice Hall, 2008 Multinational Strategy Adapting products and their marketing strategies in each national market to suit local preferences – Difficult to exploit economies of scale + Respond quickly to buyer preferences

12 International Business 4e Chapter © Prentice Hall, 2008 Global Strategy Offering the same products using the same marketing strategy in all national markets – May overlook varying buyer preferences + Cost savings from standardization

13 International Business 4e Chapter © Prentice Hall, 2008 Levels of Company Strategy

14 International Business 4e Chapter © Prentice Hall, 2008 Growth Strategy Internally generated growth Mergers and acquisitions Joint ventures Strategic alliances Increase the scale (size of activities) or scope (kinds of activities) of operations

15 International Business 4e Chapter © Prentice Hall, 2008 Retrenchment Strategy Reduce the scale or scope of a corporation’s businesses ConditionsActions  Poor economic conditions  Increased competition  Lay off workers  Close inefficient factories  Sell unprofitable businesses

16 International Business 4e Chapter © Prentice Hall, 2008 Stability Strategy Guard against change and avoid growth or retrenchment  No opportunities or threats  Strengths fully exploited  Weaknesses fully protected  Stated objectives are met

17 International Business 4e Chapter © Prentice Hall, 2008 Combination Strategy Invest in promising units Retrench for less exposure Stabilize other units Mix of growth, retrenchment, and stability strategies across a corporation’s business units

18 International Business 4e Chapter © Prentice Hall, 2008 Business-Level Strategies

19 International Business 4e Chapter © Prentice Hall, 2008 Low-Cost Strategy Exploit economies of scale to have the lowest cost structure of any competitor in an industry Mantra is cutting costs Quality remains important Scale is barrier for new entrants Perhaps low customer loyalty

20 International Business 4e Chapter © Prentice Hall, 2008 Differentiation Strategy DifferentiatorsDifferentiators Brand image Product design QualityQuality EffectsEffects Customer loyalty Portion of market only Price premium Design products to be perceived as unique by buyers throughout an industry Higher production costs Higher production costs

21 International Business 4e Chapter © Prentice Hall, 2008 Focus Strategy Focus on narrowly defined market segment by being the low-cost leader, differentiating, or both Many sub-segments today Need distinctive product Specific geography, ethnicity, etc.

22 International Business 4e Chapter © Prentice Hall, 2008 Organizational Structure Centralized decision making Decentralized decision making + Coordination is paramount + Financial control and cost savings + Local responsiveness is key + Fast-changing environment

23 International Business 4e Chapter © Prentice Hall, 2008 International Division Structure

24 International Business 4e Chapter © Prentice Hall, 2008 International Area Structure

25 International Business 4e Chapter © Prentice Hall, 2008 Global Product Structure

26 International Business 4e Chapter © Prentice Hall, 2008 Global Matrix Structure

27 International Business 4e Chapter © Prentice Hall, 2008 Self-managedteam Employees from one department take on responsibilities of former supervisorsSelf-managedteam Employees from one department take on responsibilities of former supervisorsCross-functionalteam Group of employees from similar levels but different functional departmentsCross-functionalteam Group of employees from similar levels but different functional departmentsGlobalteam Top managers from headquarters and subsidiaries solve company problemsGlobalteam Top managers from headquarters and subsidiaries solve company problems Work Teams

28 International Business 4e Chapter © Prentice Hall, 2008 Chapter Review Define core competency and value-chain analysis Explain multinational and global strategies Describe the four corporate-level strategies Discuss the three business-level strategies Identify what influences organizational structure Describe each type of international organizational structure


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