1. The Strategy of International Business & The Organization of International Business

2. Chapter 12 & 13 - 2 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. Chapter 12 & 13 - 3 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. Chapter 12 & 13 - 4 Strategy-Formulation Process

5. Chapter 12 & 13 - 5 Identify Mission and Goals Mission statements must consider: Company activities Business objectives Stakeholders Stockholders Customers Residents Environment and much more…

6. Chapter 12 & 13 - 6 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. Chapter 12 & 13 - 7 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 12 & 13 - 8 Value Chain Components

9. Chapter 12 & 13 - 9 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. Chapter 12 & 13 - 10 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. Chapter 12 & 13 - 11 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. Chapter 12 & 13 - 12 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. Chapter 12 & 13 - 13 Levels of Company Strategy

14. Chapter 12 & 13 - 14 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. Chapter 12 & 13 - 15 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. Chapter 12 & 13 - 16 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. Chapter 12 & 13 - 17 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. Chapter 12 & 13 - 18 Business-Level Strategies

19. Chapter 12 & 13 - 19 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. Chapter 12 & 13 - 20 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. Chapter 12 & 13 - 21 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. Chapter 12 & 13 - 22 Organizational Structure Centralized decision making Decentralized decision making + Coordination is paramount + Financial control and cost savings + Local responsiveness is key + Fast-changing environment

23. Chapter 12 & 13 - 23 International Division Structure

24. Chapter 12 & 13 - 24 International Area Structure

25. Chapter 12 & 13 - 25 Global Product Structure

26. Chapter 12 & 13 - 26 Global Matrix Structure

27. Chapter 12 & 13 - 27 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. Chapter 12 & 13 - 28 Chapter Summary This chapter presents the strategies companies use to achieve their international business objectives. National and international business environments complicate strategy formulation. To overcome obstacles, firms formulate multinational or global strategies. They support these general approaches with appropriate corporate, business, and department-level strategies. For strategies to be implemented successfully, a company must select an appropriate organizational structure. Issues that affect organizational structure include centralized vs. decentralized decision making and the need for coordination and flexibility. Companies choose from four types of organizational structure: the international division structure, area structure, product structure, and matrix structure. Work teams are assigned the tasks of coordinating their efforts to arrive at solutions and implement corrective action. The three main types of work teams are: self-managed teams, cross-functional teams, and global teams.

29. Chapter 12 & 13 - 29 International Strategy and Organization