Global Strategy Mike W. Peng c h a p t e r 1010 Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Strategic Management Mike W. Peng Chapter 10 Multinational Strategies, Structures, and Learning

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational Strategies and Structures: The Integration–Responsiveness Framework Figure 10.1

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Four Strategic Choices for Multinational Enterprises ADVANTAGESDISADVANTAGES Home replication  Leverages home country-based advantages  Lack of local responsiveness  Relatively easy to implement  May result in foreign customer alienation Multidomestic  Maximizes local responsiveness  High costs due to duplication of efforts in multiple countries  Too much local autonomy  Lack of local responsiveness  Leverages low-cost advantagesGlobal  Too much centralized control Transnational  Cost-efficient while being locally responsive  Organizationally complex  Engages in global learning and diffusion of innovations  Difficult to implement Table 10.1

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational Strategies and Structures: Four Organizational Structures Four organizational structures that are appropriate for the four strategic choices:  International division  Geographical area  Global product division  Global matrix

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Division Structure at Starbucks Figure 10.2

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Geographic Area Structure at Avon Products Avon Central & Eastern Europe Avon Western Europe Middle East Africa Avon Asia Pacific Avon Latin America Avon North America Source: Adapted from avoncompany.com. Headquartered in New York, Avon Products, Inc. is the company behind numerous “Avon ladies” around the world. Figure 10.3

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Product Division Structure at European Aeronautic Defense and Space Company (EADS) Source: Adapted from Headquartered in Munich, Germany, and Paris, France, EADS is the largest commercial aircraft maker and the largest defense contractor in Europe. Figure 10.4

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Hypothetical Global Matrix Structure Figure 10.5

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Comprehensive Model of Multinational Structure, Learning, and Innovation Figure 10.6

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Worldwide Learning, Innovation and Knowledge Management: Knowledge Management in MNEs Knowledge management can be defined as the structures, processes, and systems that actively develop, leverage, and transfer knowledge. Knowledge management is considered by some writers the defining feature of MNEs  Explicit knowledge (e.g., a driving manual): Captured by IT  Tacit knowledge (e.g., knowledge about how to drive)  Its acquisition and transfer require hands-on experience

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Knowledge Management in Four Types of Multinational Enterprises Sources: Adapted from (1) C. Bartlett & S. Ghoshal, 1989, Managing Across Borders: The Transnational Solution (p. 65), Boston: Harvard Business School Press; (2) T. Kostova & K. Roth, 2003, Social capital in multinational corporations and a micro-macro model of its formation (p. 299), Academy of Management Review, 28 (2): 297–317. STRATEGYHOME REPLICATIONLOCALIZATION GLOBAL STANDARDIZATION InterdependenceModerateLowModerate Role of foreign subsidiaries Adapting and leveraging parent company competencies Sensing and exploiting local opportunities Implementing parent company initiatives Differentiated contributions by subsidiaries to integrate worldwide operations TRANSNATIONAL High Development and diffusion of knowledge Knowledge developed at the center and transferred to subsidiaries Knowledge developed and retained within each subsidiary Knowledge mostly developed and retained at the center and key locations Knowledge developed jointly and shared worldwide Flow of knowledge Extensive flow of knowledge and people from headquarters to subsidiaries Limited flow of knowledge and people in both directions (to and from the center) Extensive flow of knowledge and people from the center and key locations to subsidiaries Extensive flow of knowledge and people in multiple directions Table 10.2

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Problems in Knowledge Management Table 10.3 Source: Adapted from A. Gupta & V. Govindarajan, 2004, Global Strategy and Organization (p. 109), New York: Wiley. ELEMENTS OF KNOWLEDGE MANAGEMENTCOMMON PROBLEMS Knowledge acquisitionFailure to share and integrate external knowledge Knowledge retentionEmployee turnover and knowledge leakage Knowledge outflow“How does it help me?” syndrome and “knowledge is power” mentality Knowledge transmissionInappropriate channels Knowledge inflow“Not invented here” syndrome and absorptive capacity