1. Presentation on Global Strategy www.AssignmentPoint.com
This is a test

2. 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

3. 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

5. 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

6. Pressures for Global Integration & Local Responsiveness
High
Ball bearings,
wheat
Cost Reduction
(Global Integration)
Pressures
Cosmetics, food,
household goods
Low
Low
High
Local Responsiveness Pressures
Differences in
- consumer tastes/preferences
- infrastructure/practices
- distribution channels
- host government needs/requirements

7. Strategic Choice High “Global” Strategy “Transnational” Strategy
Cost Reduction
(Global Integration)
Pressures
“International”
Strategy
“Multidomestic”
Strategy
Low
Low
Local Responsiveness Pressures
High

8. Multidomestic MNC HK UK Chile USA 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

9. International MNC HK UK Chile USA 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

10. Global MNC HK Chile UK 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

11. Transnational MNC HK UK Chile 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

13. 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

14. Making alliances work which partner?
A suitable partner
Helps achieve strategic goals
Adds needed, valuable capabilities
Shares the firm’s 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

15. 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

16. 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