1. Global Strategies and the MNC
Shea Gordon
Kyle Harris
Bradley Peters
Matthew Powers

2. IKEA’s International Strategy
A brief company history
Pattern of Internationalization
Challenges of Internationalization
Tastes changes from culture to culture
Adaptation was necessary
Recent struggles moving to China

3. Patterns of Internationalization
Sheltered Industries
Trading Industries
Multidomestic Industries
Global Industries

4. Analyzing Competitive Advantage in an International Context
National Influences on Competitiveness
Comparative Advantage
Firm Resources and Capabilities
The Industry Environment
The National Environment

5. Porter’s National Diamond
Factor Conditions
Demand Conditions
Related and Supporting Industries
Establishing competitive advantage in global industries requires congruence between business strategy and the pattern of the country’s comparative advantage.
Limitation of diamond model:
Model fails to take into consideration the attributes of the home country’s largest trading partners, isn't applicable to most of the world's smallest nations, and ignores the role of multinational corporations in influencing the competitive success of nations.
The diamond value is so general, it lacks real value.
Trying to explain all aspects of trade and competition the model ends up explaining nothing because it is insufficiently precise to generate testable predictions
Strategy, Structure, and Rivalry

6. Intel Diamond Model Easy and cheap materials Well-educated work force
Factor Conditions
Easy and cheap materials
Well-educated work force
Related and Supporting Industries
Demand Conditions
Slowing growth in PC market
“evolving market trends”
Difficult to imitate product
Slowing PC growth
Must look to foreign countries for supplies.
Growing competition for superconductors
Little rivalry for microprocessors
Move to open mobile platforms
Strategy, Structure, and Rivalry

7. Applying the Framework: International Location of Production
National resource availability
Firm-specific competitive advantage
Tradability
Political Considerations
NRA: where key resources differ in their availability or cost, firms should manufacture where resource supplies are favorable
CA: optimal location depends on where those resources and capabilities are situated and how mobile they are
Trade: the more difficult it is to transport, the more production will need to take place within the local market
PC: government incentives. Penalties and restrictions affect location decisions

8. Location and Value Chain
Seek countries whose resource availability and cost best match each stage of the value chain
Cost factors:
Availability of resources
Quality of resources and capabilities

9. Entering Foreign Markets

10. Entering Foreign Markets: Cont.
International Business class
International alliances and joint ventures:
Strategic alliances: collaborative arrangements between firms
by sharing resources and capabilities between partners, alliances not only economize on investment, they also allow access to more highly developed resources and capabilities than a firm can create for itself.

11. Five Key Factors for Market Entry
Is the firm’s competitive advantage based on firm specific or country specific resources?
Is the product tradable and what are the barriers to trade?
Does the firm possess the full range of resources and capabilities for establishing a competitive advantage in the overseas market?
Can the firm directly appropriate the returns to its resources?
What transaction costs are involved?

12. Multinational Strategies
Global Integration Vs. National Differentiation
Global Wins for 2 Reasons
Economies of Scale
Local customer preferences are disappearing

13. 5 Benefits of Global Strategy
Cost Benefits of Scale and Replication
Serving Global Customers
Exploiting National Resources
Learning benefits
Competing Strategically

14. Need For National Differentiation
National Differences in Customer Preferences continue to exert a powerful influence in most markets

15. Global Game with National Differentiation
New Skins in new Regions
Global Competitive Scene

17. Reconfiguring the MNC: the Transnational Corporation
Changing Organization Structure: national to worldwide
New Approaches to reconciling localization and global integration. Necessities for this:
Each unit is a source of ideas, skills, capabilities
National units become source for particular product
The center has a highly complex managing role

18. Reconfiguring the MNC cont.
Transnational firm is a concept rather than archetype
MNC’s are increasingly locating management outside home
Nexans head of shipbuilding cables moves to South Korea
Biggest challenge of MNC’s: integrating innovation globally

19. Summary Moving internationally increases complexity
Companies can enter markets globally by exporting, licensing, or directly investing
National differences pressures companies to adapt
Global integration requires companies to become transnational