1. TYPES OF MNC Multidomestic corporation (independant subsidiary)
Global corporation (Coca Cola/Nike/Disney)
Transnational corporation (global efficiency and local responsiveness) (Cap Gemini)
World corporation (Nestlé/Asea Brown Boveri)

2. Reasons for going global
Market expansion (amazon.com)
Resource acquisition (cheap labour)
Competative forces (Mazda)
Technological changes (Internet)
Social changes (telecommunication-gsm)
Government policies (European union-Euro)

3. Political Events with Impact on business and/or profits
War
Revolution
Expropriation/Confiscation
Taxation
Devaluation
Exchange controls
Import restrictions

4. Factors causing political risk
GOVERNMENT ACTION
Operational restrictions
Discriminatory restrictions
Physical restrictions
INTER-GOVERNMENTAL RELATIONS
ENVIRONMENTAL FACTORS

5. Political risk management
Political risk analysis
Joint Ventures and licensing
Localization
Strong linkages with local suppliers
Integration with host government
Diversification of host countries
Political risk insurance

6. Defense strategy for the 90’s
Increase a subsidiary’s bargaining power
Improve a subsidiary’s political role
build local alliances
achieve the status of “good citizenship”

7. Global strategic plan Global mission/global vision
evaluation of current position
external environmental analysis
internal resources analysis
SWOT
Global strategy formulation
Global strategy evaluation/decision
Global strategy implementation

8. Global en Local Transnational strategy: think global, act local
Global strategy strategie: World is one market
Multiple markets strategy: every BU its own market
International strategy: strong points abroad

9. Types of global strategy
exploiting a technological lead (Boeing)
exploiting a strong name (Coke/Nike)
exploiting advantages of scale (VW)
becoming a “triad power”
achieving a value chain
achieving global competative advantage (Porter)
achieving flexibility and mobility

10. Competative advantage (Porter)
global strategy : differentiation
Brand: coca-cola, Calvin Klein, Gucci)
Quality: Maglite, Shaeffer, Victorinox
distribution: Amazon.com, mail-order
Global strategy: cost leadership
Bic, Aldi, Lidl
protected niche strategy:
Haribo, W.L. Gore Inc., Loctite, Swarowski

11. indirect foreign investment
exporting
commission agent
export manager
export department
licensing
franchising

12. Exporting ADVANTAGES flexible few investments little risk
easy to terminate
DISADVANTAGES
very high cost of travel for employees
no own presence in the export-country

13. Commission agent ADVANTAGES low cost; cheap strategy
simple strategy: all it takes is a good agent
agent knows market, culture and language
DISADVANTAGES
no control over activities of agent
little attention to your company
conflict of interest

14. Licensing < > Franchising
Royalties
single product/patent
well-esthablished business
terms of years
no goodwill
royalties open to negotiation
Management fee
total business
start-up situation
terms of 5 years (10)
local goodwill
standard fee structure

15. direct foreign investment
fully owned subsidiairy
international division
international corporation
multinational corporation
joint venture
strategic alliance

16. START UP ADVANTAGES efficient: small and cost-conscious
local action (no red tape from home)
innovation : first experiment abroad
DISADVANTAGES
start-up losses: first profit after years
political risk with local investments
jealousy within the company (freedom)

17. Strategic alliances
Cooperative agreements between potential or actual competitors
Ranging from normal Joint-ventures to short term contractual agreements for a particular task:
Comprehensive alliances: total business
Functional alliances: Marketing / production / finance / Research and development

18. Examples strategic alliances 1
Joint venture: New United Motor (NUMMI) > Toyota 50% and GM 50% (since 1985)
Agreement: Boeing and Japanese consortium to develop Boeing 777
United Airlines and British Airways: unstable alliance, because UA terminated the alliance when it bought landing rights from PanAm

19. Examples Strategic alliances 2
Kodak, Fuji and Canon: new camera’s and films (establishing new standard)
Dutch and Far East builders built new airport for Hongkong
ICL and Fujitsu to produce mainframes to compete with IBM
Financial alliances to make a movie: Titanic and Star Wars

20. Advantages alliances
Ease of market entry: use partners knowledge of market, culture and government (see Microsoft case)
Sharing risk (Boeing / Fuji & Kodak)
Sharing knowledge and expertise (Nummi)
Synergy and competative advantage (Pepsico & Liptonice in USA)

21. Disadvantages alliances
Transfer of management skills can create local competitor
differences in management style, culture and mission of the company
Example: TOYOTA < > GM
Toyota opened plant in Kentucky after succesfull joint venture
GM team was split up >knowledge lost

22. Pitfalls of strategic alliances
Incompatibility of partners (AT&T/Olivetti)
Acces to informationG (Ford did not get acces to Mazda laboratory)
Distribution of earnings
Potential loss of autonomy (Fujitsu & ICL: Fujistu took over ICL after 9 years)
Changing circumstances (GM alliance with Daewoo: $ decreased in value)

23. International Marketing
International marketing research
Segmentation of potential customers
International product policy
International pricing strategy
Global or local promotion strategy
International distribution system

24. International product policy
Product modification
technical factors
legal environment (product liability)
use conditions, tastes and preferences
income and education
packaging
Development of new products
Elimination of failing products
Strategic Brand marketing

25. International Pricing Strategy
Production cost
Taxes and exchange rates
Promotion and distribution cost
What the market will bear:
competitor orientation
demand orientation (see Asian yuppies)

26. Global Procduct Strategy
Product-communication extension
(dual extension) Gilette
Product extension - communication adaptation Perrier
Product adaptation - communication extension Exxon
Product-communication adaptation
(dual adaptation) Heinz
Product invention Colgate Total

27. Four Models of Advertising
Domestic extension model
Multi National model
Global model
Pattern model

28. Communication Problems
Misair (Egyptian Airline) = Misère
Croma (Fiat model) = butter brand NL
Chevrolet Nova : Spanish “no va” = no go
Ford Probe: Germany = test drive only
Ford Pinto: Protugal= very small dick
“the Gift Shop” = the poison shop (German)

29. Communication Problems 2
Daewoo Espero: Spanish = I’m waiting
Ford Fiera: Spanish = old witch
Fiat Uno: Finnish =
Ford Caliente: Mexico = street hooker
Fokker airplanes: this is our first Fokker, we call it the mother-Fokker
Fiat Regatta: Swedish = fighting woman

30. Recruitment and selection
Location of the subsidiairy
coordination and control
goals and objectives of the firm
management orientation
management development
cost and repatriation problems
local restrictions
gender and racial bias; local acceptance

31. International staffing
ethnocentric : appoint home country nationals
Polycentric: appoint host country nationals
Regiocentric: appoint the best from a given region
Geocentric: appoint the best, regardless of nationality

32. Negotiating styles JAPANESE emotional sensitive hiding emotions
group decision making
consensus
face saving crucial
relation building
non argumentative
step by step
NORTH AMERICAN
sensitivity not valued
dealing straightforward
indivudual (team input)
consensus not needed
cost / benefit
impersonal
argumentative
methodical and fast