1. Globalization of Strategy
MGMT 480
Dr. Keith Robbins
Meagan DenOuden

2. Globalization
Process of closer integration and exchange between different countries and peoples world-wide
Made possible by:
Falling trade and investment barriers
Advancements in telecommunications
Reduced transportation costs

3. Why Globalize?
Resource-based: resources are the key to a firms superior performance
Superior Craftsmanship: better/cheaper labor in different countries
Transportation costs: decrease costs by having warehouse in country
Better production efficiency
Avoid political, trade, and regulatory rules
Gain access to a larger market

4. Why Globalize?
Competitive Disadvantage
If you are not global in your reach and your rivals are…

5. Dominant Multinational Market Groups
The G-7 Nations
NAFTA – (soon to be AFTA?)
Pacific Rim /Asia EU

6. The Group of 7 Nations
Formerly the G8 (Russia) These meetings of the leaders of the United States, Britain, Italy, Japan, France, Germany, and Canada are the way the powerful industrialized nations of the world seek to work out differences between themselves and arrive at policies that can reduce conflict and other problems elsewhere.

7. The European Union
Austria, Belgium, Bulgaria, Croatia, Cyprus (Greek part) Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom

8. Evolutionary Development of a Global Corporation
1. Export-import activity
Evolution of a global firm entails progressively involved strategy levels
2. Foreign licensing and technology transfer
3. Direct investment in overseas operations (manufacturing plants and global management skills)
4. Substantial increase in foreign investment (foreign assets comprise significant portion of total assets)

9. Comparative Management Framework
Compare and Contrast the Management Models, Practices, Principles, Strategies, Policies…Across Classes of Organizations
Could be Profit vs Not-For-Profit, Small vs Large , Private vs Public
Most Often Concerned with Comparative Analysis Among Different Regions of World

10. Multi-domestic Strategy
Also known as localization strategy
Maximize local responsiveness, hoping that local consumers will perceive them to be domestic
Be perceived as local.

11. Multi-domestic Strategy
Pros
Cons
Reduced exchange-rate exposure
Value creation in host country
Costly and inefficient
Highly autonomous units

12. Multi-domestic Strategy Examples
McDonalds
China: Rice McWraps
Italy: Pizzarotto
Saudi Arabia: Mc Arabia Chicken
India: No beef → mutton- based and vegetarian burgers
Lowered prices based on average income
Heinz
Always sell ketchup
China → soy sauce
Indonesia → chili sauces
Brazil → tomato sauces

13. Multi-domestic Strategy Examples
Hard Rock Cafe
Hawaii → fresh fish
Retail shops → carry location specific items
London: t-shirts with London written on it
Prague: signature pins
MTV
Feeds for UK and Ireland
Feeds for Germany, Austria, and Switzerland
Feeds for Scandinavia, Italy, France, Spain, and Holland

14. Global Strategy Lowest costs possible.
Attempts to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost
Arises due to:
High pressure for cost reductions
Low pressure for local responsiveness
Lowest costs possible.

15. Global Strategy Pros Cons Obtain the lowest costs Economies of scale
If you can’t get the lowest costs you won’t succeed
No local responsiveness
No product differentiation

16. Global Strategy Examples
Lenovo
Computer Manufacturers; Makers of the ThinkPad
Hubs in Beijing, Shanghai, Raleigh, and Japan
Manufacturing in Mexico, India, and China
Walmart
Tried to enter Germany
Wanted door greeters and polite staff
Couldn’t gain enough market share and keep their costs low

17. Transnational Strategy
Also called glocalization
Attempts to combine the benefits of a localization strategy with those of a global strategy
High local-responsiveness and lowest cost attainable
Think globally, act locally.

18. Transnational Strategy
Pros
Cons
Economies of scale
Location
Learning
Costly and difficult to implement
Exchange rate exposure

19. Transnational Strategy Examples
Unilever
Brand & innovation lead to lower environmental impact
Sustainable growth operations in multiple continents
Create a positive social improvement
Coca-Cola
Retains the same secret formula in each country
Sells in 200 countries world-wide
Bottles will be in local language