11 International Strategy and Organization Copyright © 2014 Pearson Education, Inc.
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Transcript of 11 International Strategy and Organization Copyright © 2014 Pearson Education, Inc.
11 InternationalStrategy andOrganization
Copyright © 2014 Pearson Education, Inc.
11 - 2Copyright © 2014 Pearson Education, Inc.
Chapter ObjectivesChapter Objectives
• Explain the stages of identification and analysis that
precede strategy selection
• Identify the two international strategies and the
corporate-level strategies that companies use
• Identify the business-level strategies of companies and
the role of department-level strategies
• Discuss the important issues that influence the choice
of organizational structure
• Describe each type of international organizational
structure, and explain the importance of work teams
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RyanairRyanair
• Employs a low-cost business strategy• Charges far less than national airlines• Uses low-cost airports near major cities
• Employs a low-cost business strategy• Charges far less than national airlines• Uses low-cost airports near major cities
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Planning and StrategyPlanning and Strategy
Planning Strategy
Identifying and selecting objectives and deciding how to achieve those objectives
Set of planned actions that managers take to help a
company meet its objectives
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Strategy-Formulation ProcessStrategy-Formulation Process
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Identify Mission and GoalsIdentify Mission and Goals
Mission statementsmust consider: Company activities Business objectives Stakeholders Stockholders Customers Residents Environment
and much more…
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Identify Core CompetencyIdentify Core CompetencyIdentify Core CompetencyIdentify Core Competency
Special ability of a company that competitors find extremely difficult or impossible to equalSpecial ability of a company that competitors find extremely difficult or impossible to equal
Coordination of multiple skillsCoordination of multiple skills
Develop over lengthy period of timeDevelop over lengthy period of time
Difficult to teachDifficult to teach
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Value Chain AnalysisValue Chain Analysis
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Business EnvironmentBusiness Environment
National differences are inherent in analyzing a firm’s unique abilities
Cultural differences
Political processes
Legal matters
Economic systems
Labor issues
Consumer forces
and much more…
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Discussion QuestionDiscussion Question
What are the three stages of the strategy-formulation process, and what is involved at each stage?
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Answer to Discussion Answer to Discussion QuestionQuestion
Stage one is to identify company mission and goals. This means defining the business and its main objectives.
Stage two is to identify company core competency and value-creating activities. This means analyzing a firm’s unique abilities, primary and support activities, and the business environment.
Stage three is to formulate strategies. This means selecting a multinational or global strategy and then formulating corporate-, business-, and department-level strategies.
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Multinational StrategyMultinational Strategy
Adapting products and their marketing strategies
to local preferences in each national market
– Difficult to exploit economies of scale
+ Respond quickly to buyer preferences
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Global StrategyGlobal Strategy
Offering the same products using the same marketing strategy in all
national markets
– May overlook varying buyer preferences
+ Cost savings from standardization
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Levels of Company StrategyLevels of Company Strategy
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Growth StrategyGrowth Strategy
Internally generated growth
Mergers and acquisitions
Joint ventures
Strategic alliances
Increase the scale (size of activities) orscope (kinds of activities) of operations
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Retrenchment StrategyRetrenchment Strategy
Reduce the scale or scopeof a corporation’s businesses
Reduce Scale Reduce Scope
Close factories
Lay off workers
Sell unprofitable businesses
Sell unrelated businesses
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Stability StrategyStability Strategy
Guard against change and avoidgrowth or retrenchment
No opportunities or threats
Strengths fully exploited
Weaknesses fully protected
Stated objectives are met
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Combination StrategyCombination Strategy
Invest inpromising units
Retrench forless exposure
Stabilizeother units
Mix of growth, retrenchment, and stability strategies across business units
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Discussion QuestionDiscussion Question
A company that adapts its products and marketing to local preferences in each national market follows a __________ strategy.
a. Global
b. Multinational
c. Preference
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Answer to Discussion Answer to Discussion QuestionQuestion
A company that adapts its products and marketing to local preferences in each national market follows a __________ strategy.
a. Global
b. Multinational
c. Preference
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Business-Level StrategiesBusiness-Level Strategies
Low-cost leadership
Differentiation
Focus
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Low-Cost StrategyLow-Cost StrategyLow-Cost StrategyLow-Cost Strategy
Exploit economies of scale to have the lowestcost structure of any competitor in an industryExploit economies of scale to have the lowestcost structure of any competitor in an industry
• Mantra is cutting costs
• Quality remains important
• Scale is barrier to new entrants
• Perhaps low customer loyalty
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Differentiation StrategyDifferentiation Strategy
Effects
Price premium
Customer loyalty
Portion of market only
Higher production costs
Design products that buyers perceiveas unique throughout an industry
Differentiators
Quality
Brand image
Product design
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Focus StrategyFocus StrategyFocus StrategyFocus Strategy
Focus on narrow market segment by being the low-cost leader, differentiating, or both
Focus on narrow market segment by being the low-cost leader, differentiating, or both
• Many sub-segments today
• Need distinctive product
• Single geography, ethnicity, etc.
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Department-Level StrategiesDepartment-Level Strategies
Departmental strategies
are key to a company
achieving its objectives:
Manufacturing Marketing Logistics Research & development
and others…Source: Peng Neng/NewscomSource: Peng Neng/Newscom
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Discussion QuestionDiscussion Question
What are the main differences between the three types of business-level strategy?
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Answer to Discussion Answer to Discussion QuestionQuestion
A low-cost leadership strategy exploits economies of scale to have the lowest cost structure of any competitor in an industry.
A differentiation strategy designs products that buyers perceive as unique throughout an industry.
A focus strategy focuses on the needs of a narrowly defined market segment by being the low-cost leader, by differentiating its product, or by doing both.
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Organizational StructureOrganizational Structure
Centralizeddecision making
Decentralizeddecision making
+ Coordination is paramount+ Financial control & cost savings
+ Improves local responsiveness+ Increases accountability
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International Division International Division StructureStructure
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International Area StructureInternational Area Structure
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Global Product StructureGlobal Product Structure
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Global Matrix StructureGlobal Matrix Structure
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Work TeamsWork Teams
Cross-functionalteam
Group of employeesfrom similar levels but
different functionaldepartments
Self-managedteam
Employees from onedepartment take onresponsibilities offormer supervisors
Globalteam
Top managers fromheadquarters andsubsidiaries solvecompany problems
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Discussion QuestionDiscussion Question
The organizational structure that divides worldwide operations according to a company’s product areas is called a(n) __________ structure.
a. Global matrix
b. Global product
c. International division
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Answer to Discussion Answer to Discussion QuestionQuestion
The organizational structure that divides worldwide operations according to a company’s product areas is called a(n) __________ structure.
a. Global matrix
b. Global product
c. International division
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means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher.
Printed in the United States of America.
Copyright © 2014 Pearson Education, Inc.
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