Globalization of Strategy MGMT 480 Dr. Keith Robbins Meagan DenOuden.
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Transcript of Globalization of Strategy MGMT 480 Dr. Keith Robbins Meagan DenOuden.
Globalization of Strategy
MGMT 480
Dr. Keith Robbins
Meagan DenOuden
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
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
Why Globalize?
Competitive Disadvantage
If you are not global in your reach and your rivals are…
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Dominant Multinational Market Groups
The G-7 Nations NAFTA – (soon to be AFTA?) Pacific Rim /Asia EU
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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.
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The Group of 7 Nations
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
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Evolutionary Development of a Global Corporation
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1. Export-import activity
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)
Evolution of a global firm
entails progressively
involved strategy levels
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
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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.
Multi-domestic Strategy
Pros Reduced exchange-rate
exposure Value creation in host
country
Cons Costly and inefficient Highly autonomous
units
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
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
Global Strategy 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.
Global Strategy
Pros Obtain the lowest costs Economies of scale
Cons If you can’t get the
lowest costs you won’t succeed
No local responsiveness
No product differentiation
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
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.
Transnational Strategy
Pros Economies of scale Location Learning
Cons Costly and difficult to
implement Exchange rate
exposure
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