International Strategy Anne-Caroline BERTHELOT
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Transcript of International Strategy Anne-Caroline BERTHELOT
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International Strategy
Anne-Caroline BERTHELOTNoémie HUBINJanine STROH
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I. The basic directions for a firm’s strategy
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1. State of mind
• Perlmutter (1960) admits that there are 3 types of attitudes :
- Ethnocentric- Polycentric- Geocentric.
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State of mind II
• Ethnocentric :
Two characteristics : - National strategy- Home country reference
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Organization Design ETHNOCENTRIC
Complexity of organization
Complex in home country, simple in subsidiaries
Decision making High in headquarters
Evaluation and control Home standards applied for persons and performance
Rewards and punishments; incentives
High in headquarters, low in subsidiaries
Communication; information flow High volume to subsidiaries
Identification Nationality of owner
Perpetuation (recruiting, development ) Recruit people of home country.
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State of mind III
• Polycentric :
Polycentric company have :- regional strategy,- host country reference.
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Organization Design POLYCENTRICComplexity of organization Varied and independent.
Decision making Relatively low in headquarters.
Evaluation and control Determined locally.
Rewards and punishments; incentives
Wide variation; can be high or low rewards for subsidiary
performance.Communication; information flow
Little to and from headquarters. Little between subsidiaries.
Identification Nationality of host country.Perpetuation (recruiting,
development )Develop people of local
nationality.
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State of mind IV
• Geocentric :
Two points :- Global strategy.- Goal : worldwide approach.
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Organization Design GEOCENTRICComplexity of organization
Increasingly complex and interdependent
Decision making Collaborative approach
Evaluation and control Find standards which are universal and local
Rewards and punishments; incentives
International and local executives rewarded for reaching local and
worldwide objectivesCommunication; information flow
Both ways and between subsidiaries
Identification Truly international company but identifying with national interest
Perpetuation Develop best men everywhere
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Two other notions…
• EPG : E : EthnocentricP : PolycentricG : Geocentric.
• Regioncentric :New notion that appears in the years
1980ies.
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Nowadays…
Mostly polycentric and geocentric.
However there is still an ethnocentric attitude in every companies.
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2. Resources and capabilities• A Resource-Based Approach to Strategy Analysis :
Strategy
Competitive Advantage
Capabilities
Resources.
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Resources
• 6 major categories : - Financial resources- Physical resources- Human resources- Technological resources- Reputation and- Organizational resources.
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Capabilities
• Strategic capabilities.
• Comparative advantages.Ex : Fed Ex.
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Competitive advantages
• Two factors provide to appraise the rent-generating potential of resources and capabilities :
- The respect of the rules (durability, transparency, transferability, replicability).
- The appropriability of returns.
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Strategy
• The point : select a strategy.
• If there are resources gap, they have to be filled.
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II. Analyze of international business strategy
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Yip’s (2003) view as a global company :
“A global company has the capacity to go anywhere, deploy any assets, and access any resources, and it maximizes profits on a global basis.”
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3 main possibilities of strategy
• An entirely globally-centered business
• A fully polycentric business on a national level
• A regional organization
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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A framework for analyzing “Globalization”Locus of decision making power on corporate, business, functional strategy issues
Corporate headquarters Regional centers National units
World product 1
Global strategy4 7
Region-based or adapted product
2 5Regional strategy
8
Nation-based or adapted product
3 6 9National strategy
Actual product Characteristics
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III. Multinationals and Regional Trading
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NAFTA
The build-up of regional trading blocks I
EU
MERCOSURFTAA
ASEAN
APEC
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The build-up of regional trading blocks II
EUROPE(EU)
AMERICAS(NAFTA)
ASIA(APEC,ASEAN)
Central & Eastern Europe
South America (MERCOSUR)China & India
Africa
Middle East
CIS
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Influence of Free Trade Areas
Overall growth in international trade and political stability
Shift of regulatory authority to the regional level
Rise of “intra-regional trade”
Free Trade Area = free trade
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Influence of WTOWTO (World Trade Organization): successor to the
General Agreement on Tariffs and Trade (GATT)
Arbitration of triad-based disputes
Protectionism of health, safety and environmental
Reinforce of triad-markets
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States – Firms – Regions I
Regional InstitutionCompany
Company Regional Institution
Government Government
2
4
1
3
6
5
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States – Firms – Regions II
Relationships (1), (2) and (3) reflect conventional interactions between firms and national governments in form of cooperation or competition
Relationships (4), (5) and (6) are of special interest in a regionalized world
R
RC
C
G G
2
1
46
35
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States – Firms – Regions IIIRelationship (5)
national governments have to pay the same attention to regional institutions as to state-to-state relationships
Relationship (6)deepening of regional integration will lead to bargaining among regional institutions
R
RC
C
G G
2
1
46
35
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States – Firms – Regions III
Relationship (4)
- MNE should pay increasing attention to policy making at regional level- MNE may be affected by common standards or additional costs
R
RC
C
G G
2
1
46
35
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MNEs and Regional Policy
1
2 4
3
Fortress against Outsiders
Internal Liberalization
Manageable
Exogenous
Perceived Regional Policy Intent
MNE Perception of Regional Policy
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Case StudyBenetton’s International Strategy
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Revenues 2003 Net sales for the casual segment by geographic area for
the last three years (in thousands of Euro)
2001 2002 2003
EU 1,193,948 1,165,642 1,179,334
Asia 154,832 143,025 138,382
The Americas 85,815 81,107 77,422
Other Areas 193,276 196,236 183,389
WORLD 1,627,871 1,586,010 1,578,527
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Number of Stores
2000 2001 2002 2003
Italy 2,095 2,202 2,270 2,256
Rest of Europe 2,200 2,157 1,999 1,932
The Americas 294 259 262 286
Other geographic areas
718 622 675 621
Total 5,307 5,240 5,206 5,095
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Organizational Structure Benetton Group S.p.A. is the holding company of the
Benetton group companies. The following table setsforth the significant subsidiaries owned, directly or indirectly, by Benetton Group S.p.A.
Benetton Group S.p.A. belongs to the Edizione Holding Group.
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Country OwnershipBenetton International N.V. S.A The Netherlands 100 %
Benetton Trading USA Inc USA 100 %
Benetton Japan Co., Ltd. Japan 100 %
Benetton International Property N.V. S.A
The Netherlands 100 %
Olimpias S.p.A Italy 85 %
Benetton Textil Spain S.L Spain 100 %
Benetton Retail International S.A Luxembourg 100 %
Benetton Società di Servizi S.A Switzerland 100 %
Bencom S.r.l. Italy 100 %
Benind S.p.A Italy 100 %
Bentec S.p.A. Italy 100 %
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Thanks a lot for your attention.