Mba 618 global strategy 2011
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Transcript of Mba 618 global strategy 2011
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Global StrategyGlobal Strategy
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Procter & Gamble
Pan-European Brand Development
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P&G Multidomestic StrategyP&G Multidomestic Strategy
UK
GermanyFrance
Italy
Neth.
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Product Characteristics MapProduct Characteristics MapHigh Washing Temp
FabricSoftener
BleachAdditives
EnzymaticStain
Removers
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Product Characteristics MapProduct Characteristics MapHigh Washing Temp
FabricSoftener
BleachAdditives
EnzymaticStain
Removers
Italy
Spain
ItalyExcludedcountries
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P&G “TransEuro” StrategyP&G “TransEuro” Strategy
UK
GermanyFrance
Italy
Neth.
Spain
Zone 1
Zone 2
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EpilogueEpilogue VIZIR was precursor to “Liquid Tide” in US
– Great irony is: P&G’s struggle to develop “Euro-brand” first found success in another large, integrated market…the U.S.
– The VIZIR experience facilitated learning/cross-fertilization w/in P&G worldwide
– Developed “world-class” technology and product development capabilities worldwide
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Industry Globalization
o What is a global industry? Why?o Which drivers/factors most important?o How does a global industry compare with a multi-
domestic one?o How is the extent of globalization “measured”?o What are the implications for firms’ international
strategies?
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Globalization Drivers
o Market Driverso Cost Driverso Government Driverso Competitive Drivers
Low
Multi-domestic
High
Global
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Definitions
Multi-domestic – Many-country view of the international
marketplace
– Value chain activities are performed in the local country-market and are adapted to local tastes, preferences, needs, etc.
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DefinitionsGlobal
– A whole world-level view of the international marketplace, the world is the market
– Value chain activities are standardized and are performed in country locations according to efficiency, favorable policies, knowledge, resources, etc.
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DefinitionsTransnational
– A “glocal” level view of the international marketplace – has some global, some local elements
– Some value chain activities are standardized and are performed in country locations others are nationally-adapted and performed in the local market
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Market Globalization Drivers
o Common customer needso Global customerso Global market channelso Transferable marketing
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Strength of Market Drivers
Low High
Baked Goods
Book Publishing
Retail Banking
Toothpaste
Soft Drinks
Automobiles
Computers
Aircraft
Multidomestic Global
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Cost Globalization Drivers
o Global scale economieso Sourcing efficiencieso Factor of production differenceso High product development costso Rapidly changing technology
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Strength of Cost Drivers
Low High
Baked Goods
Retail Banking
Toothpaste
Soft Drinks
Automobiles
Computers
Aircraft
Pharmaceuticals
Multidomestic Global
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Government Globalization Driverso Unrestrictive trade and investment policieso Compatible technical standardso Common marketing regulations
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Strength of Government Drivers
Restrictive Loose
Baked Goods
Retail Banking
Toothpaste
Soft Drinks
Automobiles
Computers
Airlines
Pharmaceuticals
Multidomestic Global
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Competitive Globalization Driverso High two-way trade / cross-border FDIo Global competitorso Interdependence among countries
o Trade/Investment Policieso Role of WTO, etc.
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Strength of Competitive Drivers
Low High
Baked Goods
Retail Banking
Toothpaste
Soft Drinks
Automobiles
Computers
AircraftPharmaceuticals
Multidomestic Global
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International Strategyo Globalization drivers – Assess dual Globalization drivers – Assess dual
pressures:pressures:• Global efficiency - Global efficiency - standardizationstandardization
• National/local responsiveness - National/local responsiveness - adaptationadaptation
o Location/configuration of value-creating Location/configuration of value-creating activitiesactivities
o Integration/coordination of value-creating Integration/coordination of value-creating activitiesactivities
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Effective Standardization
Coca-Cola’s “transnational polar bears”
McDonald’s “Big Mac”
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Effective Adaptationo McMutton Pie in Australiao Wendy’s shrimp sandwich in Japano Campbell’s non-condensed soups in the UKo Coca-Cola’s 175 ml containers in Japan
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Barbieo Barbie is 51 years oldo Sold in 130 countrieso National adaptations:
• Physical features• Costumes• Activity sets
o Standardized physique:• Scaled to 6’2”, 110 lbs.
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Globalization Drivers
o Market Driverso Cost Driverso Government Driverso Competitive Drivers
Low
Multidomestic
High
Global
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International Strategy:Managing Dual Pressures
Pre
ssur
es f
or G
loba
l Eff
icie
ncy
Pressures for Local Responsiveness
High
Low
HighLow
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Value ChainLocation and standardization/adaptation
Infrastructure
Technology Development
Procurement
Human Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
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Value Chain
InfrastructureInfrastructure
Technology DevelopmentTechnology Development
ProcurementProcurement
Human Resource ManagementHuman Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
Headquarters
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Value Chain
InfrastructureInfrastructure
Technology DevelopmentTechnology Development
ProcurementProcurement
Human Resource ManagementHuman Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
Upstream
Headquarters
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Value Chain
InfrastructureInfrastructure
Technology DevelopmentTechnology Development
ProcurementProcurement
Human Resource ManagementHuman Resource Management
InboundInboundLogisticsLogistics OperationsOperations
OutboundOutboundLogisticsLogistics MarketingMarketing ServiceService
ProfitMargin
Upstream Downstream
Headquarters
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Value Chain Sub-functions (Marketing)InfrastructureInfrastructure
Technology DevelopmentTechnology Development
ProcurementProcurement
Human Resource ManagementHuman Resource Management
InboundInboundLogisticsLogistics OperationsOperations
OutboundOutboundLogisticsLogistics MarketingMarketing ServiceService
ProfitMargin
Advert. Pricing Distrib. Packaging
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Value Chain Configuration
o Geographic location of value chain activities – Concentrated/centralized vs.
dispersed/decentralized
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Value Chain Coordinationo Cross-border linkages between dispersed value-
creating unitso Coordination = Flows of:
– $
– Product (finished and intermediate)
– Technology
– People
– Information (market data, strategic direction, etc.)
o Highly coordinated vs. only money flows
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International Strategy:Managing Dual Pressures
Pre
ssur
es f
or G
loba
l Eff
icie
ncy
Pressures for Local Responsiveness
High
Low
HighLow
ExportStrategy
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Export Strategy(same as Export entry mode)
U.S.
Germany
Mexico
Malaysia
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International Strategy:Managing Dual Pressures
Pre
ssur
es f
or G
loba
l Eff
icie
ncy
Pressures for Local Responsiveness
High
Low
HighLow
ExportStrategy
??
MultidomesticStrategy
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Multidomestic Strategy
U.S.
Germany
Mexico
Malaysia
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International Strategy:Managing Dual Pressures
Pre
ssur
es f
or G
loba
l Eff
icie
ncy
Pressures for Local Responsiveness
High
Low
HighLow
ExportStrategy
??
MultidomesticStrategy
GlobalStrategy
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Global Strategy(Textbook Variety)
U.S.
Germany
Mexico
Malaysia
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International Strategy:Managing Dual Pressures
Pre
ssur
es f
or G
loba
l Eff
icie
ncy
Pressures for Local Responsiveness
High
Low
HighLow
ExportStrategy
??
MultidomesticStrategy
GlobalStrategy
TransnationalStrategy
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Transnational Strategy (v.1)
U.S.
Germany
Mexico
Malaysia
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Transnational Strategy (v.2)
U.S.
Germany
Mexico
Malaysia
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Transnational Strategy (v.3)
U.S.Germany
Mexico
Malaysia
Engines
Final Assembly
Trim, seats,glass
Steel
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VW International Strategy - Jetta
Germany
Japan
Mexico
Poland
Transmission
Final Assembly
Engine
Misc.
U.S.Marketing
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Entry Mode Framework
Mindset Country-market opportunity/cost analysis
Stand-alone Attractiveness Strategic Importance
Resources-Control-Risk tradeoff
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Mindset and International Activity International
Overseas activities support / subordinate to domestic activities
Multinational Flexibly adapting value-creating activities on
country-by-country basis; nationally-responsive
Global The world is the market; standardization
Transnational “Glocalization” – Some value-creating activities
standardized/globalized, others localized
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Entry Mode Decision Matrix
Hi
Lo
HiLo
Str
ateg
ic I
mpo
rtan
ce
Str
ateg
ic I
mpo
rtan
ce
of C
ount
ryof
Cou
ntry
Stand-alone AttractivenessStand-alone Attractivenessof Countryof Country
Lo
Hi
Resource
s,
Resource
s,
Control,
Control,
RiskRisk
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Country-Market AnalysisStand-alone attractiveness:
– Size
– Growth
– Product acceptance / segmentation
– Cultural similarity
– Risk
– Policy incentives
– Other factors? ….MNC “power”?
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Country-Market AnalysisStrategic importance:
– Home market of global customer
– Home market of global rivals
– Significant market of global rivals
– Major source of innovation
– Demanding/sophisticated customers
– Factor-cost advantages
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Resources-Control-Risks Resources
$$, time, technology, machinery, people, organizational, strategy
Control Operational and strategic discretion over
value-creating activities Risks
Political, F/X, economic, cultural, dissemination
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Control Extent of involvement:
Channel control / ownership:
Ship Product
Marketing
Distribution
After-salesSupport
Mfg.
ExportAgent
ImportAgent
RegionalWhsle.
LocalWhsle.
Retail
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Entry Mode Decision Framework
Licensing
Exporting Intermediaries
Direct
Joint Venture
Wholly-owned Subsidiary
ControlControl ResourcesResources RiskRisk Dissem. LowLow LowLowLowLow
HighHigh HighHighHighHigh Low
High
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Entry Mode Decision Matrix
Hi
Lo
HiLo
Str
ateg
ic I
mpo
rtan
ce
Str
ateg
ic I
mpo
rtan
ce
of C
ount
ryof
Cou
ntry
Stand-alone AttractivenessStand-alone Attractivenessof Countryof Country
Lo
Hi
Resource
s,
Resource
s,
Control,
Control,
RiskRisk
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General Electric and International Involvement
GE Product Divisions: Light bulbs Aircraft engines Appliances Power-generation
GE Market Opportunity: North America Europe Pacific rim / Asia Emerging markets
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GE’s Markets, Entry and Strategy ChoicesP
rodu
ct L
ines
Pro
duct
Lin
es
Country-MarketsCountry-Markets Internatio
nal
Internatio
nal
Strateg
y
Strateg
y
4
3
2
1
A B C D
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Entry Mode Decision Matrix
Hi
Lo
HiLo
Str
ateg
ic I
mpo
rtan
ce
Str
ateg
ic I
mpo
rtan
ce
of C
ount
ryof
Cou
ntry
Stand-alone AttractivenessStand-alone Attractivenessof Countryof Country
Lo
Hi
Resource
s,
Resource
s,
Control,
Control,
RiskRisk
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McDonald’s Identity
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McDonald’s Site Selection and StoresUS -- Colorado
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McDonald’s Site Selection and Stores
Bangkok,Thailand
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McDonald’s Site Selection and StoresMoscow, Russia
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McDonald’s Transnational MenuUS Brazil Canada India Germany
Big Mac French Fries Coca-Cola McNuggets McAloo Tikki McRib McBier McLobster McCalebresa PitaMac McFarmer
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Hamburger UniversityIllinois, USA
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Hamburger University Curriculum
o 80 classroom hourso Topics – Fast food “the McDonald’s way”
• Restaurant operations, food preparation• Crew selection, training and team building• Marketing and promotion• Asset management• Corporate citizenship and ethics• Leadership, effective supervisory skills
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Hamburger University
Illinois
Sydney
London
Munich
Hong-Kong
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McDonald’sTransnational Strategy
U.S.
Singapore
Greece
Brazil