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Global Strategic Management. Philips & Matsushita: Types of International Strategy. MULTI-DOMESTIC STRATEGY Product is fully customized in each country. Decentralized federation of national organizations. Local decision making authority. - PowerPoint PPT Presentation
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Jeff Dyer - BYU
Global Strategic Management
Philips & Matsushita:
Types of International Strategy
Jeff Dyer - BYU
TYPES OF INTERNATIONAL STRATEGYTYPES OF INTERNATIONAL STRATEGY
MULTI-DOMESTIC STRATEGYMULTI-DOMESTIC STRATEGY
• Product is fully customized in each country.
• Decentralized federation of national organizations. Local decision making authority.
• Effective when differences between countries are large.
• Sources of Advantage:
• Differentiation
• Local responsiveness
• Minimize political risk
• Minimize rate exchange risk
GLOBAL STRATEGYGLOBAL STRATEGY
• Product is standardized worldwide
• Centralized organization structure. National subsidiaries possess little decision-making authority.
• Effective when differences between countries are small.
• Sources of Advantage:
• Cost
• Ability to coordinate activities
• Speed in new product development
Jeff Dyer - BYU
A FRAMEWORK FOR ANALYSIS
Pressuresfor GlobalIntegration
Pressuresfor LocalDifferentiation
Jeff Dyer - BYU
A Framework: Global Integration - Local Differentiation
High
High
Low
Low
For
ces
for
Glo
bal
Inte
grat
ion
Forces for LocalDifferentiation
Global Strategy
Multi-domestic Strategy
Local Strategy
Jeff Dyer - BYU
HQ
STRATEGIC INTENT: Gain Global Market Share Leadership
POLICIES:
• Specialized Production and R&D Centers
• Break Down Value Chain and Exploit Low Cost Locations
• World Products to Build Volume and Global Product Roll-out
• Price Leadership
• Optimize Global Network at Local Expense
• International Human Resources
GLOBAL STRATEGY
Source: J. de la Torre
Jeff Dyer - BYU
The Extreme Global Value Chain
CountryCountry ActivitiesActivities
A
B
C
D
E
F
G
H
R & D
Design
Purch-asing
Manu-facturing
Marketing
Selling
Distrib-ution
Service
Design
Purchasing Manu-facturing
Etc.
Jeff Dyer - BYU
THE GLOBAL MAXIMIZER
Some Companies Emphasizing this Approach:
• Royal Dutch Shell
• Caterpillar
• Hewlett Packard
• Boeing
• Intel
• Coca Cola
• Matsushita
• IBM
• American Express
• LM Ericsson
• Toyota
• Sony
THERE IS RELATIVELY LITTLE ROOM FOR JOINT VENTURES IN THIS MODEL, EXCEPT FOR UPSTREAM ACTIVITIES. ACQUISITIONS PLAY A SECONDARY ROLE VS. INTERNAL GROWTH AND GREENFIELD INVESTMENTS.
Source: J. de la Torre
Jeff Dyer - BYU
2. A MULTI-DOMESTIC STRATEGY
HOLDING
STRATEGIC INTENT: Gain Key Positions in
Selected Markets
POLICIES:
• Tailor Products to National Idiosyncrasies
• Differentiated Operations
• Sacrifice Efficiency for Market Access
• Reach Economies of Scale Upstream
• Maximize Local Value Added
• Gain Government Support
• Use Join Ventures to Preempt Competition and Add Local Value
• National Human ResourcesSource: J. de la Torre
Jeff Dyer - BYU
The Fully Multi-local Value Chain
Country Activities
A
B
C
****
Z
R & D Design ServiceDistrib-utionSelling
Market-ing
Manu-facturing
Purch-asing
R & D
R & D
R & D
Design
Design
Design
Purch-asing
Purch-asing
Purch-asing
Manu-facturing
Manu-facturing
Manu-facturing
Market-ing
Market-ing
Market-ing
Selling
Selling
Selling
Distrib-ution
Distrib-ution
Distrib-ution
Service
Service
Service
Jeff Dyer - BYU
THE FEDERALIST
Some Companies Emphasizing this Approach:
• Unilever
• Procter & Gamble
• Federal Express
• PricewaterhouseCoopers
• KPMG
• Heineken
• Philips
• Nestlé
• BASF
• General Motors
• Carrefour
• Wal-Mart
THERE IS AMPLE ROOM FOR JOINT VENTURES AND LOCAL AFFILIATIONS IN THIS MODEL. ACQUISITIONS PLAY AN IMPORTANT ROLE TO OBTAIN DOMESTIC PRESENCE IN IMPORTANT MARKETS
Source: J. de la Torre
Jeff Dyer - BYU
Linking Market, Strategy, Structure & Processes
A n a lys is o f th e en viron m en t / m arke t p reced es ch o ice o f firms tra teg y w h ich p reced es ch o ice o f firm s tru c tu re an d p rocesses .
F irm S truc ture and Processes
F irm S tra tegy
E nvironm ent / M arke t C os ts C om p etito rs C u s tom ers G overn m en t
Jeff Dyer - BYU
Where Next ?
High
High
Low
Low
For
ces
for
Glo
bal
Inte
grat
ion
Forces for LocalResponsiveness
?