Global Strategies and the MNC

Shea GordonKyle HarrisBradley PetersMatthew Powers

A brief company history Pattern of Internationalization Challenges of

Internationalization Tastes changes from culture to

culture Adaptation was necessary Recent struggles moving to

China

IKEA’s International Strategy

Patterns of Internationalization

• Sheltered Industries• Trading Industries• Multidomestic Industries• Global Industries

National Influences on Competitiveness Comparative Advantage

Firm Resources and Capabilities The Industry Environment The National Environment

Analyzing Competitive Advantage in an International Context

Porter’s National Diamond

Factor Conditions

Strategy, Structure, and

Rivalry

Demand Conditions

Related and Supporting Industries

Intel Diamond Model

• Easy and cheap materials

• Well-educated work force

• Growing competition for superconductors

• Little rivalry for microprocessors

• Move to open mobile platforms

• Slowing growth in PC market

• “evolving market trends”

• Difficult to imitate product

• Slowing PC growth• Must look to foreign

countries for supplies.

Factor Conditions

Related and Supporting Industries

Strategy, Structure, and Rivalry

Demand Conditions

Applying the Framework: International Location of Production• National resource availability• Firm-specific competitive

advantage• Tradability• Political Considerations

Seek countries whose resource availability and cost best match each stage of the value chain

Cost factors: Availability of resources Quality of resources and capabilities

Location and Value Chain

Entering Foreign Markets

Entering Foreign Markets: Cont.

1. Is the firm’s competitive advantage based on firm specific or country specific resources?

2. Is the product tradable and what are the barriers to trade?

3. Does the firm possess the full range of resources and capabilities for establishing a competitive advantage in the overseas market?

4. Can the firm directly appropriate the returns to its resources?

5. What transaction costs are involved?

Five Key Factors for Market Entry

Multinational Strategies

Global Integration Vs. National DifferentiationGlobal Wins for 2 Reasons 1. Economies of Scale2. Local customer

preferences are disappearing

Cost Benefits of Scale and Replication

Serving Global Customers Exploiting National Resources Learning benefits Competing Strategically

5 Benefits of Global Strategy

Need For National DifferentiationNational Differences in Customer Preferences continue to exert a powerful influence in most markets

Global Game with National Differentiation New Skins in new Regions Global Competitive Scene

Changing Organization Structure: national to worldwide

New Approaches to reconciling localization and global integration. Necessities for this: Each unit is a source of ideas, skills, capabilities National units become source for particular

product The center has a highly complex managing role

Reconfiguring the MNC: the Transnational Corporation

Transnational firm is a concept rather than archetype

MNC’s are increasingly locating management outside home

Nexans head of shipbuilding cables moves to South Korea

Biggest challenge of MNC’s: integrating innovation globally

Reconfiguring the MNC cont.

Moving internationally increases complexity Companies can enter markets globally by

exporting, licensing, or directly investing National differences pressures companies to

adapt Global integration requires companies to

become transnational

Summary