Strategy Implementation: Organizing for Action. Strategy. International Corporate Strategies. Identifying International Opportunities

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1 Identifying Opportunities Implementation: Organizing for Action Increased Market Size Return on Investment Economies of Scale and Learning Location Advantages Determinants of National Advantage -Level Factor conditions Firm, structure, and rivalry Demand conditions -Cost Differentiation Focus Strategies Integrated -Cost/Differentiation Related and supporting industries Strategies Need for Integration Need for Local Responsiveness Continuum from to Specialized by country Value Chain and Operations Centralized Pure and Services Pure

2 The s in various countries are independent Each unit treats its markets as distinct from all others headquarters is not much more than just another unit The s in various countries are under centralized corporate control Standardized products suitable for a variety of markets ion is coordinated centrally to create economies of scale The s coordinate their activities s in various countries may adapt to special circumstances only they face Entire organization draws upon relevant corporate resources, wherever they are Market Entry Mode Type of Entry Alliances Acquisition Wholly-owned Subsidiary Characteristics cost, low control cost, low risk, less profit Shared costs, shared risk, problems of integration Quick access, high cost, complex negotiations Complex, high cost, high risk, high profit Market Entry Mode Environment Risks Coup in Guatemala Wholly Owned Subsidiary Political Risks Civil war in Bosnia Protectionism in Russia Joint Venture Failure of EU None Franchising None Ownership and Control of Foreign Operations Economic Risks Asian markets woes Germany s reunification problems Mexico s impact Japan s trade policies

3 Management Problems Increased Coordination Costs Different Government Regulations Cultural Differences Trade Barriers Increased Competition Host Government Relationships Identify international opportunities Increase market size Return on investment Economies of scale and learning Location advantage Explore resources and capabilities business-level strategies Use core competence alliances Acquisitions Establishment of new subsidiary Modes of entry Achieve strategic competitiveness Management problems and risk Management problems and risk er Innovation and Implementation Functional s Multidivisional s Distribution of Large Firms Dominant- and Diversified Simple Holding-company Functional Sales growth Vertical Integration Unrelated Combination related and unrelated Wholly owned divisions Multidivisional (M-form) Related-linked level Relatedconstrained Number of Companies Functional with integrated subsidiaries Competitive M-form Cooperative M-form Specialization Ratio Functional for Cost-Leadership Office of the Functional for Differentiation and limited staff Centralized Staff Engineering Operations Personnel Accounting New Operations Human Resources

4 Cooperative Multidivisional for Related-Constrained SBU Multidivisional for Related-Linked Government Legal Planning HR Lab Planning HR Competitive Multidivisional for Unrelated Legal Headquarters Office Auditing Attributes of s Structural Characteristics Centralization Use of Integrating Mechanisms al Performance Appraisal al Incentive Compensation Cooperative Centralized at corporate office Overall Structural Form SBU Partially centralized (in SBUs) Competitive Decentralized to divisions Extensive Moderate Nonexistent Emphasizes subjective criteria Linked to overall corporate Uses a mixture of subjective and objective criteria Mixed linkage to corporate, SBU and divisional Emphasizes objective criteria (financial or ROI) Linked to divisional and Domestic Functional expansion by country Independent country functional subsidiary (H-form) structure geographic area structure Combination division expansion by product Independent divisional product (M-form) product divisional Geographic Area for Latin America Asia Australia Multinational Headquarters ed States Middle East/ Africa Europe

5 al for Headquarters