International Business
Chapter Fifteen
Control Strategies
Control
 Control
is management’s planning,
implementation, evaluation, and correction
of performance to ensure the organization
meets its objectives
 Management must balance global needs
while adapting to country-level differences
 Control keeps a company’s direction or
strategy on track
Control in International Business
EXTERNAL INFLUENCES
PHYSICAL AND SOCIETAL
FACTORS
Political policies and legal
practices
Cultural factors
Economic forces
Geographical influences
COMPETETIVE
ENVIRONMENT
CONTROL OF
OPERATIONS
OBJECTIVES
STRATEGY
MEANS
Assurance that
objectives are met
Control Difficulties in International
Business
 Distance
 Diversity





Market size
Type of local competition
Nature of product
Labor cost
Currency
International Control Process
 Planning
 Organizational
structure
 Location of decision making
 Control mechanisms
 Special situations
Organizational Structure
 Separate
vs. Integrated International
structures
 Dynamic Nature of structures
 Mixed Nature of structures
 Nontraditional structures
Separate vs. Integrated
International Structures
1.
2.
3.
4.
5.
International Division Structure
Functional Division Structure
Product Division Structure
Geographic Division Structure
Matrix Division Structure
Organizational Structure
 Separate
vs. Integrated International
structures
 Dynamic Nature of structures
 Mixed Nature of structures
 Nontraditional structures
Nontraditional Structures
1.
Network organizations
2.
Lead Subsidiary Organizations
International Control Process
 Planning
 Organizational
structure
 Location of decision making
 Control mechanisms
 Special situations
Location of Decision-making
 Pressures
for Global Integration vs. Loacal
responsiveness
 Capabilities of Headquarters vs.
Subsidiary personnel
 Decision Expediency and Quality
Pressures for Global Integration vs.
Loacal responsiveness
Resource Transference
2. Standardization
3. Systematic Dealings with
Stakeholders
4. Transnational Strategy
1.
Location of Decision-making
 Pressures
for Global Integration vs. Loacal
responsiveness
 Capabilities of Headquarters vs.
Subsidiary personnel
 Decision Expediency and Quality
Decision Expediency and Quality
1.
Cost and Expediency
2.
Importance of the Decision
International Control Process
 Planning
 Organizational
structure
 Location of decision making
 Control mechanisms
 Special situations
Control Mechanisms
 Corporate
culture
 Coordinating
 Reports
Methods
Reports
1.
2.
3.
4.
5.
6.
Types of Reports
Visits to Subsidiaries
Management Performance Evaluation
Cost and Accounting Comparability
Evaluative Measurements
Information Systems
International Control Process
 Planning
 Organizational
structure
 Location of decision making
 Control mechanisms
 Special situations
Control in Special Situations
 Acquisitions
 Shared
Ownership
 Changes
in Strategies
International Planning Process
 Set
long-range strategic intent
 Analyze internal corporate resources
 Set international corporate objectives
 Analyze local conditions
 Implement strategy
 Select alternatives and priorities
Analyze internal corporate resources
I.
II.
III.
IV
Financial resources
a. Immediate and future cash flow and needs
b. Capital availability, including borrowing
c. Ability to transfer funds
d. Profit and divident targets
Human resources
a. General versus product skills
b. Specific functional skills
c. Transferability of people
d. Capacity use
e. Ability to acquire additional resources
f. Attitudes toward foreign activity
Product resources
a. Capacity use and bottlenecks
b. Monopolistic characteristics
c. Adaptations needee for foreign sales
d. Primary versus derived demand
e. Transport practicality
f. Cost savings through scale and scope
Environmental effects
a. Supply and cost changes, including foreign trade
b. Long-run and cyclical changes in demand
c. Comparison with competition
d. Societal attitudes
Set international corporate objectives
I.
II.
III.
IV.
Sales objectives
a. Maintain volume
b. Expand volume
c. Increase markup
d. Spread fixed costs
Resource acquisition objectives
a. Reduce direct costs
b. Gain tax advantages
c. Gain complementary resources
Diversification objectives
a. Diversify markets
b. Diversify supplies
Competetive risk minimization objectives
a. Acquire scarce resources
b. Prevent competitors’ advantage
Analyze local conditions
I.
II.
III.
IV.
Same factors as in Analyze internal corporate resources, plus
Financial factors
a. Local evalutaion methods
b. De facto and de jure tax systems
c. Timing of receivables and pavables
d. Needs for financing cuppliers and customers
e. Governmental priorities for funds’ use
Marketing factors
a. Cost and availability of market data
b. Distribution methods and costs
c. Nature of competition
d. Government regulation of price, advertising, etc.
Other factors
a. Attitudes toward business in general
b. Attitudes toward foreign business
c. Political and economic stability
Select alternatives and priorities
Alternatives
a. Location of value-added activities
b. Location of sales targets
c. Level of involvement
d. Product/services strategy
e. Global versus multidomestic marketing
f. Country moves as part of global strategy
g. Factor movement and start-up strategy
II. Setting priorities among alternatives
I.
Implement strategy
Set target results/goals
a. Production amount
b. Costs
c. Sales
II. Do reports showing deviations from target
III. Do environmental analysis that might
change results
IV. Make corrections if possible
V. Move to contingency plan
I.