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.