International Strategy
Which is the American car?
Pontiac G8
Page 2
BWM X5
Which is the American car?
Toyota Sequoia
Page 3
Jeep Patriot
The Last “American” Car
Page 4
Country of Origin for VW Models Sold in U.S.:
Major Components and Final Assembly
Touareg
Passat
Jetta
Beetle
Golf
Engine
Germany
Hungary
Germany
Poland
Mexico
Mexico
Hungary
Transmission
Japan
Japan
Argentina
Japan
Argentina
Japan
Argentina
Final
Assembly
Slovakia
Germany
Mexico
Mexico
Brazil
VW Jetta…just a little “German”
Customers
Lexington
Assembly
Mexico
Engines
Poland
Transmissions
Japan
Strategic Importance
of Country
Entry Mode Decision Matrix
Hi
Lo
Lo
Hi
Stand-alone Attractiveness
of Country
Country-Market Analysis
 Stand-alone
attractiveness:
– Size
– Growth
– Product acceptance / segmentation
– Cultural similarity
– Risk
– Policy incentives
– Other factors? ….MNC “power”?
Country-Market Analysis
 Strategic
importance:
– Home market of global customer
– Home market of global rivals
– Significant market of global rivals
– Major source of innovation
– Demanding/sophisticated customers
– Factor-cost advantages
Resources-Control-Risks

Resources
 $$, time, technology, machinery, people,
organizational, strategy

Control
 Operational and strategic discretion over
value-creating activities

Risks
 Political, F/X, economic, cultural,
dissemination
Control
 Extent
of involvement:
Ship Product
Distribution
After-sales
Support
Marketing
 Channel
control / ownership:
Export
Agent
Mfg.
Import
Agent
Regional
Whsle.
Local
Whsle.
Retail
Entry Mode Decision Framework
Control Resources
Risk
Dissem.
Low
Low
Low
High
High
High
High
Low
Licensing
Exporting
Intermediaries
Direct
Joint Venture
Wholly-owned
Subsidiary
Strategic Importance
of Country
Entry Mode Decision Matrix
Hi
Lo
Lo
Hi
Stand-alone Attractiveness
of Country
General Electric and
International Involvement

GE Product Divisions:





Light bulbs
Aircraft engines
Appliances
Power-generation
GE Market Opportunity:




North America
Europe
Pacific rim / Asia
Emerging markets
Product Lines
GE’s Markets, Entry and Strategy Choices
4
3
2

1

A
B
C
D
Country-Markets
Strategic Importance
of Country
Entry Mode Decision Matrix
Hi
Lo
Lo
Hi
Stand-alone Attractiveness
of Country
Industry Globalization
o
o
o
o
o
What is a global industry? Why?
Which drivers/factors most important?
How does a global industry compare with a multidomestic one?
How is the extent of globalization “measured”?
What are the implications for firms’ international
strategies?
Globalization Drivers
o
o
o
o
Market Drivers
Cost Drivers
Government Drivers
Competitive Drivers
Low
Multi-domestic
High
Global
Definitions
Multi-domestic
– Many-country view of the international
marketplace
– Value chain activities are performed in the
local country-market and are adapted to local
tastes, preferences, needs, etc.
Definitions
Global
– A whole world-level view of the
international marketplace, the world is the
market
– Value chain activities are standardized and
are performed in country locations according
to efficiency, favorable policies, knowledge,
resources, etc.
Definitions
Transnational
– A “glocal” level view of the international
marketplace – has some global, some local
elements
– Some value chain activities are standardized
and are performed in country locations
others are nationally-adapted and performed
in the local market
Market Globalization Drivers
o
o
o
o
Common customer needs
Global customers
Global market channels
Transferable marketing
Strength of Market Drivers
Aircraft
Computers
Automobiles
Soft Drinks
Toothpaste
Retail Banking
Book Publishing
Baked Goods
Low
Multidomestic
High
Global
Cost Globalization Drivers
o
o
o
o
o
Global scale economies
Sourcing efficiencies
Factor of production differences
High product development costs
Rapidly changing technology
Strength of Cost Drivers
Pharmaceuticals
Aircraft
Computers
Automobiles
Toothpaste
Retail Banking
Baked Goods
Soft Drinks
Low
Multidomestic
High
Global
Government Globalization Drivers
o
o
o
Unrestrictive trade and investment policies
Compatible technical standards
Common marketing regulations
Strength of Government Drivers
Toothpaste
Baked Goods
Soft Drinks
Computers
Automobiles
Pharmaceuticals
Airlines
Retail Banking
Restrictive
Loose
Multidomestic
Global
Competitive Globalization Drivers
o High two-way trade / cross-border FDI
o Global competitors
o Interdependence among countries
o Trade/Investment Policies
o Role of WTO, etc.
Strength of Competitive Drivers
Aircraft
Pharmaceuticals
Computers
Toothpaste
Automobiles
Soft Drinks
Retail Banking
Baked Goods
Low
Multidomestic
High
Global
Globalization Drivers
o
o
o
o
Market Drivers
Cost Drivers
Government Drivers
Competitive Drivers
Low
Adapt
High
Standardize
Effective Standardization
Coca-Cola’s
“global polar bears”
McDonald’s
“Big Mac”
Effective Adaptation
o
P&G single-use shampoo packages in India
Effective Transnationalization
o Barbie is 51 years old
o Sold in 130 countries
o National adaptations:
• Physical features
• Costumes
• Activity sets
o Standardized physique:
• Scaled to 6’2”, 110 lbs.
Value Chain
Location and standardization/adaptation
Infrastructure
Technology Development
Procurement
Human Resource Management
Inbound
Outbound
Operations
Logistics
Logistics
Marketing
Profit
Margin
Service
Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
Profit
Margin
Service
Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Inbound
Outbound
Operations
Logistics
Logistics
Upstream
Marketing
Profit
Margin
Service
Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Inbound
Outbound
Operations
Logistics
Logistics
Upstream
Profit
Margin
Marketing
Service
Downstream
Value Chain
Headquarters
Profit
Margin
Manufacturing
Upstream
Marketing
Downstream
Value Chain Configuration
o
Geographic location of value chain activities
around the world
VW Jetta…just a little “German”
Customers
Lexington
Assembly
Mexico
Engines
Poland
Transmissions
Japan
Value Chain Coordination
o
o
Cross-border linkages between dispersed valuecreating units
Coordination = Flows of:
–
–
–
–
–
o
Money
Product (finished and intermediate)
Technology
People
Information (market data, strategic direction, etc.)
Highly coordinated vs. only money flows
Pressures for Global Efficiency
International Strategy:
Managing Competing Pressures
High
Low
Low
High
Pressures for Local Responsiveness
Pressures for Global Efficiency
International Strategy:
Managing Competing Pressures
High
Low
Export
Strategy
Low
High
Pressures for Local Responsiveness
Export Strategy
Germany
U.S.
Mexico
Malaysia
Export Strategy
Germany
U.S.
Sweden
England
International Strategy:
Pressures for Global Efficiency
Managing Competing Pressures
High
Low
Export
Strategy
??
Low
Multidomestic
Strategy
High
Pressures for Local Responsiveness
Multidomestic Strategy
Germany
U.S.
Mexico
Malaysia
P&G Multidomestic Strategy
UK
Neth.
France
Germany
Italy
International Strategy:
Pressures for Global Efficiency
Managing Competing Pressures
High
Low
Global
Strategy
Export
Strategy
??
Low
Multidomestic
Strategy
High
Pressures for Local Responsiveness
Global Strategy
(Textbook Variety)
Germany
U.S.
Mexico
Malaysia
International Strategy:
Pressures for Global Efficiency
Managing Competing Pressures
High
Low
Global
Strategy
Export
Strategy
??
Low
Transnational
Strategy
Multidomestic
Strategy
High
Pressures for Local Responsiveness
Transnational Strategy (v.1)
Germany
U.S.
Mexico
Malaysia
P&G “Pan-Euro” Strategy
UK
Neth.
France
Spain
Zone 1
Germany
Italy
Zone 2
Surprising Outcome

VIZIR was precursor to “Liquid Tide” in US
– Great irony is: P&G’s struggle to develop
“Euro-brand” first found success in a
different large, integrated market…
Surprising Outcome

VIZIR was precursor to “Liquid Tide” in US
– Great irony is: P&G’s struggle to develop
“Euro-brand” first found success in a
different large, integrated market…
The U.S.
Transnational Strategy (v.2)
Germany
U.S.
Mexico
Malaysia
Transnational Strategy (v.2)
Germany
U.S.
Mexico
Malaysia
Transnational Strategy (v.3)
Germany
U.S.
Engines
Steel
Mexico
Final
Assembly
Malaysia
Trim, seats,
glass
VW International Strategy - Jetta
U.S.
Japan
Marketing
Transmission
Mexico
Germany
Final
Assembly
Misc.
Poland
Engine
McDonald’s Identity
McDonald’s Transnational Menu
US
Brazil
Canada
Big Mac



French Fries








Coca-Cola
McNuggets
McBier
PitaMac
McFarmer










McLobster
McCalebresa
Germany

McAloo Tikki
McRib
India



McDonald’s Site Selection and Stores
US -- Colorado
McDonald’s Site Selection and Stores
Moscow, Russia
McDonald’s Site Selection and Stores
Bangkok,
Thailand
Hamburger University
Illinois, USA
Hamburger University
HongKong
London
Illinois
Sydney
Munich
Hamburger University Curriculum
o 80 classroom hours
o Topics – Fast food “the McDonald’s way”
•
•
•
•
•
•
Restaurant operations, food preparation
Crew selection, training and team building
Marketing and promotion
Asset management
Corporate citizenship and ethics
Leadership, effective supervisory skills
Standardization of Processes
McDonald’s
Transnational Strategy
Singapore
U.S.
Greece
Brazil