Global Strategy
Procter & Gamble
Pan-European Brand Development
P&G Multidomestic Strategy
UK
Neth.
France
Germany
Italy
Product Characteristics Map
High Washing Temp
Enzymatic
Stain
Removers
Fabric
Softener
Bleach
Additives
Product Characteristics Map
High Washing Temp
Excluded
countries
Fabric
Softener
Italy
Italy
Enzymatic
Stain
Removers
Spain
Bleach
Additives
P&G “TransEuro” Strategy
UK
Neth.
France
Spain
Zone 1
Germany
Italy
Zone 2
Epilogue

VIZIR was precursor to “Liquid Tide” in US
– Great irony is: P&G’s struggle to develop
“Euro-brand” first found success in another
large, integrated market…the U.S.
– The VIZIR experience facilitated learning/crossfertilization w/in P&G worldwide
– Developed “world-class” technology and
product development capabilities worldwide
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
International Strategy
o Globalization drivers – Assess dual
pressures:
• Global efficiency - standardization
• National/local responsiveness - adaptation
o Location/configuration of value-creating
activities
o Integration/coordination of value-creating
activities
Effective Standardization
Coca-Cola’s
“transnational polar bears”
McDonald’s
“Big Mac”
Effective Adaptation
o
o
o
o
McMutton Pie in Australia
Wendy’s shrimp sandwich in Japan
Campbell’s non-condensed soups in the UK
Coca-Cola’s 175 ml containers in Japan
Barbie
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.
Globalization Drivers
o
o
o
o
Market Drivers
Cost Drivers
Government Drivers
Competitive Drivers
Low
High
Multidomestic
Global
Pressures for Global Efficiency
International Strategy:
Managing Dual Pressures
High
Low
Low
High
Pressures for Local Responsiveness
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 Sub-functions (Marketing)
Infrastructure
Technology Development
Procurement
Human Resource Management
Inbound
Outbound
Operations
Logistics
Logistics
Advert.
Pricing
Marketing
Distrib.
Profit
Margin
Service
Packaging
Value Chain Configuration
o
Geographic location of value chain activities
– Concentrated/centralized vs.
dispersed/decentralized
Value Chain Coordination
o
o
Cross-border linkages between dispersed valuecreating units
Coordination = Flows of:
–
–
–
–
–
o
$
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 Dual Pressures
High
Low
Export
Strategy
Low
High
Pressures for Local Responsiveness
Export Strategy
(same as Export entry mode)
Germany
U.S.
Mexico
Malaysia
International Strategy:
Pressures for Global Efficiency
Managing Dual Pressures
High
Low
Export
Strategy
??
Low
Multidomestic
Strategy
High
Pressures for Local Responsiveness
Multidomestic Strategy
Germany
U.S.
Mexico
Malaysia
International Strategy:
Pressures for Global Efficiency
Managing Dual 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 Dual 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
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
Entry Mode Framework


Mindset
Country-market opportunity/cost analysis
 Stand-alone Attractiveness
 Strategic Importance

Resources-Control-Risk tradeoff
Mindset and International Activity

International
 Overseas activities support / subordinate to
domestic activities

Multinational
 Flexibly adapting value-creating activities on
country-by-country basis; nationally-responsive

Global
 The world is the market; standardization

Transnational
 “Glocalization” – Some value-creating activities
standardized/globalized, others localized
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
McDonald’s Identity
McDonald’s Site Selection and Stores
US -- Colorado
McDonald’s Site Selection and Stores
Bangkok,
Thailand
McDonald’s Site Selection and Stores
Moscow, Russia
McDonald’s Transnational Menu
US
Brazil
Canada
Big Mac



French Fries








Coca-Cola
McNuggets
McBier
PitaMac
McFarmer










McLobster
McCalebresa
Germany

McAloo Tikki
McRib
India



Hamburger University
Illinois, USA
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
Hamburger University
HongKong
London
Illinois
Sydney
Munich
McDonald’s
Transnational Strategy
Singapore
U.S.
Greece
Brazil