Schedule
7-31
8-1
8-5
8-6
8-7
8-8
8-12
Philips and Matsushita
EuroDisney
P&G
P&G Cont. Summary Evaluations
ClipIt! discussion
Presentations
Final in Class
0
CH-ZWA645-005jsmGB
Global or Local?
James Oldroyd
Kellogg Graduate School of Management
Northwestern University
j-oldroyd@northwestern.edu
801-422-7888
650 TNRB
TVs
1932
1937
2
Continued
1939
1950
1938
1958 VCR
1938-1950
3
Today
4
TYPES OF INTERNATIONAL STRATEGY
MULTI-DOMESTIC
STRATEGY
• Product is fully customized in
each country.
• Decentralized federation of
national organizations. Local
decision making authority.
• Effective when differences
between countries are large.
• Sources of Advantage:
•
•
•
•
Differentiation
Local responsiveness
Minimize political risk
Minimize rate exchange
risk
GLOBAL STRATEGY
• Product is standardized
worldwide
• Centralized organization
structure. National subsidiaries
possess little decision-making
authority.
• Effective when differences
between countries are small.
• Sources of Advantage:
•
•
•
Cost
Ability to coordinate
activities
Speed in new product
development
A FRAMEWORK FOR ANALYSIS
Pressures
for Global
Integration
Pressures
for Local
Differentiation
A Framework: Global Integration - Local
Differentiation
High
Global
Strategy
Local
Strategy
Multi-domestic
Strategy
Low
Low
Source: Jeff Dyer BYU 2002
High
Forces for Local
Differentiation
1. A GLOBAL STRATEGY
STRATEGIC INTENT: Gain/Maintain Global
Leadership
POLICIES:
• Specialized Production and R&D
Centers
• Break Down Value Chain and Exploit
Low Cost Locations
HQ
• World Products to Build Volume and
Global Product Roll-out
• Price Leadership
• Optimize Global Network at Local
Expense
• Move Into Key Markets Preemptively
• International Human Resources
Source: J. de la Torre
The Extreme Global Value Chain
Country Activities
A
R & D Design Purchasing
B
C
.
Manufacturing
Design
Purchasing
D
Manufacturing
E
Marketing
F
G
H
Etc
Selling
Distribution
Service
THE GLOBAL MAXIMIZER
Some Companies Emphasizing this Approach:
•
•
•
•
•
•
Matsushita
IBM
American Express
LM Ericsson
Toyota
Sony
•
•
•
•
•
•
Royal Dutch Shell
Caterpillar
Hewlett Packard
Boeing
Intel
Coca Cola
THERE IS RELATIVELY LITTLE ROOM FOR JOINT VENTURES
IN THIS MODEL, EXCEPT FOR UPSTREAM ACTIVITIES.
ACQUISITIONS PLAY A SECONDARY ROLE VS. INTERNAL
GROWTH AND GREENFIELD INVESTMENTS.
Source: J. de la Torre
2. A MULTI-DOMESTIC STRATEGY
STRATEGIC INTENT: Gain Key Positions in
Selected Markets
POLICIES:
• Tailor Products to National
Idiosyncrasies
• Differentiated Operations
HOLDING
• Sacrifice Efficiency for Market Access
• Reach Economies of Scale Upstream
• Maximize Local Value Added
• Gain Government Support
• Use Join Ventures to Preempt
Competition and Add Local Value
• National Human Resources
Source: J. de la Torre
The Fully Multi-local Value Chain
Country Activities
A
B
C
R&D
R&D
R&D
Design
Purchasing
Manufacturing
Market
-ing
Design
Purchasing
Manufacturing
Market
-ing
Design
Purchasing
Manufacturing
Market
-ing
Design
Purchasing
Manufacturing
Market
-ing
Selling
Distribution
Service
Selling
Distribution
Service
Selling
Distribution
Service
Selling
Distribution
Service
*
*
*
*
Z
R&D
THE FEDERALIST
Some Companies Emphasizing this Approach:
•
•
•
•
•
•
Philips
Nestlé
BASF
General Motors
Carrefour
Wal-Mart
•
•
•
•
•
•
Unilever
Procter & Gamble
Federal Express
PricewaterhouseCoopers
KPMG
Heineken
THERE IS AMPLE ROOM FOR JOINT VENTURES AND LOCAL
AFFILIATIONS IN THIS MODEL. ACQUISITIONS PLAY AN
IMPORTANT ROLE TO OBTAIN DOMESTIC PRESENCE IN
IMPORTANT MARKETS
Source: J. de la Torre
Linking Market, Strategy, Structure &
Processes
Environment / Market
Costs
Competitors
Customers Government
Firm Strategy
Firm Structure and
Processes
Analysis of the environment / market precedes choice of firm
strategy which precedes choice of firm structure and processes.
Where Next ?
Forces for Global
Integration
High
Low
Low
Forces for Local
Responsiveness
High
Matsushita’s Performance
16
New Structure
17
Philips
18
Philips
19