10
Chapter
10
chapter
Multinational
Strategies,
Structures, and
Learning
Strategy
GlobalGlobal
Strategic
Management
Mike W. Peng
Mike W. Peng
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Multinational Strategies and Structures:
The Integration–Responsiveness Framework
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 10.1
Four Strategic Choices for Multinational Enterprises
Home replication
Multidomestic
ADVANTAGES
DISADVANTAGES
 Leverages home country-based advantages
 Lack of local responsiveness
 Relatively easy to implement
 May result in foreign customer alienation
 Maximizes local responsiveness
 High costs due to duplication of efforts in
multiple countries
 Too much local autonomy
Global
 Leverages low-cost advantages
 Lack of local responsiveness
 Too much centralized control
Transnational
 Cost-efficient while being locally responsive
 Organizationally complex
 Engages in global learning and diffusion
of innovations
 Difficult to implement
Copyright © 2014 Cengage Learning. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Table 10.1
Multinational Strategies and Structures:
Four Organizational Structures
• Four organizational structures that are
appropriate for the four strategic choices:
 International division
 Geographical area
 Global product division
 Global matrix
Copyright © 2014 Cengage Learning. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
International Division Structure at Starbucks
Copyright © 2014 Cengage Learning. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Figure 10.2
Geographic Area Structure at Avon Products
Avon
North America
Avon
Latin America
Avon
Asia Pacific
Avon
Western Europe
Middle East
Africa
Source: Adapted from avoncompany.com. Headquartered in New York, Avon Products, Inc. is the
company behind numerous “Avon ladies” around the world.
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
Avon
Central & Eastern
Europe
Figure 10.3
Global Product Division Structure at
European Aeronautic Defense and Space Company
(EADS)
Source: Adapted from www.eads.com. Headquartered in Munich, Germany, and Paris, France,
EADS is the largest commercial aircraft maker and the largest defense contractor in Europe.
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
Figure 10.4
A Hypothetical Global Matrix Structure
Copyright © 2014 Cengage Learning. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Figure 10.5
A Comprehensive Model of
Multinational Structure,
Learning, and Innovation
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
Figure 10.6
Worldwide Learning, Innovation
and Knowledge Management:
Knowledge Management in MNEs
• Knowledge management can be defined as the
structures, processes, and systems that actively
develop, leverage, and transfer knowledge.
• Knowledge management is considered by some writers
the defining feature of MNEs
 Explicit knowledge (e.g., a driving manual): Captured by IT
 Tacit knowledge (e.g., knowledge about how to drive)

Its acquisition and transfer require hands-on experience
Copyright © 2014 Cengage Learning. All Rights Reserved. May not
be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Knowledge Management in Four Types
of Multinational Enterprises
STRATEGY
HOME REPLICATION
LOCALIZATION
GLOBAL
STANDARDIZATION
TRANSNATIONAL
Interdependence
Moderate
Low
Moderate
High
Role of foreign
subsidiaries
Adapting and leveraging
parent company
competencies
Sensing and exploiting
local opportunities
Implementing parent
company initiatives
Differentiated contributions
by subsidiaries to
integrate worldwide
operations
Development and
diffusion of
knowledge
Knowledge developed
at the center and
transferred to
subsidiaries
Knowledge developed
and retained within
each subsidiary
Knowledge mostly
developed and retained
at the center and key
locations
Knowledge developed
jointly and shared
worldwide
Flow of
knowledge
Extensive flow of
knowledge and
people from
headquarters to
subsidiaries
Limited flow of
knowledge and people
in both directions (to and
from the center)
Extensive flow of
knowledge and people
from the center and key
locations to subsidiaries
Extensive flow of
knowledge and people in
multiple directions
Sources: Adapted from (1) C. Bartlett & S. Ghoshal, 1989, Managing Across Borders: The Transnational Solution (p. 65),
Boston: Harvard Business School Press; (2) T. Kostova & K. Roth, 2003, Social capital in multinational corporations and
a micro-macro model of its formation (p. 299), Academy of Management Review, 28 (2): 297–317.
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
Table 10.2
Problems in Knowledge Management
ELEMENTS OF KNOWLEDGE MANAGEMENT
COMMON PROBLEMS
Knowledge acquisition
Failure to share and integrate external knowledge
Knowledge retention
Employee turnover and knowledge leakage
Knowledge outflow
“How does it help me?” syndrome and “knowledge is power”
mentality
Knowledge transmission
Inappropriate channels
Knowledge inflow
“Not invented here” syndrome and absorptive capacity
Source: Adapted from A. Gupta & V. Govindarajan, 2004, Global Strategy and Organization (p. 109), New York: Wiley.
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
Table 10.3