Global Strategic Management

Philips & Matsushita:

Types of International Strategy

Jeff Dyer - BYU

 TYPES OF INTERNATIONAL STRATEGY

MULTI-DOMESTIC STRATEGY GLOBAL STRATEGY

• Product is fully customized in each • Product is standardized worldwide

country.

• Decentralized federation of national • Centralized organization structure.

organizations. Local decision making National subsidiaries possess little
authority. decision-making authority.

• Effective when differences between • Effective when differences between

countries are large. countries are small.

• Sources of Advantage:
• Sources of Advantage:
• Cost
• Differentiation
• Ability to coordinate activities
• Local responsiveness
• Speed in new product
• Minimize political risk development
• Minimize rate exchange risk Jeff Dyer - BYU
 A FRAMEWORK FOR ANALYSIS

Pressures
for Global
Integration

Pressures
for Local
Differentiation Jeff Dyer - BYU
 A Framework:
Global Integration - Local Differentiation

High
Global
Strategy
Forces for Global
Integration

Local Multi-domestic
Strategy Strategy
Low

Low Forces for Local High

Differentiation

Jeff Dyer - BYU

 GLOBAL STRATEGY

STRATEGIC INTENT: Gain Global Market

Share 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
• International Human Resources

Source: J. de
Jeff Dyer - BYU
la Torre
 The Extreme Global Value Chain
Country Activities
Manu-
A R&D Desig Purchasing
facturing
Etc.
n

B Design

Purch-
C asing

Manu-
D facturing

E Marketing

F Selling

Distrib-
G ution

H Service

Jeff Dyer - BYU

 THE GLOBAL MAXIMIZER

Some Companies Emphasizing this Approach:

• Matsushita • Royal Dutch Shell
• IBM • Caterpillar
• American Express • Hewlett Packard
• LM Ericsson • Boeing
• Toyota • Intel
• Sony • 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
Jeff Dyer - BYU
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
Jeff Dyer - BYU
la Torre
 The Fully Multi-local Value Chain
Country Activities
Purch- Manu- Market Distrib-
A R&D Design asing facturing -ing Selling ution Service

Purch- Manu- Market Distrib-

B R&D Design asing facturing -ing Selling ution Service

Purch- Manu- Market Distrib-

C R&D Design asing facturing -ing Selling ution Service

*
*
*
*
Purch- Manu- Market Distrib-
Z R&D Design asing facturing -ing Selling ution Service

Jeff Dyer - BYU

 THE FEDERALIST

Some Companies Emphasizing this Approach:

• Philips • Unilever
• Nestlé • Procter & Gamble
• BASF • Federal Express
• General Motors • PricewaterhouseCoopers
• Carrefour • KPMG
• Wal-Mart • 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
Jeff Dyer - BYU
la Torre
 Linking Market, Strategy,
Structure & Processes

E n v iro n m e n t / M a rk e t
C o s ts C o m p e t it o r s
C u s to m e rs G o v e rn m e n t

F irm S tra te g y

F irm S tru c tu re a n d P ro c e s s e s

A n a ly s is o f t h e e n v ir o n m e n t / m a r k e t p r e c e d e s c h o ic e o f fir m
s t r a t e g y w h ic h p r e c e d e s c h o ic e o f fir m s t r u c t u r e a n d p r o c e s s e s .

Jeff Dyer - BYU

 Where Next ?

High

?
Forces for Global
Integration

Low

Low Forces for Local High

Responsiveness

Jeff Dyer - BYU