International Strategy

 Globalization drivers – Assess dual

pressures:
– Global efficiency - standardization
– National/local responsiveness - adaptation
 Location/configuration of value-creating
activities
 Integration/coordination of value-creating
activities
 Strategy and entry
 “Forced” Standardization
 Coca-Cola in Chinese:
“bite the wax tadpole”
 Coca-Cola 30 liter
bottle??
 U.S. carmakers’ left-
hand drive cars
 Effective Standardization
Coca-Cola’s
“transnational polar bears”

McDonald’s
“Big Mac”
Barbie: The “All-American”
Girl Goes Overseas
 Barbie is 41 years old
 Sold in 130 countries
 National adaptations:
– Physical features
– Costumes
– Activity sets
 Standardized physique:
– Scaled to 6’2”, 110 lbs.
– 38-18-28
 Effective Adaptation
 McMutton Pie in
Australia
 Wendy’s shrimp sandwich
in Japan
 Campbell’s non-
condensed soups in the
UK
Cadillac Seville
 Coca-Cola’s 175 ml  1997 Asian edition
containers in Japan
 Right-hand drive, shorter
seats, closer pedals, 10”
shorter, retractable mirrors
 Globalization Drivers
 Market Drivers
 Cost Drivers
 Government Drivers
 Competitive Drivers

Low High
Multidomestic Global
 Strength of Market Drivers
Aircraft
Computers
Automobiles
Soft Drinks
Toothpaste
Retail Banking
Book Publishing
Baked Goods
Low High
Multidomestic Global
 Strength of Cost Drivers
Pharmaceuticals
Aircraft
Computers
Automobiles
Toothpaste
Retail Banking
Baked Goods
Soft Drinks
Low High
Multidomestic Global
 International Strategy:
Managing Dual Pressures
Pressures for Global Efficiency

High

Low

Low High
Pressures for Local Responsiveness
 Value Chain
Location and standardization/adaptation
Infrastructure

Technology Development
Procurement
Human Resource Management
Profit
Margin

Inbound Outbound
Operations Marketing Service
Logistics Logistics
 Value Chain
Headquarters
Infrastructure

Technology Development
Procurement
Human Resource Management
Profit
Margin

Inbound Outbound
Operations Marketing Service
Logistics Logistics
 Value Chain
Headquarters
Infrastructure

Technology Development
Procurement
Human Resource Management
Profit
Margin

Inbound Outbound
Operations Marketing Service
Logistics Logistics

Upstream
 Value Chain
Headquarters
Infrastructure

Technology Development
Procurement
Human Resource Management
Profit
Margin

Inbound Outbound
Operations Marketing Service
Logistics Logistics

Upstream Downstream
Value Chain Sub-functions (Nestles?)
Infrastructure

Technology Development
Procurement
Human Resource Management
Profit
Margin

Inbound Outbound
Operations Marketing Service
Logistics Logistics

Advert. Pricing Distrib. Packaging

 Value Chain Configuration
 Geographic location of value chain
activities
– Concentrated/centralized vs.
dispersed/decentralized
– Which entry mode?
 Value Chain Coordination
 Cross-border linkages between dispersed
value-creating units
 Coordination = Flows of:
–$
– Product (finished and intermediate)
– Technology
– People
– Information (market data, strategic direction, etc.)
 Highly coordinated vs. only money flows
 International Strategy:
Managing Dual Pressures
Pressures for Global Efficiency

High

Export
Low Strategy
??
Low High
Pressures for Local Responsiveness
 Export Strategy
(same as Export entry mode)

Germany
U.S.

Mexico

Malaysia
 International Strategy:
Managing Dual Pressures
Pressures for Global Efficiency

High

Export Multidomestic
Strategy
Low Strategy
??

Low High
Pressures for Local Responsiveness
 Multidomestic Strategy

Germany

U.S.

Mexico

Malaysia
Entry?
 International Strategy:
Managing Dual Pressures
Pressures for Global Efficiency

High
Global
Strategy

Export Multidomestic
Strategy Strategy
Low ??

Low High
Pressures for Local Responsiveness
 Global Strategy
(Textbook Variety)

Germany
U.S.

Mexico

Malaysia
Entry?
 International Strategy:
Managing Dual Pressures
Pressures for Global Efficiency

High
Global Transnational
Strategy Strategy

Export Multidomestic
Strategy Strategy
Low ??

Low High
Pressures for Local Responsiveness
Transnational Strategy (v.1)

Germany
U.S.

Mexico

Malaysia
Entry?
Transnational Strategy (v.2)

Germany

U.S.

Mexico

Malaysia
Entry?
Transnational Strategy (v.3)

Germany
Engines
U.S.
Steel
Mexico
Final
Assembly

Malaysia
Trim, seats,
Entry? glass
Strategic Importance
Entry Mode Decision Matrix

Hi
of Country

Lo Hi
es,
Lo rc
u l,
s o
Lo Hi
Re ontro
Stand-alone Attractiveness C isk
R
of Country
Foreign Market Entry Modes
 Export
 Licensing
 Joint Venture
 WOS
– Acquisition
– Greenfield
Intl. Strategy and Entry Mode
Germany
JV
U.S. H.Q.
Mexico
WOS-G

Malaysia
Export