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 Coca-Cola’s 175 ml containers in Japan Cadillac Seville 1997 Asian edition Right-hand drive, shorter seats, closer pedals, 10” shorter, retractable mirrors

Globalization Drivers Market Drivers Cost Drivers Government Drivers Competitive Drivers Low Multidomestic High 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 High Pressures for Global Efficiency Low Low High Pressures for Local Responsiveness

Value Chain Location and standardization/adaptation Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service

Value Chain Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service

Value Chain Headquarters Upstream Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream

Value Chain Headquarters Upstream Downstream Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream Downstream

Value Chain Sub-functions (Nestles?) Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service 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 High Pressures for Global Efficiency Export Strategy ?? Low Low High Pressures for Local Responsiveness

Export Strategy (same as Export entry mode) Germany U.S. Mexico Malaysia

International Strategy: Managing Dual Pressures High Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness

Multidomestic Strategy Germany U.S. Mexico Malaysia Entry?

International Strategy: Managing Dual Pressures High Global Strategy Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness

Global Strategy (Textbook Variety) Germany U.S. Mexico Malaysia Entry?

International Strategy: Managing Dual Pressures High Global Strategy Transnational Strategy Pressures for Global Efficiency Export Strategy ?? Multidomestic 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, glass Entry?

Entry Mode Decision Matrix Hi Strategic Importance of Country Lo Hi Resources, Control, Risk Lo Lo Hi Stand-alone Attractiveness 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