International Strategy

Procter & Gamble Pan-European Brand Development

No problem taking a sack. I’ll just use Vizir after the game.

Gotta keep this sweaty Tarheel off my clean uniform… I’m out of Vizir.

P&G Multidomestic Strategy UK Germany France Italy Neth.

Product Characteristics Map High Washing Temp Fabric Softener Bleach Additives Enzymatic Stain Removers

Product Characteristics Map High Washing Temp Fabric Softener Bleach Additives Enzymatic Stain Removers Italy Spain Italy Excluded countries

P&G “TransEuro” Strategy UK Germany France Italy Neth. Spain Zone 1 Zone 2

Epilogue F VIZIR was precursor to “Liquid Tide” in US –Great irony is: P&G’s struggle to develop “Euro-brand” first found success in another large, integrated market…the U.S. –The VIZIR experience facilitated learning/cross- fertilization w/in P&G worldwide –Developed “world-class” technology and product development capabilities worldwide

Industry Globalization o What is a global industry? Why? o Which drivers/factors most important? o How does a global industry compare with a multi- domestic one? o How is the extent of globalization “measured”? o What are the implications for firms’ international strategies?

Globalization Drivers o Market Drivers o Cost Drivers o Government Drivers o Competitive Drivers Low Multi-domestic High Global

Definitions Multi-domestic –Many-country view of the international marketplace –Value chain activities are performed in the local country-market and are adapted to local tastes, preferences, needs, etc.

Definitions Global –A whole world-level view of the international marketplace, the world is the market –Value chain activities are standardized and are performed in country locations according to efficiency, favorable policies, knowledge, resources, etc.

Definitions Transnational –A “glocal” level view of the international marketplace – has some global, some local elements –Some value chain activities are standardized and are performed in country locations others are nationally-adapted and performed in the local market

Market Globalization Drivers o Common customer needs o Global customers o Global market channels o Transferable marketing

Strength of Market Drivers Low High Baked Goods Book Publishing Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Multidomestic Global

Cost Globalization Drivers o Global scale economies o Sourcing efficiencies o Factor of production differences o High product development costs o Rapidly changing technology

Strength of Cost Drivers Low High Baked Goods Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Pharmaceuticals Multidomestic Global

Government Globalization Drivers o Unrestrictive trade and investment policies o Compatible technical standards o Common marketing regulations

Strength of Government Drivers Restrictive Loose Baked Goods Retail Banking Toothpaste Soft Drinks Automobiles Computers Airlines Pharmaceuticals Multidomestic Global

Competitive Globalization Drivers oHigh two-way trade / cross-border FDI oGlobal competitors oInterdependence among countries oTrade/Investment Policies oRole of WTO, etc.

Strength of Competitive Drivers Low High Baked Goods Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Pharmaceuticals Multidomestic Global

International Strategy oGlobalization drivers – Assess dual pressures: Global efficiency - standardizationGlobal efficiency - standardization National/local responsiveness - adaptationNational/local responsiveness - adaptation oLocation/configuration of value-creating activities oIntegration/coordination of value-creating activities

Effective Standardization Coca-Cola’s “transnational polar bears” McDonald’s “Big Mac”

Effective Adaptation o McMutton Pie in Australia o Wendy’s shrimp sandwich in Japan o Campbell’s non-condensed soups in the UK o Coca-Cola’s 175 ml containers in Japan

Barbie oBarbie is 51 years old oSold in 130 countries oNational adaptations: Physical features Costumes Activity sets oStandardized physique: Scaled to 6’2”, 110 lbs.

Globalization Drivers o Market Drivers o Cost Drivers o Government Drivers o Competitive Drivers Low Multidomestic High Global

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

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

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

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

Value Chain Infrastructure Technology Development Procurement Human Resource Management InboundLogistics Operations OutboundLogistics MarketingService Profit Margin UpstreamDownstream Headquarters

Value Chain Sub-functions (Marketing)Infrastructure Technology Development Procurement Human Resource Management InboundLogistics Operations OutboundLogistics MarketingService Profit Margin Advert. Pricing Distrib.Packaging

Value Chain Configuration o Geographic location of value chain activities –Concentrated/centralized vs. dispersed/decentralized

Value Chain Coordination o Cross-border linkages between dispersed value- creating units o Coordination = Flows of: –$ –Product (finished and intermediate) –Technology –People –Information (market data, strategic direction, etc.) o Highly coordinated vs. only money flows

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

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

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

Multidomestic Strategy U.S. Germany Mexico Malaysia

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

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

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

Transnational Strategy (v.1) U.S. Germany Mexico Malaysia

Transnational Strategy (v.2) U.S. Germany Mexico Malaysia

Transnational Strategy (v.3) U.S. Germany Mexico Malaysia Engines Final Assembly Trim, seats, glass Steel

VW International Strategy - Jetta Germany Japan Mexico Poland Transmission Final Assembly Engine Misc. U.S. Marketing

McDonald’s Identity

McDonald’s Transnational Menu USBrazilCanadaIndiaGermany Big Mac French Fries Coca-Cola McNuggets McAloo Tikki McRib McBier McLobster McCalebresa PitaMac McFarmer

McDonald’s Site Selection and Stores US -- Colorado

McDonald’s Site Selection and Stores Bangkok, Thailand

McDonald’s Site Selection and Stores Moscow, Russia

Hamburger University Illinois, USA

Hamburger University Curriculum o80 classroom hours oTopics – Fast food “the McDonald’s way” Restaurant operations, food preparation Crew selection, training and team building Marketing and promotion Asset management Corporate citizenship and ethics Leadership, effective supervisory skills

Hamburger University Illinois Sydney London Munich Hong- Kong

McDonald’s Transnational Strategy U.S. Singapore Greece Brazil