Chapter 11 International Strategy and Organization

International Business 4e Chapter Preview Define core competency and value-chain analysis Explain multinational and global strategies Describe the four corporate-level strategies Discuss the three business-level strategies Identify what influences organizational structure Describe each type of international organizational structure © Prentice Hall, 2008 International Business 4e

Planning and Strategy Planning Strategy Identifying and selecting objectives and deciding how to achieve those objectives Set of planned actions that managers take to help a company meet its objectives © Prentice Hall, 2008 International Business 4e

Strategy-Formulation Process © Prentice Hall, 2008 International Business 4e

Identify Mission and Goals Mission statements must consider: Company activities Business objectives Stakeholders Stockholders Customers Residents Environment and much more… © Prentice Hall, 2008 International Business 4e

Identify Core Competency Special ability of a company that competitors find extremely difficult or impossible to equal Coordination of multiple skills Lengthy period to develop Difficult to teach © Prentice Hall, 2008 International Business 4e

International Business 4e Value-Chain Analysis Divide company activities into primary and support activities and identify those that create value for customers Each activity is a source of either strength or weakness Insights gained are fed into the strategy formulation process © Prentice Hall, 2008 International Business 4e

Value Chain Components © Prentice Hall, 2008

International Business 4e Business Environment National differences are inherent in analyzing a company’s unique abilities Cultural differences Political processes Legal matters Economic systems Labor issues Consumer forces and much more… © Prentice Hall, 2008 International Business 4e

International Business 4e Small Firm Strategy Be sure company is ready to go international Thoroughly understand your product Examine your company’s internal activities Ask important questions of strategy Finally, create the strategic plan © Prentice Hall, 2008 International Business 4e

Multinational Strategy Adapting products and their marketing strategies in each national market to suit local preferences Respond quickly to buyer preferences Difficult to exploit economies of scale © Prentice Hall, 2008 International Business 4e

products using the same International Business 4e Global Strategy Offering the same products using the same marketing strategy in all national markets Cost savings from standardization May overlook varying buyer preferences © Prentice Hall, 2008 International Business 4e

Levels of Company Strategy © Prentice Hall, 2008 International Business 4e

Growth Strategy Increase the scale (size of activities) or scope (kinds of activities) of operations Internally generated growth Mergers and acquisitions Joint ventures Strategic alliances © Prentice Hall, 2008 International Business 4e

Retrenchment Strategy Reduce the scale or scope of a corporation’s businesses Conditions Actions Poor economic conditions Increased competition Lay off workers Close inefficient factories Sell unprofitable businesses © Prentice Hall, 2008 International Business 4e

Stability Strategy Guard against change and avoid growth or retrenchment No opportunities or threats Strengths fully exploited Weaknesses fully protected Stated objectives are met © Prentice Hall, 2008 International Business 4e

International Business 4e Combination Strategy Mix of growth, retrenchment, and stability strategies across a corporation’s business units Invest in promising units Retrench for less exposure Stabilize other units © Prentice Hall, 2008 International Business 4e

Business-Level Strategies International Business 4e © Prentice Hall, 2008 International Business 4e

Low-Cost Strategy Exploit economies of scale to have the lowest cost structure of any competitor in an industry Mantra is cutting costs Quality remains important Scale is barrier for new entrants Perhaps low customer loyalty © Prentice Hall, 2008 International Business 4e

Differentiation Strategy Design products to be perceived as unique by buyers throughout an industry Differentiators Brand image Product design Quality Effects Price premium Customer loyalty Portion of market only Higher production costs © Prentice Hall, 2008 International Business 4e

Focus Strategy Focus on narrowly defined market segment by being the low-cost leader, differentiating, or both Many sub-segments today Need distinctive product Specific geography, ethnicity, etc. © Prentice Hall, 2008 International Business 4e

Organizational Structure Centralized decision making Decentralized decision making Coordination is paramount Financial control and cost savings Local responsiveness is key Fast-changing environment © Prentice Hall, 2008 International Business 4e

International Division Structure © Prentice Hall, 2008 International Business 4e

International Area Structure © Prentice Hall, 2008 International Business 4e

Global Product Structure © Prentice Hall, 2008 International Business 4e

Global Matrix Structure © Prentice Hall, 2008 International Business 4e

from similar levels but International Business 4e Work Teams Self-managed team Employees from one department take on responsibilities of former supervisors Cross-functional team Group of employees from similar levels but different functional departments Global team Top managers from headquarters and subsidiaries solve company problems © Prentice Hall, 2008 International Business 4e

International Business 4e Chapter Review Define core competency and value-chain analysis Explain multinational and global strategies Describe the four corporate-level strategies Discuss the three business-level strategies Identify what influences organizational structure Describe each type of international organizational structure © Prentice Hall, 2008 International Business 4e