International Strategy and Organization Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

International Business 5e 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Strategy-Formulation Process Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Identify Mission and Goals Mission statements must consider: Company activities Business objectives Stakeholders Stockholders Customers Residents Environment and much more… Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Business 5e 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Value Chain Components Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Business 5e 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… Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Business 5e 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

products using the same International Business 5e Global Strategy Offering the same products using the same marketing strategy in all national markets Cost savings from standardization May overlook varying buyer preferences Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Levels of Company Strategy Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Stability Strategy Guard against change and avoid growth or retrenchment No opportunities or threats Strengths fully exploited Weaknesses fully protected Stated objectives are met Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Business 5e 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Business-Level Strategies International Business 5e Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Organizational Structure Centralized decision making Decentralized decision making Coordination is paramount Financial control and cost savings Local responsiveness is key Fast-changing environment Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Division Structure Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Area Structure Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Global Product Structure Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

Global Matrix Structure Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

from similar levels but International Business 5e 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Business 5e 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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

International Strategy and Organization Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall