0 Schedule 7-31Philips and Matsushita 8-1EuroDisney 8-5P&G 8-6P&G Cont. Summary Evaluations 8-7ClipIt! discussion 8-8Presentations 8-12 Final in Class.

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Presentation transcript:

0 Schedule 7-31Philips and Matsushita 8-1EuroDisney 8-5P&G 8-6P&G Cont. Summary Evaluations 8-7ClipIt! discussion 8-8Presentations 8-12 Final in Class

CH-ZWA jsmGB Global or Local? James Oldroyd Kellogg Graduate School of Management Northwestern University TNRB

2 TVs

3 Continued 1958 VCR

4 Today

TYPES OF INTERNATIONAL STRATEGY MULTI-DOMESTIC STRATEGY Product is fully customized in each country. Decentralized federation of national organizations. Local decision making authority. Effective when differences between countries are large. Sources of Advantage: Differentiation Local responsiveness Minimize political risk Minimize rate exchange risk GLOBAL STRATEGY Product is standardized worldwide Centralized organization structure. National subsidiaries possess little decision-making authority. Effective when differences between countries are small. Sources of Advantage: Cost Ability to coordinate activities Speed in new product development

A FRAMEWORK FOR ANALYSIS Pressures for Global Integration Pressures for Local Differentiation

Global Strategy Multi-domestic Strategy Local Strategy A Framework: Global Integration - Local Differentiation High Low Forces for Global Integration Forces for Local Differentiation Source: Jeff Dyer BYU 2002

HQ STRATEGIC INTENT:Gain/Maintain Global Leadership POLICIES: Specialized Production and R&D Centers Break Down Value Chain and Exploit Low Cost Locations World Products to Build Volume and Global Product Roll-out Price Leadership Optimize Global Network at Local Expense Move Into Key Markets Preemptively International Human Resources 1. A GLOBAL STRATEGY Source: J. de la Torre

The Extreme Global Value Chain CountryActivities ABCDEFGHABCDEFGH R & D Purchasing Manufacturing Marketing Selling Distribution Service Design Etc. Design PurchasingManufacturing

THE GLOBAL MAXIMIZER Some Companies Emphasizing this Approach: Royal Dutch Shell Caterpillar Hewlett Packard Boeing Intel Coca Cola Matsushita IBM American Express LM Ericsson Toyota Sony THERE IS RELATIVELY LITTLE ROOM FOR JOINT VENTURES IN THIS MODEL, EXCEPT FOR UPSTREAM ACTIVITIES. ACQUISITIONS PLAY A SECONDARY ROLE VS. INTERNAL GROWTH AND GREENFIELD INVESTMENTS. Source: J. de la Torre

2. A MULTI-DOMESTIC STRATEGY HOLDING STRATEGIC INTENT: Gain Key Positions in Selected Markets POLICIES: Tailor Products to National Idiosyncrasies Differentiated Operations Sacrifice Efficiency for Market Access Reach Economies of Scale Upstream Maximize Local Value Added Gain Government Support Use Join Ventures to Preempt Competition and Add Local Value National Human Resources Source: J. de la Torre

The Fully Multi-local Value Chain CountryActivities ABC****ZABC****Z R & DDesignService Distrib- utionSelling Market -ing Manu- facturing Purch- asing R & D Design Purch- asing Purch- asing Purch- asing Manu- facturing Manu- facturing Manu- facturing Market -ing Selling Distrib- ution Distrib- ution Distrib- ution Service

THE FEDERALIST Some Companies Emphasizing this Approach: Unilever Procter & Gamble Federal Express PricewaterhouseCoopers KPMG Heineken Philips Nestlé BASF General Motors Carrefour Wal-Mart THERE IS AMPLE ROOM FOR JOINT VENTURES AND LOCAL AFFILIATIONS IN THIS MODEL. ACQUISITIONS PLAY AN IMPORTANT ROLE TO OBTAIN DOMESTIC PRESENCE IN IMPORTANT MARKETS Source: J. de la Torre

Linking Market, Strategy, Structure & Processes Analysis of the environment / market precedes choice of firm strategy which precedes choice of firm structure and processes. Firm Structure and Processes Environment / Market Costs Competitors Customers Government Firm Strategy

Where Next ? High Low Forces for Global Integration Forces for Local Responsiveness

16 Matsushita’s Performance

17 New Structure

18 Philips

19 Philips