© 2010 Cengage Learning. All rights reserved. CHAPTER 12 GLOBAL  PENG

© 2010 Cengage Learning. All rights reserved. Chapter 12 LEARNING OBJECTIVES After studying this chapter, you should be able to: 1.Describe the relationship between multinational strategy and structure 2.Explain how institutions and resources affect structure, learning and innovation 3.Outline the challenges associated with learning, innovation, and knowledge management 4.List three things you can do to make a multinational firm successful.

© 2010 Cengage Learning. All rights reserved. LO1: MULTINATIONAL STRATEGIES AND STRUCTURES MNEs confront two sets of pressures:  Cost reduction – calls for global integration.  Local responsiveness – calls for local adaptation. Integration Responsive Framework

© 2010 Cengage Learning. All rights reserved. LO1: MULTINATIONAL STRATEGIES AND STRUCTURES

© 2010 Cengage Learning. All rights reserved. LO1: FOUR ORGANIZATIONAL STRATEGIES International division: Typically used when firms engage home replication strategy

© 2010 Cengage Learning. All rights reserved. LO1: FOUR ORGANIZATIONAL STRATEGIES Geographic Area Structure: appropriate for localization strategy.

© 2010 Cengage Learning. All rights reserved. LO1: FOUR ORGANIZATIONAL STRATEGIES Global product division structure: Highly responsive to pressure for cost efficiency; Reduces inefficient duplication in multiple countries.

© 2010 Cengage Learning. All rights reserved. LO1: FOUR ORGANIZATIONAL STRATEGIES Global matrix: Designed to be both cost efficient and locally responsive; Difficult to deliver in practice.

© 2010 Cengage Learning. All rights reserved. LO2: EFFECT OF INSTITUTIONS AND RESOURCES Institution-Based Considerations External relationships Internal relationships

© 2010 Cengage Learning. All rights reserved. LO2: EFFECT OF INSTITUTIONS AND RESOURCES Resource-Based Considerations  Does a structural change add value?  Strategy must be rare.  Inimitability – formal structures are easier to observe, making informal structures more popular.  Organization of MNEs, formal and informal.

© 2010 Cengage Learning. All rights reserved. LO3: CHALLENGES ASSOCIATED WITH LEARNING, INNOVATION, KNOWLEDGE MANAGEMENT Knowledge management: the structures, processes, and systems that actively develop, leverage, and transfer knowledge. Two categories of knowledge:  Explicit knowledge – codifiable.  Tacit knowledge – non-codifiable. Transfer requires hands-on practice.

© 2010 Cengage Learning. All rights reserved. LO3: KNOWLEDGE MANAGEMENT IN FOUR TYPES OF MNEs

© 2010 Cengage Learning. All rights reserved. DEBATE: CORPORATE CONTROL vs. SUBSIDIARY INITIATIVES Subsidiary control: Subsidiary initiatives may inject a spirit of entrepreneurship throughout the larger corporation. Corporate control: Hard to distinguish between good-faith subsidiary initiative and opportunistic empire-building. Subsidiary initiatives are not necessarily compatible with corporate-wide goals.

© 2010 Cengage Learning. All rights reserved. LO4: THREE THINGS TO DO