1. Foundations of Strategy Chapter 8: Global Strategies and the Multinational Corporation
Team 4 10:00am
Ford Motor Company
Brooks Garner
Alex Mills
Grayson Watson

2. Implications of International Competition for Industry Analysis
Sheltered Industries
Trading Industries
Multidomestic Industries
Global Industries

3. Implications for Competition
Porter’s Five Forces (Three to focus on)
Competition from Potential Entrants
Rivalry Among Existing Firms
Increasing the bargaining power of buyers
US Automakers (Ford, GM) domestic market share reduced from 84% in 1976 to 35.7% in 2011

4. Analysing Competitive Advantage Globally
Availability of resources
Internal resources and capabilities
National environment

5. Comparative Advantage
Recognizing your company’s advantages compared to competitors
Recognizing the advantages of the country you are operating in
Natural resource endowments, labour supply, and capital stock
Technology, human skills, and management capability

6. Porter’s National Diamond
Factor Conditions
Related and Supporting Industries
Demand Conditions
Strategy, Structure, and Rivalry

7. Ford’s Global Strategy
Cost Leadership
Divides the world into regions
Different models in different regions
Five basic, inexpensive chassis to build off of (Except F-series and Mustang)
Plants all over the world, primary source of profits is in the US
Toyota: Kaizen
GM: Electric Cars, GM plans at least 20 new electric, fuel cell vehicles globally by 2023

8. Units Produced FY 2017
Battery-Operated Cars Sold
Ford Vehicles Sold per Country

9. The International Location of Production
Choosing Where To Locate Production
Natural resource availability
Firm-Specific competitive advantage
Tradability
Political considerations
Location and Value Chain
Most goods and services are comprised of a vertical chain
Cost and quality are most heavily considered (Outsourcing)

10. Ford Value Chain
governance/value-chain-impacts.html

11. How Should Firms Enter Foreign Markets?
5 KEY Factors to consider
Is the firm's competitive advantage based on firm specific resources
Is the product tradable? What are the barriers?
Does the firm have the resources and capabilities to go overseas?
Can the firm directly appropriate the returns to its resources?
What transaction costs are involved

12. International Alliances and Joint Ventures
Strategic International Alliance
Companies from different countries join forces
Increasingly popular way to reach foreign markets
Joint Venture
A cooperative enterprise entered into by two or more business intenties for the purpose of a specific project or other business activity

13. Global Integration VS. National Differentiation
Global Strategy-One that views the world as a single market
National Differentiation- is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market.

14. Strategy and Organization within the Multinational Corporation
Greatest Challenge- aligning organizational structures and management systems and their fit with the strategies being pursued.

15. The Evolution of Multinational Strategies and Structures
International firms have adopted different strategies and structural configurations, but these changes can be very slow, difficult and costly. Especially when governments get involved.
Captives of their history

16. Era of the European Multinational- Early 20th Century
Pioneers of multinational expansion: Unilever, Shell, ICI, and Phillips
Created “multinational federations” because of the conditions at the time.

17. Era of the American Multinational- Post WWII
U.S. economic dominance for Ford, GM, IBM, Coca-Cola, Caterpillar, and P&G.
Overseas subsidiaries allowed considerable autonomy.
U.S. based resources and capabilities were primary competitive advantage in world markets.

18. The Japanese Challenge- 70’s and 80’s
Japanese multinational corporations pursued global strategies from centralized domestic bases.
R & D and manufacturing were concentrated in Japan.
Overseas subsidiaries were responsible for sales and distribution.
Globally standardized products in large scale plants provided unrivalled cost and quality advantages.
R & D and manufacturing eventually dispersed.

19. Strengths of the Multinationals
Europe
Adapting to the conditions and requirements of individual national markets.
America
Ability to transfer technology and proven new products from domestic strongholds to national subsidiaries.
Japan
Efficiency of global production and new product development.

20. Challenges of the Multinationals
Europe
Achieve greater integration of their sprawling international empires.
America
Nurturing the ability to tap their foreign subsidiaries for technology, design and new product ideas.
Japan
To become true insiders in the overseas countries where they do business.

21. The Transnational
Changes in responsibilities, decision making powers, and modes of coordination are more important than formal changes in structure.
Costs of research and new product development are rising.
Transnational Organization- an integrated network of distributed and interdependent resources and capabilities.
Necessitates that…

22. Transnational Organization
Each national unit is a source of ideas, skills, and capabilities that can be harnessed for the benefit of the total organization.
National units access global scale economies by designating them the company’s world source for a particular product, component, or activity.
The centre must establish a new, highly complex managing role that coordinates relationships among units but does so in a highly flexible way.

23. Ford succeeding in the International Environment
Internationally- 5th largest automobile company (Behind GM, Volkswagen, and Toyota)
U.S. - 2nd largest in the U.S. (Behind GM)

24. Summary
Competitive advantage not by resources and capabilities, but by the national environment.
Determining whether to enter an overseas market by whether or not a firm can create value from it.
Knowing how to be successful in the international market, not just in their home market.
Senior managers still have trouble being successful in determining strategies and organizational structures internationally.