1. International Strategy Anne-Caroline BERTHELOT Noémie HUBIN Janine STROH

2. I. The basic directions for a firm’s strategy

3. 1. State of mind Perlmutter (1960) admits that there are 3 types of attitudes : -Ethnocentric -Polycentric -Geocentric.

4. State of mind II Ethnocentric : Two characteristics : - National strategy - Home country reference

5. Organization DesignETHNOCENTRIC Complexity of organization Complex in home country, simple in subsidiaries Decision makingHigh in headquarters Evaluation and control Home standards applied for persons and performance Rewards and punishments; incentives High in headquarters, low in subsidiaries Communication; information flow High volume to subsidiaries IdentificationNationality of owner Perpetuation (recruiting, development ) Recruit people of home country.

6. State of mind III Polycentric : Polycentric company have : - regional strategy, - host country reference.

7. Organization DesignPOLYCENTRIC Complexity of organization Varied and independent. Decision makingRelatively low in headquarters. Evaluation and controlDetermined locally. Rewards and punishments; incentives Wide variation; can be high or low rewards for subsidiary performance. Communication; information flow Little to and from headquarters. Little between subsidiaries. IdentificationNationality of host country. Perpetuation (recruiting, development ) Develop people of local nationality.

8. State of mind IV Geocentric : Two points : - Global strategy. - Goal : worldwide approach.

9. Organization DesignGEOCENTRIC Complexity of organization Increasingly complex and interdependent Decision makingCollaborative approach Evaluation and control Find standards which are universal and local Rewards and punishments; incentives International and local executives rewarded for reaching local and worldwide objectives Communication; information flow Both ways and between subsidiaries Identification Truly international company but identifying with national interest PerpetuationDevelop best men everywhere

10. Two other notions… EPG : E : Ethnocentric P : Polycentric G : Geocentric. Regioncentric : New notion that appears in the years 1980ies.

11. Nowadays… Mostly polycentric and geocentric. However there is still an ethnocentric attitude in every companies.

12. 2. Resources and capabilities A Resource-Based Approach to Strategy Analysis : Strategy Competitive Advantage Capabilities Resources.

13. Resources 6 major categories : - Financial resources - Physical resources -Human resources -Technological resources -Reputation and -Organizational resources.

14. Capabilities Strategic capabilities. Comparative advantages. Ex : Fed Ex.

15. Competitive advantages Two factors provide to appraise the rent- generating potential of resources and capabilities : -The respect of the rules (durability, transparency, transferability, replicability). -The appropriability of returns.

16. Strategy The point : select a strategy. If there are resources gap, they have to be filled.

17. II. Analyze of international business strategy

18. Yip’s (2003) view as a global company : “A global company has the capacity to go anywhere, deploy any assets, and access any resources, and it maximizes profits on a global basis.”

19. 3 main possibilities of strategy An entirely globally-centered business A fully polycentric business on a national level A regional organization

20. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

21. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

22. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

23. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

24. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

25. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

26. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

27. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Corporate headquarters Regional centersNational units World product 1 Global strategy 47 Region- based or adapted product 2 5 Regional strategy 8 Nation- based or adapted product 36 9 National strategy Actual product Characteristics

28. III. Multinationals and Regional Trading

29. NAFTA The build-up of regional trading blocks I EU MERCOSUR FTAA ASEAN APEC

30. The build-up of regional trading blocks II EUROPE (EU) AMERICAS (NAFTA) ASIA (APEC,ASEAN) Central & Eastern Europe South America (MERCOSUR) China & India Africa Middle East CIS

31. Influence of Free Trade Areas  Overall growth in international trade and political stability  Shift of regulatory authority to the regional level  Rise of “intra-regional trade”  Free Trade Area = free trade

32. Influence of WTO  WTO (World Trade Organization): successor to the General Agreement on Tariffs and Trade (GATT)  Arbitration of triad-based disputes  Protectionism of health, safety and environmental  Reinforce of triad-markets

33. States – Firms – Regions I Regional Institution Company Regional Institution Government 2 4 1 3 6 5

34. States – Firms – Regions II  Relationships (1), (2) and (3) reflect conventional interactions between firms and national governments in form of cooperation or competition  Relationships (4), (5) and (6) are of special interest in a regionalized world R RC C G G 2 1 4 6 3 5

35. States – Firms – Regions III  Relationship (5) national governments have to pay the same attention to regional institutions as to state-to-state relationships  Relationship (6) deepening of regional integration will lead to bargaining among regional institutions R RC C G G 2 1 4 6 3 5

36. States – Firms – Regions III  Relationship (4) - MNE should pay increasing attention to policy making at regional level - MNE may be affected by common standards or additional costs R RC C G G 2 1 4 6 3 5

37. MNEs and Regional Policy 1 2 4 3 Fortress against Outsiders Internal Liberalization Manageable Exogenous Perceived Regional Policy Intent MNE Perception of Regional Policy

38. Case Study Benetton’s International Strategy

39. Revenues 2003  Net sales for the casual segment by geographic area for the last three years (in thousands of Euro) 200120022003 EU1,193,9481,165,6421,179,334 Asia154,832143,025138,382 The Americas85,81581,10777,422 Other Areas193,276196,236183,389 WORLD1,627,8711,586,0101,578,527

40. Number of Stores 2000200120022003 Italy 2,0952,2022,2702,256 Rest of Europe 2,2002,1571,9991,932 The Americas 294259262286 Other geographic areas 718622675621 Total 5,3075,2405,2065,095

41. Organizational Structure  Benetton Group S.p.A. is the holding company of the Benetton group companies. The following table sets forth the significant subsidiaries owned, directly or indirectly, by Benetton Group S.p.A.  Benetton Group S.p.A. belongs to the Edizione Holding Group.

42. CountryOwnership Benetton International N.V. S.AThe Netherlands100 % Benetton Trading USA IncUSA100 % Benetton Japan Co., Ltd.Japan100 % Benetton International Property N.V. S.A The Netherlands100 % Olimpias S.p.AItaly85 % Benetton Textil Spain S.LSpain100 % Benetton Retail International S.ALuxembourg100 % Benetton Società di Servizi S.ASwitzerland100 % Bencom S.r.l.Italy100 % Benind S.p.AItaly100 % Bentec S.p.A.Italy100 %

43. Thanks a lot for your attention.