1. International Strategy

2. Which is the American car? Page 2 Pontiac G8 BWM X5

3. Page 3 Toyota SequoiaJeep Patriot Which is the American car?

4. The Last “American” Car Page 4

6. TouaregPassatJettaBeetleGolf Engine Germany Hungary Germany Poland Mexico Hungary TransmissionJapan Argentina Japan Argentina Japan Argentina Final Assembly SlovakiaGermanyMexico Brazil Country of Origin for VW Models Sold in U.S.: Major Components and Final Assembly

7. VW Jetta…just a little “German” Transmissions Japan Assembly Mexico Engines Poland Customers Lexington

9. Entry Mode Decision Matrix Hi Lo HiLo Strategic Importance of Country Stand-alone Attractiveness of Country Lo Hi Resources,Control,Risk

10. Country-Market Analysis F Stand-alone attractiveness: –Size –Growth –Product acceptance / segmentation –Cultural similarity –Risk –Policy incentives –Other factors? ….MNC “power”?

11. Country-Market Analysis F Strategic importance : –Home market of global customer –Home market of global rivals –Significant market of global rivals –Major source of innovation –Demanding/sophisticated customers –Factor-cost advantages

12. Resources-Control-Risks  Resources  $$, time, technology, machinery, people, organizational, strategy  Control  Operational and strategic discretion over value-creating activities  Risks  Political, F/X, economic, cultural, dissemination

13. Control F Extent of involvement: F Channel control / ownership: Ship Product Marketing Distribution After-sales Support Mfg. Export Agent Import Agent Regional Whsle. Local Whsle. Retail

14. Entry Mode Decision Framework Licensing Exporting Intermediaries Direct Joint Venture Wholly-owned Subsidiary Control Resources Risk Control Resources Risk Dissem. LowLowLow HighHighHighLow High

15. Entry Mode Decision Matrix Hi Lo HiLo Strategic Importance of Country Stand-alone Attractiveness of Country Lo Hi Resources,Control,Risk

16. General Electric and International Involvement  GE Product Divisions:  Light bulbs  Aircraft engines  Appliances  Power-generation  GE Market Opportunity:  North America  Europe  Pacific rim / Asia  Emerging markets

17. GE’s Markets, Entry and Strategy Choices Product Lines Country-Markets InternationalStrategy 4 3 2 1 ABCD  

18. Entry Mode Decision Matrix Hi Lo HiLo Strategic Importance of Country Stand-alone Attractiveness of Country Lo Hi Resources,Control,Risk

19. Industry Globalization o What is a global industry? Why? o Which drivers/factors most important? o How does a global industry compare with a multi- domestic one? o How is the extent of globalization “measured”? o What are the implications for firms’ international strategies?

20. Globalization Drivers o Market Drivers o Cost Drivers o Government Drivers o Competitive Drivers Low Multi-domestic High Global

21. Definitions Multi-domestic –Many-country view of the international marketplace –Value chain activities are performed in the local country-market and are adapted to local tastes, preferences, needs, etc.

22. Definitions Global –A whole world-level view of the international marketplace, the world is the market –Value chain activities are standardized and are performed in country locations according to efficiency, favorable policies, knowledge, resources, etc.

23. Definitions Transnational –A “glocal” level view of the international marketplace – has some global, some local elements –Some value chain activities are standardized and are performed in country locations others are nationally-adapted and performed in the local market

24. Market Globalization Drivers o Common customer needs o Global customers o Global market channels o Transferable marketing

25. Strength of Market Drivers Low High Baked Goods Book Publishing Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Multidomestic Global

26. Cost Globalization Drivers o Global scale economies o Sourcing efficiencies o Factor of production differences o High product development costs o Rapidly changing technology

27. Strength of Cost Drivers Low High Baked Goods Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Pharmaceuticals Multidomestic Global

28. Government Globalization Drivers o Unrestrictive trade and investment policies o Compatible technical standards o Common marketing regulations

29. Strength of Government Drivers Restrictive Loose Baked Goods Retail Banking Toothpaste Soft Drinks Automobiles Computers Airlines Pharmaceuticals Multidomestic Global

30. Competitive Globalization Drivers oHigh two-way trade / cross-border FDI oGlobal competitors oInterdependence among countries oTrade/Investment Policies oRole of WTO, etc.

31. Strength of Competitive Drivers Low High Baked Goods Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Pharmaceuticals Multidomestic Global

32. Globalization Drivers o Market Drivers o Cost Drivers o Government Drivers o Competitive Drivers Low Adapt High Standardize

33. Effective Standardization Coca-Cola’s “global polar bears” McDonald’s “Big Mac”

34. Effective Adaptation o P&G single-use shampoo packages in India

35. Effective Transnationalization oBarbie is 51 years old oSold in 130 countries oNational adaptations: Physical features Costumes Activity sets oStandardized physique: Scaled to 6’2”, 110 lbs.

36. Value Chain Location and standardization/adaptation Infrastructure Technology Development Procurement Human Resource Management Inbound Logistics Operations Outbound Logistics Marketing Service Profit Margin

37. Value Chain Infrastructure Technology Development Procurement Human Resource Management Inbound Logistics Operations Outbound Logistics MarketingService Profit Margin Headquarters

38. Value Chain Infrastructure Technology Development Procurement Human Resource Management Inbound Logistics Operations Outbound Logistics MarketingService Profit Margin Upstream Headquarters

39. Value Chain Infrastructure Technology Development Procurement Human Resource Management InboundLogistics Operations OutboundLogistics MarketingService Profit Margin UpstreamDownstream Headquarters

40. Value Chain Marketing Profit Margin UpstreamDownstream Headquarters Manufacturing

41. Value Chain Configuration location o Geographic location of value chain activities around the world

42. VW Jetta…just a little “German” Transmissions Japan Assembly Mexico Engines Poland Customers Lexington

43. Value Chain Coordination linkages o Cross-border linkages between dispersed value- creating units o Coordination o Coordination = Flows of: –Money –Product (finished and intermediate) –Technology –People –Information (market data, strategic direction, etc.) o Highly coordinated vs. only money flows

44. International Strategy: Managing Competing Pressures Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low

45. International Strategy: Managing Competing Pressures Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low Export Strategy

46. Export Strategy U.S. Germany Mexico Malaysia

47. Export Strategy U.S. Germany Sweden England

48. International Strategy: Managing Competing Pressures Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low Export Strategy ?? Multidomestic Strategy

49. Multidomestic Strategy U.S. Germany Mexico Malaysia

50. P&G Multidomestic Strategy UK Germany France Italy Neth.

51. International Strategy: Managing Competing Pressures Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low Export Strategy ?? Multidomestic Strategy Global Strategy

52. Global Strategy (Textbook Variety) U.S. Germany Mexico Malaysia

53. International Strategy: Managing Competing Pressures Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low Export Strategy ?? Multidomestic Strategy Global Strategy Transnational Strategy

54. Transnational Strategy (v.1) U.S. Germany Mexico Malaysia

55. P&G “Pan-Euro” Strategy UK Germany France Italy Neth. Spain Zone 1 Zone 2

56. Surprising Outcome F VIZIR was precursor to “Liquid Tide” in US –Great irony is: P&G’s struggle to develop “Euro-brand” first found success in a different large, integrated market…

57. Surprising Outcome F VIZIR was precursor to “Liquid Tide” in US –Great irony is: P&G’s struggle to develop “Euro-brand” first found success in a different large, integrated market… The U.S.

58. Transnational Strategy (v.2) U.S. Germany Mexico Malaysia

59. Transnational Strategy (v.2) U.S. Germany Mexico Malaysia

60. Transnational Strategy (v.3) U.S. Germany Mexico Malaysia Engines Final Assembly Trim, seats, glass Steel

61. VW International Strategy - Jetta Germany Japan Mexico Poland Transmission Final Assembly Engine Misc. U.S. Marketing

63. McDonald’s Identity

64. McDonald’s Transnational Menu USBrazilCanadaIndiaGermany Big Mac French Fries Coca-Cola McNuggets McAloo Tikki McRib McBier McLobster McCalebresa PitaMac McFarmer

65. McDonald’s Site Selection and Stores US -- Colorado

67. McDonald’s Site Selection and Stores Moscow, Russia

68. McDonald’s Site Selection and Stores Bangkok, Thailand

69. Hamburger University Illinois, USA

70. Hamburger University Illinois Sydney London Munich Hong- Kong

71. Hamburger University Curriculum o80 classroom hours oTopics – Fast food “the McDonald’s way” Restaurant operations, food preparation Crew selection, training and team building Marketing and promotion Asset management Corporate citizenship and ethics Leadership, effective supervisory skills Standardization of Processes

72. McDonald’s Transnational Strategy U.S. Singapore Greece Brazil