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Global Strategy
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Procter & Gamble Pan-European Brand Development
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P&G Multidomestic Strategy
UK Neth. France Germany Italy
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Product Characteristics Map
High Washing Temp Enzymatic Stain Removers Fabric Softener Bleach Additives
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Product Characteristics Map
High Washing Temp Excluded countries Italy Italy Enzymatic Stain Removers Fabric Softener Spain Bleach Additives
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P&G “TransEuro” Strategy
UK Neth. Zone 1 France Germany Spain Italy Zone 2
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Epilogue VIZIR was precursor to “Liquid Tide” in US
Great irony is: P&G’s struggle to develop “Euro-brand” first found success in another large, integrated market…the U.S. The VIZIR experience facilitated learning/cross-fertilization w/in P&G worldwide Developed “world-class” technology and product development capabilities worldwide
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Industry Globalization
What is a global industry? Why? Which drivers/factors most important? How does a global industry compare with a multi-domestic one? How is the extent of globalization “measured”? What are the implications for firms’ international strategies?
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Globalization Drivers
Market Drivers Cost Drivers Government Drivers Competitive Drivers Low Multi-domestic High Global
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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.
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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.
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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
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Market Globalization Drivers
Common customer needs Global customers Global market channels Transferable marketing
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Strength of Market Drivers
Aircraft Computers Automobiles Soft Drinks Toothpaste Retail Banking Book Publishing Baked Goods Low High Multidomestic Global
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Cost Globalization Drivers
Global scale economies Sourcing efficiencies Factor of production differences High product development costs Rapidly changing technology
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Strength of Cost Drivers
Pharmaceuticals Aircraft Computers Automobiles Toothpaste Retail Banking Baked Goods Soft Drinks Low High Multidomestic Global
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Government Globalization Drivers
Unrestrictive trade and investment policies Compatible technical standards Common marketing regulations
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Strength of Government Drivers
Toothpaste Baked Goods Soft Drinks Computers Automobiles Pharmaceuticals Airlines Retail Banking Restrictive Loose Multidomestic Global
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Competitive Globalization Drivers
High two-way trade / cross-border FDI Global competitors Interdependence among countries Trade/Investment Policies Role of WTO, etc.
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Strength of Competitive Drivers
Aircraft Pharmaceuticals Computers Toothpaste Automobiles Soft Drinks Retail Banking Baked Goods Low High Multidomestic Global
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International Strategy
Globalization drivers – Assess dual pressures: Global efficiency - standardization National/local responsiveness - adaptation Location/configuration of value-creating activities Integration/coordination of value-creating activities
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Effective Standardization
Coca-Cola’s “transnational polar bears” McDonald’s “Big Mac”
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Effective Adaptation McMutton Pie in Australia
Wendy’s shrimp sandwich in Japan Campbell’s non-condensed soups in the UK Coca-Cola’s 175 ml containers in Japan
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Barbie Barbie is 51 years old Sold in 130 countries
National adaptations: Physical features Costumes Activity sets Standardized physique: Scaled to 6’2”, 110 lbs.
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Globalization Drivers
Market Drivers Cost Drivers Government Drivers Competitive Drivers High Global Low Multidomestic
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International Strategy: Managing Dual Pressures
High Pressures for Global Efficiency Low Low High Pressures for Local Responsiveness
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Value Chain Location and standardization/adaptation
Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service
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Value Chain Headquarters Infrastructure Technology Development
Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service
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Value Chain Headquarters Upstream Infrastructure
Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream
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Value Chain Headquarters Upstream Downstream Infrastructure
Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream Downstream
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Value Chain Sub-functions (Marketing)
Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Advert. Pricing Distrib. Packaging
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Value Chain Configuration
Geographic location of value chain activities Concentrated/centralized vs. dispersed/decentralized
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Value Chain Coordination
Cross-border linkages between dispersed value-creating units Coordination = Flows of: $ Product (finished and intermediate) Technology People Information (market data, strategic direction, etc.) Highly coordinated vs. only money flows
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International Strategy: Managing Dual Pressures
High Pressures for Global Efficiency Export Strategy Low Low High Pressures for Local Responsiveness
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Export Strategy (same as Export entry mode)
Germany U.S. Mexico Malaysia
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International Strategy: Managing Dual Pressures
High Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness
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Multidomestic Strategy
Germany U.S. Mexico Malaysia
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International Strategy: Managing Dual Pressures
High Global Strategy Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness
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Global Strategy (Textbook Variety)
Germany U.S. Mexico Malaysia
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International Strategy: Managing Dual Pressures
High Global Strategy Transnational Strategy Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness
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Transnational Strategy (v.1)
Germany U.S. Mexico Malaysia
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Transnational Strategy (v.2)
Germany U.S. Mexico Malaysia
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Transnational Strategy (v.3)
Germany Engines U.S. Steel Mexico Final Assembly Malaysia Trim, seats, glass
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VW International Strategy - Jetta
U.S. Japan Marketing Transmission Mexico Final Assembly Germany Misc. Poland Engine
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Entry Mode Framework Mindset Country-market opportunity/cost analysis
Stand-alone Attractiveness Strategic Importance Resources-Control-Risk tradeoff
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Mindset and International Activity
Overseas activities support / subordinate to domestic activities Multinational Flexibly adapting value-creating activities on country-by-country basis; nationally-responsive Global The world is the market; standardization Transnational “Glocalization” – Some value-creating activities standardized/globalized, others localized
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Entry Mode Decision Matrix
Hi Strategic Importance of Country Lo Hi Resources, Control, Risk Lo Lo Hi Stand-alone Attractiveness of Country
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Country-Market Analysis
Stand-alone attractiveness: Size Growth Product acceptance / segmentation Cultural similarity Risk Policy incentives Other factors? ….MNC “power”?
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Country-Market Analysis
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
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Resources-Control-Risks
$$, time, technology, machinery, people, organizational, strategy Control Operational and strategic discretion over value-creating activities Risks Political, F/X, economic, cultural, dissemination
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Control Extent of involvement: Channel control / ownership:
Ship Product Distribution After-sales Support Marketing Channel control / ownership: Retail Local Whsle. Regional Whsle. Import Agent Export Agent Mfg.
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Entry Mode Decision Framework
Control Resources Risk Dissem. Low Low Low High Licensing Exporting Intermediaries Direct Joint Venture Wholly-owned Subsidiary High High High Low
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Entry Mode Decision Matrix
Hi Strategic Importance of Country Lo Hi Resources, Control, Risk Lo Lo Hi Stand-alone Attractiveness of Country
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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
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GE’s Markets, Entry and Strategy Choices
4 3 Product Lines 2 1 International Strategy A B C D Country-Markets
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Entry Mode Decision Matrix
Hi Strategic Importance of Country Lo Hi Resources, Control, Risk Lo Lo Hi Stand-alone Attractiveness of Country
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McDonald’s Identity
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McDonald’s Site Selection and Stores
US -- Colorado
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McDonald’s Site Selection and Stores
Bangkok, Thailand
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McDonald’s Site Selection and Stores
Moscow, Russia
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McDonald’s Transnational Menu
US Brazil Canada India Germany Big Mac French Fries Coca-Cola McNuggets McAloo Tikki McRib McBier McLobster McCalebresa PitaMac McFarmer
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Hamburger University Illinois, USA
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Hamburger University Curriculum
80 classroom hours Topics – 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
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Hamburger University Hong- Kong London Illinois Munich Sydney
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McDonald’s Transnational Strategy
Singapore U.S. Greece Brazil
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