1. International Entry Modes and Strategy

2. 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

3. VW Jetta Transmissions Japan Assembly Mexico Engines Poland Customers U.S.

4. Reasons to “Go Global” Proactive Reasons o Exploit factor-cost differences across countries o Unique product o Technological advantage o Economies of scale o Growing foreign markets o Exclusive information o Attack rivals on home turf Reactive Reasons o Competitive pressure o Overcapacity o Declining domestic sales o Saturated home market o Under attack from foreign rivals

5. Going Global: Effect on Bottom Line ROI % Foreign Sales/ Total Sales

6. Foreign Market Entry Modes  Export  Licensing  Joint Venture  WOS  Acquisition  Greenfield

7. Entry Mode Framework  Mindset  Country-market opportunity/cost analysis  Stand-alone Attractiveness  Strategic Importance  Resources-Control-Risk tradeoff

8. Mindset and International Activity  International  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

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. Procter & Gamble Pan-European Brand Development

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

21. Product Characteristics Map High Washing Temp Fabric Softener Bleach Additives Enzymatic Stain Removers

22. Product Characteristics Map High Washing Temp Fabric Softener Bleach Additives Enzymatic Stain Removers Italy Spain Italy Excluded countries

23. P&G “TransEuro” Strategy UK Germany France Italy Neth. Spain Zone 1 Zone 2

24. No problem taking a sack. I’ll just use Vizir after the game.

25. Gotta keep this sweaty Tarheel off my clean uniform… I’m out of Vizir.

26. Epilogue F 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

27. 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?

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

29. 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.

30. 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.

31. 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

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

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

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

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

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

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

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

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

40. International Strategy oGlobalization drivers – Assess dual pressures: Global efficiency - standardizationGlobal efficiency - standardization National/local responsiveness - adaptationNational/local responsiveness - adaptation oLocation/configuration of value-creating activities oIntegration/coordination of value-creating activities

41. Effective Standardization Coca-Cola’s “transnational polar bears” McDonald’s “Big Mac”

42. Effective Adaptation o Campbell’s non-condensed soups in the UK o P&G single-use shampoo packages in India

43. 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.

44. Globalization Drivers o Market Drivers o Cost Drivers o Government Drivers o Competitive Drivers Low Multidomestic High Global

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

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

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

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

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

50. Value Chain Sub-functions (Marketing)Infrastructure Technology Development Procurement Human Resource Management InboundLogistics Operations OutboundLogistics MarketingService Profit Margin Advert. Pricing Distrib.Packaging

51. Value Chain Configuration o Geographic location of value chain activities –Concentrated/centralized vs. dispersed/decentralized

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

53. International Strategy: Managing Dual Pressures Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low Export Strategy

54. Export Strategy (same as Export entry mode) U.S. Germany Mexico Malaysia

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

56. Multidomestic Strategy U.S. Germany Mexico Malaysia

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

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

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

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

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

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

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

65. McDonald’s Identity

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

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

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

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

71. Hamburger University Illinois, USA

72. 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

73. Hamburger University Illinois Sydney London Munich Hong- Kong

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