1. 0 Schedule 7-31Philips and Matsushita 8-1EuroDisney 8-5P&G 8-6P&G Cont. Summary Evaluations 8-7ClipIt! discussion 8-8Presentations 8-12 Final in Class

2. CH-ZWA645-005jsmGB Global or Local? James Oldroyd Kellogg Graduate School of Management Northwestern University j-oldroyd@northwestern.edu 801-422-7888 650 TNRB

3. 2 TVs 1937 1932

4. 3 Continued 1958 VCR 1939 1938 1950 1938-1950

5. 4 Today

6. TYPES OF INTERNATIONAL STRATEGY MULTI-DOMESTIC STRATEGY Product is fully customized in each country. Decentralized federation of national organizations. Local decision making authority. Effective when differences between countries are large. Sources of Advantage: Differentiation Local responsiveness Minimize political risk Minimize rate exchange risk GLOBAL STRATEGY Product is standardized worldwide Centralized organization structure. National subsidiaries possess little decision-making authority. Effective when differences between countries are small. Sources of Advantage: Cost Ability to coordinate activities Speed in new product development

7. A FRAMEWORK FOR ANALYSIS Pressures for Global Integration Pressures for Local Differentiation

8. Global Strategy Multi-domestic Strategy Local Strategy A Framework: Global Integration - Local Differentiation High Low Forces for Global Integration Forces for Local Differentiation Source: Jeff Dyer BYU 2002

9. HQ STRATEGIC INTENT:Gain/Maintain Global Leadership POLICIES: Specialized Production and R&D Centers Break Down Value Chain and Exploit Low Cost Locations World Products to Build Volume and Global Product Roll-out Price Leadership Optimize Global Network at Local Expense Move Into Key Markets Preemptively International Human Resources 1. A GLOBAL STRATEGY Source: J. de la Torre

10. The Extreme Global Value Chain CountryActivities ABCDEFGHABCDEFGH R & D Purchasing Manufacturing Marketing Selling Distribution Service Design Etc. Design PurchasingManufacturing

11. THE GLOBAL MAXIMIZER Some Companies Emphasizing this Approach: Royal Dutch Shell Caterpillar Hewlett Packard Boeing Intel Coca Cola Matsushita IBM American Express LM Ericsson Toyota Sony THERE IS RELATIVELY LITTLE ROOM FOR JOINT VENTURES IN THIS MODEL, EXCEPT FOR UPSTREAM ACTIVITIES. ACQUISITIONS PLAY A SECONDARY ROLE VS. INTERNAL GROWTH AND GREENFIELD INVESTMENTS. Source: J. de la Torre

12. 2. A MULTI-DOMESTIC STRATEGY HOLDING STRATEGIC INTENT: Gain Key Positions in Selected Markets POLICIES: Tailor Products to National Idiosyncrasies Differentiated Operations Sacrifice Efficiency for Market Access Reach Economies of Scale Upstream Maximize Local Value Added Gain Government Support Use Join Ventures to Preempt Competition and Add Local Value National Human Resources Source: J. de la Torre

13. The Fully Multi-local Value Chain CountryActivities ABC****ZABC****Z R & DDesignService Distrib- utionSelling Market -ing Manu- facturing Purch- asing R & D Design Purch- asing Purch- asing Purch- asing Manu- facturing Manu- facturing Manu- facturing Market -ing Selling Distrib- ution Distrib- ution Distrib- ution Service

14. THE FEDERALIST Some Companies Emphasizing this Approach: Unilever Procter & Gamble Federal Express PricewaterhouseCoopers KPMG Heineken Philips Nestlé BASF General Motors Carrefour Wal-Mart THERE IS AMPLE ROOM FOR JOINT VENTURES AND LOCAL AFFILIATIONS IN THIS MODEL. ACQUISITIONS PLAY AN IMPORTANT ROLE TO OBTAIN DOMESTIC PRESENCE IN IMPORTANT MARKETS Source: J. de la Torre

15. Linking Market, Strategy, Structure & Processes Analysis of the environment / market precedes choice of firm strategy which precedes choice of firm structure and processes. Firm Structure and Processes Environment / Market Costs Competitors Customers Government Firm Strategy

16. Where Next ? High Low Forces for Global Integration Forces for Local Responsiveness

17. 16 Matsushita’s Performance

18. 17 New Structure

19. 18 Philips

20. 19 Philips