Chapter 7: Designing Organizations for the International Environment Flashcards
What are the motivations for entering the global arena?
- economies of scale (through large-volume production, these industrial giants were able to achieve the lowest possible cost per unit of production.)
- economies of scope (Having a presence in multiple countries provides marketing power and synergy compared to the same size firm that has a presence in fewer countries.)
- low-cost production factors (opportunity to obtain raw materials and other resources at the lowest possible cost)
Four Stages of Development
- Domestic
- International
- Multinational
- Global
Domestic stage
company is domestically oriented, but managers are aware of the global environment and may want to consider initial foreign involvement to expand production volume and realize economies of scale
international stage
company takes exports seriously and begins to think multidomestically.
Multidomestic
means competitive issues in each country are independent of other countries; the company deals with each country individually.
multinational stage
company has extensive experience in a number of international markets and has established marketing, manufacturing, or research and development facilities in several foreign countries.
global stage
company transcends any single country. The business is not merely a collection of domestic industries
What is another name for global companies?
Stateless corporations
Cultural intelligence
the ability to use reasoning and observation skills to interpret unfamiliar gestures and interpretations and devise appropriate responses
Joint ventures
separate entity created with two or more active firms as sponsors.
Consortia
groups of independent companies—including suppliers, customers, and even competitors—that join together to share skills, resources, costs, and access to one another’s markets
Challenges of global design
- complexity and differentiation
- need for coordination
- transfer of knowledge and reverse innovation
Globalization strategy
product design, manufacturing, and marketing strategy are standardized throughout the world.
multidomestic strategy
competition in each country is handled independently of competition in other countries.
Two forces that determine the strategy and design structure that orgs should follow
global integration
national responsiveness