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Managing the Multinational Enterprise > International Firm's Competitive Strategies > Flashcards

International Firm's Competitive Strategies Flashcards

1
Q

Why go international?

A
  • Competitive advantage
  • Growth
  • Profits
  • New markets
  • Bigger market
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2
Q

What are the different strategic intentions?

A
  • Global scale efficiency: scope, scale
  • Multi-national flexibility/responsiveness: adaptability
  • Worldwide learning and innovation: R+D and Idea sourcing
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3
Q

What are the three means to achieve competitive advantage?

A

EOS

Scope economies (cost advantages through sharing, putting in common resources, common distribution channels, sharing R+D)

National differences: culture, tastes, behaviours, local competitors, cost and currency stability

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4
Q

What is the international structural model?

A

Adopting different structures at different stages at international expansion

Depending on foreign sales as % of total sales and foreign product diversity

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5
Q

Why is it difficult to manage internationally?

A
  • Culture: food, language, ethnicities, religion, trust, values
  • Competition
  • Legal barriers
  • Taxation
  • Coordination
  • Currency exchange
  • Government policies
  • Distance
  • Politcal instability
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6
Q

What is administrative distance?

A
  • Different legal frameworks
  • Different judiciary
  • Different political structure
  • Different human rights practices
  • Currency convertibility
  • Trade restrictions
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7
Q

What are the different legal systems?

A

Civil law - Europe
Common law - based on legal precedents set by courts (UK, US)
Religious law - ethical and moral codes taught by religion - Saudi
Pluralistic systems - multiple systems within a population (India)

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8
Q

What is economic distance?

A
  • GDP/PPP differences
  • Labour cost and other manufacturing costs
  • Financial resources, Human Resources, infrastructure or knowledge
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9
Q

Is it worth operating internationally?

A

Yes, if it makes a difference to the competitive performance of the firm. It must align and strengthen the choice of how you compete strategically.

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10
Q

What is the integration and responsiveness matrix in terms of strategic choice?

A

Need for global coordination vs need for local adaptation

  • Global (high global, low local)
  • International (low global, low local)
  • Multi-national (low global, high local)
  • Transnational (high global, high local)
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11
Q

What does international strategy involve?

A

Strategic orientation: exploiting knowledge from the parent company by transferring it to foreign markets; expects to use innovations to reduce costs, enhance revenues, or both

  • Configuration of assets and capabilities: core competencies centralised and others decentralised

E.g American companies exploit home country innovations abroad

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12
Q

What does global strategy involve?

A

Strategic orientation: global efficiency, assumes that the best cost position is the key source of competitiveness

Configuration of assets and capabilities; centralised and locally scaled

E.g Japanese companies like Toyota, Canon

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13
Q

What does multinational strategy involve?

A

Strategic orientation: flexibility to respond to differences in national markets, sees differentiation as the primary way to enhance performance

Configuration of assets and capabilities; decentralised and self-sufficient: localisation focus

E.g European companies such as Unilever, Nestle

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14
Q

What is transnational strategy?

A

Strategic orientation: global efficiency, flexibility, worldwide learning simultaneously

Efficiency and innovation important.

Configuration of assets and capabilities; dispersed, interdependent, specialised

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15
Q

How are transnational strategies implemented?

A

1) Decide which resources/capabilities should be centralised in home country (protection, supervision)

2) Decide which to locate abroad
- World-scale production plants for labour intensive countries might be in lower wage countries e.g Vietnam
- Sony relocated treasury operations to London

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16
Q

What are the history and heritage biases and preferences?

A

European - multinational

American - international

Japanese - global

Not born transnational but can grow there

17
Q

What are the limitations of the integration responsiveness framework?

A
  • Strategy choice is independent of industry context
  • Strategy can vary over time
  • Matrix organisation structures can lead to gridlock
18
Q

How does transnational strategy rely on rational view?

A
  • Assumes rational behaviour due to thorough analysis of data (ignores manager biases)
  • Data only exists on the past (or at best present) decisions have to be made for future
  • Fallacy of prediction, one truth about forecasts is that they are always wrong
19
Q

What is an easy definition of transnational strategy?

A

Pursuing simultaneously efficiencies (scope and scale) and flexibility and learning logically

Integrated network managed through a matrix structure

20
Q

What makes a transnational strategy hard to actually implement?

A
  • Historical/cultural bias
  • Matrix gridlock
  • Flawed decision making: primacy of home-based thinking, strength of voice = weight of argument
  • Local adaptation is only relevant locally
21
Q

What are some examples of transnational companies?

A

Unilever
Syngenta
Standard Chartered

22
Q

How is innovation the most important source of competitive advantage?

A
  • Learning from and in the world
  • Not all knowledge is in one place
  • Knowledge is valueless unless it is applied
  • Cost of distance is falling
  • Prospect for untapped knowledge sources globally
  • Create product knowledge through experimentation
  • Connect and leverage knowledge source
  • Transcend not cross borders
23
Q

What is meta national?

A

Beyond transnational -

To develop flexibility:

  • create specialised roles
  • Create special teams
  • Introduce boundary spinning roles
  • Disperse responsibilities
  • Legitimise diversity
  • Manage complexity
24
Q

What is the alternative view, 3A strategies?

A

Aggregation: pursuit of increased scale to achieve greater efficiencies (sourcing) or effectiveness (brand recognition)

Arbitrage: pursuit of flexibility in sourcing and market access in order to increase CA (adjusting the balance of supplier from different countries)

Adaptation: pursuit of insight and innovation from markets, moving knowledge between markets to apply elsewhere for CA

25
Q

What does Ghemawat (2007) sat about managing differences in terms of managing differences and the challenge of global strategy?

A

Must decide which elements of the 3A strategy meet business needs, not feesible to do all 3

Many companies emphasise different As at different times of their evolution

One or two As should be pursued at once

26
Q

What is the 3A triangle?

A

A strategy map for managers =

  • The % of sales spent on advertising indicates how important adaption is
  • % Spent on R+D indicates importance for aggregation
  • % spent on labour helps huge importance of arbitrage
27
Q

What is cage distance?

A

Cultural, Administration, Geographic and Economic distance

Managing the Multinational Enterprise (7 decks)

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