MNE Topic 3 Flashcards
why go international
how achieve this
build a competitive strategy
undertaking different strategic action
strategic intent goals
- global scale efficiency (scale & scope)
- multinational flexibility/responsiveness (adaptability)
- worldwide learning and innovation (R&D and idea sourcing)
- sometimes simultaneous sometimes contrasting
3 means to achieve a competitive advantage
- EOS
- Economies of scope
- National differences
Economies of scale
cost adv obtained due to size
Economies of scope
cost adv through sharing common certain resources/products
-common distribution channels
-global brand name
-pooling knowledge in different markets
-sharing R&D
National differences
- culture
- tastes
- behaviour
- local comp
- costs
- currency stability
Multinational flexibility
- diff market opps from env
- best one/attractive-> may change
- understanding & risk
-risk = policy, economic perf, ER, labour, resources, preferences, comp
worldwide innovation and learning
stimuli (trends) -> resources needed (capital/knowledge/tech)
Strategic objectives
(WHAT)
1. achieve global scale efficiency
2. implement with locally responsive flexibility
3. develop cross border learning capabilities
global scale efficiency
variation between value of output (revenue) over cost of factor
Strategic means
(HOW)
1. develop and leverage EOS
2. Sense and respond to national differences
3. Recognise and capture scope economies
MNE Environments
diversity of environments & capabilities
multiple learning opportunities = obj worldwide learning
CAGE Distances
- cultural
- administrative
- geographical
- economic
- require time and inv management
cultural distance
attribute of society from interactions
- values/norms/dispositions
- customs
- foods
- languages
- ethnicities
- religions
- lack of trust
e.g. Heineken crossing differences
administrative distance
- legal framework (Law -> civil, common, religious, pluralistic)
- political structure
- currency convertibility/stability
- trade restrictions (regulatory/practice)
- judiciary
- human rights practice/speech freedom
geographical distance
- physical distance
- lack land border
- time zones
- climate/disease env
- population density
three economic distances
- GDP/PPP differences
- labour & other manufacturing costs
- financial/Human/infrastructure/knowledge
e.g. Google -> china and russia
worth operating internationally?
- make difference to competitive performance of firm
- how operate internationally is aligned with and strengthen choice of how compete strategically
integration/responsiveness matrix
global coordination and local adaption
- global
- transnational
- international
- multinational
strategy
making choices (to do and not do)
align choices of how operate
behave with those strategic choices
international strategy
Exploiting home country innovations abroad
global strategy
develop global efficiency, via different means
achieve best cost and quality positions for products
multinational strategy
Differentiate product and service responding to national differences in preference/ industry/gov regulations
transnational strategy
Manage costs and revenue simultaneously
Efficiency and innovation = important
Innovation- arise in many parts of world
concentration of resources for transnational
Concentrated at home
- Core tech
- Global account team
Concentrated but not necessarily at home
- World scale production plants (labour intense – lower wage)
industry characteristics and strategic choices
integration- responsiveness framework
limitations of the IR framework
- strategy choice independent of industry context
- strategy can vary over time
- matrix org structures often lead to gridlock
-old fashioned
amazon integration responsiveness matrix
is transnational possible
- matrix gridlock
- flawed decision making
-> primacy of home base thinking
-> strength of voice = weight of argument - risk of losing control of operations in some countries
transnational
pursuing simultaneously efficiencies (scope and scale), flexibility, learning globally
integrated network -> managed through matrix structure
business units x functions x geographical areas
innovation
most important source of comp adv
- learning from and in world
- not all knowledge is in 1 place
- knowledge valueless unless applied
- cost of distance = falling rapidly
- prospect for untapped knowledge sources globally
- create knowledge through experimentation
- connect and leverage knowledge sources
sensing + mobilising + applying
metanational
beyond transnational
- develop flexibility
- multiple innovation processes - local central, global
- balance multiple perspectives
how to develop flexibility - 4 ways
- specialised roles
- special teams
- introduce boundary - spanning roles
- disperse responsibilities (empower people to act)
3As strategy
- Aggregation
- Arbitrage
- Adaptation
Aggregation
pursuit of increased scale
to achieve greater efficiencies (sourcing) or effectiveness (brand recognition)
arbitrage
pursuit of flexibility in sourcing and mkt access
increase competitive adv (adjust balance of supplies from diff countries depending on exchange and logistics rates)
adaptation
pursuit of insight and innovation from mats
moving knowledge between mkts to apply elsewhere for comp adv
AAA triangle
leaders - find which elements meet companies needs = prioritise
- emphasis different As at different times of evolution
- same industry can differ
- one or 2 -> 3 is possible but challenge due to tensions/differences
- org and strategy trade offs make hard to pursue multiple -> staffing/ operations/ marketing/leadership/metrics
pursuing 1 or 2
- Ghemawat’s argument differs in respect from Bartlett et al’s view on transnational strategy
