Multinational Strategy Flashcards
Define STRATEGY in an INTERNATIONAL BUSINESS CONTEXT
- STRATEGY: what firms do with what they have to achieve their goals
- in INTERNATIONAL BUSINESS: how firms achieve their goals while being aware of culture, politics, and differing legal systems of another country (host country)
What are the elements of STRATEGY?
STRATEGIC CHOICES: what product/service to focus on
STRATEGIC ANALYSIS: coordinate business ops and see if strategic plan is implemented correctly
FUNCTIONAL STRATEGY: aka ‘departmental strategy’ relates to different functions (eg. marketing, sales, HR) to align towards overall organisational strategy
ASPECTS of STRATEGY ANALYSIS
- setting goals & objectives
- analysing environment to include competitive and industry analysis
- analysing resources & capabilities
- developing strategic options
- choosing and implementing the strategy
What are INTERNATIONAL STRATEGY ISSUES?
- increasing geographic spread/internationalisation
- building cross-national economic integration/globalisation
- adapting to local conditions/responsiveness
- pursuing markets, resources, strategic assets through options such as alliances or M&As
P E S T L E
is a tool to help in strategic analysis
P = Political factors E = Economic factors S = Sociological factors T = Technological factors L = Legal factors E = Environmental/Ecological factors
ONSHORING
Relocating a business process or work unit to a more productive, lower-cost location (eg. in another city)
in the home country.
HOMESHORING
Work-at-home staff handle activities that had previously been offshored to foreign
locations. (Outsourcing to home-based employees)
RESHORING
Returning an activity from the foreign location to the country where the work had
originally been done.
OFFSHORING
Relocating a value activity to a different country that either remains within or moves
outside the MNE.
NEARSHORING
A less aggressive form of offshoring whereby an MNE transfers an activity to
a neighbouring or nearby country.
What is the difference between GLOBAL INTEGRATION and LOCAL RESPONSIVENESS?
GLOBAL INTEGRATION: standardises MNEs’ activities, products and processes, worldwide in order to maximise efficiency gains
LOCAL RESPONSIVENESS: adapting to the local unique situations of the market
What are some MOTIVATIONS for LOCAL RESPONSIVENESS?
- Customize products and process to local customer preferences to optimize scale, experience, and learning effects
- Satisfy host government requirements and regulations
- Tap into local resources, capabilities. and competencies
- Promote a local profile to placate national stakeholders
- Directly engage local competitors
- Adjust to local political, economic, and cultural circumstances
- Increase sensitivity to new product and process options
- Tailor marketing message to local ideals
- Accommodate differences in distribution channels and service systems
- Build local goodwill by supporting national agenda
- Respond to historical or geographic imperatives
What are some MOTIVATIONS for GLOBAL INTEGRATION?
- Standardize products and processes to maximize scale, experience, and learning effects
- Maximize productivity of resources, capabilities, and competencies
- Exploit location effects
- Capitalise on converging consumer preferences and universal needs
- Provide uniform service to all customers
- Accelerate consumers’ quest to maximize purchasing power parity
- Source materials and inputs globally
- Directly engage global competitors
- Build a global image with a universal message
Exploit integration efforts of transnational institutions - Leverage expanding cross-national technological connectivity
- Respond to the progressive, ongoing globalization of markets
What is CORPORATE-LEVEL STRATEGY
actions that MNEs may take to gain a competitive advantage by selecting and managing (parts of) its businesses across a group of nations
1) articulates how to reconcile GLOBAL INTEGRATION with LOCAL RESPONSIVENESS
2) stipulates how managers will integrate MNE’s various parts into a strategic whole
3) specifies the decision-making roles taken by HQ or its subsidiaries
What are the 4 STRATEGY ARCHETYPES used by MNEs?
INTERNATIONAL STRATEGY: Leverage core competencies and home-country innovations into superior competitive positions abroad
LOCALISATION STRATEGY: Differentiate products to respond to national differences in customer preferences, industry characteristics, or government regulations
GLOBAL STRATEGY: Target universal needs or wants that support selling standardized products worldwide; Emphasize volume, cost minimization, and efficiency
TRANSNATIONAL: Simultaneously manages the tensions of global integration and local differentiation in ways that leverage specialized knowledge and promote worldwide learning.
