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.
What is a STRATEGIC CHOICE?
A decision made when multiple strategies, after being formulated, have been carefully considered against one another, to bring about the most value and impact to the business
What are four ways that MNEs conduct information gathering on its external environment?
EXPERT OPINION: asking industry experts to discuss trends and make forecasts
BENCHMARKING: using historical industry trends to forecast future developments
PREDICTIVE ANALYTICS: using machine learning, statistical modelling, to simulate the industry environment and to generate likely future developments
CONSULTING: asking knowledgeable executives to describe what they foresee for the industry in the next 2-3 years
What are the SIX FORCES of INDUSTRY COMPETITIVENESS?
SUPPLIERS: the bargaining power of suppliers
BUYERS: the bargaining power of buyers
NEW ENTRANTS: potential threats of new entrants
SUBSTITUTES: potential threats of substitute goods or services
RIVALRY: among competitors
COMPLEMENTORS: availability of complementary products
Define ORGANISATIONAL STRUCTURE
formal arrangement of roles, responsibilities, and relationships in the MNE
What is meant by VERTICAL and HORIZONTAL DIFFERENTIATION?
VERTICAL DIFFERENTIATION: deciding who has what authority to make which decision
HORIZONTAL DIFFERENTIATION: specifying which people in which unit do which jobs
What are some of the CLASSICAL STRUCTURES used by MNEs for HORIZONTAL DIFFERENTIATION?
FUNCTIONAL: based on business activity (eg. marketing, sales, finance)
DIVISIONAL: based on product or geography
MATRIX / MIXED: combination of the above (eg. UK Sales, China Sales, Regional Finance)
What are elements of Knowledge Governance?
- Knowledge Retention
- Knowledge Sharing
- Knowledge Transmission
- Knowledge Utilisation
