Chapter 11 International Strategy and Organization Prentice Hall

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Chapter 11 International Strategy and Organization Prentice Hall 2003 1

Chapter 11 International Strategy and Organization Prentice Hall 2003 1

Chapter Preview • Define core competency and value-chain analysis • Explain multinational and global

Chapter Preview • Define core competency and value-chain analysis • Explain multinational and global strategies • Describe the four corporate-level strategies • Discuss the three business-level strategies • Identify what influences organizational structure • Describe each type of international organizational structure © Prentice Hall, 2008 International Business 4 e 2

Planning and Strategy Planning Strategy Identifying and selecting Set of planned actions objectives and

Planning and Strategy Planning Strategy Identifying and selecting Set of planned actions objectives and deciding that how to achieve those managers take to help a objectives © Prentice Hall, 2008 International Business 4 ecompany meet its 3

Strategy-Formulation Process © Prentice Hall, 2008 International Business 4 e 4

Strategy-Formulation Process © Prentice Hall, 2008 International Business 4 e 4

Identify Mission and Goals Mission statements must consider: Company activities ü Business objectives ü

Identify Mission and Goals Mission statements must consider: Company activities ü Business objectives ü Stakeholders ü Stockholders ü Customers ü Residents ü Environment ü and much more… © Prentice Hall, 2008 International Business 4 e 5

Identify Core Competency Special ability of a company that competitors find extremely difficult or

Identify Core Competency Special ability of a company that competitors find extremely difficult or impossible to equal Coordination of multiple skills Lengthy period to develop Difficult to teach © Prentice Hall, 2008 International Business 4 e 6

Value-Chain Analysis Divide company activities into primary and support activities and identify those that

Value-Chain Analysis Divide company activities into primary and support activities and identify those that create value for customers Each activity is a source of either strength or weakness © Prentice Hall, 2008 Insights gained are fed into the strategy formulation process International Business 4 e 7

Value Chain Components 8

Value Chain Components 8

Business Environment National differences are inherent in analyzing a company’s unique abilities Ø Cultural

Business Environment National differences are inherent in analyzing a company’s unique abilities Ø Cultural differences Ø Political processes Ø Legal matters Ø Economic systems Ø Labor issues Ø Consumer forces and much more… © Prentice Hall, 2008 International Business 4 e 9

Small Firm Strategy ü Be sure company is ready to go international ü Thoroughly

Small Firm Strategy ü Be sure company is ready to go international ü Thoroughly understand your product ü Examine your company’s internal activities ü Ask important questions of strategy ü Finally, create the strategic plan © Prentice Hall, 2008 International Business 4 e 10

Multinational Strategy Adapting products and their marketing strategies in each national market to suit

Multinational Strategy Adapting products and their marketing strategies in each national market to suit local preferences + Respond quickly to buyer preferences – Difficult to exploit economies of scale © Prentice Hall, 2008 International Business 4 e 11

Global Strategy Offering the same products using the same marketing strategy in all national

Global Strategy Offering the same products using the same marketing strategy in all national markets + Cost savings from standardization – May overlook varying buyer preferences © Prentice Hall, 2008 International Business 4 e 12

Levels of Company Strategy © Prentice Hall, 2008 International Business 4 e 13

Levels of Company Strategy © Prentice Hall, 2008 International Business 4 e 13

Growth Strategy Increase the scale (size of activities) or scope (kinds of activities) of

Growth Strategy Increase the scale (size of activities) or scope (kinds of activities) of operations Internally generated growth Mergers and acquisitions Joint ventures Strategic alliances © Prentice Hall, 2008 International Business 4 e 14

Retrenchment Strategy Reduce the scale or scope of a corporation’s businesses Conditions Actions Ø

Retrenchment Strategy Reduce the scale or scope of a corporation’s businesses Conditions Actions Ø Lay off workers Ø Poor economic conditions Ø Close inefficient factories Ø Increased competition Ø Sell unprofitable businesses © Prentice Hall, 2008 International Business 4 e 15

Stability Strategy Guard against change and avoid growth or retrenchment è No opportunities or

Stability Strategy Guard against change and avoid growth or retrenchment è No opportunities or threats è Strengths fully exploited è Weaknesses fully protected è Stated objectives are met © Prentice Hall, 2008 International Business 4 e 16

Combination Strategy Mix of growth, retrenchment, and stability strategies across a corporation’s business units

Combination Strategy Mix of growth, retrenchment, and stability strategies across a corporation’s business units Invest in promising units Retrench for less exposure Stabilize other units © Prentice Hall, 2008 International Business 4 e 17

Business-Level Strategies © Prentice Hall, 2008 International Business 4 e 18

Business-Level Strategies © Prentice Hall, 2008 International Business 4 e 18

Low-Cost Strategy Exploit economies of scale to have the lowest cost structure of any

Low-Cost Strategy Exploit economies of scale to have the lowest cost structure of any competitor in an industry Mantra is cutting costs Quality remains important Scale is barrier for new entrants Perhaps low customer loyalty © Prentice Hall, 2008 International Business 4 e 19

Differentiation Strategy Design products to be perceived as unique by buyers throughout an industry

Differentiation Strategy Design products to be perceived as unique by buyers throughout an industry Differentiators Effects Quality Price premium Customer loyalty Brand image Product design © Prentice Hall, 2008 Portion of market only Higher production costs International Business 4 e 20

Focus Strategy Focus on narrowly defined market segment by being the low-cost leader, differentiating,

Focus Strategy Focus on narrowly defined market segment by being the low-cost leader, differentiating, or both Many sub-segments today Need distinctive product Specific geography, ethnicity, etc. © Prentice Hall, 2008 International Business 4 e 21

Organizational Structure Centralized decision making Decentralized decision making + Coordination is paramount + Financial

Organizational Structure Centralized decision making Decentralized decision making + Coordination is paramount + Financial control and cost + Local responsiveness savings © Prentice Hall, 2008 is key + Fast-changing International Business 4 e environment 22

International Division Structure © Prentice Hall, 2008 International Business 4 e 23

International Division Structure © Prentice Hall, 2008 International Business 4 e 23

International Area Structure © Prentice Hall, 2008 International Business 4 e 24

International Area Structure © Prentice Hall, 2008 International Business 4 e 24

Global Product Structure © Prentice Hall, 2008 International Business 4 e 25

Global Product Structure © Prentice Hall, 2008 International Business 4 e 25

Global Matrix Structure © Prentice Hall, 2008 International Business 4 e 26

Global Matrix Structure © Prentice Hall, 2008 International Business 4 e 26

Work Teams Self-managed Cross-functional team Global team Employees from one Group of employees. Top

Work Teams Self-managed Cross-functional team Global team Employees from one Group of employees. Top managers from department take on from similar levels butheadquarters and responsibilities of different functional subsidiaries solve former supervisors departments company problems © Prentice Hall, 2008 International Business 4 e 27

Chapter Review • Define core competency and value-chain analysis • Explain multinational and global

Chapter Review • Define core competency and value-chain analysis • Explain multinational and global strategies • Describe the four corporate-level strategies • Discuss the three business-level strategies • Identify what influences organizational structure • Describe each type of international organizational structure © Prentice Hall, 2008 International Business 4 e 28