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International Strategy (PowerPoint)

VIEWS: 21 PAGES: 67

									Global Strategy
    Procter & Gamble

Pan-European Brand Development
     P&G Multidomestic Strategy
UK                Neth.




         France            Germany




                   Italy
      Product Characteristics Map
             High Washing Temp




 Fabric                          Enzymatic
Softener                           Stain
                                 Removers



                  Bleach
                 Additives
      Product Characteristics Map
                   High Washing Temp
   Excluded                 Italy
   countries


           Italy                       Enzymatic
 Fabric
Softener                                 Stain
           Spain                       Removers



                        Bleach
                       Additives
     P&G “TransEuro” Strategy
UK                    Neth.
                                     Zone 1



             France            Germany




     Spain             Italy
                                     Zone 2
                            Epilogue
   VIZIR was precursor to “Liquid Tide” in US
    – Great irony is: P&G’s struggle to develop
      “Euro-brand” first found success in another
      large, integrated market…the U.S.
    – The VIZIR experience facilitated learning/cross-
      fertilization w/in P&G worldwide
    – Developed “world-class” technology and
      product development capabilities worldwide
       Industry Globalization
o   What is a global industry? Why?
o   Which drivers/factors most important?
o   How does a global industry compare with a multi-
    domestic one?
o   How is the extent of globalization “measured”?
o   What are the implications for firms’ international
    strategies?
          Globalization Drivers
 o   Market Drivers
 o   Cost Drivers
 o   Government Drivers
 o   Competitive Drivers



Low                                High

Multi-domestic                Global
              Definitions

Multi-domestic
  – Many-country view of the international
    marketplace
  – Value chain activities are performed in the
    local country-market and are adapted to local
    tastes, preferences, needs, etc.
              Definitions
Global
  – A whole world-level view of the
    international marketplace, the world is the
    market
  – Value chain activities are standardized and
    are performed in country locations according
    to efficiency, favorable policies, knowledge,
    resources, etc.
                Definitions
Transnational
  – A “glocal” level view of the international
    marketplace – has some global, some local
    elements
  – Some value chain activities are standardized
    and are performed in country locations
    others are nationally-adapted and performed
    in the local market
Market Globalization Drivers
o   Common customer needs
o   Global customers
o   Global market channels
o   Transferable marketing
         Strength of Market Drivers
                                               Aircraft
                                        Computers
                                  Automobiles
                           Soft Drinks
                     Toothpaste
          Retail Banking
       Book Publishing

   Baked Goods
  Low                                               High
Multidomestic                                       Global
    Cost Globalization Drivers

o   Global scale economies
o   Sourcing efficiencies
o   Factor of production differences
o   High product development costs
o   Rapidly changing technology
            Strength of Cost Drivers
                                           Pharmaceuticals
                                         Aircraft
                                   Computers
                          Automobiles

                      Toothpaste
            Retail Banking
        Baked Goods
    Soft Drinks
  Low                                               High
Multidomestic                                       Global
    Government Globalization Drivers
o   Unrestrictive trade and investment policies
o   Compatible technical standards
o   Common marketing regulations
     Strength of Government Drivers
                                               Toothpaste
                                         Baked Goods
                                    Soft Drinks
                               Computers

                         Automobiles
                    Pharmaceuticals
                Airlines

    Retail Banking


Restrictive                                         Loose
Multidomestic                                       Global
Competitive Globalization Drivers
o High two-way trade / cross-border FDI
o Global competitors
o Interdependence among countries
  o Trade/Investment Policies
  o Role of WTO, etc.
        Strength of Competitive Drivers
                                                Aircraft
                                      Pharmaceuticals
                                     Computers
                                Toothpaste
                         Automobiles

                 Soft Drinks

        Retail Banking

   Baked Goods
  Low                                              High
Multidomestic                                      Global
         International Strategy
o Globalization drivers – Assess dual
  pressures:
  • Global efficiency - standardization
  • National/local responsiveness - adaptation
o Location/configuration of value-creating
  activities
o Integration/coordination of value-creating
  activities
       Effective Standardization
       Coca-Cola’s
“transnational polar bears”

                              McDonald’s
                              “Big Mac”
           Effective Adaptation
o   McMutton Pie in Australia
o   Wendy’s shrimp sandwich in Japan
o   Campbell’s non-condensed soups in the UK
o   Coca-Cola’s 175 ml containers in Japan
Barbie
 o Barbie is 51 years old
 o Sold in 130 countries
 o National adaptations:
    • Physical features
    • Costumes
    • Activity sets
 o Standardized physique:
    • Scaled to 6’2”, 110 lbs.
          Globalization Drivers
 o   Market Drivers
 o   Cost Drivers
 o   Government Drivers
 o   Competitive Drivers


Low                               High

Multidomestic                     Global
                                         International Strategy:
                                          Managing Dual Pressures
Pressures for Global Efficiency



                                  High




                                  Low

                                          Low                          High
                                          Pressures for Local Responsiveness
                  Value Chain
Location and standardization/adaptation
                  Infrastructure

             Technology Development
                   Procurement
          Human Resource Management
                                                         Profit
                                                         Margin

Inbound              Outbound
          Operations Logistics     Marketing   Service
Logistics
                   Value Chain
                   Headquarters
                    Infrastructure

              Technology Development
                    Procurement
            Human Resource Management
                                                           Profit
                                                           Margin

Inbound                  Outbound
            Operations               Marketing   Service
Logistics                Logistics
                  Value Chain
                  Headquarters
                   Infrastructure

             Technology Development
                    Procurement
           Human Resource Management
                                                          Profit
                                                          Margin

 Inbound              Outbound
           Operations               Marketing   Service
 Logistics            Logistics




Upstream
                  Value Chain
                  Headquarters
                   Infrastructure

             Technology Development
                    Procurement
           Human Resource Management
                                                          Profit
                                                          Margin

 Inbound              Outbound
           Operations               Marketing   Service
 Logistics            Logistics




Upstream                                   Downstream
Value Chain Sub-functions (Marketing)
                        Infrastructure

                  Technology Development
                         Procurement
                Human Resource Management
                                                                Profit
                                                                Margin

      Inbound              Outbound
                Operations               Marketing   Service
      Logistics            Logistics




 Advert.           Pricing                Distrib.             Packaging
      Value Chain Configuration
o   Geographic location of value chain activities
    – Concentrated/centralized vs.
      dispersed/decentralized
          Value Chain Coordination
o   Cross-border linkages between dispersed value-
    creating units
o   Coordination = Flows of:
    –   $
    –   Product (finished and intermediate)
    –   Technology
    –   People
    –   Information (market data, strategic direction, etc.)
o   Highly coordinated vs. only money flows
                                         International Strategy:
                                          Managing Dual Pressures
Pressures for Global Efficiency



                                  High




                                            Export
                                  Low      Strategy
                                          Low                          High
                                           Pressures for Local Responsiveness
   Export Strategy
(same as Export entry mode)

                              Germany
U.S.

                              Mexico



                              Malaysia
                                         International Strategy:
                                           Managing Dual Pressures
Pressures for Global Efficiency



                                  High




                                              Export
                                             Strategy
                                                            Multidomestic
                                  Low           ??            Strategy
                                          Low                           High
                                          Pressures for Local Responsiveness
Multidomestic Strategy

                         Germany

 U.S.


                          Mexico




                         Malaysia
                                         International Strategy:
                                          Managing Dual Pressures
Pressures for Global Efficiency



                                  High
                                            Global
                                           Strategy

                                             Export           Multidomestic
                                            Strategy            Strategy
                                  Low          ??

                                          Low                          High
                                           Pressures for Local Responsiveness
  Global Strategy
       (Textbook Variety)

                            Germany
U.S.

                            Mexico



                            Malaysia
                                         International Strategy:
                                          Managing Dual Pressures
Pressures for Global Efficiency



                                  High        Global        Transnational
                                             Strategy
                                                              Strategy

                                             Export           Multidomestic
                                            Strategy            Strategy
                                  Low          ??

                                          Low                          High
                                           Pressures for Local Responsiveness
Transnational Strategy (v.1)

                          Germany
    U.S.

                           Mexico



                          Malaysia
Transnational Strategy (v.2)

                          Germany

    U.S.


                           Mexico




                          Malaysia
Transnational Strategy (v.3)

                          Germany
                           Engines
   U.S.
   Steel
                           Mexico
                            Final
                           Assembly


                          Malaysia
                          Trim, seats,
                             glass
VW International Strategy - Jetta

  U.S.                       Japan
Marketing                    Transmission


                              Mexico
                               Final
            Germany           Assembly
             Misc.
                              Poland
                              Engine
      Entry Mode Framework
   Mindset
   Country-market opportunity/cost analysis
     Stand-alone Attractiveness
     Strategic Importance
   Resources-Control-Risk tradeoff
Mindset and International Activity
   International
     Overseas activities support / subordinate to
      domestic activities
   Multinational
     Flexibly adapting value-creating activities on
      country-by-country basis; nationally-responsive
   Global
     The world is the market; standardization
   Transnational
     “Glocalization” – Some value-creating activities
      standardized/globalized, others localized
Strategic Importance
                       Entry Mode Decision Matrix



                       Hi
      of Country




                       Lo


                                 Lo           Hi
                            Stand-alone Attractiveness
                                   of Country
  Country-Market Analysis
 Stand-alone   attractiveness:
  – Size
  – Growth
  – Product acceptance / segmentation
  – Cultural similarity
  – Risk
  – Policy incentives
  – Other factors? ….MNC “power”?
     Country-Market Analysis
 Strategic   importance:
  – Home market of global customer
  – Home market of global rivals
  – Significant market of global rivals
  – Major source of innovation
  – Demanding/sophisticated customers
  – Factor-cost advantages
       Resources-Control-Risks
   Resources
     $$, time, technology, machinery, people,
      organizational, strategy
   Control
     Operational and strategic discretion over
      value-creating activities
   Risks
     Political, F/X, economic, cultural,
      dissemination
                               Control
     Extent      of involvement:
Ship Product                          Distribution

                                                              After-sales
                        Marketing
                                                               Support


     Channel       control / ownership:                            Retail
                                                     Local
                                                     Whsle.
                                      Regional
                                       Whsle.
                             Import
                             Agent
               Export
               Agent
 Mfg.
    Entry Mode Decision Framework
                 Control Resources   Risk   Dissem.
                  Low       Low      Low     High
Licensing

Exporting
Intermediaries


   Direct


Joint Venture

Wholly-owned
 Subsidiary       High     High      High     Low
Strategic Importance
                       Entry Mode Decision Matrix



                       Hi
      of Country




                       Lo


                                 Lo           Hi
                            Stand-alone Attractiveness
                                   of Country
           General Electric and
        International Involvement
   GE Product Divisions:
       Light bulbs
       Aircraft engines
       Appliances
       Power-generation
   GE Market Opportunity:
       North America
       Europe
       Pacific rim / Asia
       Emerging markets
GE’s Markets, Entry and Strategy Choices



                 4
 Product Lines




                 3

                 2

                                               
                 1
                                           
                     A      B    C     D
                         Country-Markets
Strategic Importance
                       Entry Mode Decision Matrix



                       Hi
      of Country




                       Lo


                                 Lo           Hi
                            Stand-alone Attractiveness
                                   of Country
McDonald’s Identity
McDonald’s Site Selection and Stores
            US -- Colorado
 McDonald’s Site Selection and Stores



Bangkok,
Thailand
McDonald’s Site Selection and Stores
          Moscow, Russia
  McDonald’s Transnational Menu
               US   Brazil   Canada   India   Germany
Big Mac                                      
French Fries                                
Coca-Cola                                   
McNuggets                                     
McAloo Tikki                           
McRib          
McBier                                         
McLobster                      
McCalebresa          
PitaMac                                         
McFarmer                                        
Hamburger University
                 Illinois, USA
   Hamburger University Curriculum
o 80 classroom hours
o Topics – Fast food “the McDonald’s way”
  •   Restaurant operations, food preparation
  •   Crew selection, training and team building
  •   Marketing and promotion
  •   Asset management
  •   Corporate citizenship and ethics
  •   Leadership, effective supervisory skills
         Hamburger University
Hong-
Kong
                        London



             Illinois            Munich




Sydney
      McDonald’s
  Transnational Strategy

                           Singapore

U.S.


                            Greece




                           Brazil

								
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