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Global Strategy

Global Strategy. Procter & Gamble Pan-European Brand Development. P&G Multidomestic Strategy. UK. Neth. France. Germany. Italy. Product Characteristics Map. High Washing Temp. Enzymatic Stain Removers. Fabric Softener. Bleach Additives. Product Characteristics Map.

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Global Strategy

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  1. Global Strategy

  2. Procter & GamblePan-European Brand Development

  3. P&G Multidomestic Strategy UK Neth. France Germany Italy

  4. Product Characteristics Map High Washing Temp Enzymatic Stain Removers Fabric Softener Bleach Additives

  5. Product Characteristics Map High Washing Temp Excluded countries Italy Italy Enzymatic Stain Removers Fabric Softener Spain Bleach Additives

  6. P&G “TransEuro” Strategy UK Neth. Zone 1 France Germany Spain Italy Zone 2

  7. 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

  8. Industry Globalization • What is a global industry? Why? • Which drivers/factors most important? • How does a global industry compare with a multi-domestic one? • How is the extent of globalization “measured”? • What are the implications for firms’ international strategies?

  9. Globalization Drivers • Market Drivers • Cost Drivers • Government Drivers • Competitive Drivers High Global Low Multi-domestic

  10. 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.

  11. 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.

  12. 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

  13. Market Globalization Drivers • Common customer needs • Global customers • Global market channels • Transferable marketing

  14. Strength of Market Drivers Aircraft Computers Automobiles Soft Drinks Toothpaste Retail Banking Book Publishing Baked Goods Low High Multidomestic Global

  15. Cost Globalization Drivers • Global scale economies • Sourcing efficiencies • Factor of production differences • High product development costs • Rapidly changing technology

  16. Strength of Cost Drivers Pharmaceuticals Aircraft Computers Automobiles Toothpaste Retail Banking Baked Goods Soft Drinks Low High Multidomestic Global

  17. Government Globalization Drivers • Unrestrictive trade and investment policies • Compatible technical standards • Common marketing regulations

  18. Strength of Government Drivers Toothpaste Baked Goods Soft Drinks Computers Automobiles Pharmaceuticals Airlines Retail Banking Restrictive Loose Multidomestic Global

  19. Competitive Globalization Drivers • High two-way trade / cross-border FDI • Global competitors • Interdependence among countries • Trade/Investment Policies • Role of WTO, etc.

  20. Strength of Competitive Drivers Aircraft Pharmaceuticals Computers Toothpaste Automobiles Soft Drinks Retail Banking Baked Goods Low High Multidomestic Global

  21. International Strategy • Globalization drivers – Assess dual pressures: • Global efficiency - standardization • National/local responsiveness - adaptation • Location/configuration of value-creating activities • Integration/coordination of value-creating activities

  22. Effective Standardization Coca-Cola’s “transnational polar bears” McDonald’s “Big Mac”

  23. McMutton Pie in Australia Wendy’s shrimp sandwich in Japan Campbell’s non-condensed soups in the UK Coca-Cola’s 175 ml containers in Japan Effective Adaptation

  24. Barbie is 51 years old Sold in 130 countries National adaptations: Physical features Costumes Activity sets Standardized physique: Scaled to 6’2”, 110 lbs. Barbie

  25. Globalization Drivers • Market Drivers • Cost Drivers • Government Drivers • Competitive Drivers High Global Low Multidomestic

  26. International Strategy:Managing Dual Pressures High Pressures for Global Efficiency Low Low High Pressures for Local Responsiveness

  27. Value ChainLocation and standardization/adaptation Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Service Operations Marketing

  28. Value Chain Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service

  29. Value Chain Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream

  30. Value Chain Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream Downstream

  31. Value Chain Sub-functions (Marketing) Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Advert. Distrib. Packaging Pricing

  32. Value Chain Configuration • Geographic location of value chain activities • Concentrated/centralized vs. dispersed/decentralized

  33. Value Chain Coordination • Cross-border linkages between dispersed value-creating units • Coordination = Flows of: • $ • Product (finished and intermediate) • Technology • People • Information (market data, strategic direction, etc.) • Highly coordinated vs. only money flows

  34. International Strategy:Managing Dual Pressures High Pressures for Global Efficiency Export Strategy Low Low High Pressures for Local Responsiveness

  35. Export Strategy(same as Export entry mode) Germany U.S. Mexico Malaysia

  36. International Strategy:Managing Dual Pressures High Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness

  37. Multidomestic Strategy Germany U.S. Mexico Malaysia

  38. International Strategy:Managing Dual Pressures High Global Strategy Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness

  39. Global Strategy(Textbook Variety) Germany U.S. Mexico Malaysia

  40. International Strategy:Managing Dual Pressures High Global Strategy Transnational Strategy Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness

  41. Transnational Strategy (v.1) Germany U.S. Mexico Malaysia

  42. Transnational Strategy (v.2) Germany U.S. Mexico Malaysia

  43. Transnational Strategy (v.3) Germany Engines U.S. Steel Mexico Final Assembly Malaysia Trim, seats, glass

  44. VW International Strategy - Jetta U.S. Japan Marketing Transmission Mexico Final Assembly Germany Misc. Poland Engine

  45. Entry Mode Framework • Mindset • Country-market opportunity/cost analysis • Stand-alone Attractiveness • Strategic Importance • Resources-Control-Risk tradeoff

  46. 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

  47. Entry Mode Decision Matrix Hi Strategic Importance of Country Lo Hi Resources, Control, Risk Lo Lo Hi Stand-alone Attractiveness of Country

  48. Country-Market Analysis • Stand-alone attractiveness: • Size • Growth • Product acceptance / segmentation • Cultural similarity • Risk • Policy incentives • Other factors? ….MNC “power”?

  49. 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

  50. 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

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