MULTINATIONAL FIRMS AND INTERNATIONAL MANAGEMENT

2. MULTINATIONAL FIRMS AND INTERNATIONALMANAGEMENT Ing. Jiří Šnajdar 2013 Mgr. Evžen Staněk

3. TECHNOLOGICAL AMBIANCE • is provided by research potential and establishes technical advance of country • analysis of technological ambience deals with three indicators : • indicator of level of expense on research and development, which is given with percentage from rough domestic product (GDP) • number of research workers of given country • level of expense on research activity in branch

4. MULTINATIONAL FIRMS • = firm residential in one country and developing its activity under its control in two other countries, where realises at least 10 % of its turnover. • mother company + foreign branches • control : financial, manager, technological • companies : industrial, commercial, services • designation : supranational, multinational, transnational

5. Development of supranational companies • end of 19 century Europe - raw material sources – investment abroad • since 1945 “American wave” of Europe renewal – American companies establish subsidiaries – local consumption, cheap labour force, high production profitability • 70th – development of European and Japanese supranational companies

6. Reasons for supranational companies • present in the country of consumption (not always is possible to transport – high transportation costs) • support from government – growth of employment , support from investors • large capital market in USA – high technology level • branches : mining industry • manufacturing industry • sector of services

7. Operation of supranational companies • targets : profit + future development and growth in 2 levels (mother – daughter) • difficult organisation system – difference in environments • organised : • horizontal – according to regions • vertical – according to branches in whole world (diversification activity) • combination – territorial and products organisation (example Unilever, Philips) • budget of subsidiary - checked up from mother company, determined budget worldwide

8. Decisions of supranational companies • strategic decision : depending on orientation, political process (make general directorate) • administrative decision : organisation covering of firm activities (make general directorate and branches) • political decisions : financial management, marketing (make general directorate and branches) • operative decisions : branches management, (general directorate does not interfere)

9. Supranational companies =concern of capital companies • (today many holdings) • operate in more countries • production factors – home, abroad • company politics – worldwide • capital – in whole world • mother company and daughter companies • international transaction – strategies • yearly deadlines – worldwide balance sheet

10. INTERNATIONAL MANAGEMENT • ethnocentric thinking • country of mother company is respected • in manager positions in branch predominate members of mother company • polycentric thinking • managers from different countries • in branch management representatives of different national cultures • geocentric thinking • in branch management are representatives of given culture in given country

11. ADAPTATION OF PRODUCT ON INTERNATIONAL MARKET • VARIABLE VALUES OF PRODUCT • the nature of companies international operations is product or service, e.g. summary of tangible and non- tangible elements, that differentiate product and service from other organisations on market. • success of the company depends on how good is its product or service and how good can the firm its offer differentiate from offer of competitors. • products can differ in compounds, country of origin, tangible characteristics as is wrapping, quality or additional characteristics as is guarantee. • Basisresourcesatformationofproductstrategy in international marketing

12. CHOICE OF STRATEGY FOR NEW PRODUCTS • Analytical dimension • function of product and satisfaction of needs • conditions of product usage • ability of purchase • Choice of strategy • extensive – standardisation • adaptation – customisation • innovation • global

13. Extensive strategy – standardisation • company chose identical process on foreign market as on domestic market and brings out product in the same implementation (same kind of distribution, communication…) • standardisation is suitable mainly for products designated not for personal usage and for end user. • This way of bringing out new product on the market saves expenses on research and development, enables to stock markets from local and central sources.

14. Adaptation strategy – customise • maximal effort of product adaptation to requirements of customers on international market • is applied mainly on market of end user • it defrays high expenses connected with adaptation of product requirements of the market and with research, connected with analysis of customers´ requirements (analysis of purchase behaviour, value analysis) • obligatory adaptation • - in case of adherence of safety norms (toys) • - hygienic norms (food) • - technical norms (220 volts – 120 V) • essential adaptation • - consumers usage + other climatic conditions • decisive is product character • - consumable – high level of sensitivity, usage, taste • - industrial – less influence of culture, more respecting rules and ordinances

15. General advantages of standardisation and adaptation • Factors for standardisation • large savings in production • savings at research and product development • savings at purchase • “reducing” of world market – integrationglobal competitive abilities • Factors for adaptation • differentiation of usage conditions • government and regulation influences • differentiation of consumer behaviour models • local competitors abilities • satisfying of marketing conception

16. Strategy of globalisation • (global + local, invention strategy) = effort to act locally and think globally • product output – standardised and placed on market • suitable for market of end consumer • combination of standardisation and customisation. • In conditions of international marketing ambience is called as way for formation of strategic brand.

17. Global strategy • modern strategy for entering on foreign markets • arisen from needs to reduce costs on market entering, but together to satisfy maximal customer´s needs and local conditions of given market • part of final design of product is standardised, e.g. World component, and the rest part is flexible according to conditions of given market • maximal amount of products is identical for foreign market • new product is so developed from the beginning, to reach max. % of identical components to the point, when must be respected local requirements and needs with minimum of additional expenses on adaptation • for product must be find good defined global market segment

18. GLOBAL MARKS I. • master brands • Nike, Sony, Coca-Cola • based on aspiration themes, universal character of story • problem = to keep message relevance for further generation • prestige brands • Chanel, Mercedes, Gucci • attractiveness based no culture origin or provenience of founder • high aspiration value of marks • use of local symbols

19. GLOBAL MARKS II. • Super brands • Gillete, Pepsi • international marks • influenced by membership to categories • tension between global and local • Local brands • Dove, Nestle, Danone • in marketing asserts locally , sold globally • categories of food, home usage…

20. Brand management • identification of products, firm • differentiation of firm products • diversification of product (quality, price) • holder of culture and value • tradition and quality guarantee • author consumer image • lifestyle and epoch symbol

21. Law protection of the mark • entry into register of registered trade-marks (exclusive use and transfer by sale of licence) • national application • international office of mental ownership EU

22. QUALITY OF PRODUCT EXPORT CAPABLE • technical characters • usage characters • product priorities • price • Quality • product quality presents required functioning of product while using • customer wants to buy value, creates relation quality and price

23. Zones of cultural affinity differences among zones creating geographic areas : Nordic Europe (Sweden, Norway, Finland, Denmark, Holland, Germany) Anglo-Saxon Europe (GB, Ireland + Holland, Germany, Belgium) Central “ Lorraine” Europe (Austria, Switzerland, France, Germany, Belgium, Italy) Mediterranean Europe (Spain, Portugal, Greece, Italy, France) to each of these areas belong certain countries, some strongly, others are on borders, e.g. marginally – states show mutual consumer behaviour.

24. Business proceeding • specific forms of contacts of two individuals or groups • factors : • place on market • position of discussed commodity • momentary social role (guest) • principles of contact (diplomatic protocol) • national membership, cultural specifics

25. National particularity : • in all forms of social life, work activity and business – necessary to make profile of national mentality • - Swedes • silent, modest, reserved, formal, do not express admiration and sympathy, formal barrier • unfriendly, correct, real, self-assured, businesslikeand fast negotiation • - Latin-American • temperament, lively, non-formal, friendly, focused on family, tendency to postpone decisions, pleasant ambience and humour

26. National particularity : • Arabs • pleasant, non-formal, they are not in hurry and do not know impatience • religious – influence of Ramaḍān (no deals) • they part with decisions, price bargaining, proud and negative react on mistrust. • Japanese • kindness, hospitality, smile, much politeness, expect the same from business partner, do not argue and quarrel, do not oppose, are solid, consistent.

27. National particularity : • Russian • warm-hearted, hard in business, unbending, sticklers, elaborate tactic, slower negotiations, patient • - besides general profiles are also ethnic, religion and generation specifics (mainly USA, India, China) – waves of migration

28. Strategy and tactic - American + Russian = victory or failure - Japanese + Western European = compromise - Orient = excessive prices - Germans + Swedes = excessive price is not serious (end of negotiation) - Russians = categorical negative - Americans + Germans + Swedes = clearly deprecate - Japanese = do not say no - English = polite no - Latin-Americans + Southern Europe = immediate - Japanese = inscrutable, no feedback - Americans = contract quality - Chinese + Swedes = relationship quality -Arabs = verbal agreement, signature is offence