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Global integration, global strategic coordination, and local responsiveness

Global integration, global strategic coordination, and local responsiveness. Issues addressed. Beginning premise what are the sources of pressure for global integration? what are the sources of pressure for global strategic coordination?

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Global integration, global strategic coordination, and local responsiveness

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  1. Global integration, global strategic coordination, and local responsiveness

  2. Issues addressed • Beginning premise • what are the sources of pressure for global integration? • what are the sources of pressure for global strategic coordination? • what are the sources of pressure for local responsiveness?

  3. The source for this material is The multinational mission: Balancing local demands and global vision, by CK Prahalad & YL Doz, 1987.

  4. Beginning premise • Multinational corporations (MNCs) routinely face simultaneous pressures for the global integration of activities, for global strategic coordination, and for local responsiveness. • Addressing conflicting pressures to both centralize and decentralize management control within the firm is one of the central strategic dilemmas facing MNCs.

  5. What are the sources of pressure for global integration? • Pressures for global integration are synonymous with pressure to centralize management of the MNC in corporate HQ, in practice. • Pressure to centralize management of the MNC often revolve around pressures to reduce cost, or perhaps to standardize quality or some other aspect of product features or related services.

  6. What are the sources of pressure for global integration? • Sources of pressure for global integration include: • Strong advantages from global sourcing which use geographically dispersed low-cost factors of production • The presence of strong economies of scale and a strong learning curve effect • Products that meet a universal need and require little adaptation across national markets • The need for access to raw materials

  7. What are the sources of pressure for global strategic coordination? • Pressures towards global strategic coordination refer to pressures to have strategic coordination across and among national subsidiaries. • In practice, it is very difficult to have global strategic coordination without having a significant degree of centralized decision making at corporate HQ.

  8. What are the sources of pressure for global strategic coordination? • Sources of pressure for global strategic coordination include: • importance of multinational customers • presence of multinational competitors • investment intensity • technology intensity

  9. What are the sources of pressure for local responsiveness? • Local responsiveness involves allocating resources and authority to those who take responsibility for some geographically-bounded portion of the world. • Local responsiveness requires a significant degree of decentralization of management control.

  10. What are the sources of pressure for local responsiveness? • Sources of pressure for local responsiveness include: • differences in customer needs • differences in distribution channels • availability of substitutes and the need to adapt • market structure • host government demands

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