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International Strategy

International Strategy. Procter & Gamble Pan-European Brand Development. No problem taking a sack. I’ll just use Vizir after the game. Gotta keep this sweaty Tarheel off my clean uniform … I’m out of Vizir . . P&G Multidomestic Strategy. UK. Neth. France. Germany. Italy.

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International Strategy

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  1. International Strategy

  2. Procter & GamblePan-European Brand Development

  3. No problem taking a sack. I’ll just use Vizir after the game.

  4. Gotta keep this sweaty Tarheel off my clean uniform… I’m out of Vizir.

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

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

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

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

  9. 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

  10. 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?

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

  12. 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.

  13. 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.

  14. 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

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

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

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

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

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

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

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

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

  23. 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

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

  25. 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

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

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

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

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

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

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

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

  33. 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

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

  35. 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

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

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

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

  39. Multidomestic Strategy Germany U.S. Mexico Malaysia

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

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

  42. 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

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

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

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

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

  47. McDonald’s Identity

  48. McDonald’s Transnational Menu

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