Chapter 11 International Strategy and Organization

1. Chapter 11 International Strategy and Organization

2. Define core competency and value-chain analysis Explain multinational and global strategies Describe the four corporate-level strategies Discuss the three business-level strategies Identify what influences organizational structure Describe each type of international organizational structure Chapter Preview International Business 4e

3. Planning and Strategy Planning Strategy Identifying and selecting objectives and deciding how to achieve those objectives Set of planned actions that managers take to help a company meet its objectives International Business 4e

4. Strategy-Formulation Process International Business 4e

5. Identify Mission and Goals Mission statements must consider: • Company activities • Business objectives • Stakeholders • Stockholders • Customers • Residents • Environment and much more… International Business 4e

6. Identify Core Competency Special ability of a company that competitors find extremely difficult or impossible to equal Coordination of multiple skills Lengthy period to develop Difficult to teach International Business 4e

7. Divide company activities into primary and support activities and identify those that create value for customers Value-Chain Analysis Each activity is a source of either strength or weakness • Insights gained are • fed into the strategy • formulation process International Business 4e

8. Value Chain Components

9. Business Environment National differences are inherent in analyzing a company’s unique abilities • Cultural differences • Political processes • Legal matters • Economic systems • Labor issues • Consumer forces and much more… International Business 4e

10. Be sure company is ready to go international Thoroughly understand your product Examine your company’s internal activities Ask important questions of strategy Finally, create the strategic plan Small Firm Strategy International Business 4e

11. Multinational Strategy Adapting products and their marketing strategies in each national market to suit local preferences • Respond quickly to • buyer preferences • Difficult to exploit • economies of scale International Business 4e

12. Global Strategy Offering the same products using the same marketing strategy in all national markets • Cost savings from standardization • May overlook varying • buyer preferences International Business 4e

13. Levels of Company Strategy International Business 4e

14. Growth Strategy Increase the scale (size of activities) or scope (kinds of activities) of operations Internally generated growth Mergers and acquisitions Joint ventures Strategic alliances International Business 4e

15. Poor economic conditions • Increased competition • Lay off workers • Close inefficient factories • Sell unprofitable businesses Retrenchment Strategy Reduce the scale or scope of a corporation’s businesses Conditions Actions International Business 4e

16. Guard against change and avoid growth or retrenchment Stability Strategy • No opportunities or threats • Strengths fully exploited • Weaknesses fully protected • Stated objectives are met International Business 4e

17. Combination Strategy Mix of growth, retrenchment, and stability strategies across a corporation’s business units Invest in promising units Retrench for less exposure Stabilize other units International Business 4e

18. Business-Level Strategies International Business 4e

19. Low-Cost Strategy Exploit economies of scale to have the lowest cost structure of any competitor in an industry Mantra is cutting costs Quality remains important Scale is barrier for new entrants Perhaps low customer loyalty International Business 4e

20. Differentiators Quality Brand image Product design Differentiation Strategy Design products to be perceived as unique by buyers throughout an industry Effects Price premium Customer loyalty Portion of market only Higher production costs International Business 4e

21. Focus Strategy Focus on narrowly defined market segment by being the low-cost leader, differentiating, or both Many sub-segments today Need distinctive product Specific geography, ethnicity, etc. International Business 4e

22. Organizational Structure Centralized decision making Decentralized decision making • Coordination is paramount • Financial control and cost savings • Local responsiveness is key • Fast-changing environment International Business 4e

23. International Division Structure International Business 4e

24. International Area Structure International Business 4e

25. Global Product Structure International Business 4e

26. Global Matrix Structure International Business 4e

27. Work Teams Self-managed team Employees from one department take on responsibilities of former supervisors Cross-functional team Group of employees from similar levels but different functional departments Global team Top managers from headquarters and subsidiaries solve company problems International Business 4e

28. Define core competency and value-chain analysis Explain multinational and global strategies Describe the four corporate-level strategies Discuss the three business-level strategies Identify what influences organizational structure Describe each type of international organizational structure Chapter Review International Business 4e