International Strategy

1. International Strategy Anne-Caroline BERTHELOT Noémie HUBIN Janine STROH

2. I. The basic directions for a firm’s strategy

3. 1. State of mind • Perlmutter (1960) admits that there are 3 types of attitudes : • Ethnocentric • Polycentric • Geocentric.

4. State of mind II • Ethnocentric : Two characteristics : - National strategy - Home country reference

6. State of mind III • Polycentric : Polycentric company have : - regional strategy, - host country reference.

8. State of mind IV • Geocentric : Two points : - Global strategy. - Goal : worldwide approach.

10. Two other notions… • EPG : E : Ethnocentric P : Polycentric G : Geocentric. • Regioncentric : New notion that appears in the years 1980ies.

11. Nowadays… Mostly polycentric and geocentric. However there is still an ethnocentric attitude in every companies.

12. 2. Resources and capabilities • A Resource-Based Approach to Strategy Analysis : Strategy Competitive Advantage Capabilities Resources.

13. Resources • 6 major categories : - Financial resources - Physical resources • Human resources • Technological resources • Reputation and • Organizational resources.

14. Capabilities • Strategic capabilities. • Comparative advantages. Ex : Fed Ex.

15. Competitive advantages • Two factors provide to appraise the rent-generating potential of resources and capabilities : • The respect of the rules (durability, transparency, transferability, replicability). • The appropriability of returns.

16. Strategy • The point : select a strategy. • If there are resources gap, they have to be filled.

17. II. Analyze of international business strategy

18. Yip’s (2003) view as a global company : “A global company has the capacity to go anywhere, deploy any assets, and access any resources, and it maximizes profits on a global basis.”

19. 3 main possibilities of strategy • An entirely globally-centered business • A fully polycentric business on a national level • A regional organization

20. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

21. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

22. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

23. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

24. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

25. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

26. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

27. A framework for analyzing “Globalization” Locus of decision making power on corporate, business, functional strategy issues Actual product Characteristics

28. III. Multinationals and Regional Trading

29. The build-up of regional trading blocks I FTAA NAFTA EU APEC ASEAN MERCOSUR

30. Africa Central & Eastern Europe EUROPE (EU) Middle East CIS ASIA (APEC,ASEAN) AMERICAS (NAFTA) South America (MERCOSUR) China & India The build-up of regional trading blocks II

31. Influence of Free Trade Areas • Overall growth in international trade and political stability • Shift of regulatory authority to the regional level • Rise of “intra-regional trade” • Free Trade Area = free trade

32. Influence of WTO • WTO (World Trade Organization): successor to the General Agreement on Tariffs and Trade (GATT) • Arbitration of triad-based disputes • Protectionism of health, safety and environmental • Reinforce of triad-markets

33. Company Regional Institution 4 2 6 Company Regional Institution 1 5 3 Government Government States – Firms – Regions I

34. C R 4 2 6 C R 1 5 3 G G States – Firms – Regions II • Relationships (1), (2) and (3) reflect conventional interactions between firms and national governments in form of cooperation or competition • Relationships (4), (5) and (6) are of special interest in a regionalized world

35. C R 4 2 6 C R 1 5 3 G G States – Firms – Regions III • Relationship (5) national governments have to pay the same attention to regional institutions as to state-to-state relationships • Relationship (6) deepening of regional integration will lead to bargaining among regional institutions

36. C R 4 2 6 C R 1 5 3 G G States – Firms – Regions III • Relationship (4) - MNE should pay increasing attention to policy making at regional level - MNE may be affected by common standards or additional costs

37. 1 3 4 2 MNEs and Regional Policy Perceived Regional Policy Intent MNE Perception of Regional Policy Fortress against Outsiders Internal Liberalization Manageable Exogenous

38. Case StudyBenetton’s International Strategy

39. Revenues 2003  Net sales for the casual segment by geographic area for the last three years (in thousands of Euro)

40. Number of Stores

41. Organizational Structure  Benetton Group S.p.A. is the holding company of the Benetton group companies. The following table sets forth the significant subsidiaries owned, directly or indirectly, by Benetton Group S.p.A.  Benetton Group S.p.A. belongs to the Edizione Holding Group.

43. Thanks a lot for your attention.