Global Business 2e

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Nov 6, 2013 (4 years and 3 days ago)

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Global Business 2e

C ha p t e r 13

Strategizing, Structuring,
and Learning around

the World


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LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1.
Describe the relationship between multinational strategy and

structure.

2.
Explain how institutions and resources affect strategy,

structure, and learning.

3.
Outline the challenges associated with learning, innovation,

and knowledge management.

4.
Participate in two leading debates on multinational strategy,

structure, and learning.

5.
Draw implications for action.


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MULTINATIONAL STRATEGIES
AND STRUCTURES

Pressures for Cost Reductions

and Local Responsiveness

Integration
-
responsiveness framework

Allows managers to deal with the
pressures for both global integration and
local responsiveness


Local responsiveness

Necessity to be responsive to different
customer preferences around the world

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FOUR STRATEGIC
CHOICES

Home replication strategy

Duplicates home country
-
based competencies in
foreign countries


Localization (multidomestic) strategy

Focuses on a number of foreign countries/regions,
each of which is regarded as a stand
-
alone local
(domestic) market worthy of significant attention
and adaptation

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FOUR STRATEGIC
CHOICES

Global standardization strategy

Development and distribution of standardized products
worldwide in order to reap the maximum benefits from
low cost advantages


Center of excellence

Subsidiary explicitly recognized as a source of important
capabilities, with the intention that these capabilities be
leveraged by and/or disseminated to other subsidiaries


Worldwide (global) mandate

Responsible for one MNE function throughout

the world

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FOUR STRATEGIC
CHOICES

Transnational strategy

Aims to capture the best of both worlds by
endeavoring to be both cost efficient and
locally responsive

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te, in whole or in part.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible we
bsi
te, in whole or in part.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible we
bsi
te, in whole or in part.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible we
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te, in whole or in part.

A RECIPROCAL
RELATIONSHIP



Strategy usually drives structure




As much as strategy drives structure,
structure also drives strategy




Neither strategies nor structures are
static




It is often necessary to change strategy,
structure, or both

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Externally, MNEs are subject to the formal
institutional frameworks erected by various
home
-
country and host
-
country
governments

INSTITUTION
-
BASED
CONSIDERATIONS

Host
-
country governments often attract,
encourage, or coerce MNEs into
undertaking activities that they otherwise
would not

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INSTITUTION
-
BASED
CONSIDERATIONS

Dealing with host countries also involves
numerous informal institutions


Airbus devotes 40% of its procurement budget to
US suppliers in more than 40 states but there is
no formal requirement to farm out supply
contracts


Its sourcing decisions are guided an informal
norm of reciprocity: If one country’s suppliers are
involved with Airbus, airlines based in that
country are more likely to buy Airbus aircraft

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INSTITUTION
-
BASED
CONSIDERATIONS

Formal organizational charts do not reveal are the informal
rules of the game, such as organizational norms, values,
and networks




The nationality of the head of foreign subsidiaries is such
an example:

The nationality of top executives at the highest level (such
as chairman, CEO, and board members) seems to follow
another informal rule: they are almost always home
-
country
nationals.



a home country national as the head of a subsidiary (such
as an American for a subsidiary of a US
-
headquartered MNE
in India)

• a host country national (such as an Indian for the same
subsidiary)

• a third
-
country national (such as an Australian for the same
subsidiary above)


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RESOURCE
-
BASED
CONSIDERATIONS


When looking at structural changes, it is critical to
consider whether a new structure (such as a matrix)
adds concrete
value.



The value of innovation must also be considered as
a vast majority of innovations simply fail to reach
market, and most new products that do reach
market end up being financial failures

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RESOURCE
-
BASED
CONSIDERATIONS


A second question is
rarity



Certain strategies or structures may be in
vogue at a given point in time but they are
designed to be implemented widely and
appeal to a broad range of firms, thus
providing no firm
-
specific advantage for
the adopting firm

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RESOURCE
-
BASED
CONSIDERATIONS


Even when capabilities are valuable and rare, they
have to pass a third hurdle, namely,
imitability



Formal structures are easier to observe and imitate
than informal structures



The informal, flexible matrix is less a structural
classification than a broad organizational concept
or philosophy, manifested in organizational
capability and management mentality

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RESOURCE
-
BASED
CONSIDERATIONS

Organizational culture

Collective programming of the mind that
distinguishes the members of one
organization from another

?

Can you think of an example of organizational

culture in your personal life?

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KNOWLEDGE MANAGEMENT



Knowledge management



Structures, processes, and systems that actively
develop, leverage, and transfer knowledge.



Explicit knowledge



Knowledge that is
codifiable

(that is, can be
written down and transferred with little loss of


richness).


Tacit knowledge


Knowledge that is
noncodifiable
,
and its
acquisition and transfer require hands
-
on


practice.

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PROBLEMS AND SOLUTIONS IN
KNOWLEDGE MANAGEMENT

Global virtual team

Teams that do not meet face to face

Absorptive capacity

The ability to recognize the value of new
information, assimilate it, and apply it


Social capital

The informal benefits individuals and organizations
derive from their social structures and networks


Micro
-
macro link

The micro, informal interpersonal relationships
among managers of various units may greatly
facilitate macro, inter
-
subsidiary cooperation

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CORPORATE CONTROLS VS
SUBSIDIARY INITIATIVES


Subsidiary initiative


When subsidiaries actively pursue their
own, subsidiary level strategies and
agendas

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CUSTOMER
-
FOCUSED DIMENSIONS
VS INTEGRATION,
RESPONSIVENESS AND LEARNING

Global account structure

Customer
-
focused dimension in which
companies strive to supply customers (often
other MNEs) in a coordinated and consistent
way across various countries


Solutions
-
based structure

Customer
-
focused dimension in which
companies strive to supply customers with what
fits their needs, regardless of what that involves

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te, in whole or in part.