SOLUTION: Five Min Power point presentation. Focus on strategies related to the teaching power point. Strate

Five Min Power point presentation. Focus on strategies related to the teaching power point.

Strategic Management

Jeff Dyer

Third Edition

Samsung:

Overtaking Philips and Panasonic/Sony as the Leader in Consumer Electronics

TYPES OF INTERNATIONAL STRATEGY

Product/service is customized in each country.

Decentralized federation of national organizations. Local decision making authority.

Effective when differences between countries are large.

Sources of Advantage:

Differentiation

Local responsiveness

Minimize political & exchange rate risks

Product/service is standardized worldwide

Centralized organization structure. National subsidiaries possess little decision-making authority.

Effective when differences between countries are small.

Sources of Advantage:

Cost

Ability to coordinate activities

Speed in new product development

MULTI-DOMESTIC STRATEGY

GLOBAL STRATEGY

Cost (aggregation)

Differentiation (adaptation)

A Framework For Analysis

Pressures

for Global

Integration

Pressures

for Local

Differentiation

Low

High

Differences in customer needs

Differences in govt. regulations

Differences in mkt./distribution channels

Significant economies of scale

– High R&D

Steep Experience Curve

Need to control quality/experience

A Framework:
Global Integration – Local Differentiation

High

Low

Forces for Global

Integration

Forces for Local

Differentiation

Global Strategy

Multi-domestic Strategy

Local Strategy

A Multi-domestic Strategy

HOLDING

Co. (HQ)

STRATEGY:

Differentiate in local markets drawing on worldwide resources.

Source: J. de la Torre

POLICIES:

Tailor Products to National Idiosyncrasies

Sacrifice Efficiency for Market Focus

Reach Economies of Scale Upstream

Maximize Local Value Added

The Fully Multi-Domestic Value Chain

R & D

Design

Service

Distrib-ution

Selling

Market-ing

Manu-

facturing

Purch-

asing

R & D

Design

Purch-

asing

Purch-

asing

Purch-

asing

Manu-

facturing

Manu-

facturing

Manu-

facturing

Market-ing

Selling

Distrib-

ution

Distrib-

ution

Distrib-

ution

Service

Country

Functional Activities

THE MULTI-DOMESTIC APPROACH

Some Companies Emphasizing this Approach:

Philips

Unilever

P&G

KPMG

BASF

FedEx

Carrefour

Nestle

pwc

STRATEGY:

Gain Global Market Share

Cost/Leadership

POLICIES:

World Products to Build Volume and Global Product Roll-out

Break Down Value Chain and Exploit Low Cost Locations around the World

Optimize Global Network at Local Expense

GLOBAL STRATEGY

Source: J. de la Torre

The Extreme Global Value Chain

Country

Functional Activities

R&D

Design

Marketing

Selling

Distribution

Service

Purchasing

Manu-

facturing

Etc.

Design

Purchasing

Manu-

facturing

THE GLOBAL STRATEGY

Some Companies Emphasizing this Approach:

Panasonic

Coca-Cola

Boeing

Sony

CAT

Toyota

American Express

IBM

Intel

Where to Next ?

High

Low

Forces for Global

Integration

Forces for Local

Responsiveness

Samsung

Panasonic

Phillips

Panasonic

High

Cost

Sharing

Low

Same

Different

Customer Needs

Global

Strategy

(Cost)

Transnational or

Mass Customization

Strategy

(some functions are

global, some are local)

Multi-Domestic

Strategy

(Differentiation)

Types of International Strategy

Local Strategy

Function/Activity

National

Regional

Global

Research & Development

Product Design

Components

Assembly

Marketing

Sales & Distribution

Service

Samsung: Achieving both Integration and Differentiation

Transnational Strategy

STRATEGY:

Create “best value” by differentiating where you have to (e.g., product design) but standardizing in all other activities (e.g., R&D, components, etc.)

POLICIES:

Break the world into regions where customers have similar needs/similar demographics

Develop products for each region depending on needs

Break down value chain and exploit low cost locations around the world whenever possible

Balance needs of global operations vs. local demands

THE TRANSNATIONAL STRATEGY

Some Companies Emphasizing this Approach:

Samsung

McDonald’s

P&G

Merck

Whirlpool

Hyundai

In Summary: Different Strategic Positions Have Different Managerial Requirements

Pressures

for Global

Integration

Pressures

for Local

Differentiation

Global Strategy

Central direction and national affiliates in supporting roles

Multi-Domestic

Strategy

A federation of autonomous subsidiaries sharing some central services

Transnational Strategy

Some functions global, some local, semi-autonomous

subsidiaries, and

close coordination

Home Market Base

Opportunistic

export/investments

Source: J. de la Torre

Pressures

for Global

Integration

Pressures

for Local

Differentiation

Different Industries
Have Different Positions

Mainframe

Computers

Pharmaceuticals

Specialty

Chemicals

Autos

Civilian

Aircraft

Bulk

Chemicals

Telecom

Agricultural

Equipment

Beer

Packaged

Foods

Retail Banking

Food

Retailing

Appliances

Household

Services

Industrial

Services

Source: J. de la Torre

Semi conductors

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