International Strategy Anne-Caroline BERTHELOT Noémie HUBIN Janine STROH
I. The basic directions for a firm’s strategy
1.  State of mind <ul><li>Perlmutter (1960) admits that there are 3 types of attitudes : </li></ul><ul><li>Ethnocentric </...
State of mind II <ul><li>Ethnocentric : </li></ul><ul><li>Two characteristics :  </li></ul><ul><li>- National strategy </l...
Recruit people of home country. Perpetuation (recruiting, development ) Nationality of owner Identification High volume to...
State of mind III <ul><li>Polycentric : </li></ul><ul><li>Polycentric company have : </li></ul><ul><li>- regional strategy...
Develop people of local nationality. Perpetuation (recruiting, development ) Nationality of host country. Identification L...
State of mind IV <ul><li>Geocentric : </li></ul><ul><li>Two points : </li></ul><ul><li>- Global strategy. </li></ul><ul><l...
Develop best men everywhere Perpetuation  Truly international company but identifying with national interest Identificatio...
Two other notions… <ul><li>EPG :  </li></ul><ul><li>E : Ethnocentric </li></ul><ul><li>P : Polycentric </li></ul><ul><li>G...
Nowadays… <ul><li>Mostly polycentric and geocentric. </li></ul><ul><li>However there is still an ethnocentric  </li></ul><...
2. Resources and capabilities <ul><li>A Resource-Based Approach to Strategy Analysis :  </li></ul><ul><li>Strategy </li></...
Resources <ul><li>6 major categories :  </li></ul><ul><li>-  Financial resources </li></ul><ul><li>-  Physical resources <...
Capabilities <ul><li>Strategic capabilities. </li></ul><ul><li>Comparative advantages. </li></ul><ul><li>Ex : Fed Ex. </li...
Competitive advantages <ul><li>Two factors provide to appraise the rent-generating potential of resources and capabilities...
Strategy <ul><li>The point : select a strategy. </li></ul><ul><li>If there are resources gap, they have to be filled. </li...
II. Analyze of international business strategy
Yip’s (2003) view as a global company : <ul><li>“ A global company has the capacity to go anywhere, deploy any assets, and...
3 main possibilities of strategy  <ul><li>An entirely globally-centered business </li></ul><ul><li>A fully polycentric bus...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate,  business, functional strat...
III. Multinationals and Regional Trading
The build-up of regional trading blocks I NAFTA EU MERCOSUR FTAA ASEAN APEC
The build-up of regional trading blocks II EUROPE (EU) AMERICAS (NAFTA) ASIA (APEC,ASEAN) Central & Eastern Europe South A...
Influence of Free Trade Areas <ul><li>Overall growth in international trade and political stability </li></ul><ul><li>Shif...
Influence of WTO <ul><li>WTO (World Trade Organization): successor to the General Agreement on Tariffs and Trade (GATT) </...
States – Firms – Regions I Regional Institution Company Company Regional Institution Government Government 2 4 1 3 6 5
States – Firms – Regions II <ul><li>Relationships (1), (2) and (3) reflect conventional interactions between firms and nat...
States – Firms – Regions III <ul><li>Relationship (5) </li></ul><ul><li>national governments have to pay the same attentio...
States – Firms – Regions III <ul><li>Relationship (4) </li></ul><ul><li>- MNE should pay increasing attention to policy ma...
MNEs and Regional Policy  Fortress against Outsiders Internal Liberalization Manageable Exogenous Perceived Regional Polic...
Case Study Benetton’s International Strategy
Revenues 2003 <ul><li>   Net sales for the casual segment by geographic area for the last three years (in thousands of Eu...
Number of Stores 5,095 5,206 5,240 5,307 Total 621 675 622 718 Other geographic areas 286 262 259 294 The Americas 1,932 1...
Organizational Structure <ul><li>   Benetton Group S.p.A. is the holding company of the </li></ul><ul><li>Benetton group ...
100 % Italy Benind S.p.A 100 % Italy Bentec S.p.A.  100 % Italy Bencom S.r.l.  100 % Switzerland Benetton Società di Servi...
<ul><li>Thanks a lot for your attention. </li></ul>
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International Strategy Anne-Caroline BERTHELOT

  1. 1. International Strategy Anne-Caroline BERTHELOT Noémie HUBIN Janine STROH
  2. 2. I. The basic directions for a firm’s strategy
  3. 3. 1. State of mind <ul><li>Perlmutter (1960) admits that there are 3 types of attitudes : </li></ul><ul><li>Ethnocentric </li></ul><ul><li>Polycentric </li></ul><ul><li>Geocentric. </li></ul>
  4. 4. State of mind II <ul><li>Ethnocentric : </li></ul><ul><li>Two characteristics : </li></ul><ul><li>- National strategy </li></ul><ul><li>- Home country reference </li></ul>
  5. 5. Recruit people of home country. Perpetuation (recruiting, development ) Nationality of owner Identification High volume to subsidiaries Communication; information flow High in headquarters, low in subsidiaries Rewards and punishments; incentives Home standards applied for persons and performance Evaluation and control High in headquarters Decision making Complex in home country, simple in subsidiaries Complexity of organization ETHNOCENTRIC Organization Design
  6. 6. State of mind III <ul><li>Polycentric : </li></ul><ul><li>Polycentric company have : </li></ul><ul><li>- regional strategy, </li></ul><ul><li>- host country reference. </li></ul>
  7. 7. Develop people of local nationality. Perpetuation (recruiting, development ) Nationality of host country. Identification Little to and from headquarters. Little between subsidiaries. Communication; information flow Wide variation; can be high or low rewards for subsidiary performance. Rewards and punishments; incentives Determined locally. Evaluation and control Relatively low in headquarters. Decision making Varied and independent. Complexity of organization POLYCENTRIC Organization Design
  8. 8. State of mind IV <ul><li>Geocentric : </li></ul><ul><li>Two points : </li></ul><ul><li>- Global strategy. </li></ul><ul><li>- Goal : worldwide approach. </li></ul>
  9. 9. Develop best men everywhere Perpetuation Truly international company but identifying with national interest Identification Both ways and between subsidiaries Communication; information flow International and local executives rewarded for reaching local and worldwide objectives Rewards and punishments; incentives Find standards which are universal and local Evaluation and control Collaborative approach Decision making Increasingly complex and interdependent Complexity of organization GEOCENTRIC Organization Design
  10. 10. Two other notions… <ul><li>EPG : </li></ul><ul><li>E : Ethnocentric </li></ul><ul><li>P : Polycentric </li></ul><ul><li>G : Geocentric. </li></ul><ul><li>Regioncentric : </li></ul><ul><li>New notion that appears in the years 1980ies. </li></ul>
  11. 11. Nowadays… <ul><li>Mostly polycentric and geocentric. </li></ul><ul><li>However there is still an ethnocentric </li></ul><ul><li>attitude in every companies. </li></ul>
  12. 12. 2. Resources and capabilities <ul><li>A Resource-Based Approach to Strategy Analysis : </li></ul><ul><li>Strategy </li></ul><ul><li>Competitive Advantage </li></ul><ul><li>Capabilities </li></ul><ul><li>Resources. </li></ul>
  13. 13. Resources <ul><li>6 major categories : </li></ul><ul><li>- Financial resources </li></ul><ul><li>- Physical resources </li></ul><ul><li>Human resources </li></ul><ul><li>Technological resources </li></ul><ul><li>Reputation and </li></ul><ul><li>Organizational resources. </li></ul>
  14. 14. Capabilities <ul><li>Strategic capabilities. </li></ul><ul><li>Comparative advantages. </li></ul><ul><li>Ex : Fed Ex. </li></ul>
  15. 15. Competitive advantages <ul><li>Two factors provide to appraise the rent-generating potential of resources and capabilities : </li></ul><ul><li>The respect of the rules (durability, transparency, transferability, replicability). </li></ul><ul><li>The appropriability of returns. </li></ul>
  16. 16. Strategy <ul><li>The point : select a strategy. </li></ul><ul><li>If there are resources gap, they have to be filled. </li></ul>
  17. 17. II. Analyze of international business strategy
  18. 18. Yip’s (2003) view as a global company : <ul><li>“ A global company has the capacity to go anywhere, deploy any assets, and access any resources, and it maximizes profits on a global basis.” </li></ul>
  19. 19. 3 main possibilities of strategy <ul><li>An entirely globally-centered business </li></ul><ul><li>A fully polycentric business on a national level </li></ul><ul><li>A regional organization </li></ul>
  20. 20. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  21. 21. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  22. 22. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  23. 23. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  24. 24. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  25. 25. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  26. 26. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  27. 27. A framework for analyzing “Globalization” <ul><li>Locus of decision making power on corporate, business, functional strategy issues </li></ul>Actual product Characteristics National units Regional centers Corporate headquarters 9 National strategy 6 3 Nation-based or adapted product 8 5 Regional strategy 2 Region-based or adapted product 7 4 1 Global strategy World product
  28. 28. III. Multinationals and Regional Trading
  29. 29. The build-up of regional trading blocks I NAFTA EU MERCOSUR FTAA ASEAN APEC
  30. 30. The build-up of regional trading blocks II EUROPE (EU) AMERICAS (NAFTA) ASIA (APEC,ASEAN) Central & Eastern Europe South America (MERCOSUR) China & India Africa Middle East CIS
  31. 31. Influence of Free Trade Areas <ul><li>Overall growth in international trade and political stability </li></ul><ul><li>Shift of regulatory authority to the regional level </li></ul><ul><li>Rise of “intra-regional trade” </li></ul><ul><li>Free Trade Area = free trade </li></ul>
  32. 32. Influence of WTO <ul><li>WTO (World Trade Organization): successor to the General Agreement on Tariffs and Trade (GATT) </li></ul><ul><li>Arbitration of triad-based disputes </li></ul><ul><li>Protectionism of health, safety and environmental </li></ul><ul><li>Reinforce of triad-markets </li></ul>
  33. 33. States – Firms – Regions I Regional Institution Company Company Regional Institution Government Government 2 4 1 3 6 5
  34. 34. States – Firms – Regions II <ul><li>Relationships (1), (2) and (3) reflect conventional interactions between firms and national governments in form of cooperation or competition </li></ul><ul><li>Relationships (4), (5) and (6) are of special interest in a regionalized world </li></ul>R R C C G G 2 1 4 6 3 5
  35. 35. States – Firms – Regions III <ul><li>Relationship (5) </li></ul><ul><li>national governments have to pay the same attention to regional institutions as to state-to-state relationships </li></ul><ul><li>Relationship (6) </li></ul><ul><li>deepening of regional integration will lead to bargaining among regional institutions </li></ul>R R C C G G 2 1 4 6 3 5
  36. 36. States – Firms – Regions III <ul><li>Relationship (4) </li></ul><ul><li>- MNE should pay increasing attention to policy making at regional level </li></ul><ul><li>- MNE may be affected by common standards or additional costs </li></ul>R R C C G G 2 1 4 6 3 5
  37. 37. MNEs and Regional Policy Fortress against Outsiders Internal Liberalization Manageable Exogenous Perceived Regional Policy Intent MNE Perception of Regional Policy 1 2 4 3
  38. 38. Case Study Benetton’s International Strategy
  39. 39. Revenues 2003 <ul><li> Net sales for the casual segment by geographic area for the last three years (in thousands of Euro) </li></ul>1,578,527 1,586,010 1,627,871 WORLD 183,389 196,236 193,276 Other Areas 77,422 81,107 85,815 The Americas 138,382 143,025 154,832 Asia 1,179,334 1,165,642 1,193,948 EU 2003 2002 2001
  40. 40. Number of Stores 5,095 5,206 5,240 5,307 Total 621 675 622 718 Other geographic areas 286 262 259 294 The Americas 1,932 1,999 2,157 2,200 Rest of Europe 2,256 2,270 2,202 2,095 Italy 2003 2002 2001 2000
  41. 41. Organizational Structure <ul><li> Benetton Group S.p.A. is the holding company of the </li></ul><ul><li>Benetton group companies. The following table sets </li></ul><ul><li>forth the significant subsidiaries owned, directly or indirectly, by Benetton Group S.p.A. </li></ul><ul><li> Benetton Group S.p.A. belongs to the Edizione Holding Group. </li></ul>
  42. 42. 100 % Italy Benind S.p.A 100 % Italy Bentec S.p.A. 100 % Italy Bencom S.r.l. 100 % Switzerland Benetton Società di Servizi S.A 100 % Luxembourg Benetton Retail International S.A 100 % Spain Benetton Textil Spain S.L 85 % Italy Olimpias S.p.A 100 % The Netherlands Benetton International Property N.V. S.A 100 % Japan Benetton Japan Co., Ltd. 100 % USA Benetton Trading USA Inc 100 % The Netherlands Benetton International N.V. S.A Ownership Country
  43. 43. <ul><li>Thanks a lot for your attention. </li></ul>
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