This lecture covers the concept of global strategic structure. We first discuss the integration-responsiveness framework and how corporations can either adapt or standardize production. We then review the four basic IB strategies and discuss their evolution over time. Lastly, we link these strategies to their appropriate structures, such as a product or geographical area structure. The limitations of the matrix structure are discussed in depth.

1. Lecture 8
Global Strategic Structure
Lecturer: Dr. Preston Teeter
BUSS 2067
International Business Environment

2. Before we start:
1) Phones/electronics silent, off, and away!
2) Say hello to the people around you;
you need a small group to discuss
questions
BUSS 2067
International Business Environment

3. Outline
• Lecture 7 quiz
• The integration-responsiveness framework
• Four basic IB strategies
• Organizational structures for IB

4. LECTURE 7 QUIZ

5. Question 1
True or False:
In general, advanced economies have much
higher GDP growth rates than emerging markets.

6. Question 2
True or False:
Similar to countries in Asia, Eastern Europe, and
South America, Africa has experienced relatively
fast and equal economic development over the
past few decades.

7. Question 3
Which of the following statements best describes the
difference between emerging markets and developing
economies?
A. Developing economies have lower trade barriers and
higher trade volume.
B. Emerging markets constitute more countries, but much
lower per capita income.
C. Developing economies have an overall larger
population and more motor vehicles per capita.
D. Emerging markets have more competition, higher trade
volume, and higher inward FDI.

8. Question 4
Which of the following is NOT a key to the
future growth of African economies?
A. Greater political and legal stability
B. Foreign help with affordable infrastructure
and eradicating disease
C. Freeing up international agricultural trade
D. More economic specialization in resource
extracting industries

9. THE INTEGRATION-
RESPONSIVENESS FRAMEWORK

10. I-R framework
In this lecture, we will discuss two cases related
to international business strategy and structure.
In order to do so, we first need to understand the
integration-responsiveness framework.
1. What is global integration and what are the
pressures for global integration?
2. What is local responsiveness and what are the
pressures for local responsiveness?

11. I-R framework
Global integration is the coordination of the firm’s
value-chain activities across multiple countries to
achieve worldwide efficiency and synergy in
order to take advantage of similarities between
countries.
Local responsiveness refers to when companies
respond to specific conditions in local markets, as
they manage diverse opportunities and risks on a
country-by-country basis.

13. I-R framework
The video below and following slides exemplify
some of these concepts, which pressures do you
note?
Watch video

15. +

16. McDonald’s France

17. What is the top-selling car in each country?
Ford F-Series
Ford Fiesta
Toyota HiLux
Volkswagen Golf

18. FOUR BASIC IB STRATEGIES

19. IB strategies
Consider the case of Australian surfwear provider
Billabong International. Billabong is a truly global
company, with 80 percent of sales coming from
abroad and their collections distributed in over 100
countries. The majority of their sales are through
wholly-owned operations in Australia, N. America,
S. America, Europe, and Japan. They began as a
wholesaler but later started opening their own retail
stores.

20. IB strategies
Unfortunately, starting around 2008, the
company experienced numerous difficulties.
Watch video
And see the following slides…

21. Source: abc.net.auSource: http://www.abc.net.au/pm/content/2012/s3577009.htm

22. Source: Google Finance

23. Sompany.com.au
Source: http://www.smartcompany.com.au/leadership/38255-can-billabong-market-
its-way-back-into-the-black.html#

24. IB strategies
What happened at Billabong? Answer the following:
1) What are the four basic IB strategies? How do they
differ?
2) What type of strategy did Billabong seem to be
following?
3) What changes would you have recommended to turn
things around at Billabong?
Please discuss in small groups, or, if online, consult your
textbook and other sources. We will reconvene in 5
minutes to discuss as a class.

26. Determinants of Enterprise Value

27. Source: http://retailbiz.com.au/offline-retailing/billabong-to-make-a-turnaround-with-
simplified-strategy-plan/

28. Source: https://www.itnews.com.au/news/billabongs-it-enabled-turnaround-reaps-results-
408454

29. Source: http://www.roymorgan.com/findings/7201-young-australians-sportswear-vs-
surfwear-australia-december-2016-201704031027

30. ORGANIZATIONAL
STRUCTURES FOR IB

31. IB structures
Consider the case of the BBC, the British
Broadcasting Corporation, founded in 1922. See
information below and on the next few slides
concerning their circumstances in 2011.
• World’s oldest national broadcasting organization
• Largest broadcaster by employees: 21,000 staff
• Income: license fees and world service grants
• Structure:
– Television, radio, news, future media (digital), North
Group (Sport, etc), finance & business

32. IB structures
• BBC Worldwide Ltd.: wholly owned subsidiary
– Profit-generating commercial operations
– Sells BBC and other British programming for
broadcast abroad
– Customers all over the world
– Strategy to grow online portfolio and operations in
Australia and the United States
– Structure mimics that of BBC

33. Source:TheGuardian
Source: https://www.theguardian.com/media/2009/jul/14/bbc-worldwide-profits-
slump

34. Source: http://mediadecoder.blogs.nytimes.com/2011/02/18/bbc-charts-new-course-
for-its-u-s-newscast

35. IB structures
Through a consultant’s eyes, answer the following:
1) What were the major issues confronting BBC circa
2011?
2) Do you think the BBC was in need of
restructuring?
3) If so, what sort of change would you recommend?
4) Would such a structural change require any other
adjustments?

40. Source: http://www.bbc.co.uk/mediacentre/worldwide/220612bbcworldwide.html

41. Source: http://www.nytimes.com/1989/06/04/business/an-anxious-
philips.html?pagewanted=all

42. A synthesis of strategy, structure,
and control systems

43. Questions?