The document discusses strategy in international business. It covers topics like the role of strategy, industry structure and the five forces model, value creation through cost leadership and differentiation, global integration versus local responsiveness pressures, and the integration-responsiveness grid for measuring these pressures. The value chain and how it is configured and coordinated in response to changes is also examined. Different types of strategies are outlined, and future visions for strategies with concepts like metanational and cybercorp companies.
11 The Strategy of International BusinessBrent Weeks
To evaluate industry structure, firm strategy, and value creation
To profile the features and functions of the value chain
To assess how managers configure and coordinate a value chain
To explain global integration and local responsiveness
To profile the types of strategies firms use in international business
To explain the rationales for governmental policies that enhance and restrict trade
To show the effects of pressure groups on trade policies
To describe the potential and actual effects of governmental intervention on the free flow of trade
To illustrate the major means by which trade is restricted and regulated
To demonstrate the business uncertainties and business opportunities created by governmental trade policies
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
06 International Trade and Factor MobilityBrent Weeks
To understand theories of international trade
To explain how free trade improves global efficiency
To identify factors affecting national trade patterns
To explain why a country’s export capabilities are dynamic
To understand why production factors, especially labor and capital, move internationally
To explain the relationship between foreign trade and international factor mobility
11 The Strategy of International BusinessBrent Weeks
To evaluate industry structure, firm strategy, and value creation
To profile the features and functions of the value chain
To assess how managers configure and coordinate a value chain
To explain global integration and local responsiveness
To profile the types of strategies firms use in international business
To explain the rationales for governmental policies that enhance and restrict trade
To show the effects of pressure groups on trade policies
To describe the potential and actual effects of governmental intervention on the free flow of trade
To illustrate the major means by which trade is restricted and regulated
To demonstrate the business uncertainties and business opportunities created by governmental trade policies
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
06 International Trade and Factor MobilityBrent Weeks
To understand theories of international trade
To explain how free trade improves global efficiency
To identify factors affecting national trade patterns
To explain why a country’s export capabilities are dynamic
To understand why production factors, especially labor and capital, move internationally
To explain the relationship between foreign trade and international factor mobility
03 The Political and Legal Environments Facing BusinessBrent Weeks
To discuss the philosophy and practices of the political environment
To profile trends in contemporary political systems
To explain the idea of political risk and approaches to managing it
To discuss the philosophy and practices of the legal system
To describe trends in contemporary legal systems
To explain legal issues facing international companies
> To define globalization and international business and show how they affect each other
> To understand why companies engage in international business and why international business growth has accelerated
> To discuss globalization’s future and the major criticisms of globalization
> To become familiar with different ways in which a company can accomplish its global objectives
> To apply social science disciplines to understanding the differences between international and domestic business
> To define globalization and international business and show how they affect each other
To describe the International Monetary Fund and its role in the determination of exchange rates
To discuss the major exchange-rate arrangements that countries use
To explain how the European Monetary System works and how the euro became the currency of the euro zone
To identify the major determinants of exchange rates
To show how managers try to forecast exchange-rate movements
To explain how exchange rate movements influence business decisions
To examine the broad foundation of ethical behavior
To demonstrate the cultural and legal foundations of ethical behavior
To discuss the importance of social responsibility when operating internationally, especially in the areas of sustainability
To discuss some key issues in the social activities and consequences of globalized business
To examine corporate responses to globalization in the form of codes of conduct, among other things
14 Direct Investment and Collaborative StrategiesBrent Weeks
To clarify why companies may need to use modes other than exporting to operate effectively in international business
To comprehend why and how companies make foreign direct investments
To understand the major motives that guide managers when choosing a collaborative arrangement for international business
To define the major types of collaborative arrangements
To describe what companies should consider when entering into international arrangements with other companies
To grasp why collaborative arrangements succeed or fail
To see how companies can manage diverse collaborative arrangements
02 The Cultural Environments Facing BusinessBrent Weeks
To understand methods for learning about cultural environments
To analyze the major causes of cultural difference and change
To discuss behavioral factors influencing countries’ business practices
To understand guidelines for cultural adjustment
PowerPoint presentation to accompany
Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl
03 The Political and Legal Environments Facing BusinessBrent Weeks
To discuss the philosophy and practices of the political environment
To profile trends in contemporary political systems
To explain the idea of political risk and approaches to managing it
To discuss the philosophy and practices of the legal system
To describe trends in contemporary legal systems
To explain legal issues facing international companies
> To define globalization and international business and show how they affect each other
> To understand why companies engage in international business and why international business growth has accelerated
> To discuss globalization’s future and the major criticisms of globalization
> To become familiar with different ways in which a company can accomplish its global objectives
> To apply social science disciplines to understanding the differences between international and domestic business
> To define globalization and international business and show how they affect each other
To describe the International Monetary Fund and its role in the determination of exchange rates
To discuss the major exchange-rate arrangements that countries use
To explain how the European Monetary System works and how the euro became the currency of the euro zone
To identify the major determinants of exchange rates
To show how managers try to forecast exchange-rate movements
To explain how exchange rate movements influence business decisions
To examine the broad foundation of ethical behavior
To demonstrate the cultural and legal foundations of ethical behavior
To discuss the importance of social responsibility when operating internationally, especially in the areas of sustainability
To discuss some key issues in the social activities and consequences of globalized business
To examine corporate responses to globalization in the form of codes of conduct, among other things
14 Direct Investment and Collaborative StrategiesBrent Weeks
To clarify why companies may need to use modes other than exporting to operate effectively in international business
To comprehend why and how companies make foreign direct investments
To understand the major motives that guide managers when choosing a collaborative arrangement for international business
To define the major types of collaborative arrangements
To describe what companies should consider when entering into international arrangements with other companies
To grasp why collaborative arrangements succeed or fail
To see how companies can manage diverse collaborative arrangements
02 The Cultural Environments Facing BusinessBrent Weeks
To understand methods for learning about cultural environments
To analyze the major causes of cultural difference and change
To discuss behavioral factors influencing countries’ business practices
To understand guidelines for cultural adjustment
PowerPoint presentation to accompany
Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl
Report on Shamrafs- Pakistani Designer brand, Olympia Textile Groupsarah101
Report on Shamrafs- Pakistani Designer brand, Olympia Textile Group
Report regarding the business and operations in Pakistan, challenges faced, solutions SWOT Analysis, industry analysis, growth, revenue, financials, sales, distribution, outlets, factory, products etc
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
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how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
An industry is composed of the companies engaged in a particular kind of commercial enterprise.
The IO paradigm presumes that markets demonstrate perfect competition.
Perfect competition presumes:
• Many buyers and sellers such that no individual affects price or quantity
• Perfect information for both producers and consumers
• Few, if any, barriers to market entry and exit
• Full mobility of resources
• Perfect knowledge among firms and buyers
The IO paradigm assumes that firm performance is a function of its conduct, which is ultimately determined by industry factors that shape the corresponding pattern of competition.
Firm conduct refers to the strategic and tactical choices a company makes regarding research and innovation, product strategy, plant investment, pricing behavior, and the like that influence its profitability.
These two anomalies—markets are not always perfectly competitive and some firms consistently outperform industry averages—suggest that industry structure is not entirely deterministic of firm performance. Instead, firm performance is influenced by the presence of bright, motivated managers and their keen sense of innovative products or processes.
The idea of industry structure helps explain the functions, form, and interrelationships among:
• Suppliers of inputs
• Buyers of outputs
• Substitute products
• Potential new entrants
• Rivalry among competing sellers
New products, new firms, new markets, and new managers trigger new developments in rivalry, pricing, substitutes, buyers, and suppliers. These developments often change a minor feature of the industry, such as the expansion of an existing distribution channel. More recently, changes due to the global economic crisis are resetting the structure of most industries.
Creating value spurs the firm to develop a compelling value proposition (why a consumer should buy its goods or use its services) that specifies its targeted customer markets (those consumers for whom a firm creates goods or services).
Value is what remains after costs have been deducted from the revenues of a firm. Cost leadership emphasizes high production volumes, low costs, and low prices. Firms that choose this strategy strive to be the low-cost producer in an industry for a given level of quality. This strategy requires that a firm sell its products at the average industry price to earn a profit higher than that of rivals or below the average industry prices to capture market share.
Differentiation spurs the company to provide a unique product that customers value and that rivals find hard, if not impossible, to match or copy.
The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation.
A value chain disaggregates a firm into:
• Primary activities that create and deliver the product
• Support activities that aid the individuals and groups engaged in primary activities
Value chains identify the format and interactions between different activities of the company.
Configuration is the way in which managers arrange the activities of the value chain.
Manufacturing costs vary from country to country because of wage rates, worker productivity, resource
availability, and fiscal and monetary policies.
An industry cluster is a system of businesses and institutions engaged with one another at various levels.
Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.
The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.
The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.
Coordination is the way that managers connect the activities of the value chain. As companies globally configure value activities, they must develop coordination tools. Coordinated well, MNEs can leverage their core competencies, using them to serve customers, boost sales, and improve profits.
A company’s core competency is:
• The unique skills and/or knowledge that it does better than its competitors
• Essential to its competitiveness and profitability
A core competency can emerge from various sources, including:
• Product development
• Employee productivity
• Manufacturing expertise
• Marketing imagination
• Executive leadership
Several factors influence value chain coordination:
• Operational obstacles
• National cultures
• Learning effects
• Subsidiary networks
The globalization of a company’s value chain, such as design done in Finland, inputs sourced from Brazil, production done in China, distribution organized in the United States, and service done in Mexico, presses managers to understand how foreign cultures influence coordination.
National cultures also impose hurdles in coordinating a transaction from one stage of the value chain to another. Units anchored in individual versus collectivist cultures may disagree over information sharing or collaboration responsibilities; conflicts complicate coordination. Hence, features of national culture require managers to understand their implications to the collaborative relationship that shape the coordination of value activities.
A learning curve is the commonsense principle that the more one does something, the better one gets at it.
Companies configure value chain activities to exploit the learning curve.
The matter of learning shapes how manufacturing and service MNEs coordinate value chains. In the case of the former, MNEs often adapt production activities for different attitudes and approaches to manufacturing. For example, an MNE may have factories in different countries, such as Japan and Mexico, which manufacture the same product but apply different production philosophies. The Mexican factory may use a traditional assembly-line operation given the local conditions of inexpensive labor, patchy transportation infrastructure, and marginal cost of high technology. The Japanese factory, in contrast, may use a lean production system given local labor competency, manufacturing expertise, and efficient logistics. The different manufacturing approaches complicate how managers coordinate activities between factories. Planning to learn how to coordinate these links in the value-chain positions the MNE to gain production efficiencies that lead to lower costs, higher quality, satisfied customers, and new sales. MNEs run into problems getting the various links of their global value chain to engage.
Operating internationally inevitably runs into communication challenges because of time zones, differing languages, and ambiguous meanings. Increasingly, companies rely on browser-based communications methods to coordinate the handoffs from link to link. The thinking goes that electronically linked producers and retailers can lower coordination costs throughout the value chain. In addition, standardizing the format for data input helps standardize the format for interpretation. Electronic transactions boost efficiency by reducing intermediary transactions and the associated unneeded coordination (streamlining the distributor link in the value chain by eliminating an intermediary).
The growing prevalence of social networks provides perspectives for managers to better understand the dynamics of their subsidiary networks.
Designing and delivering a strategy is an ongoing struggle for companies. While some succeed, many fall short
of their objectives.
Integration is the process of combining differentiated parts into a standardized whole.
Responsiveness is the process of disaggregating a standardized whole into differentiated parts.
The convergence of national markets, standardization of business processes, and the drive to maximize production efficiency push for the integration of value activities. A provocative thesis, increasingly supported by global buying patterns and companies’ strategies, suggests that consumers worldwide seek global products—whether they are Apple iPods, Samsung plasma screens, Facebook connections, Starbucks espressos, Google searches, or Zara blouses. Two conditions—one demand-pull, the other supply-push—influence this trend. Powering demand-pull conditions are the intrinsic functions of money.
Money has three inalienable features:
• difficult to acquire
• scarce
• transient
Global and local pressures challenge how the firm configures and coordinates its value chain. The convergence of national markets and quest for production efficiency push for the global integration of value activities.
Standardization is the handmaiden of globalization, encouraging supply conditions that produce volumes of low-cost, high-quality products. That is, standardization is the push dynamic that drives supply, whereas the globalization of markets represents the pull dynamic that converges consumer preferences. The logic of standardization is straightforward. Repeatedly doing the same task the same way improves the efficiency of effort. Improving efficiency in the value chain, in turn, supports aggressive product development, lower-cost production processes, and lower prices.
Prominent pressures for local responsiveness are consumer divergence and host-government policies.
Contrary to the globalization-of-markets thesis, others argue that divergences in consumer preferences across countries necessitate locally responsive value chains.
Differences in local consumers’ preferences endure due to cultural predisposition, historical legacy, and endemic nationalism. Regardless of the cause, consumers often prefer goods that are sensitive to the particular idiosyncrasies of their daily life. Consequently, cross-national divergence presses MNEs to adapt value activities to the demands of local markets. The source of many variations is the policies, or the lack thereof, mandated by host-country governments. Prior to the economic crisis, companies confronted policy differences as they moved from country to country. However, these differences had been narrowing as capitalism and economic freedom shaped policy in a growing number of countries. Now, in the early phases of the crisis, governments’ distrust of market mechanisms spurs revising the rules of the market. Moreover, despite calls for coordinated policy initiatives, different countries have taken different paths to reset fiscal, monetary, and business policies. Collectively, these trends required companies to rethink their value chains. Constrained options for standardization and wavering momentum of globalization spotlight the sustainability of value chains biased toward local responsiveness.
The international strategy leverages a company’s core competencies in foreign markets. It allows limited local customization.
Benefits of Int’l Strategy:
An international strategy works well when a firm has a core competence that foreign rivals lack and industry conditions do not demand high degrees of global integration or local responsiveness.
Limitations of Int’l Strategy:
Unless aware, the company implementing the international strategy can be blindsided by an unexpectedly innovative rival. Google, for example, faces increasingly adept local rivals in South Korea, specifically Naver, and China, specifically Baidu, whose native sensitivities to local search tendencies pose threats.
The multidomestic strategy adjusts products, services, and business practices to meet the needs of local markets.
Firms applying a multidomestic strategy hold that value-chain design is the prerogative of the local subsidiary, not the unilateral declaration by the home office. Management that chooses the multidomestic strategy believes in customizing value activities to the unique conditions that prevail in different markets.
Benefits (Multidomestic):
A multidomestic strategy makes sense when the company faces a high need for local responsiveness and low need to reduce costs via global integration (the lower right-hand space of the IR grid). It has other benefits as well, such as minimizing political risk given the local standing of the company, lower exchange-rate risk given reduced need to repatriate funds to the home office, greater prestige given its national prominence, higher potential for innovative products from local R&D, and higher growth potential due to entrepreneurial zeal.
Limitations (Multidomestic):
The multidomestic strategy leads to widespread replication of management, design, production, and marketing activities—the outcome of building “mini-me” units around the world. Customizing products and processes to local markets inevitably increases costs. Different product designs require different materials, production runs become shorter, marketing programs are adapted, distribution requires new channels, and different transactions require different coordination methods. Hence, the multidomestic strategy is impractical in cost-sensitive situations.
A global strategy champions worldwide consistency and standardization.
Firms that choose the global strategy face strong pressure for cost reductions but weak pressure for local responsiveness.
Benefits (Global):
Global strategy is suited to industries that emphasize efficient operations and where local responsiveness needs either are nonexistent or can be neutralized by offering a higher-quality product for a lower price than the local substitute.
Limitations (Global):
Countries whose markets demand local responsiveness reduce the attractiveness of the global strategy. More fundamentally, the strength of the global strategy, ironically, is its weakness. The cost sensitivity and standardization bias of a global strategy gives MNEs little latitude to adapt value activities to local conditions. Moreover, disruptive market changes or product breakthroughs can turn a fine-tuned value chain into a misfiring machine.
A transnational strategy simultaneously engages pressures for global integration and local responsiveness in ways that leverage insight to improve the firm’s core competency.
A transnational strategy makes the exchange of ideas across value activities a key element of competitive advantage. The company implementing a transnational strategy aims not to work harder or work smarter than competitors but rather work differently based on diffusing the lessons it has learned and the knowledge it has earned throughout its worldwide operations. Ideas are the primary source of competitiveness for companies implementing a transnational strategy.
Benefits(transnational):
The learning orientation of the transnational strategy drives many benefits—most visibly its fine-tuned balancing of global integration and local responsiveness. The vitality of learning in the transnational strategy pushes managers to respond to changing environments, configuring resources and coordinating processes without imposing more bureaucracy. Ultimately, these capabilities permit standardizing some links of the value chain to generate the efficiencies warranted by global integration pressures, while also adapting other links to meet pressures for local responsiveness—but without sacrificing the benefits of one for the other.
Limitation (transnational):
Transnational strategy, admittedly difficult to even specify in theory, is even more difficult to implement in practice. Limitations arise from complicated agendas, high costs, and cognitive limits.
MNEs go through three phases on the path to becoming a global powerhouse:
1. First there was the nineteenth-century “international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.”
2. Phase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.
3. The third phase, the “globally integrated enterprise,” is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world “based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.”
Visions of the future: Others trumpet a world where a dynamic ecology of locations and firms pushes beyond the historic division of local firms versus global companies. This view provides for different types of companies following different types of strategies. In a sense, these companies create a natural ecology that reacts to, and interacts with, their different environments. The diversity of these strategies and companies in this global ecology creates a business world populated by a variety of local firms, regional firms, firms that operate in a few countries or many countries, centralized firms, and networks of firms.
The Metanational Company:
Others see the emergence of a new type of global corporation, the so-called metanational company, which thrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company “builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.”
Micro-Nationals:
Although the number of MNEs grows worldwide, their average size is falling—most of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.
The Cybercorp:
To this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologies—not the physical geography of lines on a map—defines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.