Appreciate Appreciate the the complexities complexities ofof the the global-local global-local dilemma dilemma
Understand Understand the the content content ofof the the multinational multinational strategies strategies Formulate Formulate aa multinational multinational strategy strategy Understand Understand the the content content ofof the the participation participation strategies strategies Formulate Formulate aa participation participation strategy strategy
Multinational Strategies: Dealing with the Global-Local Dilemma •• Local-responsiveness Local-responsiveness solution: solution: customize customize toto country country or or regional regional differences differences •• Global Global integration
integration solution: solution: conduct conduct business business similarly similarly throughout throughout the the world world •• Global-local Global-local dilemma: dilemma: choice choice between between aa locallocalresponsiveness responsiveness or or global global approach approach toto aa multinational’s multinational’s strategies strategies
Multinational Strategies: Dealing with the Global-Local Dilemma •• Four Four broad broad multinational multinational strategies strategies •• Multidomestic Multidomestic •• Transnational Transnational •• International International •• Regional Regional
Multidomestic Strategy •• Emphasizing Emphasizing local-responsiveness local-responsiveness issues issues •• Ex.: Ex.: different different packages, packages, colors colors •• Costs Costs more more toto produce, produce, need need toto charge charge higher higher prices prices toto recoup recoup •• AAform form ofof the the differentiation differentiation strategy strategy •• Not Not limited limited toto large large multinationals multinationals
Resolving the Global-Local Dilemma: Formulating a Multinational Strategy •• Selection Selection ofof strategy strategy depends depends on on degree degree ofof globalization globalization inin an an industry industry •• Globalization Globalization drivers: drivers: conditions conditions inin aa industry industry that that favor favor transnational transnational or or international international strategies strategies •• Four Four categories categories ofof global global drivers: drivers: markets, markets, costs, costs, governments, governments, and and competition competition
Are Are there there global global economies economies ofof scale? scale? Are Are there there global global sources sources ofof low-cost low-cost raw raw materials? materials? Are Are there there cheaper cheaper sources sources ofof highly highly skilled skilled labor? labor? Are Are product-development product-development costs costs high? high?
Governments •• Do Do the the targeted targeted countries countries have have favorable favorable trade trade policies? policies? •• Do Do the the target target countries countries have have regulations regulations that that restrict restrict operations? operations?
Competitive Advantage in the Value Chain (cont.) •• Mixed Mixed conditions conditions •• Competitive Competitive strength strength downstream downstream inin industry industry with with strong strong globalization globalization drivers drivers •• Competitive Competitive strength strength upstream upstream inin industries industries with with local local adaptation adaptation pressures pressures •• Both Both favor favor regional regional strategies strategies
Participation Strategies: The Content Options •• Participation Participation strategies: strategies: the the choice choice ofof how how toto enter enter each each international international market market •• Exporting Exporting •• Licensing Licensing •• Strategic Strategic alliances alliances •• Foreign Foreign direct direct investment investment
Easiest Easiest way way toto sell sell aa product product inin international international market market Passive Passive exporter: exporter: company company that that treats treats and and fills fills overseas overseas orders orders like like domestic domestic orders orders •• Alternatively, Alternatively, aa company company can can put put extensive extensive resources resources into into exporting exporting with with dedicated dedicated export export department department
Export Strategies (cont.) •• Channels Channels inin direct direct exporting exporting •• Sales Sales representatives representatives use use the the company’s company’s promotional promotional literature literature and and samples samples •• Foreign Foreign distributors distributors resell resell the the products products •• Sell Sell directly directly toto foreign foreign retailers retailers or or end end users users
Licensing •• Licensing: Licensing: contractual contractual agreement agreement between between aa domestic domestic licensor licensor and and aa foreign foreign licensee licensee •• Licenser Licenser has has valuable valuable patent, patent, know-how, know-how, or or trademark trademark •• Foreign Foreign licensee licensee pays pays royalties royalties for for use use