Topic 11: Strategy and Organisation of International Firms

What are the different motivations for internatilisation

traditional and emerging

What are traditional motivations for internalisation

resource seeking motive, market seeking behaviour

What are the emerging motivations for internalisation

more integration, global scanning and learning capabiloity, compettive positioning

What is strategic positioning

selecting a competitive strategy with a value proposition that is either low cost, differentiated or both and configuring internal operations to support that strategy

Waht are the determinants of enterprise vlaue

probability (reduce costs and add vlaue and raise prices) and profit growth (sell more in existing markets and enter new markets)

How to value creation

R and D, production, amrketing sales, after sales service and support

What is A

value of a product to an average consumer

What is B

price per unit

What is C

cost of production per unit

What is G

consumer surplus p

What is H

profit per unit sold

What is I

value created per unit

What do you want

for the smallest A - B

What is in the middle of organisational architecture

people

what is the outaide of the orgnaisational architecture

processes, structure, incentives and controls, culture

What are the three dimensions of organisational structure

vertical differentiation, horizontal differentiation and the estbalishment of integrating mechanisms

What is vertical differentiation

the location of decision-making respionsibilties within a structure - either centraliused or decentralised

What is horizontal differentiation

the formal divison of organisation into sub-units

What is the estbalushment of integrating mechanism

the mechanism for coordination of sub-units

What are the differetn types of control systems in an internatinal company

personal, bureacratic, output, cultural

What is prsonal controls example

personal contract between subordinate staff

bureacratic controls example

rules and procedures, budgets, delegations

output controls exmaple

performance metrics such as sales and profit targets

cultural controls example

norms and values that employees enter

Types of controlsystems in an international company - the negative impact on the flow of information between headwuarters and subsidiairies

geographic distance, cultural distance, differing frames of reference between these two organisational units

What is orgnisational culture

the values and norms that employees are encouraged to follow

How can organisational culture be maintained

hiring and promotional practices, reward strategies, socialisation processes, communication strategies

What is the strategic fit

operations strategy and ogranisation architecture should support strategy which fits into the market conditions

How can the international firms incrase profitability and profit growth

exapanding their market, realising location economies, exploiting greater cost economies from exeprience effects, transferring valuable skills within the firm

What are the business level strategy

cost leadership, differentiation, focus

Business level strategy - cost leadership

appeal to the average customer, strong focus on manufacturing and materials management functions e.g. Bunnings

Business level strategy - differentiation

many niches of market segmentation, uniqueness through quality, innovation and customer responsiveness e.g. Ferrari

Business-level strategy - focus

specialisation in a particular niche market (by geographic region, type of customer or segment of product line)

What are the two comptitive pressures that exist in the global marketplace

pressures for cost reduction, pressures to be locally responsiveness

What pressures for cost reductions are the greatest

producing commodity type poroducts that fill universal needs where price is the main competitive weapon, when competitors are low-cost locations, persitstent excess capacity, consumers are powerful and face low switching costs

When are the pressures for local responsivenes the greatest

differences in consumer tastes, traditional practices and infrastructure, distribution channels, host government demands, rise of regionalism

What should be done if pressure for cost reduction and pressure for local responsivessness low

international strategy

What should be done if the pressure for cost reduction is high and the local responsiveness for lows

global standardisation strategy

What if cost reduction is low but local respionsiveness is high

localisation strategy

What is cost reduction is high and local responsiveness is high

transnational strategy