Transnational Management Lecture

Front 1

the forces

Back 1

FORCE 1 - global integration and coordination

--> economies of scale, scope and above average return

FORCE 2 - national responsiveness and differentiation

--> understanding the different wants and needs of local markets and responding to those needs

FORCE 3 - worldwide innovation and learning and diffusion of learning

--> dispersement of knowledge

Front 2

components of force 1

Back 2

--> economies of scale - producing on a large scale so that efficiencies are made whilst minimising costs. must have the selling ability to sell the large production amount.

--> economies of scope - the range of products a business sells, must still have economies of scale.

--> factor costs - sourcing resources from the best locations in the world at the lowest prices, allows for greater margins.

--> liberalising of markets - the opening up of markets allows for greater access to resources and consumers.

Front 3

components of force 2

Back 3

--> cultural differences - affects consumer tastes and preferences and the ways that businesses are conducted.

--> national infrastructure - differences in technical standards and distribution channels.

--> government demands - pressures from government demands, if it is not responded to then political risk is incurred which translates to economies risk

--> local competitors - already have established knowledge, brand and consumer base, must have entrant strengths to compete.

Front 4

what's different about multinational management?

Back 4

--> organisational diversity and complexity

--> government demands and political risk

--> multiple operating environments

--> global competitive game

--> currency fluctuations and exchange rate risk

Front 5

what defines an MNE?

Back 5

--> substantial investment in overseas operation

--> active management of overseas assets and capabilities

--> management integration of operations located in different parts of the world

Front 6

why do companies internationalise?

Back 6

--> gain competitive advantage - must internationalise to stay competitive, to secure profit sanctuaries, to access more markets/consumers

--> global scanning - to gain access to the newest technologies, skills, talent, products, knowledge

Front 7

types of MNEs

Back 7

GLOBAL

--> sell standardised product to entire globe

--> strat. - global efficiency (force 1)

--> man. struct. - centralised, no autonomy given to managers

--> no differentiation of products

MULTINATIONAL

--> understand wants and needs of local markets and respond to them by creating customised products

--> strat. - local diff. and responsive. (force 2)

--> man. struc. - decentralised, management have autonomy

--> loss of global efficiency

INTERNATIONAL

--> subsidiaries are seen as distant outposts whose role is to support the parent company

--> strat. - knowledge transfer (force 3)

--> man. struc. - coorindated, managers do not have autonomy

--> products are created at headquarters with R&D kept at home, then distributed to subsidiaries

TRANSNATIONAL

--> responding to global demands, local preferences and worldwide innovative opportunities whilst maintaining global efficiency

--> strat. - all 3 forces

--> man. struc - integrated

--> can still respond to local markets whilst maintaining economies of scale

Front 8

characteristics of transnational management

Back 8

--> builds and legitimises multiple internal perspectives

--> dispersed and interdependent assets and capability

--> robust and flexible integrative process

Front 9

traditional globalisation strategy

Back 9

traditionally businesses set up in the home country, established themselves for a few years, before venturing out into international business.

when they did internationalise, it was only to a country with a small physical and psychic distance to the home country.

Front 10

today's globalisation strategy

Back 10

today business are being BORN GLOBAL

--> establishing international operations within a couple of years of starting up

--> are able to source the best talent, skills, technology, manufacturing facilities straight away

--> face many challenges in the global sphere

Front 11

challenges of internationalising

Back 11

--> physical distance - creates time differences which complicates business operations, differences in working hours of businesses

--> psychic distance - differences in consumer tastes and preferences affected by differences in trends, culture, religion. when businesses internationalise, they often move onto a business with a small psychic distance to them.

--> context - differences in political, economic, judicial, legal, cultural systems.

--> resources --> start ups often have little capital/assets to use in their initial stages, yet customers/competitors still expect high quality and skills.

Front 12

goals of worldwide competitive advantage

Back 12

--> global efficiency

--> multinational flexibility

--> worldwide learning

Front 13

means of worldwide competitive advantage

Back 13

--> national differences

--> scale economies

--> scope economies

Front 14

strategic tasks of worldwide competitive advantage

Back 14

--> defend world dominance

--> challenge global leader

--> protect domestic niches

Front 15

forms of innovation

Back 15

INCREMENTAL

--> small changes to established innovations, important for revenue

RADICAL

--> completely new ideas, MNEs are always looking for radical innovations as they achieve above average return

Front 16

capabilities of offshore units in worldwide innovation

Back 16

SENSING - locating the best technology, trends, products around the world

RESPONDING - attracting the best talent and skills

IMPLEMENTING - act collectively with headquarters and other offshore units

Front 17

what does success in worldwide innovation depend upon?

Back 17

CUSTOMER - being discerning and discriminating

COMPETITORS - locating innovations where biggest competitors are

HUBS - locating innovations where hubs of the industry are

Front 18

types of innovation

Back 18

CENTRE FOR LOCAL - global and int. MNEs

--> developing innovation at headquarters to sell in local markets

LOCAL FOR LOCAL - multinational MNEs

--> developing innovation in local market subsidiaries to sell to local markets

GLOBALLY LINKED - trans. MNEs

LOCALLY LEVERAGED - trans. MNEs