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44 Cards in this Set
- Front
- Back
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International Mentality |
Company leverages its domestic capabilities worldwide
Managed as a coordinated federation Products are developed for the domestic marketand only subsequently sold abroad Knowledge is transferred from parent to overseas operators Offshoring is used to protect company’s homemarket Low physical distance between countries and the homemarket |
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Multinational Enterprise (MNE) Mentality |
Substantial direct investment in foreign countries (notjust trading relationships of an export business)
Active coordinated management of these offshore assets (notsimply holding them as a passive financial portfolio) Strategic and organizational integration of operationslocated in different countries Company overseas markets as portfolio of localopportunities Managed as a decentralized federation |
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Global Mentality |
Company views world as a single unit of analysis Operations managed centrally Products created for a world market and manufactured on aglobal scale Believes national tastes and preferences are more similarthan different Standardized products Central coordination and organizational structure |
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Transnational Mentality |
Company simultaneously responds to local needs, globaldemands, and cross-border learning opportunities; managed as an integratednetwork
Sharing of information globally Interdependent network of worldwide operations Recognizes the importance of flexibility and responsivecountry-level operations Network is coordinated to insure efficiency |
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Traditional motivations |
Resource Seeking: Secure supplies, exploit factor cost differences
Market Seeking: Fill capacity, exploit economiesof scale and scope |
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Emerging motivations |
Competitive positioning (or “global chess”):Need global operations to pre-empt others, cross-subsidize markets, secureprofit sanctuaries, etc.
Global scanning: Access emerging trends, new technologies, andbest skills worldwideٓ |
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Uppsala Model |
Incremental process of increasing commitment andunderstanding of foreign markets
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Stages of Uppsala model |
Initial commitment to foreign market
Gains local knowledge about customers, suppliers,regulations Evaluates activities Analyze subsequent investments Makes additional commitment |
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Born Global Companies |
Global entrepreneurs who “don’t automatically buy rawmaterials from nearby suppliers or set up factories close to their headquarters[but who] … hunt for the planet’s best manufacturing locations and scout fortalent across the globe, tap investors wherever they may be located, and learnto manage operations from a distance – the moment they go into business Focus on foreign markets versus their own. |
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Characteristics of Global Entreprenuers |
See distance as an opportunity; they use distance to createnew products or services Articulate a clear global purpose Strike alliances from positions of weakness Manage global supply chains Establish multinational organizations from the outset |
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Four dimensions of distance |
Cultural Administrative/Political Geographic Economic |
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Cultural dimension of distance |
religion, language, social norms, race |
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Administrative/Political dimension of distance |
form of economic system Refers to laws, policies treaties Political instability, tarrifs quotas |
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Geographic dimension of distance |
transportation cost- physical distance increase of cost
size of country - remoteness |
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Economic dimension of distance
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Economic size Difference in consumer income Difference in cost and quality of resources Difference in infrastructure |
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Three goals or objectives and organization has when it goes international
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Efficiency
Flexibility
Learning |
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Efficiency Goal |
Efficiency = value of outputs / cost of inputs
The higher the value of outputs, the better theefficiency The lower the cost of inputs, the better theefficiency Global integration lowers the costs of inputs
Local responsiveness increases the value of outputs - Brings in more revenue |
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Flexibility Goal |
The ability to manage risks and exploit opportunitiesarising from the diversity and volatility of the global environment
Markets and political environments are going to change
Understanding and managing different forms of risk(macroeconomic, political, competitive, resource)
Scanning and responding to discontinuities in globalenvironment
Selecting most attractive markets |
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Learning Goal |
Capture external diversity Worldwide stimuli as potential source of competitiveinformation advantage Need to convert “delivery pipelines” into “sensory feelers” Leverage internal variety Worldwide human resources and capabilities as potentialsources of competitive advantage Opportunity to leverage central and local innovations Create true global innovation by linking sensing,response, and implementation capabilities Key Issues: Need to develop a world-wide learning system;innovative capability as the emerging source of competitive advantage |
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means to achieve the goals or objectives and organization has when it goesinternational |
National differences Scale Economies Scope Economies |
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National Difference Means |
Differences in factor costs/ source markets Differences in output market |
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Scale Economies Economies of Scale |
a proportionate saving in costs gained by an increased level of production As globalization spreads the division of labor to a global scale, countries are able to export labor and production processes that they are relatively less profitable at and instead specialize in labor that is relatively more profitable Static and dynamic forms Higher volumes help you accumulate learning.alpi+ |
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Scope economies Economies of Scope |
Based on the notion that certain economies arise from the fact that the cost of the joint production, development, or distribution of two or more products can be less than the cost of producing themseparately.
made operational when a firm builds upon or extends existing capabilities, resources, or areas of expertise for greater competitiveness
Using information or technology across products
Dependent on firm’s ability to share acrossdifferent areas
Must have infrastructure to support |
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Global Chess |
Organization believespositions in all markets are linked, and that funds generated in one market cansubsidize positions in other markets
Specialized and standardization of product Respondingto threats in one market by reactions in other markets Companies that message their worldwide operations as interdependent units implementing a coordinated global strategy. |
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five Hofstede's Value Dimensions |
Power Distance Uncertainty Avoidance Individualism/Collectivism Masculine/Femininity Long Term/ Short Term Orientation |
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Power Distance |
the extent to which a society accepts the fact that power ininstitutions & organizations is distributed unequally Thefundamental issue here is how a society handles inequalities among people |
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Uncertainty Avoidance |
the extent to which a society feels threatened by uncertain &ambiguous situations & tries to avoid these situations by providing greatercareer stability, establishing more formal rules, not tolerating deviant ideas& behaviors, and believing in absolute truths and the attainment of expertise The fundamental issue here is how a society deals with the fact thatthe future can never be known: should we try to control the future or just letit happen? |
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Individualism/ Collectivism |
IND – loosely knit social framework in which people are supposed totake care of themselves and their immediate families.
COL – people distinguish between in-groups and out-groups, they expectthe in-group to look after them in exchange for loyalty Asociety's position on this dimension is reflected in whether people’sself-image is defined in terms of “I” or “we.” |
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Masculine/ Femininity |
Masculine – Masculinity side of this dimension represents a preferencein society for achievement, heroism, assertiveness and material rewards forsuccess
Feminine - preference for cooperation, modesty, caring for the weakand quality of life In the businesscontext Masculinity versus Femininity is sometimes also related to as"tough versus tender" cultures |
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Long-term Orientation or Confucian Dynamism |
long-term pragmatic vs. short-term normative orientation LT – persistence, thrift ST – respect for tradition, fulfilling social obligations
Inthe business context this dimension is related to as "(short term)normative versus (long term) pragmatic”
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Issues that influence organizations to be responsive to the local market |
Cultural Differences
National Infrastructure
Government Demands
Local Competitors |
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Cultural differences - influences |
Consumer tastes and preferences Ways of doing business (Hofstede and Globe studies) |
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National Infrastructure |
Technical standards (e.g. voltage, TV broadcast, etc.) Distribution channels (e.g. supermarkets vs. bazaars) |
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Government Demands |
National laws and regulations Host country pressures and demands |
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Local Competitors |
Appeal to nationalism – pressure for localization |
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Strategies to uncover unmet needs of Middle Class |
Investigate what your customers are doing withyour product
Look at the alternatives to your offerings
Watch for compensating behavior
Search for explanations |
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Middle Class Consumer's Ability to Buy |
Affordability Disposable Income Product Cost Willingness to Stretch Accessibility Product distribution - not many in some countries |
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Middle class ability to buy X Consumer Need |
Ability X Need: High X Local - Shape or localize Low X Local - Reinvent the business model High X Global - Create a Platform Low X Global - Target Niche |
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Attributes that contribute to a nation beingcompetitive - Porter’s Thorey of Competitive advantage |
Factor condition Demand Condition Related & Supporting Industries (Clustering) Firm Strategy, Structure, Rivalry Sources of national Advantage |
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Factor Condition |
nation’s position in factors of production ○ ex. labor and infrastructure Roads, construction, high/low labor cost Nations succeed in industries where they are good at factor creation
Being at a disadvantage can spur an industry to innovate
Disadvantages can become advantages |
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Demand Condition |
home-market demand for the industry’s product orservice Size of home demand less important than character ofdemand Allows insight into emerging trends Success may mean trend is exported (i.e. credit cards) Began in the U.S. □80's 90% booked airline on CC; Europe was 30%08$& |
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Related and Supporting Industries (clustering) |
Presence of competitive supplier industries and otherrelated industries Eg Silicon Valley, Detroit, Banking Centers (New York, London, Tokyo)
Advantages: shortened lines of communication, reduced costs, joint R & D,nationalistic pride, skill enhancement Fostering of company generation |
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Firm Strategy, structure, rivalry |
national conditions governing how companies arecreated organized, and managed
Each country has a different focus
Local rivalries are strong force in driving innovation
Most powerful force in the diamond model – creates pressure to innovate |
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Overview |
4 mentalities 4 dimensions of distance 4 issues of influence 5 hofstede 4 porter theory of competitive advatage |
