Transcript 4-Readings-global-context-Chapter 10.ppt

CHAPTER
IV. Introduction to the Readings
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Overview
10.1
Th. Levitt: The Globalization of Markets
 The Global Convergence Perspective
10.2
S. Douglas and Y. Wind: The Myth of Globalization
 The International Diversity Perspective
10.3
M. Porter: The Competitive Advantage of Nations
 The Role of (International) Clusters
10.4
C. Bartlett and S. Ghoshal: Transnational
Management
 Globalization and the Organization
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Strategy – Process, Content, Context
The International Context
CHAPTER
Globalization of Markets
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Basic Assumptions
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
Technology is the major force that drives the world toward
a converging commonality

The result of this force is the emergence of global markets
for standardized consumer products on a previously
unimagined scale of magnitude

This trend toward globalization is the beginning of the end
for multinational corporations, only global firms will survive

Our age can be characterized as ‘The Republic of
Technology (whose) supreme law … is convergence, the
tendency for everything to become more like everything
else (Daniel. J. Boorstin)
Strategy – Process, Content, Context
The International Context
CHAPTER
Globalization of Markets
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The Hedgehog knows…
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Strategy – Process, Content, Context
The International Context
CHAPTER
The Myth of Globalization
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Underlying Assumptions and Pitfalls
Pitfalls
Homogenization of the world’s wants
•
•
Lack of evidence of homogenization. Some industries developed indeed global products, but most
did not.
Growth of intracountry segmentation price sensivity. There still exists considerable diversity within
and between countries.
Universal preference for low price at acceptable quality
Pitfalls
•
•
•
Lack of evidence of increased price sensivity. There is no evidence that customers are willing to
trade off specific product features for a lower price.
Low price positioning is a highly vulnerable strategy. Low price strategy in international
markets offers no long-term competitive advantage.
Standardized low price can be overpriced in some countries and underpriced in others.
Economies of scale of production and marketing
Pitfalls
•
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Development in flexible factory automation. Recent developments in flexible factory automation
methods have lowered the minimum efficient scale of operation.
Production costs are often a minor component of total costs. In many consumer and service
industries, production costs are a small fraction of the total sum.
The standardization philosophy is primarily product driven. It ignores key strategy variables
De Wit & Meyer
Strategy – Process, Content, Context
The International Context
CHAPTER
The Myth of Globalization
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Requisite conditions for Global Standardization
Requisite conditions for global
standardization
Existence of global
market segments
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Synergies associated
with global
standardization
Strategy – Process, Content, Context
Availability of an
international
communication and
distribution
infrastructure
The International Context
CHAPTER
The Myth of Globalization
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Operational Constraints
Operational constraints to effective
implementation of a standardization strategy
External constraints
Internal constraints
Government and
trade restrictions
Nature marketing
infrastructure
Interdependencies
resource markets
Nature competitive
structure
Existing international operations
Local management
motivation/attitude
Tariffs and other
trade barriers
frequently hinder the
standardization of
the product line,
pricing, or
promotional strategy
Differences in the
availability and reach
of various
promotional media
can hinder the
standardization
process
The
interdependence of
resource markets
will influence
decisions regarding
sourcing and
location
Differences in the
nature of competitive
situation in different
countries suggest
the desirability of
adaptation strategy
Almost every
company has
already a number of
existing operations in
various countries
and this has to be
taken into account
When
standardization
strategies are
implemented it will
be difficult to
motivate ‘local’
employees in an
effective way
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Strategy – Process, Content, Context
The International Context
CHAPTER
Competitive Advantage of Nations 10
The Diamond
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Strategy – Process, Content, Context
The International Context
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Competitive Advantage of Nations 10
New Rules for Innovation
1.
Sell to the most sophisticated and demanding
buyers and channels
2.
Seek out the buyers with the most difficult needs
3.
4.
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Establish norms of exceeding the toughest
regulatory hurdles or product standards
Source from the most advanced and international
home-based suppliers
5.
Treat employees as permanent
6.
Establish outstanding competitors as motivators
Strategy – Process, Content, Context
The International Context
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Competitive Advantage of Nations 10
The Home Base Diamond
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Strategy – Process, Content, Context
The International Context
CHAPTER
Transnational Management
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International Structural Stages Model
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Strategy – Process, Content, Context
The International Context
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Transnational Management
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Organizational Configuration Models
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Strategy – Process, Content, Context
The International Context
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Transnational Management
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Integrated Network Model
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Strategy – Process, Content, Context
The International Context
CHAPTER
The International Context
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Influencing Factors in an International Context
1. Level of Nationalism
2. Size of Country
3. Preference for Central Decision-Making
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Strategy – Process, Content, Context
The International Context