Five Min Power point presentation. Focus on strategies related to the teaching power point.
Strategic Management
Jeff Dyer
Third Edition
Samsung:
Overtaking Philips and Panasonic/Sony as the Leader in Consumer Electronics
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TYPES OF INTERNATIONAL STRATEGY
Product/service is customized in each country.
Decentralized federation of national organizations. Local decision making authority.
Effective when differences between countries are large.
Sources of Advantage:
Differentiation
Local responsiveness
Minimize political & exchange rate risks
Product/service is standardized worldwide
Centralized organization structure. National subsidiaries possess little decision-making authority.
Effective when differences between countries are small.
Sources of Advantage:
Cost
Ability to coordinate activities
Speed in new product development
MULTI-DOMESTIC STRATEGY
GLOBAL STRATEGY
Cost (aggregation)
Differentiation (adaptation)
Copyright ©2020 John Wiley & Sons, Inc.
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A Framework For Analysis
Pressures
for Global
Integration
Pressures
for Local
Differentiation
Low
High
High
Differences in customer needs
Differences in govt. regulations
Differences in mkt./distribution channels
Significant economies of scale
– High R&D
Steep Experience Curve
Need to control quality/experience
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A Framework:
Global Integration – Local Differentiation
High
High
Low
Low
Forces for Global
Integration
Forces for Local
Differentiation
Global Strategy
Multi-domestic Strategy
Local Strategy
Copyright ©2020 John Wiley & Sons, Inc.
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A Multi-domestic Strategy
HOLDING
Co. (HQ)
STRATEGY:
Differentiate in local markets drawing on worldwide resources.
Source: J. de la Torre
POLICIES:
Tailor Products to National Idiosyncrasies
Sacrifice Efficiency for Market Focus
Reach Economies of Scale Upstream
Maximize Local Value Added
Copyright ©2020 John Wiley & Sons, Inc.
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The Fully Multi-Domestic Value Chain
A
B
C
*
*
*
Z
R & D
Design
Service
Distrib-ution
Selling
Market-ing
Manu-
facturing
Purch-
asing
R & D
R & D
R & D
Design
Design
Design
Purch-
asing
Purch-
asing
Purch-
asing
Manu-
facturing
Manu-
facturing
Manu-
facturing
Market-ing
Market-ing
Market-ing
Selling
Selling
Selling
Distrib-
ution
Distrib-
ution
Distrib-
ution
Service
Service
Service
Country
Functional Activities
Copyright ©2020 John Wiley & Sons, Inc.
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THE MULTI-DOMESTIC APPROACH
Some Companies Emphasizing this Approach:
Philips
Unilever
P&G
KPMG
BASF
FedEx
Carrefour
GM
Nestle
pwc
Copyright ©2020 John Wiley & Sons, Inc.
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STRATEGY:
Gain Global Market Share
Cost/Leadership
POLICIES:
World Products to Build Volume and Global Product Roll-out
Break Down Value Chain and Exploit Low Cost Locations around the World
Optimize Global Network at Local Expense
GLOBAL STRATEGY
HQ
Source: J. de la Torre
Copyright ©2020 John Wiley & Sons, Inc.
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The Extreme Global Value Chain
Country
Functional Activities
A
B
C
D
E
F
G
H
R&D
Design
Marketing
Selling
Distribution
Service
Purchasing
Manu-
facturing
Etc.
Design
Purchasing
Manu-
facturing
Copyright ©2020 John Wiley & Sons, Inc.
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THE GLOBAL STRATEGY
Some Companies Emphasizing this Approach:
Panasonic
Coca-Cola
HP
Boeing
Sony
CAT
Toyota
American Express
IBM
Intel
Copyright ©2020 John Wiley & Sons, Inc.
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Where to Next ?
High
High
Low
Low
Forces for Global
Integration
Forces for Local
Responsiveness
?
Samsung
Panasonic
Phillips
Panasonic
Copyright ©2020 John Wiley & Sons, Inc.
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High
Cost
Sharing
Low
Same
Different
Customer Needs
Global
Strategy
(Cost)
Transnational or
Mass Customization
Strategy
(some functions are
global, some are local)
Multi-Domestic
Strategy
(Differentiation)
Types of International Strategy
Local Strategy
Copyright ©2020 John Wiley & Sons, Inc.
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Function/Activity
National
Regional
Global
Research & Development
Product Design
Components
Assembly
Marketing
Sales & Distribution
Service
X
X
X
X
X
X
X
X
X
X
X
Samsung: Achieving both Integration and Differentiation
X
X
X
Copyright ©2020 John Wiley & Sons, Inc.
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Transnational Strategy
STRATEGY:
Create “best value” by differentiating where you have to (e.g., product design) but standardizing in all other activities (e.g., R&D, components, etc.)
POLICIES:
Break the world into regions where customers have similar needs/similar demographics
Develop products for each region depending on needs
Break down value chain and exploit low cost locations around the world whenever possible
Balance needs of global operations vs. local demands
HQ
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THE TRANSNATIONAL STRATEGY
Some Companies Emphasizing this Approach:
Samsung
McDonald’s
P&G
Merck
Whirlpool
Hyundai
Copyright ©2020 John Wiley & Sons, Inc.
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In Summary: Different Strategic Positions Have Different Managerial Requirements
Pressures
for Global
Integration
Pressures
for Local
Differentiation
Global Strategy
Central direction and national affiliates in supporting roles
Multi-Domestic
Strategy
A federation of autonomous subsidiaries sharing some central services
Transnational Strategy
Some functions global, some local, semi-autonomous
subsidiaries, and
close coordination
Home Market Base
Opportunistic
export/investments
Source: J. de la Torre
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Pressures
for Global
Integration
Pressures
for Local
Differentiation
Different Industries
Have Different Positions
Mainframe
Computers
Pharmaceuticals
Specialty
Chemicals
Autos
Civilian
Aircraft
Bulk
Chemicals
Telecom
Agricultural
Equipment
Beer
Packaged
Foods
Retail Banking
Food
Retailing
Appliances
Household
Services
Industrial
Services
Source: J. de la Torre
Semi conductors
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Copyright
Copyright © 2020 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.
Copyright ©2020 John Wiley & Sons, Inc.
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Copyright
Copyright © 2020 John Wiley & Sons, Canada, Ltd.
All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.
Copyright ©2020 John Wiley & Sons, Inc.
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