Decision to Globalize

Opportunity to expand market Recoup large capital or R&D investments Achieve economies of scale & learning Take advantage of low cost factors of production Secure key resources

Globalization Of Markets

Globalization Of Markets & Production

Adaptation Aggregation - Arbitrage AAA Triangle

Strategic Choices

Strategic Choices
International Strategy transferring differentiated product offerings developed at home to new markets; Less pressure for local responsiveness & cost reduction Global Strategy - Competitive strategy is centralized & controlled by home office Multidomestic Strategy - Strategic & operating decisions are decentralized to subsidiaries Transnational Strategy - Seeks to achieve both global efficiency & local responsiveness

Convergence of Global & Multi domestic Strategies

Global to Multi Domestic

Consumer Electronics
1980s huge scale R & D, Marketing, Manufacturing Panasonic standardized product line production in huge centralized plants Government resistance to flood of imports local players catering to local tastes Matsushita/Panasonic followed suit increased No of models

Multi domestic to Global

Laundry Detergents
European Market P & G Washing habits hot & cold; hand vs. machine Gradual uniformity Pressure on cost input side Standardization

Globalization: Implications
To be responsive to the varied & changing needs of international markets w.r.t. Consumer Behavior Competitive Challenges Managerial initiatives & Motivation Centralization can impair this ability

UN Model & HQ Syndrome

Most MNCs treat their Subsidiaries in a uniform manner HQ has the tendency to control key resources, have subsidiaries act as implementers and adapters of global strategy in the local market

OUTCOME
HQ Need for Control SUBSIDIARY Need for Freedom

Strained & Adversarial Relationship

Roles of National Subsidiaries