International Business

Global integration / Local responsiveness

Coordination of the value-chain activities across countires to achive efficiency, synergy and cross-fertilization to take max. advantage of similarities between countries.

Management of value-chain activities on country-by-country basis to address diverse opportunities and risks.

local resp./global int.

low/low ---- International (Home Replication, Ethnocentric) Strategy

low/high --- Global (Standardization, Geocentric) Strategy

high/low --- Localization (Multidomestic, Polycentric) Strategy

high/high -- Transnational (Regiocentric) Strategy

- international business as seperated/secondary to domestic business

- opportunity for additional sales

- designs products for domestic customers 

- no adaption for foreign customers

- typically employed by smaller firms

- headquarters deligates autonomy to managers in each foreign unit

- operate independently

- emphasizes differences between national markets

- vary product and management by country

- min. pressure on headquarters / delegate many tasks

- disadvantages: each manager develop local strategy, no knowledge transfer - reduced econmies of scale

- headquarters seeks substantial control / operational responsibility worldwide

- min. redundancy and max. efficiency, learning and integration worldwide

- same thing, the same way, everywhere

- advantages: cross-national learning & cross-fertilization, creates economies of scale

- limitations: challenging to coordinate, must maintain ongoing communication 

- firm relatively responsive while retaining sufficient central control

- ensure efficency and learning

- combination of advantages of multidomestic and global strategies to min. their disadvantages

- most MNEs find it difficult to implement