InBus

• Duration of several decades
• All areas (eco, consump., values, media, politics)
• Global
• complex (multidimensional) --> megatrends influence each other and reinforce each other impact

• should be considerd in riskmanagement-->analyizing trends on an early stage

1. Rapid urbanization (growth is taking place in lesser known medium sized cities of developing countries)
2. Climate change nd resource scarcity
3. shift in global economic power (recession)
4. Demographic and social change
5. Technological breakthroughts 

The rumsfield decision matrix

• KK=treated as a fact
• UU= shocks
• KU=trends
• UK=events which can be externalized

• Develpoments in a country such as red-tape, corruption, protectionism

To determine a country competitive advantage of nations i.e. competitive strengtg or development focus

Market:

• limited government interventions
• few state companies
• financing on the financelmarkets
• adversarial labor relations
• eg: UK & Ireland

Managed:

• Indirect support of the economy (Education & R&D)
• Network oriented economy model (Strong professional associations) 
• Welfare state (social security, social transfer)
• eg: Germany, Norway, Austria, Netherlands, Sweden, Denmark

State:

• State intervenes directly into strategic industires (financing, state ownership, regulation)
• Government involved into labor relations
• eg: Greece, France, Italy

1. European Council (Decision on strategies; Presidents of the states)
2. European Commission (1 comissioners per state, power to implement laws and can retract them at any time unless condirmed by parliment)
3. European Parliment (Votes on laws by the commission, simple majorty rule, budget and oversees institutions)
4. Council of the EU (Ministers responsible for the departments, legislative body, co-decision procedure with parliment) 
5. European Court of Justice 

Exklusive (Brussel)

• Marine ressources
• competion policy
• customs

shared

• R&D policies
• Environment
• Transport
• Energy
• Internal markets

Support/Coordinate

• Industry
• Culture
• Tourism
• Education

links between the home-market activities and activities in international markets which result in additional value creation.

Favorable markets are politically stable, have free market systems, and relatively low inflation rates 

• Ressources & Capabilities
• cost reduction pressure
• localization pressure
• Product charactersitics
• Market characteristics

Market asset motives: Gain access to new markets, follow key customers, compete with key rivals in their own markets

Resource or Asset Seeking motives: access raw materials, gain access knowledge, access tech. & mngmt know-how of the key markets

Efficancy seeking motives: reduce sourcing & production cost, locate production close to customers, take advantages of government incentives, avoid tradebarriers

Reduce sourcing & production cost

locate prdouction close to customers (necessary if the taste of customers changes rapidly-->eg. Zara)

Take advantages of government incentives (subsidies & tax concessions to motivate foreign firms to invest-->generates jobs & transfers knowledge & skills)

Avoide trade barriers

Vertical: Involves acqusition of a key component of a company's supply chain, either up or downstream. -->improved margins, reduces cost and increased control. Ownership of multiple stages of a value chain. When investing outside of normal sphere of operating

Horizontal: Owns a singel stage of value chain-->when investing into its own industry

Forgein partner contributes the capital

local partner contributes the factory/local knowhow/language/

Collaboration in which partners create a project with narrow scope and a defined timetable without any legal entity.

Reduces cost in R&D and helps to catch up

• - no legal entity
• no ownership of parent company
• timetable --> end date

Usually a project based nonequity venture initiated by multiple partners to fulfill a large scale project. 
Work is allocated to the members on the same basis as profits. no formal legal entity

• It is a low responsiveness / low cost pressure strategy
• Products from domestic market-->sell internationally with min. local customization
• For niche markets
• MNC: Ethnocentric-->focus on values, processes & resources of domestic company and replicate
• Critical elements of value chain stay at home (R&D, procurment & production)
• Local marketing and sales under tight control of HQ
• To similar markets

• high responsiveness / low cost pressure
• Customizing goods/services for local markets
• MNC: Ploycentric-->focus on values and interests of local culture
• Value chain-->flexible organized to meet the needs of the local markets
• Critical elements of value chain (R&D, production, procurement, marketing) are located in the local markets
• minimizing political & exchange rate risks
• greater prestige through local elements

• low responsiveness / high cost pressure
• no/min. differences in consumers preferences
• world=one single integrated market
• MNC: geocentric-->focuses on global values & universal needs
• Cirtical parts of value chain are located at HQ/key locations
• Goal: max. efficiency & intergration worldwide & better quality through standardization

• World seen as a portfolio of regional integrated markets = consumer preferences region to region
• MNC: Regiocentric-->georgraphics markets and global network of operations, knowledge transfer
• Manufactering in few key locations
• Benefitinh form both global integration & local responsiveness

1. International Division: If sales are low (beginning of internationalization) Gives centralized control and ist easy to integrate in structure but could be hard to coordinate
    

If regional markets strongly differ and foreign sales are high.
Suited for mulitdomestic strategies and eliminates costy transportation (import of overseas products)
Large overhead and lack of global orientation

EG: Nestle F&B

If integration and cost pressures are high and pressure for local responsiveness are low
Tight centralized  control & coordination, focused global strategy with functional expertise

Difficult to coordinate production & marketin areas and slow reaction to changing envirmonets

E.G: BP

Integration & cost pressure are high and pressure for local responsiveness are low, 

all support functions are focused on a product-->easier to spin off product ranges and allows to focus on specific needs of its costumer

harder local responsiveness

eg Apple

If demands are high for integration & responsiveness

best of both worlds, HQ global control & coordination -->max. inta-orgnizational learning

eg Unilever & Phlips

• Export Modes (Indirect/Direct)
• Contractual Modes (Contract manufacturing, Licensing, Franchising)
• Itermediate Modes (Upstream & Downstream spec / Joint Venture)
• Hierarchical Modes (Merger & Acquistions M&A /Wholly owned Subisdiarries FDI)

Externalization or internalization means where the costs are

+no investment in overseas production
+ fast entry
+ Gain info about foreign competitors
+Risk & investment minimization

- Expensive tax, marketing, transport, expenses
- Logistical organization is high
- views as a outsider
- loss of control over pricing & marketing

Licensing:
+ little upfront capital and solid rate of return
+ Local producer may have advanteges (country specific)
- Selecting the right partner
- Licensee may not reflect the true turnover potential
- little control of ops and potential lack of QC

Franchise:
+low risk
+Able to develop new markets on large scale
+ Could be first activity for FDI
- lack of control of franchisee
- may create future competitor
-cost of brand recofnition

Shared costs, risk, commitment, ownership
+ Reduced market & politcal risks
+ Access expertise and local markets contracts
- goals of partner may lead to conflicts
- loss of confidentiality and flexibility

M&A
+ less time consuming (working base to start with = less effort to start of the greenfield and less risky)
- Complex task involving bankers, lawyers etc.

FDI
+reduced tisk of losing control over core business (Tech. Advantage)
+ Tight control over ops
+ less risky than acquistions bcs of unpleasant suprises
-most costly entry strategy
- slower to establish

• Global Integration (pressure for cost reduction - global standardization, geocentric strategy)
• Local adaptation - pressure for local responsiveness - localization (Multi-domestic, polycentric) strategy
• Pressure in global integration & cost & local responsiveness - Transnational (regiocentric) strategy

• Rising labor & other costs
• fierce competition
• government policies
• economy slowdown in cHINA
• Trade conflicts