Woche 6

Treatment of foreign market:

• Take products for the domestic market and sell them internationally with minimal local customization
• Markets with low competition, similar customer needs, niche markets
• Foreign markest often similar to the domestic market (low psychic distance9
• Ethnocentric: Focus on values, processes and resources of thr domestic comapny and replicate

Value Chain:

• Critical elements of the value chain stay centralized (R&D, procurement, production)
• Local marketing and sales but under tight control from headquarter
• Generally no adaption to foreign markets - Products are marketed zhrough intermediaries

Rationale:

• Transferring core competencies of the companies (products/services) to locations wher elocal competitors lack them.

Example: Swiss Watches, Victorinox Messer, 

Treatment of Foreign Markets:

• Increase profitability by customizing goods or services so that they match tastes and conditions in local markets 
• In local industries
• Autonomous subsidiaires (Tochtergesellschaften) pursue local responsiveness and localized strategy
• Polycentric: Focus on values and interests of the local culture in the served markets

Value Chain:

• Value Chain is flexibly organized according to needs of different national markets
• Critical elements are positioned in the local market (R&D, production, procurement, marketing) decentralized and with authority to adapt to local market conditions

Rationale:

• Minimizing political and exchange rate risks
• Greater prestige through local/customized elements

For example: Nestlé, Coca Cola

Treatment of Foreign Markets:

• World is seen asmsingle integrated market
• No or minimal differences in consumer preferences from country to country

(Why not make the same thing , the same way, everywhere?)

• Geocentric: Focus on global values and universal need

Value Chain:

• Concentratingof critical value chain activities (R&D, production and marketing) in headquarters or in the few most favorable keylocations, central control over operations
• No or minimum customization applied

Rationale:

• Increase profitability through minimum repetition, maximum efficiency and integration worldwide, improved quality through standardization

Example: Zara, H&M. Mc Donalds, IKEA, Apple

Treatment of Foreign Markets:

•  Coordination approach: Word is seen as a portfolio regionally integrated markets, standardiation-localization mix differs from region to region
• Aggregation om regional level: Consumer preferences from region to region
• Regiocentric: Focus on intergration in geographic markets and buidling a global network of opertaions
• Facilitate global learning and knowledge transfer

Value Chain:

• Scale economies through sourcing from reduced number of global suppliers, concentrate manufacturing in few key locations
• Dispersed (zerstreut), subject to minimum efficiency standards, to meet local preferences

Rationale:

• Benefiting from global integration and local responsivneness and leveraging global competencies: "Standardize where possible, adapt where appropriate"
• Coordinate global competitive moves

For example: Caterpillar

Vertikal Differentiation: 

• Centralization
• Decentralization

Horizontal Differentiation:

• International Division
• Area Division
• Worldwide Product Division
• Global Matrix

Centralization:

Premises: 

• Decision made by senior manager
• Effective value chain activities require direct local activities from headquarter
• Local opertaions support the centrals vision/mission (MNE)

Advantages:

• Decisions support objectives
• HQ authority to regulate change
• Avoid duplicate activities
• Coordinating is simlplified
• Financial Controll over procurement
• Consisten Stakeholder relations

Multi-domestic -/ Policentric Strategy

Standardization -/ Geocentric Strategy

Regiocentric Strategy

Home Replication -/ Ethocentric Strategy

.

.

• Marketing

• cross-fertilization

Presmises:

• Decisions made my managers closest to customer
• Effective value chain requires adaption by local managers
• Local sucess = anchors global perfomrance

Advantages:

• Local managers decision making
• Encourage entrepreneurinal behavior
• Improves loyalty and accountability of frontline employees
• Decentralized customer service
• Links decisions to performance

Global Strategy:

• High pressure of global integration and cost reduction
• Low Pressure for Local Responsiveness
• Standardization and Centralization are imperative / Decentralization is unnecessary to sell generic product to similar markets

International Strategy:

• Low Pressure of global integration and Cost Reduction
• Low Pressure of Local Rssponsiveness
• StandardizatioN not necessary/ Adaption & Decentralization unnecessary to sell generic product to similar markets

Transnational Strategy:

• High Pressure of Global Integration/Cost Reduction
• High Pressure of Local Responsiveness
• Standardization imperative / Adaption & Decentralization needed to sell generic product to similar markets

Localization Strategy:

• Low Pressure of global integration and Cost Reduction
• High Pressure of Local Responsiveness
• Standardization not necessary / Adaption & Decentralization needed to sell generic product to similar markets

1. Client Service
2. Product Quality
3. Experiendced/educated perosnnel
4. Long run profitability
5. Reputation

1. Flexibility - Local oppurtunities
2. Learning - Unique Learnings in a diverse environmnet
3. Efficiency - Lower costs on a global scal

Standartization: Pressure for global intergration and cost reduction

Mostly in industries producing commodities for universal needs / Price pressure / consumer are powerfull and face low switching costs

example: Easyjet (Higher number of seats, higher load factor, younger fleed deal = lower costst) = Cost advantage

Differentiation: Pressure for local responsiveness:

Different consumer tastes / differences in traditional practices