chapter 10: global strategy not done
Globalization 3.0 (2000-present)
- MNEs reorganize into a more seamless global enterprise - Firms create global networks of local expertise - Technology helps reduce communication distances
Globalization 1.0 (1900-1941)
-Sales, operations, and some procurement -Strategy flowed from HQ to international sites
Globalization 2.0 (1945-2000)
-To reconstruct damage from the war -Focus on European countries, Japan, and Australia -Greater local-responsiveness -HQ set goals, international sites influenced tactics
CAGE distance framework
A decision framework based on the relative distance between home and a foreign target country along four dimensions: cultural distance, administrative and political distance, geographic distance, and economic distance.
multinational enterprise (MNE)
a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries
foregin direct investment (FDI)
a firm's investments in value chain activities abroad
polycentric innovation strategy
a strategy in which MNEs now draw on multiple, equally important innovation hubs throughout the world characteristic of Globalization 3.0
liability of foreignness
additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances
- access new markets - access lower-cost inputs - develop new competencies
advantages of international expansion
- cultural - administrative/political - geographic - economic
components of CAGE framework
- liability of foreignness - loss of reputation - loss of intellectual property
disadvantages of international expansion
- advances in telecommunications - reductions in transportation costs - falling trade barriers
helped globalization possible
transnational
high pressure for cost reduction, high pressure for local responsiveness
global standardization
high pressure for cost reduction, low pressure for local responsiveness
multidomestic
low pressure for cost reduction, high pressure for local responsiveness
international
low pressure for cost reduction, low pressure for local responsiveness
global strategy
part of a firm's corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world
global standardization strategy
strategy attempting to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lower cost
transnational strategy
strategy that attempts to combine the benefits of a localization strategy (high local responsiveness) with those of a global-standardization strategy (lowest-cost position attainable), used to pursue a blue ocean strategy
multidomestic strategy
strategy that attempts to maximize local responsiveness, with the intent that local consumers will perceive them to be domestic companies
international strategy
strategy that involves leveraging home-based core competencies by selling the same products or services in both domestic and foreign markets
national culture
the collective mental and emotional "programming of the mind" that differentiates human groups
globalization
the process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs.
