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.