Management 80 Chapter 11: International Strategy and Organization

What are the 4 key approaches to Corporate Strategy?

1) Growth Strategy is designed to increase the scale(size) or scope(activities) of operations. Firms can grow organically(internal expansion) and by forming mergers and acquisitions, joint ventures, and strategic alliances. Also can engage in joint ventures or strategic alliances to reduce competition, expand product lines, or expand geographically. 2) Retrenchment Strategy is designed to REDUCE the scale or scope of a corporation's businesses. This is deployed when there is too much competition, inefficiency in the scope of business, or when economic conditions worsen. This is done by laying off employees, closing factories, selling off unprofitable or unrelated business units. 3) Stability strategy is designed to guard against chage. This is used when a business sees no current opportunities or threats, strengths fully exploited, weaknesses fully protected, and stated objectives are met. 4) Combination Strategy mixes growth, retrenchment, and stability strategies across corporation's business units when necessary.

What are the 3 steps of strategy formulation?

1) Identify Company mission and goals 2) Identify core competencies and value-creating activities 3) Formulate Strategies

What are the 2 international strategies? Describe them.

1) MULTINATIONAL Strategy ADAPTS products and their marketing strategies in each national market to SUIT local preferences. This strategy allows companies to monitor buyer preference in e/a local market and respond quickly and effectively to changes in buyer preference. Drawback is that a firm may not be able to exploit economies of scale in product development, manufacturing, or marketing, which can make it unfit for price-competitive industries. 2) GLOBAL Strategies are used when a company offers the SAME products using the SAME marketing strategy in ALL markets. Allows firms to take advantage of scale and location economies by producing entire inventories or components in a few, optimal locations. Benefit of this approach is the cost savings from standardized products and marketing. Also, lessons learned in 1 market can be shared with other markets. Drawbacks are that it may overlook buyer preferences b/c it allows for only simple modifications in features.

What are the 3 types of Business Level Strategies?

1. Low-Cost Leadership Strategy in which a company exploits economies of scale to have the lowest cost structure of any competitor in its industry. This works best with mass-marketed products aimed at price-sensitive buyers. Administrative costs and primary activity costs must be cintained. Efficient production in large quantities can help guard against competitors bc of large start up cost required. Drawback is limited customer loyalty. 2) Differentiation Strategy: a company designs products that buyers perceive as UNIQUE throughout an industry. The exclusitivity forces companies into lower market shares, BUT companies can charge higher price and experience higher customer loyalty. These factors offset higher costs of producing and marketing. The differentiators include quality, brand image, product design, or a combo of these factors. 3) Focus Strategy focuses on serving the needs of a narrowly defined market segment by being the low-cost leader, differentiating its product, or both. Intense competition forces products to be distinguished by price, quality, or design. Some firms focus on a single geographic area.

What is core competency, and how do companies identify them?

A core competency is a special ability of a company that competitors find extremely difficult or impossible to equal. It is not a skill b/c only people possess skills. Companies find their core competencies through value chain analysis = the process of dividing a company's activities into primary and support activities, and identifying those that create value for customers. - Primary activities are directly concerned with the creation or delivery of a product, and directly increasing customer value. Ex: logistics, customer service, production, marketing and sales. - Secondary activities help improve primary activities' productivity. Include human resources, business infrastructure, technology development, and sourcing.

Global Product Structure Definition, benefits, and drawbacks please!!

A global product structure divides worldwide operations according to a company's product areas. Well suited strategy to a company that sells a diverse set of products. Since focus is primarily on the product domestic and international managers in each product division must coordinate their activities so they don't conflict.

What is a mission statement? Describe the different types.

A mission statement is a written statement of why companies exist and what it plans to accomplish. IT describes how company operations are likely to affect stakeholders in all nations where a firm is active. - High level objectives are stated in general terms. ex: Bay NovelTees to become the most popular Bay Area clothing line. - Business Unit objectives are more specific: To produce shirts at the lowest cost possible at the highest quality. - Department level objectives often carry numerical performance targets: to increase California market share by 5%/

What is the difference between centralization vs Decentralization?

Centralized decision making concentrates decision making at a high organizational level in one location, such as HQ. Decentralized decision making disperses decisions to lower organizational levels such as international subsidiaries.

When would companies decide to centralize or decentralize?

Companies that operate in multiple lines of business or many international markets would benefit from centralized decision making. International subsidiaries that use the same resources, or whose profits are another's input would need a centralized P.O.V. Decentralization would be well suited in companies that require quick responses that would suit local interests and tastes. Local responsiveness is improved, and personal accountibility is increased b/c managers are more invested into their operations.

What are department level Strategies?

Department level strategies rely on capabilities that are based in a companies' primary and supporting activities.Each department creates customer value by helping to lower costs or by contributing to a product differentiation. Manufacturing strategies can cut production costs and improve product quality, marketing strategies can promote differences between product and competitors, efficient logistics can reap savings, and R&D strategies can identify unmet consumer needs and design new products. `

What is an international division structure?

International division structure separates domestic and international activities by creating a separate international division with its own manager. A general MANAGER for e/a nation controls product manufacturing and marketing from that market. This helps firms reduce costs and increase efficiency while preventing international activities from disrupting domestic operations. Potential Problems include poor corrdination, and destructive rivalries between country managers within the international division. ex: Planes division, Trains division, Automobiles division

Spot the differences between planning and strategy

Planning is the process of identifying and selecting a company's objectives and deciding how a firm will achieve those objectives. Whereas strategy is the set of planned actions that managers take to help a company meet its objectives. Well defined strategies coordinate divisions and departments to achieve company-wide goals effectively and efficiently.

What are the differences between self-managed teams, cross-functional teams, and global teams?

Purpose of work teams is to increase responsiveness by cutting functional boundaries that slow decision making. - Self managed teams consist of employees from a single department that take on responsibilities of their former supervisors. Ex: Quality improvement teams used in manufacturing setting to improve efficiency, productivity, and product quality. Drawbacks are workers in collectivist cultures may resist these self-managed teams. - Cross-functional Teams join employees from different functional departments together who work at similar levels. This improves coordination and eliminates inter-departmental barriers - Global teams bring together top managers from HQ and subsidiaries to solve company problems. These managers must overcome large distances between team members, lengthy travel times, and inconvenience working across time zones.

What are the 4 most common types of Organizational Structures?

The four types of international company structure are: - Division structure, Area structure, Product structure, and Matrix Structure.

What is International Area Structure?

The international area structure organizes a company's global operations into countries or regions. E/a geographic division operates as a self-contained unit, with regional or country managers handling the decision making. This Area structure works well when operations are spread out in countries with vastly different cultural, political, and economic characteristics. Drawbacks are units acting independently may cause resources to overlap and impair cross fertilization of knowledge across units. ex: Asia division, Americas division, Middle East and Africa division, Europe division.

What is a global Matrix Structure?

This matrix structure splits the chain of command between PRODUCT AND AREA divisions. Presidents of the product division and geographic area share decision making. This strategy brings together specialists that increase local responsiveness, reduce costs, coordinate worldwide operations, and increase coordination. Drawbacks could be slower decision making and reaction time due to increased coordination. Also fuzzy accountability due to shared responsibility.