Basic Strategies & Multinational and Participation Strategies

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Basic Strategies & Multinational and Participation Strategies K. Praveen Parboteeah

Basic Strategies
Review of strategic decision making and strategic management Understanding of basic strategies And how to craft strategies Industry analysis SWOT analysis

Situation with diversified companies

The global-local dilemma
Some of the broad multinational strategies Multidomestic Transnational International Regional

Participation strategies – how should one enter a market

Multinational Strategies and the Global Local Dilemma

The local responsiveness solution
Customize organizations and products to country or regional differences

The global integration solution
Reduce costs with worldwide standardized products, uniform promotional strategies and distribution channels Seek lower costs or higher quality anywhere in the value chain and in the world

Four Broad Multinational Strategies
Solutions to the global--local responsiveness dilemma
Multidomestic Transnational International Regional

Multidomestic Strategy
Local markets are linked within a region Gives top priority to local responsiveness issues A form of the differentiation strategy Not limited to large multinationals

Examples of Multidomestic
Even for standardized products, sometimes localization is necessary Ex: McDonald’s could not sell its famous Big Mac in India – instead sells a mutton sandwich called Maharaja sandwich

Matsushita: A GLOCAL company – “go GLObal and act loCAL” Has key “go global, act local” strategies and policies
Be good citizen in all countries Give overseas operations your best manufacturing technology Keep expatriate headcount down – groom local managers Let plants set their own rules, fine-tune manufacturing process to match skills of workers Develop local R&D to tailor products to market Encourage competition among overseas outposts and with plants back home

Transnational/Global Strategy
Gives two goals top priority:
seek location advantages gain economic efficiencies from worldwide networks

Cost reductions Higher quality of products Customer satisfaction – can obtain and service product anywhere Increased competitive power

Example of a Global Industry: Automobiles [Honda Civic vs. City]

Road Clearance Engine Computer Engine Size Suspension Turning Radius Comfort/Safety

Honda City’s is one inch higher because of Asia’s bumpier roads Honda City’s computer is positioned higher to protect it from floods Honda City’s is smaller – poor road quality and congestion means lower speed City’s strut system is simpler that the Civic’s wishbone system City’s tighter turning ratios can better handle narrow and twisting Asian roads City is smaller, has no airbags, antilock breaks, heaters – but has extra air conditioner

International Strategy
A compromise approach Global products, similar marketing techniques worldwide Upstream and support activities remain concentrated at home country

Regional Strategy
A compromise strategy Attempts to gain economic advantages from regional network Attempts to gain local adaptation advantages from regional adaptation

Ex: Guinness in Nigeria
Guinness is now seen as a Nigerian brand How did they achieve this? Their drive has been to make customers realize that they are producing for the local market “Our market is not expatriates” They rely on local raw materials Sorghum, a common cereal in West Africa is a base for Nigerian Guinness Gives it a preferred sweet flavor

Ex: Nigeria and Guinness
Product innovation – Malta Guinness – non-alcoholic beer because people drink lightly Guinness Nigeria developed various products with a taste, alcohol strength, and consistency tailored to Nigeria Marketing is also tailored to Nigerian culture

Mixed Strategies
Seldom do companies adopt pure forms Different strategies for each business Different strategies for product differences

Pressures to Globalize...
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