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1 © Nguyễn Minh Đức 2009

CCÁÁC CHIC CHIẾẾN LƯN LƯỢỢC C QUQUẢẢN TRN TRỊỊ KINH DOANH QUKINH DOANH QUỐỐC TC TẾẾ

INTERNATIONAL BUSINESS INTERNATIONAL BUSINESS MANAGEMENT STRATEGIESMANAGEMENT STRATEGIES

NGUYỄN MINH ĐỨC

Bài giảng


International Business Management

V. Global strategy

VI. Entering foreign market

VII. Global marketing

VIII. Global operation management

IX. Global human resource management


I. Global Strategy

�Strategy: “the action managers take to attain the goals of a firm”� General purpose: maximize/make profit

• Differentiate products, increase price: add value, features, quality, service

• Achieve low cost

� Key means: allocation of scarce resources to attain goals


Activity Value Chain

�Firm as a chain of discrete value creating activities� Primary

• upstream activities, manufacturing

• downstream activities: marketing, sales, after sales service

� Support• infrastructure (general and administrative)

• human resources

• research and development


Global Expansion Benefits

�Earn greater return from distinctive skills, core competences

• inimitable or difficult to imitate skills in value chain

�Realize location economies (choice of FDI location)

• create multinational network of activities (global web)

�Realize greater experience curve economies, which reduce the cost of value creation

• learning effects, economies of scale

B

Accumulated output

Experience curveUnit costs

A


Pressures for Global Integration & Local Responsiveness

High

HighLow

Low

Cost Reduction(Global Integration)

Pressures

Local Responsiveness Pressures

Differences in - consumer tastes/preferences- infrastructure/practices- distribution channels- host government needs

Ball bearings,wheat

Cosmetics, food,household goods


Strategic Choice

High

HighLow

Low

Local Responsiveness Pressures

“Global”Strategy

“Transnational”Strategy

“Multidomestic”Strategy

“International”Strategy

Cost Reduction(Global Integration)

Pressures

Multidomestic MNC

Decentralized Federation - Many key assets, responsibilities and decisions localized

Personal Control - Informal HQ-Sub relationship, simple financial controls

Multidomestic Mentality - Management sees overseas operations as portfolio of independent businesses

UK Chile

IndiaJapan

USA

HK

Mexico

Source: Bartlett and Ghoshal, Managing across borders, 1989

International MNC

Coordinated Federation - Many key assets, responsibilities and decisions localized

Administrative Control - Centralized HQ control, formal planning and control, tight HQ-Sub linkage

International Mentality - Management sees overseas operations as appendages to a domestic operation

UK Chile

IndiaJapan

USA

HK

Mexico


Global MNC

Centralized Hub - Most strategic assets, resources, responsibilities and decisions centralized

Operational Control - Tight HQ control of decisions, resources,information

Global Mentality - Management sees overseas operations as delivery pipelines to a unified global market

UK Chile

IndiaJapan

USA

HK

Mexico


Transnational MNC

Networked Organization - Distributed, specialized resources and capabilitiesInterdependent Units - large flows of components, products, resources,

people, and informationTransnational Mentality - Complex process of coordination and cooperation

in an environment of shared decision making

UK Chile

IndiaJapan

USA

HK

Mexico



International Strategic Alliances

�Cooperative agreements between potential or actual competitors from different countries� Advantages

• Facilitate entry into a foreign country

• Allow fixed costs of new products and processes to be shared

• Bring together complementary skills and assets that can not easily be developed independently

• Help establish industry standards in technology

• Allow reduction of operating costs,e.g., shared training, purchasing


International Strategic Alliances

� Disadvantages• Give competitors a low cost route to new

technology / markets

• Disproportional benefit accrual to partners


Making alliances workWhich partner?

� A suitable partner� Helps achieve strategic goals; brings needed, valuable

capabilities

� Shares the firm’s vision for the alliance’s purpose

� Is not likely to exploit the alliance to its own ends

� To select a partner� Do thorough background check from public sources

� Collect information from third parties who have personal experience with the likely partner(s)

� Spend a lot of face-to-face time with likely partner(s)

Slide 10-11


Making alliances workWhat Structure?

� Protect technology/know-how that is not intended to be transferred

� Draw a solid contract with safeguards against opportunism

� Achieve equitable gain through agreed swaps of technology the other wants

� Seek creditable, clearly articulated commitment to partner “behavior” a-priori

Slide 10-12


Making alliances workHow to manage?

�Show sensitivity to cultural differences that explain different managerial styles

�Build trust� Set up framework for formal and informal face-to-face

meetings to create the opportunity for a common value system to emerge

� Build an informal network of personal relationships

�Learn from partners� Apply the knowledge within your own organization

� Brief your employees on partner strengths


II. Enter the foreign markets

Each country’s attractiveness to a particular firm as a particular market depends on:� The firm’s objectives

� A balance of benefits, costs, and risks


Timing of Entry

�Fist-mover advantages• Preempt rivals; establish strong brand name; capture demand

• Build sales volume; ride down experience curve ahead of competitors; cost advantage

• Create switching costs for that tie customers to 1st mover’s products

• Establish social ties ahead of following foreign competitors– important in high-context cultures

�First-mover disadvantages; pioneering costs• Time spent to learn dos-don’ts; competitors can learn from 1st mover

• If 1st mover introducing a new industry, it builds infrastructure

• 1st mover “trains” customers for followers

• Break through host country’s adjustment to “foreignness” issues– Regulations may change as a result of 1st mover’s entry

Slide 11-2


Scale of Entry

� What level of resources to commit?

� What level of resources can firm afford to commit?

� A strategic commitment is difficult to reverse� Has a long-term impact

� Means that the resources cannot be used elsewhere

� 1st mover advantages and large scale linked

� Small scale entry allows learning at low risk

� Entry in small or large potential market may require the same level of initial resources

Slide 11-3


External or “arms-length” Modes of Entry

�Firm does business overseas without investing in owned assets and own human resources in target market� Exporting

• Sell “domestically” produced products into foreign markets through local independent agents or directly to customers

� Turnkey projects• Special case of exporting for firms that set up production plants or

build facilities for others

• The “exporting firm” builds the facility overseas, starts it up, turns it over to the host country owner, and then departs

• Oil firms, construction firms, manufacturers

Slide 11-4


External or “arms-length” Modes (cont.)

� Franchising• Franchisor, grants franchisee use of intangibles under the condition

that franchisee follow strict rules of operating the business

� Licensing• Licensor grants rights to licensee for use of intangible property over a

specified period in return for a fee

• Intangible property: patents, inventions, formulas, processes, designs, copyrights, trademarks

• Licensing agreement likely allows licensor quality assurance rights over actual use of intangible asset

• If licensee sells to consumers using the licensor’s brand name, the license may also give the licensor rights to strategic brand control

• Mode of operation is part of the brand image

� International strategic alliances

Slide 11-5


“Internal” Modes of Entry

� These involve Foreign Direct Investment

� Wholly owned subsidiaries• Firms owned 100% by a company in a foreign country

� International joint ventures• Firms that are owned jointly by two or more otherwise

independent firms; most IJVs are between two firms

• One (or more) parent firms are non-resident in the host market

• Ownership % may vary from majority foreign owned, to 50%-50% owned, to minority owned by the foreign firm

Slide 11-6


Entry Mode Advantage DisadvantageWhollyownedsubsidiaries

� Enables global strategiccoordination

� Protects technology� Realizes (potentially) location

and experience economies

� High costs and risks� Requires overseas

management skills� May be slower to implement

InternationalJointVentures

� Gives access to local partner'sknowledge

� Allows sharing of developmentcosts and risks

� May be more politicallyacceptable than 100% foreignownership

� Allows foreign parent dodeploy resources across morenational markets at once

� Loss of control overtechnology and managerialknow-how

� May impede globalcoordination

� May make realization oflocation and experienceeconomies more difficult

� Sharing of profit "pie"

InternationalStrategicAlliances

� Similar to international jointventures

� May be more difficult tomanage than internationaljoint ventures

Slide 11-7

Advantages and disadvantages of Modes of Entry


Entry Mode Advantage DisadvantageFranchising � Low financial risk

� Relatively lowdevelopment costs

� Lack of direct control over quality� Successful international franchising

requires considerable start-up andongoing presence overseas (cost)

� Is likely to impede, make globalcoordination costlier than ownership

� Growth may be slower dependingon franchisee's intentions

� Sharing of profit "pie"� Possible loss of know-how to

potential competitor

Licensing � Similar to franchising� Fewer "maintenance"

costs than franchising

� Similar to franchising

Exporting � Ability to realizeexperience curveeconomies

� Transport costs� Trade barriers� Motivation of local agents a

challenge

Slide 11-8

Advantages and disadvantages of Modes of Entry


Exporting Promise and Pitfalls

� Huge revenue and profit opportunities overseas “there for the pickings”

� Large firms that are proactive about exporting may realize promise

� Systematic effort backed by knowledge of overseas markets

� Smaller firms are reactive and seek overseas markets as an afterthought

� Ad-hoc effort on an opportunistic and often naïve basis

� Exporting involves huge volumes of specialized paperwork

Slide 11-9


Export Performance Improvement

� Government information sources

� In US various parts of the Department of Commerce

� In other countries similar organization

� Embassies and consulates have commercial sections

� Export management companies

� Act as the export marketing department of firms

� Experienced specialists

� However, not exclusive

� Focused export strategy

Slide 11-10


Export/Import Financing

� Service that allows exporter to be assured of payment and importer to be assured of product

� Banks offer financing intermediary service

� Letters of credit: bank guarantee of payment to exporter “bought” by the corresponding importer

� Draft or bill of exchange: instructions to bank to pay at a certain time based on certain documentation

� Carriers also involved in the process

� Bill of lading: is a receipt, a contract and a document of title issued to the exporter by the carrier

Slide 11-11


III. Global marketing

�Globalization of Markets?

�Market Segmentation

�International Marketing

�New Product Development


Globalization of Markets?� “A powerful force drives the world toward a converging

commonality, and that force is technology” (Levitt, 1983)

� “Converging commonality” may not have happened universally

� Consumer product tastes may have converged less than industrial product specifications

� Media, communications means have

• made consumers world-wide more aware of their mutual preferences and

• have contributed to creation of world brands

• have caused certain market segments to emerge across national market that have indeed converged--inter-market segments

Slide 12-1


Market Segmentation�The process of identifying distinct groups of

consumers whose purchasing behavior differs from other groups in important ways� Demography, geography, social-cultural factors,

psychological factors

� Firms adjust their marketing mix to meet the particular needs of different market segments

�Marketing mix variables: product-price-place (distribution)-promotion

Slide 12-2


International Market Segmentation

� Across national markets, companies may try to

� Offer the same products and marginally adjust the balance of themarketing mix to appeal to market segments with similar needs across markets

• Market segments that transcend national borders -- also known as intermarket segments -- allow companies to offer standardized products

� Adapt their products and the balance of the product mix to appeal to market segments with differing needs across markets

• Market segments that have materially different needs force companies to customize -- adapt -- their products

Slide 12-3


International Marketing

� Marketing Strategy

� Standardization (Global Integration Pressures)

• intermarket segments

• efficiencies through integrated R&D, Production, Marketing

• control implications

� Adaptation (Local Responsiveness Pressures)

• buyer behavior (cultural, economic influence, brand perception--country of origin idea)

• laws regulations

• local environment needs/development

• responsive to local condition shifts

� Standardization-adaptation implications on marketing mix: Product-Pricing-Promotion-Place

Slide 12-4


International Marketing Mix: Product

� Product: a bundle of attributes

� Hamburger: meat type, taste, texture, size

� Automobile: power, design, quality, performance, comfort, size/capacity

� Attributes need to be adapted to a greater or lesser extent to satisfy

� Consumer preferences/tastes due to culture

� Economic development levels affect consumer behavior

� National product/technical standards mandated by state

Slide 12-5


�Optimal channel a company chooses to deliver the product

�Most locally responsive element of marketing mix because distribution channels vary dramatically across countries� retail system: concentrated-fragmented

� channel length: long, short

� Channel exclusivity

International Marketing Mix: PlaceSlide 12-6


Các kênh phân phối chính


International Marketing Mix: Promotion

�How firm communicates the product attributes / benefits to customers

�Barriers to international communication� Cultural barriers

� Source effects (country of origin effects)

� Noise levels

�Standardized advertising strategy possible; standardized advertising strategy execution more difficult (culture, laws)

Slide 12-7


Các yếu tố chính trong quá trình truyền thông


International Marketing Mix: Promotion

� Determinants of push/pull strategies

� Product type and consumer sophistication

� Channel length

� Media availability

� Push vs pull strategies

� Push strategy: personal selling emphasis

• Industrial products; complex new products

• Short distribution channels

• Few print or electronic media

� Pull strategy: mass media advertising

• Consumer goods

• Long distribution channels

• Marketing message can be carried via print/electronic media

Slide 12-8


Hiệu quả chi phí của từng công cụ tiếp thị


International Marketing Mix: Price


International Marketing Mix: Price

� Price discrimination: demand elasticity

� Strategic pricing� predatory (quick share-of-market focus):

• lower prices to drive competitors out, then raise prices

� Multipoint pricing:

• pricing in one market may have an impact in another market; subsidize low pricing in one market from profits in another

� experience curve:

• use aggressive pricing to build volume and move firm down experience curve (lower marginal costs)

� Regulatory issues:

• antidumping, monopoly restriction

Slide 12-9


New Product Development

�New product development� High risk / high return

� Technological innovation

� Creative destruction

�Location of R&D� Disperse R&D to trend/technology leading markets

• High investment on basic and applied research

• Strong underlying demand; affluent consumers

• Intense competition

Slide 12-10


� Integrate R&D, marketing and Production; ensure:

• Product development driven by customer needs

• New products can be manufactured efficiently/effectively

• Time to market is minimized

� Use of cross-functional, multinationally diverse teams

• Span: initial concept development to market introduction

• Team composition critical

– Assign heavyweight project manager

» High status in organization; high power and authority

» Dedicated to fullest possible extent to project

– Team should have representative from each function

– Physical co-location to build team culture, communication and conflict resolution processes

• Clear plan, goals, milestones, budgets

New Product DevelopmentSlide 12-11


Marketing Research Measurement Issues

� Functional Equivalence

� Similar observable phenomena/activities may not have the same function across cultures (shopping: Japan also a social event; US mostly a chore)

� Conceptual Equivalence

� Non-observable assumptions/concepts/ideas/constructs may not have the same meaning across cultures

� Instrument Equivalence

� must use measures that correctly measure the same phenomenon in each culture; language key

� measurement equivalence: “summer” in Australia different from UK, “middle-aged” in Somalia (life expectancy 45 - 50 yrs) not same in Scandinavia (life expectancy 80-85yrs)

� metric equivalence: weights and measures

Slide 12-12


IV Manufacturing and Materials Management

� Production: activities that involve

� Service and manufacturing

� converting inputs to a product

� Materials management: activities that

� Control the transmission of physical materials through the value chain: procurement –> production –> distribution

� Logistics

� Procurement and physical transmission of material through the supply chainsuppliers –> customers

Slide 13-1


Quality and Costs

Improves Performance

Reliability

Increases Productivity

Lowers Rework and Scrap Costs

Lowers Warranty

Costs

Lowers Manufacturing

Costs

Increases Profits

Lowers Service Costs

Fig. 13.1

Quality S

Slide 13-2


ISO 9000

�European Unions standards for quality

�Set by code

�Firm must be certified “ISO 9000” before it is allowed access to the EU marketplace

Slide 13-3


Manufacturing Location Decision

� Country Factors

� Favorable economic, political, cultural conditions

� Technological Factors

� Fixed costs relatively low

� Minimum efficient scale

• Scale of output a plant needs to realize scale-economies

• Market demand must be sufficient to reach this scale

� Flexible manufacturing-lean production-mass customization

� Product features

� Value-to-weight ratio

� Universal needs

Slide 13-4


Where to Locate?

� Concentrate manufacturing if:

� Costs of manufacturing are responsive to country environment (one location best)

� Trade barriers are low

� Exchange rates among currencies with impact on your business are stable

� Production technology

• Has high fixed costs

• Has high minimum efficient scale

• Exists in flexible manufacturing format

� Product value-to-weight ratio is high

� Product serves universal needs – minor difference in customer needs, consumer preferences

Slide 13-5


� Decentralize manufacturing if:

� Country environment does not affect costs much

� Trade barriers are high

� Production technology

• Has low fixed costs

• Has low minimum efficient scale

• Does not exists in flexible manufacturing format

� Product value-to-weight ratio is low

� Product does not serve universal needs – significant difference in customer needs, consumer preferences

Where to Locate?Slide 13-6


Make-or-Buy?

�“Make” advantage

� Lower costs in-house?

� Are specialized assets needed?

• Investment issue

� Is proprietary technology needed?

• Know-how protection issue (Dunning)

� “Buy” advantage

� Strategic flexibility needed?

� Lower costs by buying?

� Offsets a possibility by?

� In either case “improved scheduling” just as important

Slide 13-7


Other Issues

�Strategic alliances with suppliers

�Just-in-time inventory system management

�The role of information technology

Slide 13-8


Global Human Resource Management

�Staffing and International Strategy

�Expatriate Managers

�Other IHRM Issues


Human Resource Management

� Activities carried out by a firm to use its human resource effectively

� Staffing, management development, performance evaluation, compensation

� Across national borders the process increases in complexity

� Environmental differences of: labor markets, culture, legal systems, economic systems

� HR differences: compensation practices, labor laws, motivation issues

Slide 14-1


Staffing and International StrategySlide 14-2

StaffingPhilosophy

Strategy Fit?? Pros Cons

Ethnocentric• key overseas

positions staffedby homemanagers

International • puts qualifiedmanagers in place

• creates globalculture

• transfer of corecompetences

• local managerresentment

• cultural myopia• immigration

barriers• costly

Polycentric• key overseas

positions staffedby localmanagers

Multidomestic • alleviates culturalmyopia

• inexpensive toimplement

• limits careermobility

• isolates HQ fromoverseas subs

Geocentric• best for job gets

it

Global andTransnational

• uses HR efficiently• builds strong global

culture and informalmanagementnetwork

• costly• immigration

barriers


Expatriate Managers

� Managers assigned to a unit in country other than that of their national origin

� High failure rates for US MNCs (in order of importance)

• Spouse cannot adjust culturally

• Manager cannot adjust culturally

• Other family adjustment problems

• Manager’s lack of personal or emotional maturity

• Manager’s inability to cope with broader responsibility overseas

� High failure rates for Japanese firms (in order of importance)

• Manager’s inability to cope with broader responsibility overseas

• Manager cannot adjust culturally

• Manager’s lack of personal or emotional maturity

• Lack of technical competence

• Spouse cannot adjust culturally

Slide 14-3


Expatriate Success Predictors

� Self-orientation

� Strengthen self-esteem, self-confidence, mental well-being

� Adapt to food, music, sport, outside interests

� Superior technical competency

� Others-orientation

� Enhance ability to interact effectively with host nationals

� Relationship development, willingness to communicate

� Perceptual ability

� Understand why people in other countries behave the way they do

� Non-judgmental, non-evaluative in interpreting others’ behavior

� Cultural toughness

� How tough is host culture to adjust to?

Mendenhall and Oddou

Slide 14-4


Career Development for Expatriates

� Pre-departure, on-site training

� Cultural training

� Language training

� Practical training

� Repatriation

� Many repatriating expatriates lost to MNCs because suitable positions not available at home

� Autonomy, span of control, compensation

� Repatriation strategy failure makes recruitment of competent expatriates difficult

Slide 14-5


Other Expatriate Issues� Performance appraisal

� Two groups with conflicting perspectives/cultures appraise the expatriate: home managers, host managers

� Compensation

� Different national standards

� Expatriate pay issues: base pay, cost-of-living, housing, education, hardship, foreign-service-premium, double-taxation, medical/pension benefits, home leave

Slide 14-6


Other IHRM Issues

� International labor relations

� Concerns of organized labor: cultural and legal differences affect attitudes towards ...

• Better pay, job security, working conditions

• Bargaining power with management

� Strategy of organized labor

• Establish international, cross-border labor organizations

• Lobby national governments to restrict MNC activities

� Approach to labor relations

• Degree to which MNC labor relations are centralized or decentralized (integration vs responsivenessS)

Slide 14-7

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