WORLDWIDE COMPETITORS

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WORLDWIDE COMPETITORS

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Worldwide
International regional
Internationalisation
Retrenchment
International market entry and development
Restricted national market scope
Phase 4
Phase 1
Phase 2
Phase 3
Restricted national market scope
International market entry and development
International regional
Worldwide competitor
Figure 8.1. The phase model and worldwide
strategies
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• Think globally and act locally
• Balance between
• responsive and and flexible local approach
• effective global co-ordination
• No company achieved satisfactory solution!
• few flexible local and central mgnt capabilities
• attempted link them
• Globalisation
• problematic strategic spatial imperatives
• practical implementation challenges

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• Demand
• FUNDAMENTAL CHANGE IN INTERNATIONAL BUSINESS
  PRACTICE
• Autonomy - integration
• Organizational learning
• Knowledge transfer
• Global ? multi-local

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Dimensions tayloring organization

• Product geography - people/proces
• organizational complexity
• how to develop global vision
• differing organizational structures (US, EU,
  Japan)
• consider relative strengths weaknesses of
  competitors
• resource interdependencies among units
• How to integrate
• into transnational organization to exploit global
  competition advantage?

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• OUR FOCUS
• 1. Developing a global strategy
• 2. Global strategy assessment and competitive
  moves
• 3. International strategic alliances
• 4. Organizational forms for worldwide competitors
• 5. Reconciling the irreconcilable the search for
  the transnational company

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• Developing a global strategy
• Global chess
• advantage of lowest natl factor cost
• tailoring organization along three dimension
• product
• geography
• people/process
• examine carefully
• organizational structure
• systems
• value

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People and processes
Global strategy
Product
Geography
Configure product/ service operations in order
to (a) supply chosen market segments (b)
achieve economies of scale (c) avoid unnecessary
duplication of resources
Achieve geographical coverage to encompass
strategically important countries Determined
by (a) current and future sales potential (b)
the need to match competitors (c) have access to
low factor costs and/or expertise
Develop people and process in order to (a)
achieve a global vision/mindset (b) leverage
cross-unit skills and competences worldwide (c)
ensure strong coordinating and linking mechanisms
between organisational sub-units
Figure 8.2 Developing and/or reshaping the
worldwide competitor
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• Environment (external triggers)
• more open trading environment
• falling transport cost (containers, large
  carriers, deregulation)
• new technologies require global scale
• converging customer preferences (communication)
• customized core products - global scale
  efficiency - flexible manufacturing systems
• growth of global customers

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• Capture competitive advantages
• vision
• visionary leader (anticipate/shape future)
• catalyst change existing mindset gt world
  mindset needed
• realization 5 components required

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Widely shared
Business anywhere
Time
INTERNATIONAL VISION/MINDSET
Insiderisation
Leverage
Figure 8.3 The world vision/mindset
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Widely shared clearly articulated foster
cohesiveness what to do, how to do the
business Business anywhere transparent to needs
of local customers (communicationlogistic
network) Insideration respond to local needs
(no replication of domestic organizational
systems) Leverage fundamental organizational
innovation gt replace old mindset creating a
system of shared value 1 1 3 Time building
shared values takes time gt establish priorities,
monitoring (BSC)
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Established mindset

• Deeply embedded, difficoulkt to change
• It makes the need to change periodically
• If no longer appropriate organizational risk
• Firm need to seek constant renewal
• a journey without destination

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• 2. Global strategic assessment and competitive
  moves
• Rivals current position, likely competitive moves
• analyze competitive strength
• possible strategic options
• Questions to identify competitors position

• Product
• Market segments narrow/broad focus?
• Economies of scale natl-worldwide?
• Where is necessary to contrentrate to reach
  economies of scale? (RD, production)

• Geography
• Cover important markets?
• Match rivals market coverage?
• Access to low factor cost, skill, expertise,
  locations?

• People, processes
• Who operates with global vision? agressively?
• Leverage key skill and competencies? Good basis
  of global competitive advantage?
• Strong links and co-ordination between sub-units?

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Table 8.2 Assessing global market coverage
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Table 8.3 Location of key value-adding activities
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• World chocolate confectionery industry
• Thorntons
• limited market coverage, focused on UK, France
• Production UK, Belgium
• Niche player selling chocolate specialities (no
  global ambitions)
• Hershey
• strong presence in US, joint venture in Japan,
  weak in EU
• Ambition to develop greater market coverage
• Nestlé
• Extensive world coverage, acquiring national
  players
• Production in strategically important countries
• Global brands, but recognizing local tastes
• Overall strategy formed by the center
  (acquisitions), local autonomy

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1. Product-market segments
Narrow product focus
Broad based competitor
2. Products/service offer
Costumised for local/national market
Standardised globally
3. Competitive moves
Based on a country by country approach
Co-ordinated globally
Key
Thorntons
Hershey
Nestlé
Figure 8.4 Assessing product-market competitors
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• After examining competitors,
• further questions
• Is it important to operate with global market
  coverage and scale?
• Are there surviving competitive niches?
• Competitive strategies of individual companies
  are realistic and sustainable?
• Adapt following tactics, strategies

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• Strategies to be followed
• a) Cross-subsidiation of countries
• against indigenous national players or
• large competitor dependent on specific market
• b) Globally co-ordinated moves
• fragmented country-by-country strategy a set of
  competitive strategies
• Price competition
• Non-price (hidden) competition
• Co-operation/collaboration

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• Price competition
• excess capacity, new aggressive player gt
  imbalance, discontinuity
• against a weak national player it leaves the
  industry
• against a global one risky, more expensive,
  uncertain
• Non-price (hidden) competition
• Less direct way of competition, hidden
• advertising, promotion expensive
• answer differentiate products if it is a global
  competitors
• Co-operation/collaboration instead of competition
• mutual need
• final form acquisition (large/small,
  national/global)
• few have universal coverage gt try extend
  geographically gt emerging countries (China)
• complete global network

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• 3. Internl strategic alliances
• Motives
• Access to knowledge, expertise and skills
  possessed by another organization
• key driver possess different configuration of
  core competencies and resources,
• offering attractive option
• Access to new geographical markets (Honda-Rover)
• Spreading financial or political risk

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Honda and Rover 1978 similar size, began
developing strategic alliance Honda profit
making, gaining access to Europe market partner
with EU market experiences EU protectionism,
overcapacity Rover dealer network in UK, EU,
spare capacity losses, struggling for
reestablish after reconstruction, govmt
support, likelihood of change of govt develop
new product range resource needed
1978 limited agreement gt Triumph Acclaim with
Honda kit Developmentswith Honda platform
renewing Rover models joint venture developing
new platform co-production, cross-sourcing Honda
acquiring 20 of Rover equity stake Rover back
to profit, improvement in quality and reputation,
organizational learning
Retained distinctive identities Early 1994 Rover
is sold by British Aerospace to BMW Rover-Honda
alliance at risk - hard joint development
broken They do not wish to see the alliance
continue
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• Generic types of intl strategic alliences
• Joint ventures
• separate legal entity, free-standing
  organization
• partners equity share holders, providing
  resources
• difficulties one partner wishes acquire full
  control
• Non-joint ventures (collaboration)
• no separate legal entity collaborative agreements
• may be cross-company shareholdings
• limited in scope, scale
• initial phase, later can be extended
• Consortium
• (cont.)

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• Consortium
• Each company individually unable to completely
  fund RD, necessary volume
• Believe pooling resources they can compete
• Number of partners to undertake a large-scale
  activity (Exp. Airbus)
• Factors contributing to the success
• strategic need each has a continuing need for
  the other
• shared objectives (otherwise conflict at future
  direction)
• shared risk and commitment (otherwise no more
  investments)
• agrred procedures for resolving disputes
  (strengthen/undermine) gt personal relationship
• trust most critical (builds up slowly - eroding
  quickly by an action)
• Advisable understanding circumstances in which
  alliance can be terminated

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F. SATO, Toshibas president even the largest
and best resourced organizations are likely to
seek develop some form of intl strategic
alliance in some respect of their
business. Strategic alliances are attractive for
a number of reasons
For example, the digital revolution and the
development of multimedia can only reach fruition
through their cross-fertilization of
technologies, bringing together partners from the
media, communication and computing. We are
contributing here through our links with Time
Warner and other companies.

• Another consideration is cost. New technologies
  require enormous investments in research, plant
  and equipment. Alliance like ours with IBM and
  Siemens for development of 256-megabit DRAMs
  allow partners to maximise the use of their
  resources, realise cost of advantages and speed
  up development. Moreover, the diffusion of the
  developed technology also encourages competition
  at the production stage.

• Finally, the dynamic pace and vast extent of
  modern technology is just too much for a single
  company. Today, no company can avoid
  incorporating technology from other companies in
  its products. The best way to do that is by
  building up trust and working together in
  design-in and similar projects.

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4. Organizational forms for worldwide competitors
Global company
Co-ordinated international regional
International
Multi-local
Figure 8.5 The overlap between different
organisational forms employed by worldwide
competitors
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1. Product
Multi-local
Global
Localised for a national market
Standardised for the global market
2. Resources, responsibilities and control
Multi-local
Global
Decentralised to a national organisation
Centralised on a global basis
3. Dominant power group and culture
Multi-local
Global
Country-based managers independent culture

Centralised functions dependent culture
4. Research and development and innovation
Multi-local
Global
National facilities local new product
development
Centralised RD and new product development
Figure 8.6 Distinguishing between the global
company and multi-local organisation
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Global company
Key
Country-based national subsidiaries
Corporate centre based in home country
Dominant decision flow centre to subsidiaries
Figure 8.7 The organisation of the global company
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Multi- local
Key
Country-based national subsidiaries
Corporate centre based in home country
Dominant decision flow loose control of
subsidiaries by corporate centre
Figure 8.8 The multi-local organisation
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Internl company
Key
Country-based national subsidiaries
Corporate centre based in home country
Dominant decision flow largerly from corporate
centre to subsidiary, but with some independence
on key aspects of local strategy
Figure 8.9 The organisation of the international
company
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Intrenational company
Headquarter
Intrernational division
Home product divisions
A, B, C product divisions
National subsidaries
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• Advantages
• product/service offer focuses on regional
  preferences
• avoid costly duplication of facilities by
  configuring functions on a regional basis
• achieve regional-scale efficiences

• Disadvantages
• potential loss of contact with national markets
• inability to gain global-scale efficiencies
• organisational structures may become highly
  complex and potentially contradictory

Table 8.4 Co-ordinated international regional
strategy
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Multi-local

• Product/service offer Developed for local
  markets.
• Resources, responsibilities and control
  Resources largely decentralised to local
  organisation. Local organisations highly
  autonomous, with little intervention from the
  corporate centre.
• Dominant power group and elite Country-based
  national managers. Independent culture based on
  national organisations.
• RD and innovation National RD facilities to
  support local product development.
• OVERALL Each national subsidiary managed as an
  independent entity. Highly responsive national
  organisation. Independence of subsidiaries
  encourages innovation and development of new
  products to meet local needs.

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International

• Product/service offer Centrally developed
  products, customised for local needs.
• Resources, responsibilities and control Greater
  dependence on corporate centre than for
  multi-local, but more autonomy than global. Core
  competences centralised. Sophisticated management
  systems and specialist corporate staff to control
  subsidiaries.
• Dominant power group and elite Functional
  managers, especially technical and marketing.
  Parent company management often superior and
  parochial in attitude to international
  operations.
• RD and innovation RD facilities centralised
  and many likely to be located in the country of
  the corporate parent. Products developed
  centrally 'given' to national subsidiaries to
  customise.
• OVERALL Foreign subsidiaries often seen as
  appendages. Parent company seeks to leverage
  transfer of knowledge, understanding and skills
  to national subsidiaries.

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Co-ordinated international regional

• Product/service offer Product, standardised for
  the region, with minor modifications for national
  markets where necessary.
• Resources, responsibilities and control Key
  resource areas centralised on an international
  regional basis, with some relatively minor
  functions left with country-based operations.
• Dominant power group and elite Regional product
  managers. Emerging culture of international
  regional interdependence.
• RD and innovation At least some RD facilities
  regionally based.
• OVERALL Strong co-ordination and integration of
  functions on a regional basis. Able to achieve
  regional scale. Little or no co-ordination
  between international regions.

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Global company

• Product/service offer Standardised product sold
  worldwide, with possible cosmetic changes for
  local markets.
• Resources, responsibilities and control
  Centralisation of assets, resources and
  responsibilities. Overseas subsidiaries depend on
  corporate centre for resources and direction.
• Dominant power group and elite Centralised
  product divisions. Highly dependent culture based
  on parent companys home location.
• RD and innovation RD facilities wholly
  centralised in 'home' location. National
  subsidiaries unable independently to develop new
  products. New ideas need to be adopted by
  corporate centre.
• OVERALL Role of local units is to assemble
  and/or sell products developed centrally.
  National subsidiaries largely concerned with
  implementing plans and policies developed by
  corporate centre. Strength is ability to achieve
  global scale.