Global strategy

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Session 8 Global strategy
Knut Haanæs Associate Professor Norwegian School
of Management - BI
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Global Strategy
Why globalize?
Issues of global strategy
Mercedes case
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Global Strategy
Why globalize?
Issues of global strategy
Mercedes case
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Why globalize?
Knowledge
Cost advantages
Markets
Competitive position
Natural resources
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• Types of resources sought in globalization
• Natural resources Mines, oil, gas
• Markets Coca Cola, Nestlé
• Costs Nike production abroad, cars in Poland,
  bicycles in Taiwan
• Knowledge Car design, pharma, software, etc.

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Administrative heritage - It is vital to
recognize a companys core strength

• The company would not exist without some deeply
  embedded strengths in its administrative heritage

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Global Strategy
Why globalize?
Issues of global strategy
Mercedes case
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• What is a global company?
• Optimizes activities globally.
• What we do in country A influences what we do in
  country B.

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• What is a transnational company?
• Balances integration and local adaptation within
  all activities in order to locate centres.

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Forces acting on MNC
High
Economies of scale Capacity utilization Standardiz
ation Learning curve Comparative adv.
Language Culture Preferences Local
tastes Distribution Transportation
Need for integration
Low
High
Low
Need for responsiveness
Source Bartlett and Ghoshal (1987)
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Forces acting on different activities
Research
High
Manufacturing
Purchasing
Need for integration
Development
Marketing
Sales
Low
High
Low
Need for responsiveness
Source Bartlett and Ghoshal (1987)
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Types of subsidiaries
Software and Internet in Silicon Valley
Mobile phone operations in Stockholm
High
Ideas seeking subsidiary
Strategic subsidiary
Innovation
Efficiency seeking subsidiary
Bicycles in Taiwan, Shoes in Philippines,
Clothes in China
Implementing subsidiary
Low
Low
Productivity
High
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Hedlund The N-form corporation

• Combining, rather than dividing
• Temporary constellations, rather than permanent
  structures
• Coordination at lower levels, rather than only by
  managers
• Lateral communication, rather than vertical
• Manager as catalyst, architect and knowledge
  protector, rather than monitor and resource
  allocator
• Focusing, rather than diversifying corporation
• Heterarchy, rather than hierarchy
• Several strategic apexes
• Several ordering principles
• Many knowledge bases

Source Hedlund (1986 1994)
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Industry hosting advantages
Myndigheter
Konkurranse- arena
Strategy, structure and rivalry
Public sector
Etterspørsels- forhold
Factor conditions
Faktorforhold
Demand conditions
Porter (1990)
Supporting and related industries
Relaterte næringer
Tilfeldigheter
Coincidences
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Mode of entry depends upon.

• International experience
• Do we want to do this ourselves? Do we need
  control?
• When and how do we want to move?
• What is the size of the market?
• How risky is the market?