Options and Internationalisation

International Strategic Management:

Options and Internationalisation

Re-evaluate the VMOST

Customer Generic Strategies
– ‘Value disciplines’

Three Global Strategic Objectives

Efficiency: Lower the cost of the firm’s operations and activities on a global scale

Flexibility: Manage diverse country-specific risks and opportunities by tapping resources in individual countries and exploiting local opportunities

Learning: Develop the firm’s products, technologies, capabilities, and skills by internalizing knowledge gained from international ventures

Often, even successful firms excel at only one or two of these objectives.

Source: Bartlett and Ghoshal, 1989

Three Global Strategic Objectives

Efficiency refers to lowering the cost of the firm’s operations and activities on a global scale. MNEs with multiple value chains must pay special attention to how they organize their R&D, manufacturing, product sourcing, marketing, and customer service activities.

The firm must develop worldwide flexibility to accommodate diverse country-specific risks and opportunities. The firm structures its operations to ensure it can respond to specific customer needs in individual markets, especially those critical to company performance.

The firm must create the ability to obtain learning from operating in international environments and exploit this learning on a worldwide basis. By operating in various countries, the MNE can acquire new technical and managerial know-how, new product ideas, improved R&D capabilities, partnering skills, and survival capabilities in unfamiliar environments.

International business success is determined in the end by the degree to which the firm achieves all three skills—efficiency, flexibility, and learning. However, it is often difficult to excel in all three simultaneously.

Internationalisation ‘Push’ and ‘Pull’ factors

Focussing upon your chosen business

Ø Push: Those changes taking place within the domestic market which motivate movement into international markets (often negative factors)

Ø Pull: Those changes taking place within the international market which motivate expansion into those markets (often positive factors)

Individual Activity (20 mins)

Focussing upon your chosen business

Ø What are some current ‘push’(positive) and ‘pull’ (negative) factors for the business expanding internationally?

Ø What different types of ‘modes of entry’ (routes to market) does / could your chosen company use (and why)?

Prepare to share your answers

Tier 4 – Don’t ignore the tier 4 group!

Integration-Responsiveness Framework (IR Framework)

• The Integration-Responsiveness Framework summarizes two basic strategic needs:  To integrate value chain activities globally, and to create products and processes that are responsive to local market needs.

• Global integration means coordinating the firm’s value chain activities across many markets to achieve worldwide efficiency and synergy to take advantage of similarities across countries. 

Integration-Responsiveness (IR)
Grid: Strategy Types

Company Trade-Offs in

Organising International Business

Ghemewat’s CAGE Framework for Assessing Country Differences

Why Starbucks failed in the Australian Market

Watch the video and consider the key reasons why Starbucks failed in the Australian market.

Discuss and prepare to share your answers (providing justification)

What is a Global Strategy..?

Key question today:

HOW MUCH CENTRALISATION ?

What is the Role of the
Corporate Headquarters ?

Tasks Headquarters is expected to perform

=> Communicate corporate vision/strategy

=> Establish a unifying global corporate

          ideology, set of values and beliefs

=> Define brand strategy

=> Manage movement of funds between divisions

=> Design and operate performance control

          parameters/KPI and systems

=> Appoint and train top managers

List of Potential Corporate Shared Services  

• Pooling/sharing of skills and knowledge

• Research and development

• Legal and intellectual property services

• Infrastructure/property management

• Procurement/supply management

…….…

Beyond Meat boss backs tax on meat consumption

The founder of the world’s biggest plant-based meat firm says a tax on meat could get people to cut their consumption of animal-based products.

Beyond Meat boss Ethan Brown told the BBC he is in favour of a “pigouvian tax” on activities that create adverse side effects for society. Taxing meat consumption could help emerging markets to invest on plant-based protein instead, he stressed.

But critics argue that such a levy would raise the cost of living.

Mr Brown thinks that consumers are already starting to make the choice to eat less meat. “If you look at shopper data that we have, 93% of the people that are putting the Beyond burger in their cart are also putting animal protein in,” he said. “That says we’re getting more and more penetration into the broadest swath of the market, which is people who are consuming animal protein, but again, are hearing this information about their health or maybe hearing about climate, or maybe uncomfortable with factory farming, they’re deciding to cut down on their consumption of animal-based products.”

A tax on meat consumption would definitely be beneficial to companies such as Beyond Meat because it would make their products cheaper in comparison, says Rebecca Scheuneman, an equity analyst at US financial services firm Morningstar.

How much of an advantage it would give “depends how significant the tax would be”, she told the BBC.

However, at the same time latest research from Morningstar shows the global meat market was worth $1.4bn (£1bn) last year and is growing.

According to the United Nations Food and Agriculture Organization, the livestock industry accounts for about 14.5% of global greenhouse gas emissions. Cutting those would help tackle climate change and Mr Brown says plant-based meat has an important contribution to make.

Source: BBC News Online, 2nd August 2021

Consider the story above.

•What do you think of Ethan Brown’s comments?

•What would you advise Beyond Meat to do in order to grow market share in the next 2 – 3 years?

Homework

Focussing upon your chosen business…

=> What are some current pressures for global integration?

=> What are some current pressures for local responsiveness?