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Flashcards by dorota.ziakova, updated more than 1 year ago
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Created by dorota.ziakova
about 9 years ago
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| Question | Answer |
| GLOBALIZATION | The world is becoming more homogeneous The distinctions between national markets are fading and some products will eventually disappear. Therefore, companies need to globalize their international strategy by formulating it across markets to take advantage of underlying market, cost, environmental and competitive factors. |
| Globalization Drivers: | Market Factors - The world customer with similar educational backgrounds, income levels, lifestyles, use of leisure time and aspirations, whom marketers can treated as a single market, e.g.. the triad of Europe, the Far East and North America. - Channels of distribution are becoming more global. Cost Factors - Avoiding cost inefficiencies and duplication of effort - Achieving economies of scale and scope as well as synergies Environmental Factors - Reduced government barriers - Rapid technological evolution Competitive Factors - To remain competitive, a company may have to be the first to do something or to be able to match or pre-empt competitors’ moves. - Global marketers are looking for new markets and for new product categories for growth. |
| strategic business unit | - Is the unit around which decisions are based. - SBUs represent groupings with product-market similarities based on |
| Market and Competitive Analysis: | ϒ To understand the common features of customer requirements and choice factors. ϒ To understand the structure of the global industry in order to identify the forces that will drive competition and determine profitability. |
| Internal Analysis: | ϒ To assess organizational commitment to global or regional expansions. To assess the good’s readiness to face the competitive environment |
| Choice of Competitive Strategy: | ϒ Cost leadership - the company offers an identical product or service at a lower cost than competition ϒ Differentiation takes advantage of uniqueness on elements such as design or after-sales service. ϒ Focus is defined by its emphasis on a single industry segment within which the orientation may be either toward low cost or differentiation |
| Country-Market Choice | ϒ Portfolio model analysis, involve internal strength and external attractiveness. ϒ Internal strength can be indicated by relative market share, product fit, contribution margin and market presence ϒ Country attractiveness has been measured using market size, market, growth rate, number and type of competitors, governmental regulation, as well as economic and political stability. |
| Three factors should determine country selection: | (1) The standalone attractiveness of a market (e.g., China in consumer products due to its size); (2) Global strategic importance (e.g., Finland in shipbuilding due to its lead in technological development in vessel design); (3) Possible synergies (e.g., entry into Latvia and Lithuania after successful operations in the Estonian market, given significant market similarities). |
| Segmentation | ϒ Global companies can take advantage of the benefits of standardization (such as economies of scale) while addressing the unique needs and expectations of a specific target group. ϒ The identification and cultivation of intermarket segments is necessary for any standardization of programs to work, e.g. the teenage segment. ϒ Choosing an appropriate segmentation base ϒ Using a combination of rather than stand-alone bases facilitate decision making and produce more meaningful results. ϒ Markets that reflect a high degree of homogeneity with respect to marketing mix variables could be targeted with a largely standardized strategy. |
| Global Program Development: | Decisions have to be made in four areas: (1) The degree of standardization in the product offering; (2) The marketing programme beyond the product variable; (3) Location and extent of value-adding activities; (4) Competitive moves to be made |
| Implementing Global Programmes | ϒ Insufficient research and a tendency to over-standardize, internal reasons, such as inflexibility in planning and implementation handicap global programmes ϒ Globalization by design requires a balance between sensitivity to local needs and deployment of technologies and concepts globally. |
| Localizing Global Moves: | (1) Ensuring that local managers participate in the development of strategies and programmes; (2) Encouraging local managers to generate ideas for possible regional or global use; (3) Maintaining a product portfolio that includes local as well as regional and global brands; and (4) Allowing local managers control over their budgets so that they can respond to local customer needs and counter global competition. |
| Organization Structures | ϒ Matrix structure focused on customers, which has replaced the traditional country-by-country approach, is considered more effective in today’s global marketplace. ϒ Executing global account management programmes builds relationships with important customers and also allows for the development of internal systems and interaction. |
| Corporate Culture | ϒ Decision making support the goal of treating the world as a single market: planning for and execution of programmes take place on a worldwide basis. |
| Organizational Designs: | Based on the degree of internationalization, they are: ϒ Little or No Formal Organization ϒ International division ϒ Global organizations |
| Little or No Formal Organization | - In the very early stages of international involvement - No consolidation of information or authority over international sales is undertaken or is necessary. - Transactions are conducted on a case-by-case basis, with the help of facilitating agents, such as freight forwarders. - The export department is the first real step toward internationalizing the organizational structures. |
| The International Division | - Concentrating international expertise, information flows concerning foreign market opportunities and authority over international activities. - Co-ordination between domestic and international operations is necessary in order to avoid competing for products, personnel and corporate services. |
| Global Organizational Structures | Global product structure Global area structure Global functional structures Global customer structures, in which operations are structured based on distinct worldwide customer groups. Mixed – or hybrid – structures, which may combine the other alternatives. Matrix structures, in which operations have reporting responsibility to more than one group (typically, product, functions or area). |
| Product Structure | ϒ SBUs are responsible for the marketing of their product lines ϒ It is used by most consumer-product firms mainly because the diversity of their products. The benefits of the product structure ϒ Improved cost efficiency through centralization of manufacturing facilities. ϒ The ability to balance the functional inputs needed for a product and the ability to react quickly to product-specific problems in the marketplace. |
| Area Structure | ϒ Firms are organized on the basis of geographical areas, i.e., Asia-Pacific, Europe, Latin America and North America. ϒ The driver of structural choices are regional integration and cultural similarity. ϒ It is opted by companies that have relatively narrow product lines with similar end-uses and end-users |
| Functional Structure | ϒ The simplest from the administrative viewpoint because it emphasizes the basic tasks of the firm, e.g., manufacturing, sales and research and development. ϒ It works best when both products and customers are relatively few and similar in nature. ϒ The process structure ϒ A variation of the functional approach, is one that uses processes as a basis for structure Being common in the energy and mining industries |
| Customer Structure | ϒ Serving dramatically different customer groups – for example, consumers and businesses and governments. ϒ Same product, different buying processes |
| Mixed Structure | ϒ Combining two or more organizational dimensions simultaneously ϒ Permitting adequate attention to product, area or functional needs. |
| Matrix Structure | ϒ Facilitating the planning for, and organizing and controlling of, interdependent businesses, critical resources, strategies and geographic regions. ϒ Helping cut through enormous organizational complexities in making business managers, functional managers and strategy managers cooperate. ϒ However, the dual reporting channel easily causes conflict and requiring sensitive, well-trained middle managers who can cope with problems. |
| Decentralization | - Subsidiaries are granted a high degree of autonomy - Controls are relatively loose and simple - Each subsidiary operates as a profit centre. |
| Centralization | - Controls are tight - Strategic decision making is concentrated at headquarters |
| Co-ordinated decentralization | A global strategy formulation has been adopted Overall corporate strategy is provided from headquarters Subsidiaries are free to implement in consultation between headquarters and the subsidiaries |
| Challenges for moving into Co-ordinated decentralization | ϒ An inadequate understanding of the larger, global forces at work ϒ Power barriers from perceived threats ϒ The lack of necessary skills (e.g., language ability) or that an infrastructure (e.g., intranet) may not exist in an appropriate format Changing role of the country manager |
| Factors Affecting Structure and Decision Making | (1) Degree of involvement in international operations; (2) The products the firm markets; (3) The size and importance of the firm’s markets; (4) The human resource capability of the firm. |
| The Networked Global Organization: | (1) Three dimensions have incorporated: (2) The development and communication of a clear corporate vision; (3) The effective management of human resource tools to broaden individual perspectives and develop identification with corporate goals; (4) The integration of individual thinking and activities into the broad corporate agenda |
| The Role of Country Organizations | ϒ Strategic leader - a highly competent national subsidiary located in a strategically critical market. ϒ Contributor - a country organization with a distinctive competence, such as product development. ϒ Implementer - one that exists in smaller, less-developed countries, mostly for sales purposes. ϒ Black hole - a low-competence country organization or no organization at all in a highly strategic market. |
| Objects of controls: | ϒ Output controls include balance sheets, sales data, production data, product-line growth and performance reviews of personnel. ϒ Behavioural controls require the exertion of influence over behaviour after or before leading to action. |
| Bureaucratic/Formalized Control | (1) an international budget and planning system; (2) the functional reporting system; (3) policy manuals used to direct functional performance. |
| Cultural Control | ϒ Emphasizing corporate values, and culture ϒ Requiring an extensive socialization process to which informal, personal interaction is central. ϒ Substantial training is required ϒ Exercising in selecting home-country nationals and ϒ third-country nationals, |
| Exercising Controls | ϒ Employment of control systems are responsive to the needs of the function. ϒ The degree of control imposed will vary by subsidiary characteristics, including location. ϒ The more behaviorally based and culture-oriented controls are, the more care needs to be taken. ϒ Management must consider the costs of establishing and maintaining it vs. the benefits to be gained The impact of the environment has to be taken into account |
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