global strategy mike w. peng c h a p t e r 1010 copyright © 2014 cengage learning. all rights...
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Global StrategyGlobal StrategyMike W. PengMike W. Peng
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Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Global Strategic ManagementGlobal Strategic ManagementMike W. PengMike W. Peng
Chapter 10
Multinational Strategies,
Structures, and Learning
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Multinational Strategies and Structures:The Integration–Responsiveness Framework
Figure 10.1
Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Four Strategic Choices for Multinational Enterprises
ADVANTAGES DISADVANTAGES
Home replication Leverages home country-based advantages Lack of local responsiveness
Relatively easy to implement May result in foreign customer alienation
Multidomestic Maximizes local responsiveness High costs due to duplication of efforts in multiple countries
Too much local autonomy
Lack of local responsiveness Leverages low-cost advantagesGlobal
Too much centralized control
Transnational Cost-efficient while being locally responsive Organizationally complex
Engages in global learning and diffusion of innovations
Difficult to implement
Table 10.1
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Multinational Strategies and Structures:
Four Organizational Structures• Four organizational structures that are appropriate for the four strategic choices:
International division
Geographical area
Global product division
Global matrix
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International Division Structure at Starbucks
Figure 10.2
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Geographic Area Structure at Avon Products
AvonCentral & Eastern
Europe
AvonWestern Europe
Middle EastAfrica
AvonAsia Pacific
AvonLatin America
AvonNorth America
Source: Adapted from avoncompany.com. Headquartered in New York, Avon Products, Inc. is thecompany behind numerous “Avon ladies” around the world. Figure 10.3
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Global Product Division Structure at European Aeronautic Defense and Space Company
(EADS)
Source: Adapted from www.eads.com. Headquartered in Munich, Germany, and Paris, France,EADS is the largest commercial aircraft maker and the largest defense contractor in Europe. Figure 10.4
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A Hypothetical Global Matrix Structure
Figure 10.5
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A Comprehensive Model of Multinational Structure,Learning, and Innovation
Figure 10.6
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Worldwide Learning, Innovationand Knowledge Management:Knowledge Management in MNEs
• Knowledge management can be defined as the structures, processes, and systems that actively develop, leverage, and transfer knowledge.
• Knowledge management is considered by some writers the defining feature of MNEs Explicit knowledge (e.g., a driving manual): Captured by IT
Tacit knowledge (e.g., knowledge about how to drive)
Its acquisition and transfer require hands-on experience
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Knowledge Management in Four Types of Multinational Enterprises
Sources: Adapted from (1) C. Bartlett & S. Ghoshal, 1989, Managing Across Borders: The Transnational Solution (p. 65), Boston: Harvard Business School Press; (2) T. Kostova & K. Roth, 2003, Social capital in multinational corporations and a micro-macro model of its formation (p. 299), Academy of Management Review, 28 (2): 297–317.
STRATEGY HOME REPLICATION LOCALIZATIONGLOBALSTANDARDIZATION
Interdependence Moderate Low Moderate
Role of foreignsubsidiaries
Adapting and leveragingparent company competencies
Sensing and exploitinglocal opportunities
Implementing parentcompany initiatives
Differentiated contributionsby subsidiaries tointegrate worldwideoperations
TRANSNATIONAL
High
Development anddiffusion ofknowledge
Knowledge developedat the center andtransferred to subsidiaries
Knowledge developed and retained withineach subsidiary
Knowledge mostlydeveloped and retainedat the center and keylocations
Knowledge developedjointly and shared worldwide
Flow ofknowledge
Extensive flow ofknowledge andpeople from headquarters to subsidiaries
Limited flow ofknowledge and peoplein both directions (to andfrom the center)
Extensive flow ofknowledge and peoplefrom the center and keylocations to subsidiaries
Extensive flow of knowledge and people inmultiple directions
Table 10.2
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Problems in Knowledge Management
Table 10.3Source: Adapted from A. Gupta & V. Govindarajan, 2004, Global Strategy and Organization (p. 109), New York: Wiley.
ELEMENTS OF KNOWLEDGE MANAGEMENT COMMON PROBLEMS
Knowledge acquisition Failure to share and integrate external knowledge
Knowledge retention Employee turnover and knowledge leakage
Knowledge outflow “How does it help me?” syndrome and “knowledge is power” mentality
Knowledge transmission Inappropriate channels
Knowledge inflow “Not invented here” syndrome and absorptive capacity