ICTO

Information and Communication Technologies
in Organizations and Society

International Development Strategies

 
 

SESSION1 - INTRODUCTION:  Four approaches for International strategies

Mission :

In one slide or two, you are invited to identify the international approach adopted by NBA.

Four International approaches

Ethnocentric
 Polycentric
  Geocentric
  regiocentric
Strategy: International strategy

STANDARDIZATION

Guided by domestic market extension concept

It started as a Domestic strategy

The local techniques and advantages are perceived as superior.

International markets will be interested by the local advantage, regarded primarily as outlets for surplus domestic production.

International marketing plans are developed in-house by the international division.


Example: NBA American SPORTSHOW


Strategy: Multinational strategy/ 

Multidomestic strategy


ADAPTATION

Guided by the multidomestic marketing concept

Focuses on the importance and uniqueness of each international market because of cultural differences

Firms establish independent businesses in each target country.

Fully decentralized, minimal coordination with headquarters.

Marketing strategies are specific to each country.

Outcomes: No or little economies of scale, no Duplicated functions, Higher final product costs


Ex: Danone 



Strategy: Global strategy

Meganational strategy



STANDARDIZATION
Guided by the global marketing concept

Marketing strategies aimed at market segments, rather than geographic locations

Maximizes efficiencies worldwide and provides standardized product or service throughout the world

Outcomes: Economies of scale, Duplicated functions, Lower product costs 
 
Example : Apple (Iphone)
                  Ford




Strategy: Glocal strategy (the direct result of The world as a big village / social media)

Transnational strategy

Ex: Starbuck



Combination of a standardized product/message adapted by region

Guided by a glocal marketing concept

Marketing strategies are based on slicing and dicing the market to adapt the standardized product/message to local cultural differences

Example: McDonalds
                Starbuck

The NBA: The ethnocentric approach to staffing fills key management positions with parent-country nationals. 

Very popular in the past, but still holds on (P&G, Matsushita, Toyota, Samsung).

ØResearch in Japanese MNCs showed that only 29% of subs had presidents who were not Japanese.
ØFirms pursue an ethnocentric policy because:
There is a lack of qualified candidates in the host country.
It is the best way to maintain a unified corporate culture.
Value can be created by transferring core competencies to a foreign operation via parent country nationals. Transfer of innovative practices has to be supported by experts from home.
Disadvantages of the ethnocentric staffing policy:
Limits advancement opportunities for locals, stifles motivation and may cause resentment and tension.
Can lead to "cultural myopia“. Parent company loses contact with the host country culture with negative implications on marketing & management.
 

SESSION 2. Social differences to take into consideration while going international

Session 2. Culture and International business

Geert Hofstede Cultural Dimensions

Mission :

In two slides, you are invited to identify the international approach adopted by Tea collection (between the 4 international approcahes)

The geocentric approach seeks the best people for key positions, regardless their nationality.

Advantages:
Consistent with building a strong unifying culture and informal management networks.
Enables the firm to utilize best its human resources
Builds a cadre of international executives with a global mindset, who feel at home working in diverse cultures.
Disadvantages:
Might be limited by immigration laws. Many countries, including the USA, scrutinize thoroughly the foreigners who enter the country in order to fill strategic positions. Documentation may be time-consuming and expensive.
Is expensive to implement due to high costs of training and relocation.
Risk of executive failure is higher, therefore rigorous selection methods have to be applied.
 

SESSION 3. What is a Global Strategy?

‘Global Strategy’ is a shortened term that covers three areas: global, multinational and international strategies. Essentially, these three areas refer to those strategies designed to enable an organisation to achieve its objective of international expansion.
  • International strategy: the organisation’s objectives relate primarily to the home market. However, we have some objectives with regard to overseas activity and therefore need an international strategy. Importantly, the competitive advantage is developed mainly for the home market.
  • Multinational strategy: the organisation is involved in a number of markets beyond its home country. But it needs distinctive strategies for each of these markets because customer demand and, perhaps competition, are different in each country. Importantly, competitive advantage is determined separately for each country.
  • Global strategy: the organisation treats the world as largely one market and one source of supply with little local variation. Importantly, competitive advantage is developed largely on a global basis.
  • Glocal strategy: Refers to the idea of “Think global, Act local”. It represents a middle way between the global and the multinational strategies.

Case study 

Main differences and similarities between Int. Dev. Strat. of McDonald's and MasterCard

The factors that we look at when comparing companies:  

                                          Adaptation v/s Standardization 

of:  

1) Products/Services, 

2) Organisation/Processus, 

3) Marketing & communication tools. 

 

SESSION 4.  INTERNATIONAL ORIENTATION

Uppsala Theory 

Many organization obtain a gradual international presence : • Geographic aspect close to home market and gradually expanding to the world market (increasing geographic diversification) • Move through sporadic export in the foreign market of foreign subsidiaries sharing an (increasing marketing commitment)

Network Model Theory 
• Internalization where an organization establishes a geographic expansion through established relationship & networks of independent actor in one or several foreign market 
• Established through different types of bond personal legal economical or technical • Relationships are flexible 
• Benefit Suitable for environment regular changing conditions
Born Global Theory 
• Organization that experience a so- called globalization from birth 
• See the world as one market and any adaption or other elements of the marketing mix are very limited

SESSION 5.  ADAPTING THE ORGANISATION TO THE INTERNATIONAL REQUIREMENTS

CASE STUDY NISSAN

Questions

1. Based on the different theories of Global Development strategies, explain the international strategy of Nissan.

2. How Nissan adapted its organization in order to compete on the international level? How can we analyze the alliance between Nissan and Renault based on these previous explained theories?

To read for the final exam