Global Strategy Mike W. Peng c h a p t e r 1010 Copyright © 2014 Cengage Learning. All Rights...

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


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


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


International Division Structure at Starbucks

Figure 10.2


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


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


A Hypothetical Global Matrix Structure

Figure 10.5


A Comprehensive Model of Multinational Structure,Learning, and Innovation

Figure 10.6


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


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


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

Global Strategy Mike W. Peng c h a p t e r 1010 Copyright © 2014 Cengage Learning. All Rights...

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