10 Chapter 10 chapter Multinational Strategies Structures and

10 Chapter 10 chapter Multinational Strategies, Structures, and Learning Global Strategy obal Strategic Management Mike W. Peng 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 Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or Figure 10. 1 posted to a publicly accessible website, in whole or in part.

Four Strategic Choices for Multinational Enterprises ADVANTAGES Multidomestic § Leverages home country-based advantages § Lack of local responsiveness § Relatively easy to implement Home replication DISADVANTAGES § May result in foreign customer alienation § Maximizes local responsiveness § High costs due to duplication of efforts in multiple countries § Too much local autonomy Global § Leverages low-cost advantages § Lack of local responsiveness § Too much centralized control § Cost-efficient while being locally responsive § Organizationally complex § Engages in global learning and diffusion of innovations Transnational § Difficult to implement 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. Table 10. 1

Multinational Strategies and Structures: Four Organizational Structures • Four organizational structures that are appropriate for the four strategic choices: Ø International division Ø Geographical area Ø Global product division Ø Global matrix 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.

International Division Structure at Starbucks 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. Figure 10. 2

Geographic Area Structure at Avon Products Avon North America Avon Latin America Avon Asia Pacific Avon Western Europe Middle East Africa 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. Source: Adapted from avoncompany. com. Headquartered in New York, Avon Products, Inc. is the company behind numerous “Avon ladies” around the world. Avon Central & Eastern Europe Figure 10. 3

Global Product Division Structure at European Aeronautic Defense and Space Company (EADS) Copyright © 2014 Cengage in. Learning. All. Paris, France, Reserved. Source: Adapted from www. eads. com. Headquartered Munich, Germany, and Rights EADS is May the largest commercial aircraft maker and the largest defense contractor in Europe. not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure 10. 4

A Hypothetical Global Matrix Structure 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. Figure 10. 5

A Comprehensive Model of Multinational Structure, Learning, and Innovation 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. Figure 10. 6

Worldwide Learning, Innovation and 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 Ø Explicit knowledge (e. g. , a driving manual): Captured by IT Ø Tacit knowledge (e. g. , knowledge about how to drive) v Its acquisition and transfer require hands-on experience 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.

Knowledge Management in Four Types of Multinational Enterprises STRATEGY HOME REPLICATION LOCALIZATION GLOBAL STANDARDIZATION TRANSNATIONAL Interdependence Moderate Low Moderate High Role of foreign subsidiaries Adapting and leveraging parent company competencies Sensing and exploiting local opportunities Implementing parent company initiatives Differentiated contributions by subsidiaries to integrate worldwide operations Development and diffusion of knowledge Knowledge developed at the center and transferred to subsidiaries Knowledge developed and retained within each subsidiary Knowledge mostly developed and retained at the center and key locations Knowledge developed jointly and shared worldwide Flow of knowledge Extensive flow of knowledge and people from headquarters to subsidiaries Limited flow of knowledge and people in both directions (to and from the center) Extensive flow of knowledge and people from the center and key locations to subsidiaries Extensive flow of knowledge and people in multiple directions Sources: Adapted C. Bartlett & Ghoshal, 1989, Managing Across Borders: Transnational Solution (p. Copyrightfrom (1) School Press; S. (2) T. Kostova Learning. Allcapital. Themultinational corporations and © 2014 Cengage & K. Roth, 2003, Social Rights Reserved. 65), Boston: Harvard Business in a micro-macro May notmodel ofscanned, copied ofor duplicated, (2): 297– 317. be its formation (p. 299), Academy Management Review, 28 or posted to a publicly accessible website, in whole or in part. Table 10. 2

Problems in Knowledge Management 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 Copyright © 2014 Cengage Learning. All Rights Reserved. May not Source: Adapted from A. Gupta & V. Govindarajan, 2004, Global Strategy and Organization (p. 109), New York: Wiley. be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Table 10. 3