...the most efficient balance of employees to comprise their global workforce, customizing products to satisfy specific local needs, maximizing the efficiency of the global supply chain, and determining the necessary capacity of local operations. In order to use these tools in a multinational context the operations manager must have a solid grasp on global issues. He or she must be familiar with the firm's overall international strategy and the reasoning that went into developing it. He or she must be must familiar with the critical success factors involved in selecting site locations, the process by which an international corporate strategy is formed, and the changes in the organization that will need to take place in order to implement it. Without a grasp of these concepts the operations manager will not be able to use the tools of operations management to help his or her firm establish a presence in new markets. How OM Techniques can help International Consultants to become better Managers The operations aspect of international consulting should start with a SWOT analysis, an examination of Strengths, Weaknesses, Opportunities, and Threats. The analysis should be done on the firm that is seeking to move operations abroad, the countries that the firm is considering expanding to, and firms competing for the same market around the world. An analysis of the target firm will reveal its core competencies, areas of vulnerability where breakdowns could occur, opportunities for expansion...
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...3M CASE STUDY Group: 20 Team: 11 Xizi Yang : S2780364 Tan Long: S2797402 S. van Eijk: S2755246 Lecturer: Henk Ritsema Question 1 Identify 3M’s core competencies, core products and end products. How are these three sources of competitive advantage lined with each other? 3M, also known as Minnesota Mining and Manufacturing, has several core competencies. First, the rule of allowing 15 per cent of its employees’ working hours has been spent on their own projects. It is the symbol of tolerance for experimentation for 3M. Second, the development of spirit of innovation. The shared characteristics of the trio, the calculated risk-taker, the rule-breaker and the inventor, shaped 3M’s climate of innovation. 3M supplies money for independent research products. For example, 3M launched the Genesis Program to fund research projects unable to go through the regular funding channels. Same for developing unconventional projects that would not otherwise receive funding in the outside world. Technology and ideas are shared through an informal way, such as conversations, but also through a formal way, such as the ‘R&D Workcentre’ and ‘Tech Forum’. Also, 3M has mentors and sponsors who help younger people by listening to their ideas, giving them advice and assistance, and acting as their champions. Patents give 3M the power and time to protect the growth potential of its business. All these thinks develops the spirit of innovation. Third, 3M keeps the functions of engineering...
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...or expand overseas. The four potential countries favour by Sanctuary Soft in its expansion plan included China, India, Germany and United Kingdom. In order to select a proper country for Sanctuary Soft’s first foreign expansion, this report will provide a detail explanation regard to the motivation of the first internationalization of Sanctuary Soft; the market opportunity of four possible foreign countries, and the expansion strategy in order to decide a proper countries for Sanctuary Soft’s first foreign penetration. Finally, this report will suggest some IHRM strategy/principle that Sanctuary Soft needs to consider in its selected foreign subsidiary. The motivation for internationalization The major motivations for Sanctuary Soft become a multinational company (MNCs) is to explore foreign opportunities, so as to accumulate specific knowledge in order to build their capabilities to provide service to its global basis clients. The larger clients who use the information security system are often having global presence. Therefore Sanctuary Soft needs to acquire new ideas and skills in the overseas market in order to increase its capabilities to serve clients internationally. As we know that the Sanctuary Soft’s capability is being sceptical by its existing client due to the lack of global presence, thus it is obvious that Sanctuary Soft cannot just stay in their home country if they want to attract the larger global clients and increase its market competitive in the global...
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...Chapter 13: Entry Strategy and Strategic Alliances TECHNICO Chose wholly owned subsidiary (agribusiness) 1. Enter into china … not prepared to let chinese counterparts exploit their technology 2. Avoiding technical and licensing agreement 3. No risk in allowing co to use licensing strategy and not using it well | Basic Entry Decisions OLI a) Location b) Ownership specific advantage c) internalisation-specific attributes (entry modes) 1) Which foreign markets? * Assessment of nations long run profit potential * Assess overall attractiveness of model * Suitability of product to that region * Nature of indigenous competitors 2) Timing of entry * Consider first mover advantages a) ability to pre-empt rivals and capture demand by establishing strong brand name b) ability to build sales volume before other entrants cost savings allow you to further cut your costs c) create switching costs that tie customers into products * first mover disadvantages a) pioneering costs: costs that firms have to bear that late entrants can avoid… eg cost of business failure b) research shows that higher probability of survival of an international business after several firms done so c) costs of promoting and marketing the product in a new market 3) scale of entry and strategic commitments * entering market on large scale involve commitment of significant resources; also provides rapid entry...
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...multinationals succeed and fail in emerging markets with reference to relevant theories and examples. Theory of Multinational There are many theories analyzing why firms start to engage in foreign direct investments, the Eclectic Paradigm is a more integrated and general approach amongst the various, it explains how the multinational firms make their decisions and strategies by considering the Ownership Advantages (O), Location Advantages (L) and Internalizations factors (I). The theory incorporates ideas of market failure, location advantages and industrial organizations and is thus more holistic approach. The “O” paradigm explains why firms decide to start investing abroad because of possessing ownership-specific advantages relative to domestic firms, and the benefits can outweigh the transaction costs of operating in foreign markets and overcome the competitions of domestic firms, which lead to higher profitability with reduced costs. Examples of ownership-specific advantages are monopoly power of accessing markets through ownership of limited resources, patents and trademarks; technologies in relation to all forms of innovations; marketing; and economies of large size such as economies of scales, scopes, learning and greater access to financial capitals. The “L” paradigm explains the location-specific advantages of host countries in order to make the...
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...there are other, better options available? The answer lies in the idea that the branch office remains closer to the parent company. It is not independent, so all income flows back to head office. This can create an advantageous tax situation in some cases. It also provides other benefits, such as not needing to place a certain number of Canadians on the board of directors. 2. Subsidiary A subsidiary is another popular business structure for businesses expanding into Canada. In fact, the subsidiary is the most common way for foreign firms to structure their Canadian operations. Why? The answer is easy to see. Subsidiaries create a wholly Canadian entity operating in Canada. This has two major advantages. The first is favourable taxation. The Canadian subsidiary is treated as a Canadian business and so it’s taxed like one. The other major advantage is that this type of business structure insulates the parent company. If you’re unsure about your Canadian operation’s profitability, it might be better to structure as a subsidiary. This way, your company is insulated from debts and losses the Canadian subsidiary...
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...international growth places demands on management and HRM * Identify factors that impact on how managers of internationalizing firms respond to these challenges * We cover the following areas: * Structural responses to international growth: The organizational context in which IHRM activities take place. Different structural arrangement have been identified as the firm moves along the path to international status – from export department through to more complex department such as the matrix, transnational, heterarchy, networked. * Control and coordination mechanisms: Control and Coordination aspects. Formal and informal mechanisms were outlined, with emphasis on control through personal networks and relationships, and control through corporate culture, drawing out HRM implications. * Mode of operation used in various international markets: The various modes-such as wholly owned, franchising, management contracts and international joint ventures- used by multinational for foreign market entry and expansion. Again, we attempted to demonstrate the IHRM implications of the various modes, although noting that most of the literature focuses on wholly owned subsidiaries and international joint ventures. * Effect of responses on HRM approaches and activities: How international growth affects the firms approach to HRM. Firms vary from one another as they go through the stages of international development, and react in different ways to the circumstances...
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...pp.443-444 Joint Ventures Wholly Owned Subsidiaries Mergers & Acquisitions (M&A) 2 Exporting • Advantages – Avoids the substantial costs of establishing operations in the host country – Achieve experience curve and location economies • Disadvantages – High transportation costs, esp. for bulk products – Tariffs – Divided loyalties of local agents 3 Licensing • An arrangement whereby a licensor grants the rights to intangible property to another entity (the licensee) for a specific period, in return, the licensor receives a royalty fee from the licensee. • Intangible property: patents, inventions, formulas, processes, designs, copyrights, and trademarks • Advantages – Licensing firm does not need to bear the development costs and risks – Make use of intangible property that a firm possesses that they do not want to develop itself 4 • Disadvantages – Does not give a firm tight control – Limits a firm’s ability to coordinate strategic moves across countries – Difficult to control its technological know-how— Opportunistic Behaviour of Licensee 5 Franchising • Similar to licensing, but franchising involves longer term commitment and insisting strict rules on licensees • Franchiser assists franchisee to run the business on an on-going basis. • Franchiser receives royalty payment, which amounts to some percentage of the franchisee’s revenues 6 • Advantages – Relieved of many costs and risks – ...
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...Business Strategy, Management & the New Realities by Cavusgil, Knight and Riesenberger International Business: Strategy, Management, and the New Realities 1 Learning Objectives 1. The role of strategy in international business 2. The integration-responsiveness framework 3. Distinct strategies emerging from the integration-responsiveness framework 4. Organizational structure 5. Alternative organizational arrangements for international operations 6. Building the global firm 7. Putting organizational change in motion International Business: Strategy, Management, and the New Realities 2 What Is Strategy? • Strategy is a plan of action that channels an organization’s resources so that it can effectively differentiate itself from competitors and accomplish unique and viable goals. • Managers develop strategies based on the organization’s strengths and weaknesses relative to the competition and assessing opportunities. • Managers decide which customers to target, what product lines to offer, and with which firms to compete. International Business: Strategy, Management, and the New Realities 3 Strategy in an International Context • Strategy in an international context is a plan for the organization to position itself vis-a-vis its competitors, and resolve how it wants to configure its value chain activities on a global scale. • Its purpose is to help managers create an international vision, allocate resources, participate in major international markets, be competitive, and...
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...Department of International Economics and Management Copenhagen Business School Frederiksberg 2000-Denmark Draft, October 2008 ABSTRACT The aim of the paper is to analyze the overseas activities of multinational corporations (MNCs) coming from small open economies (SMOPEC), their international or global expansion strategies behind outward foreign direct investments. Using a sample of 1089 subsidiaries, of which 187 are Icelandic subsidiaries, 444 are Irish subsidiaries and 458 are Israeli subsidiaries. We explore the geographical and industrial pattern of their direct investment strategies. Our analysis reveals several important facts. Firstly, most of the outward foreign direct investment (OFDI) is directed in finance, insurance and real estate services for all of the countries. Secondly, by far the majority of investment projects are carried out in Europe and North America which are almost equal in terms of frequency of investments. Thirdly, Icelandic firms use horizontal integration strategies and they diversify risk. Irish firms use lateral integration strategies and diversify risk. Finally, MNCs from Israel tend to diversify risk and use horizontal integration strategies. Keywords: OFDI, MNC, Horizontal integration, Vertical integration, Lateral integration, SMOPEC, Iceland, Ireland, Israel, Introduction “Foreign Direct Investment (FDI) is one of the main engines of growth for national economies. In particular, many small and medium...
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...international business are: - flow of ideas, services and capital across the world - new choices to consumers - acquisition of a wider variety of products is offered - the mobility of labor, capital and tech is facilitated - new challenging employment opportunities - reallocation of resources, shift of activities to a global level International business has created a network of global links that bind countries, institutions, and individuals with trade, financial markets, technology, and living standards. MULTINATIONAL ENTERPRISE (MNE): is a business –profit or non-profit – that operates in the global arena (across national borders), with no regard to the dimension of the firm The main peculiarity of an MNE is the fact that manage actively and coordinately a set of operations located in different countries. To be true MNE a company must: * have substantial, direct investment in foreign countries (not just the trading relationships of an import-export business) * and actively manage those operations as affecting their strategy and organization The MNE is a recent phenomenon, mostly developed in the post-WW II years. The United Nations has changed (1984) the definition of MNE as these companies have grown in size and importance: “the MNE is an enterprise comprising entities in 2 or more countries, regardless of the legal form and fields of activity of those entities, which operates under a system...
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...Question 1 Discuss the economic, political, legal and cultural factors in the Macro environment and the supplier, customer and competitor factors in the Micro environment you might need to consider when reviewing new international markets prior to entry. Answer: Political 1. The political system of a country shapes its economic and legal systems. Therefore, we need to understand the nature of different political systems before discussing economic and legal systems. By political system we mean the system of government in a nation. Political systems can be assessed according to two dimensions: 1. The degree to which they emphasize collectivism as opposed to individualism. 2. The degree to which they are democratic or totalitarian. Collectivism refers to a political system that stresses the primacy of collective goals over individual goals. When collectivism is emphasized, the needs of society as a whole are generally viewed as being more important than individual freedoms. The opposite of collectivism, individualism, refers to the philosophy that an individual should have freedom in his or her economic and political pursuits. In contrast to collectivism, individualism stresses that the interests of the individual should take precedence over the interests of the state. Democracy and totalitarianism are at different ends of a political dimension. Democracy refers to a political system in which government is by the people, exercised either directly or through elected...
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...Chapter 1 Multinational Financial Management: An Overview Specific Objectives • Identify the main goal of the MNC and conflicts with that goal • Describe the key theories that justify international business • Explain the common methods used to conduct international business Outline Goals of the MNC Maximize shareholder wealth Problems encountered in meeting goals: 1) Agency problems larger for MNCs than purely domestic firms because: a) monitoring more difficult because of geographic distance b) different cultures c) MNC size d) subsidiary managers may maximize the value of their subsidiary but not of the MNC as a whole 2) Centralized vs. decentralized management a) centralized reduces agency costs because it gives parent more control; downside is that local managers may be better informed b) decentralized management increases agency costs but may result in better decisions c) Internet may facilitate monitoring of foreign subsidiaries 3) Corporate control used to reduce agency problems a) executive compensation with stock b) threat of hostile takeover c) monitoring by large shareholders Constraints encountered in meeting goals 1) Environmental - other countries may be tougher (e.g., pollution controls) 2) Regulatory - e.g., currency convertibility...
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...inability for a firm to encourage for issues to be resolved without the need of arbitration. When arbitration is needed, a firm loses precious time and possibly funds to be able to settle a dispute among the different business units with a conflict. This may result in the loss of competitive advantage and/or the loss of actual funds. 2. “Today’s challenge is to build transnational organizations that can sense an emerging consumer trend in one country, link it to a new technology or capability it has in another, develop a creative new product or service in a third, then diffuse that innovation rapidly around the world”. With this in mind, identify a company who has demonstrated this ability including a brief description of each step they took. Boeing is a perfect example of a company that was able to link technology and capabilities from national suppliers which they call “partners”, and to decentralize their manufacturing functionality to develop the new 747 dreamliner. Boeing first began by identifying key geographical “partners” that had the resources and functional capability to manufacture specific sections of the airplane. After doing so, they decentralized their manufacturing capability and handed the responsibility to these “partners”. Finally, what Boeing was left with was a strategically dispersed manufacturing plant across the globe. These “partners”, according to their resources and technological capabilities were delegated to manufacture a specific section of the...
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...What is a strategy. Strategy has been defined as a course of action including the specifications required to achieve a specific objective (UK Chartered institute of management accounts ,1996). In the context of organizations, it is the development of resources to achieve specific objectives against competition from rival organizations. All the resources of the organization which includes financial, manufacturing, marketing, technology, manpower etc are marshaled in pursuit of these objectives. Johnson and Scholes provide the following definition: Strategy is the direction and scope of an organization over the long term which achieves advantage for the organization through its configuration of resources within a changing environment and to fulfill stakeholder expectations. Henry Mintzberg observes strategy as a ‘pattern in a stream of decisions’ and describes five ways of looking at strategy as; • a plan which can be defined and followed.ie a consciously intended course of action, asset of guidelines in which to deal with a situation. Strategy in this regard is therefore concerned with how the leadership try to provide organizational direction and predetermined course of action. • a ploy; a move in a competitive business game or a stream of actions intended to outwit an opponent or competitor. • a pattern of consistent behavior or a stream of actions demonstrating consistency in behavior whether intended or unintended. • a means of identifying an organizations...
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