MBA IB04 Global Business Strategies Subject

BHARATI VIDYAPEETH
(Deemed to be University), Pune, India
School of DiStance eDucation
GLOBAL BUSINESS
STRATEGIES
MBA/MBA HR/ MBA E

SEM IV (IB04)
Bharati Vidyapeeth
(Deemed to be university), Pune
School of Distance education

Dr. Patangrao Kadam Prof. Dr. Shivajirao Kadam Prof. Dr. Manikrao Salunkhe Dr. Vishwajeet Kadam
Founder : Bharati Vidyapeeth Chancellor, Vice Chancellor, Pro-Vice Chancellor,
Founder - Chancellor : Bharati Vidyapeeth Bharati Vidyapeeth Bharati Vidyapeeth Bharati Vidyapeeth
(Deemed to be University), Pune (Deemed to be University), Pune (Deemed to be University), Pune (Deemed to be University), Pune
Advisory Council
Prof. Dr. M. M. Salunkhe Chairman
Hon’ble Vice Chancellor, Bharati Vidyapeeth (Deemed to be University), Pune
●
Prof. Dr. R. G. Takawale Member

Former Vice Chancellor, University of Pune, Former Vice Chancellor, Yashwantrao Chavan Maharashtra
●
Open University, Nashik, Former Vice Chancellor, Indira Gandhi National Open University, New Delhi
Prof. Dr. V. S. Prasad Member

Former Director, National Assessment and Accreditation Council (NAAC)
●
Prof. Dr. B. P. Sable Member

Former Vice Chancellor, Yashwantrao Chavan Maharashtra Open University, Nashik
●
Dr. Masood Parveez Member

Regional Director, Indira Gandhi National Open University, Regional Centre, Pune"
●
Prof. Dr. Anuradha Deshmukh Member

Former Professor & Director, Centre for Collaborations and Special Initiatives,
●
Yashwantrao Chavan Maharashtra Open University, Nashik
Dr. Deepak Shikarpur Member

IT - Expert, Pune
●
Dr. Sachin Vernekar Member

Dean, Faculty of Management Studies, Bharati Vidyapeeth (Deemed to be University), Pune
●
Dr. V. V. Kulkarni Member

Dean, Faculty of Arts & Commerce,Bharati Vidyapeeth (Deemed to be University), Pune
●
I N S T I T U T I O N S
PUNE : RESEARCH INSTITUTES

HEALTH SCIENCE INSTITUTES • Research & Development Centre in Pharmaceutical
• Medical College Sci. & Applied Chemistry
• Dental College & Hospital • Rajiv Gandhi Institute of Information
• College of Ayurved Technology & Biotechnology
• Homoeopathic Medical College • Interactive Research School for Health Affairs (IRSHA)
• College of Nursing
• Poona College of Pharmacy NEW DELHI
• Institute of Management & Research
TECHNICAL INSTITUTES • College of Engineering
• College of Architecture • Institute of Computer Application & Management
• College of Engineering
MUMBAI
MANAGEMENT INSTITUTE • Medical College
• Institute of Management and Entrepreneurship • Dental College & Hospital

• Nursing College
Development
KOLHAPUR
LIBERAL EDUCATION INSTITUTES
• Institute of Management
• Yashwantrao Mohite College of Arts, Sci. and Comm.
(Jr., Sr. and Post-graduate)
• Social Science Centre KARAD
• Yashwantrao Chavan Institute of Social Sciences, • Yashwantrao Mohite Institute of Management
Studies & Research

• College of Physical Education SANGLI
• The Institute of Environment Education & Research • Medical College
• Institute of Hotel Management and Catering Technology • Dental College & Hospital
• New Law College • Nursing College
• Institute of Management & Rural Development Administration
SOLAPUR
• Abhijit Kadam Institute of Management and Social Sciences
Bharati Vidyapeeth
(Deemed to be University), Pune
School of Distance education
course curriculum team
NAME DESIGNATION ORGANIZATION
Sr.
No.
1 Dr. S. B. Sawant Director BV(DU), School of Distance Education, Pune

2 Dr. S. S. Vernekar Dean, Faculty of Management Studies & Director BV(DU), IMED, Pune
3 Dr. M. V. Shitole Chairman, BoS in Business Administration BV(DU), IMED, Pune
4 Dr. Kirti Gupta Chairman, BoS in Human Research & Communication Studies BV(DU), IMED, Pune
5 Dr. V. S. Mangnale Member, BoS in Business Administration BV(DU), AKIMSS, Solapur
6 Dr. Vinod Ingawale Member, BoS in Business Administration BV(DU), IMED, Pune
7 Dr. Ravindra Marathe Member, BoS in Human Research & Communication Studies BV(DU), Institute of Management, Kolhapur
8 Dr. Broto Bhardwaj Member, BoS in Human Research & Communication Studies BV(DU), IMR, New Delhi
9 Dr. Mrs.S.D. Dharmadhikari Member, BoS in Business Administration BV(DU), IMED, Pune
10 Dr. Amarja Nargunde Member, BoS in Human Research & Communication Studies BV(DU), IMED, Pune
11 Mr. M. M. Pole Member, BoS in Business Administration BV(DU), IMED, Pune
12 Dr. Shabana Memon Member, BoS in Human Research & Communication Studies BV(DU), Institute of Management, Kolhapur
13 Dr. P. P. Kothari Member, BoS in Human Research & Communication Studies BV(DU), AKIMSS, Solapur
14 Mr. Nilesh Mate Member, BoS in Business Administration BV(DU), IMED, Pune
15 Ms. S. C. Maidargi Member, BoS in Business Administration BV(DU), AKIMSS, Solapur
academic Study centres

Sr. Centres Director Coordinator
BVDU Yashwantrao Mohite College of Arts, Science & Commerce, Prin. Dr. S. R. Patil Dr. V. A. Rankhambe
1
Paud Road, Erandwane, Pune – 411038 Tel. No. 020 – 25433383
BVDU Social Science Centre Dr. G. R. Rathod Dr. S. I. Kumbhar
2
Paud Road, Erandawane, Pune - 411 038 Tel. No. 020-25448520
BVDU New Law College, Paud Road, Erandwane, Pune – 411038 Dr. Smt. B. M. Deshpande Dr. Smt. U.S. Bendale
3
Tel. No. 09156911396, 020-25444616
BVDU Institute of Management & Entrepreneurship Development, Dr. S. S. Vernekar Prof. N. R. Mate
4
Paud Rd, Erandwane, Pune – 411038 Tel. No.020-25431060, 60127666
BVDU Institute of Management & Research, Opp. Ordnance Depot, Dr. A. R. Deshmukh Ms. Megha Sehgal
5 A-4, Rohtak Road, NH-10, Paschim Vihar Ext., New Delhi -110063 Ms. Savneet Kaur
Tel. No. 011 – 25278446, 25285808, 09250547203 / 204
BV Institute of Management Studies & Research, Sector-8, C.B.D. Dr. Smt. A. A. Kalse Dr. R. D. Patil
6
Belapur, Navi Mumbai – 400614 Tel. No. 022 – 27572433, 27562582
BVDU Institute of Management, Kadamwadi, Kolhapur – 416003 Dr. R. U. Kanthe Dr. Mukund Kulkarni
7
Tel. No. 0231 – 2660666
BVDU Yashwantrao Mohite Institute of Management, Sr. No. 114/2A, Dr. N. R. Jadhav Dr. V. P. Deshmukh
8 Venkateshnagar, Koyana Vasahat, Pune-Bangalore Road,
Malkapur, Karad – 415539 Tel. No. 02164 – 242242, 241169
BVDU Institute of Management & Rural Development Administration, Dr. Nitin Nayak Prof. K. Venkatesh
9
Rajwada Chowk, Sangli – 416416 Tel. No. 0233 – 2625776
10 BVDU Abhijit Kadam Institute of Management & Social Sciences, Dr. V. S. Mangnale Dr. S. S. Suryawanshi
Bijapur Road, Solapur – 413004 Tel. No. 0217 – 2302016
School of Distance Education
Bharati Vidyapeeth
GLOBAL BUSINESS STRATEGIES
MBA/MBA HR/ MBA E SEM IV (IB04)
(Deemed to be University), Pune, India
Writers team
Author Unit No.
Kamaljit Kaur Sahadev 1 to 6
EDITOR & REVIEWER

COURSE SUBJECT FACULTY
MBA/MBA GLOBAL BUSINESS STRATEGIES

HR/ MBA E
SEM IV
iSBn : 978-81-943851-9-6
CONTENTS
Unit Contents Page No.
Export and Import Strategies

1.1 OBJECTIVES
1.2 OPENING CASE: Grieve Corporation—A Small Business Export Strategy
1.2.1 INTRODUCTION
1.2.2 EXPORT STRATEGY
1 1.2.3 IMPORT STRATEGY 1-8
1.2.4 THIRD-PARTY INTERMEDIARIES
1.2.5 EXPORT FINANCING
1.2.6 COUNTERTRADE:
1.3 ETHICAL DILEMMA:
1.4 LOOKING TO THE FUTURE:
GLOBAL MANUFACTURING STRATEGIES

2.1 OBJECTIVES
2.2 MEANING:
2.3 PRODUCTION-DISTRIBUTION NETWORKS:
2 2.4 HAYES AND WHEELWRIGHT STAGES OF MANUFACTURING COM 9-16
PETITIVENESS:
2.5 GLOBAL SUPPLY CHAIN MANAGEMENT:
2.6 ETHICAL DILEMMA –SUPPLIER RELATIONS APPROACH THAT
YIELDS BEST RESULT:
CONTROL STRATEGIES
3.2 PLANNING FOR CONTROL STRATEGIES:
3 3.3 CONTROL STRATEGIES: 17-33
3.4 ORGANIZATIONAL STRUCTURE
3.5 CORPORATE CULTURE & CO-ORDINATING METHODS:
Unit Contents Page No.
ROLE OF LEGAL STRUCTURE IN CONTROL STRATEGIES

4.1 OBJECTIVE
4 34-35
4.3 CONTROLS IN PROCESS OF INTERNATIONALIZATION
4.4 CONTROL OR NO CONTROL CONSTANT BALANCING ACT
COLLABORATIVE STRATEGIES
5 5.1 MOTIVES FOR COLLABORATIVE ARRANGEMENTS 36-41
5.3 CONSIDERATIONS IN COLLABORATIVE ARRANGEMENTS
PROBLEMS OF COLLABORATIVE ARRANGEMENTS

6.1 INTRODUCTION
6 42-44
6.2 PROBLEMS OF COLLABORATIVE ARRANGEMENTS
6.3 COLLABORATIVE IMPORTANCE
Global Business Strategies
UNIT - I
EXPORT AND IMPORT
NOTES
STRATEGIES
1.1 OBJECTIVES
The main objective of understanding these strategies is to make students

aware of characteristics of these strategies and relevance of them in International
Business. The student will understand the concepts of import and export
strategies and third Party intermediaries.
1.2 OPENING CASE: GRIEVE CORPORATION—A SMALL

BUSINESS EXPORT STRATEGY
A small firm located near Chicago, Grieve Corporation manufactures

laboratory and industrial ovens, furnaces and heat processing systems for the
U.S. market. Grieve began losing business as (i) foreign competitors began to
penetrate the U.S. market and (ii) its customers began to move overseas and
started sourcing locally. With the help of the International Trade Administration
of the U.S. Department of Commerce, Grieve was able to identify potential Asian
distributors. During a business trip to Asia, the president of Grieve met with
potential candidates and successfully recruited exclusive agents for each country
visited. Once Grieve had gained sufficient experience in the Asian market, export
activities were expanded to other regions. Moving into international markets has
proved to be a major factor in the firm’s continued growth and success.
1.2.1 INTRODUCTION
Whereas exports represent goods and services flowing out of a country,
imports represent goods and services flowing into a country. Exports result in
receipts and imports result in payments. Although export and import activities
are a natural extension of distribution strategy, they also include elements of
product, promotion and pricing factors and decisions. Both exporting and
importing entail a lower level of risk than foreign direct investment, but while
exporting offers less control over the marketing function, importing offers less
control over the production function.
Export and Import

Strategies 1
Global Business Strategies 1.2.2 EXPORT STRATEGY
A firm’s choice of entry mode depends on various factors, such as the
ownership advantages of the firm, the location advantages of the market and the
NOTES internalization advantages of specific assets, international experience and/or the
ability to develop differentiated products (see Chapter 8). In general, firms that
possess few ownership advantages either do not enter foreign markets, or they
use the lower-risk entry modes of exporting and licensing. Still in all, the decision
to export must fit a company’s overall straStegy and take into account global
concentration (the presence of relatively few major players), global synergies
(the gains from sharing corporate expertise on a global basis) and global strategic
motivations (the firm’s competitive reasons to enter a given market).
A. Characteristics of Exporters
Research conducted on the characteristics of exporters has resulted in
two basic conclusions: (i) the probability of exporting increases with
size of company revenues and (ii) export intensity(the percentage of
total revenues generated by exports) is not positively correlated with
company size. Factors such as the risk profile of management and the
nature of industry competition are just as important as firm size.
B. Why Companies Export

Companies export in order to increase sales revenues, achieve
economies of scale in production, diversify markets and minimize risk.
C. Stages of Export Development

Firms tend to move through three phases of export development: pre-
engagement, initial exporting and advanced exporting. As they do so,
they tend to (i) export to more countries and (ii) expect exports to grow
as a percentage of total sales. In addition, they also tend to (i) diversify
their markets to more distant countries and (ii) move into environments
that are increasingly different from those of their home countries.
The import process involves strategic and procedural issues that
basically mirror those of the export process. There are two basic types
of imports: extracompany imports from independent (unrelated)
upstream sources and intracompany imports from a firm’s upstream
global supply chain that represent intermediate goods and services.
The three basic types of importers are those that:
• look for any product around the world that will generate a
positive cash flow
• look to foreign sourcing as a means to minimize product costs
• use foreign sourcing as part of their global supply chain strategy.
An import broker is a certified specialist who obtains required government
permissions and other clearances before forwarding the necessary documents to
Export and Import
2 Strategies
the carrier(s) of the goods.
A. The Role of Customs Agencies Global Business Strategies
Customs reflect a country’s import and export procedures and
restrictions. The primary duties of a customs agency are the assessment
and collection of all duties, taxes and fees on imported products, the NOTES
enforcement of customs and related laws and the administration of
certain navigation laws and treaties. National customs agencies are
increasingly involved in dealing with smuggling operations and
preventing foreign terrorist attacks. A customs broker can help an
importer minimize duties by (i) valuing products in such a way that
they qualify for more favorable treatment, (ii) qualifying for duty
refunds through drawback provisions, (iii) deferring duties by using
bonded warehouses and foreign trade zones and (iv) limiting liability
by properly marking an import’s country of origin.
B. Import Documentation
The import documentation process can be both complicated and
cumbersome. Without proper documentation, customs agencies will
not release shipments. Documents are of two types: (i) those that
determine whether customs will release the shipment and (ii) those
that contain the information necessary for duty assessment and data
gathering purposes. At a minimum, the required documents would
include an entry manifest, a commercial invoice and a packing list.
D. Potential Pitfalls of Exporting

The operational mistakes associated with exporting can be very costly.
In addition, events such as 9/11 can bring international trade activities
to a complete halt in the affected region.
E. Designing an Export Strategy

To design an effective export strategy, managers must
• assess the company’s export potential
• obtain expert counseling on exporting
• select target markets
• formulate and implement an effective export strategy.
1.2.3 IMPORT STRATEGY

The import process involves strategic and procedural issues that basically
mirror those of the export process. There are two basic types of imports:
extracompany imports from independent (unrelated) upstream sources and
intracompany imports from a firm’s upstream global supply chain that represent
intermediate goods and services. The three basic types of importers are
those that: Export and Import
Strategies 3
Global Business Strategies • look for any product around the world that will generate a positive cash flow
• look to foreign sourcing as a means to minimize product costs
• use foreign sourcing as part of their global supply chain strategy.
NOTES
An import broker is a certified specialist who obtains required government
permissions and other clearances before forwarding the necessary documents to
the carrier(s) of the goods.
A. The Role of Customs Agencies
Customs reflect a country’s import and export procedures and
restrictions. The primary duties of a customs agency are the assessment
and collection of all duties, taxes and fees on imported products, the
enforcement of customs and related laws and the administration of
certain navigation laws and treaties. National customs agencies are
increasingly involved in dealing with smuggling operations and
preventing foreign terrorist attacks. A customs broker can help an
importer minimize duties by (i) valuing products in such a way that
they qualify for more favorable treatment, (ii) qualifying for duty
refunds through drawback provisions, (iii) deferring duties by using
bonded warehouses and foreign trade zones and (iv) limiting liability
by properly marking an import’s country of origin.
B. Import Documentation
The import documentation process can be both complicated and
cumbersome. Without proper documentation, customs agencies will
not release shipments. Documents are of two types: (i) those that
determine whether customs will release the shipment and (ii) those
that contain the information necessary for duty assessment and data
gathering purposes. At a minimum, the required documents would
include an entry manifest, a commercial invoice and a packing list.
1.2.4 THIRD-PARTY INTERMEDIARIES

Third-party intermediaries are independent (unrelated) firms that facilitate
international trade transactions by assisting both importers and exporters. They
may perform any or all of the following functions:
• stimulate sales, obtain orders and conduct market research
• perform credit investigations and payment-collection activities
• handle foreign traffic arrangements and shipping details
• provide support for a client’s sales, distribution and promotion staff.
Direct exports represent products sold to an independent party outside of
the exporter’s home country; indirect exports are first sold to an intermediary in
the domestic market, who then sells the products in the export market. While
Export and Import services are more likely to be exported on a direct basis, goods are exported via
4 Strategies both avenues.
A. Direct Selling Global Business Strategies
Direct selling, i.e., exporting through sales representatives to
distributors, foreign retailers, or final end users, gives exporters greater
control over the marketing function and offers the potential to earn NOTES
higher profits as well. Whereas a sales representative usually operates
on a commission basis, a distributor is a merchant who purchases
goods from a manufacturer and resells them at a profit.
B. Direct Exporting through the Internet and Electronic Commerce

Electronic commerce allows companies both large and small to engage
in direct marketing quickly, easily and inexpensively. It is especially
important for small and medium-size firms that wish to reach distant
markets.
C. Indirect Selling
Indirect selling, i.e., selling products to or through an independent
domestic intermediary, is carried out via export management
companies and export trading companies.
D. Export Management Companies

An export management company [EMC] is a firm that either acts as a
manufacturer’s agent or buys merchandise from manufacturers for
international distribution. EMCs generally operate on a contractual
basis, provide exclusive representation in a well-defined foreign
territory and act as the export arm of a manufacturer. Often, export
management companies specialize according to product, function
and/or market area.
E. Export Trading Companies

An export trading company [ETC] is somewhat like an export
management company, but its primary purpose in becoming involved
in international trade as an independent broker is to match domestic
exporters to foreign customers. Export trading companies that are
based in the U.S. may be exempt from antitrust provisions in order to
allow them to penetrate foreign markets by collaborating with other
U.S. firms.
F. Foreign Freight Forwarders

A freight forwarder is a foreign trade specialist who deals in the
movement of goods from producer to customer. Even export
management companies may use the specialized services of foreign
freight forwarders. The typical freight forwarder is the largest export
intermediary in terms of the weight and value of cargo handled. Some
may specialize in the type of mode used, others in the geographical Export and Import
Strategies 5
Global Business Strategies area served. The movement of goods across a variety of modes from
origin to destination is known as intermodal transportation. Three
recent trends leading to a preference for air freight over ocean freight
NOTES are: (i) the need for more frequent shipments, (ii) lighter-weight
shipments and (iii) high-value shipments.
G. Export Documentation
An export license allows the exporter to ship goods to particular
countries. Other key export documents are the:
• pro forma invoice
• commercial invoice
• consular invoice
• bill of lading
• certificate of origin
• shipper’s export declaration
• export packing list.
1.2.5 EXPORT FINANCING

From the exporter’s point of view, four major issues relate to export
financing: (i) the price of the product, (ii) the method of payment, (iii) the
financing of receivables and (iv) insurance.
A. Product Price
Export prices must factor in exchange rate fluctuations, transportation
costs, relevant duties, the costs of multiple wholesale channels,
insurance fees, bank charges, antidumping laws, etc.
B. Method of Payment
The flow of money across national borders requires the use of special
documents and may be very complicated. In descending order of
security for the exporter, the basic methods of payment for exports are:
cash in advance a letter of credit (obligates the buyer’s bank to pay the
exporter) a revocable letter of credit may be changed by any of the
parties to the agreement an irrevocable letter of credit requires all
parties to the agreement to consent to the change in the document.
a confirmed letter of credit adds a guarantee of payment to an
additional bank (usually an interbank agreement). a draft or bill of
exchange a documentary draft instructs the importer to pay the
exporter if specified documents are presented a sight draft requires
payment to be made immediately a time draft requires payment to be
made at some specific date in the future.
an open account (the exporter bills the importer but does not require
Export and Import formal payment documents —generally limited to members of the
6 Strategies same corporate group).
C. Financing Receivables Global Business Strategies
The increased distances and time involved in exporting often create
cash flow problems for an exporter. Further, because exporting is risky,
banks may be unwilling to provide financing for export transactions. NOTES
However, exporters can get access to funds through factoring, i.e., the
discounting of a foreign account receivable, and forfaiting, i.e., a
longer-term instrument that includes a guarantee from a bank in the
importer’s country. In addition, exporters can apply for guarantees
from government agencies (such as the Ex-Im Bank) in order to get
banks to lend them money until payment is received.
D. Insurance
The two types of insurance most often used for export transactions are:
(i) transportation risks (e.g., devastating weather conditions or rough
handling by carriers) and (ii) political, commercial and foreign-
exchange (environmental) risks. While private insurers will covers
these types of risks for established exporters with a proven record,
government agencies tend to be the most important insurers of export
shipments.
1.2.6 COUNTERTRADE
Countertrade involves a reciprocal flow of goods and services. It provides
a means to complete a transaction when a firm (or government) does not have
sufficient convertible currency to pay for imports, or it simply does not have
sufficient funds. Countertrade transactions can be divided into two basic types:
(i) barter (based on clearing arrangements used to avoid money-based exchange)
and (ii) buybacks, offsets and counterpurchase (all of which are used to impose
reciprocal commitments).
A. Barter
Barter occurs when goods or services are traded for other goods and
services, i.e., it represents a non-monetary transaction. (Barter is not
only the oldest form of countertrade, it is the oldest form of any type
of trade transaction.) Buybacks represent counter-deliveries the
exporter receives as payment that in fact are related to or originate
from the original export.
B. Offset Trade
Offset trade occurs when the exporter sells goods or services for cash
but then helps the importer find opportunities to earn hard currency.
Direct offsets include generated business that directly relates to the
export; indirect offsets include generated business unrelated to the
export
Export and Import
Strategies 7
1.3 ETHICAL DILEMMA

NOTES
Is Demand Always Just Cause to Export?
Of all of the issues associated with exporting, two of the most vexing have
to do with hazardous materials and sensitive technology. First, regulations
concerning pesticides and other dangerous chemicals are often more lax in many
of the developing countries than in the industrialized world. The concept of prior
informed consent would require each exporter of a banned or restricted substance
to obtain through its home-country government the express consent of the
importing country government. Those who oppose this principle do so on
grounds of ethical relativism and national sovereignty. Second, although
governments usually control the export of sensitive technology to friends and
foes alike, many firms try to bypass such controls. Documents may be falsified
to hide the true nature of a transaction. In neither instance does the mere existence
of demand seem to be sufficient reason to justify export transactions.
1.4 LOOKING TO THE FUTURE
How Will Technology Affect Exporting?

Exporting continues to differ across countries in terms of its importance in
generating GDP and employment. Nonetheless, advances in transportation and
communications will continue to facilitate export growth and make it easier for
firms to reach distant international markets. A primary advance in communication
technology is the electronic data interchange (EDI), which facilitates the
electronic transfer of information across the whole of the value chain. One of the
major developments to affect exporting is the use of the Internet, which brings
producers and customers from all over the world together in ways not possible
before and allows firms to engage in direct exporting.
Questions to be discussed
Q 1. Differentiate between export and import strategies with the help of
example.
Q 2. Discuss the role of third party intermediaries.
Q 3. Is demand always cause of export . Discuss with the help of examples.
Q 4. Write short notes on Counter Trade.
Q 5. Explain Export Finance
Export and Import

*****
8 Strategies
UNIT - II
GLOBAL MANUFACTURING
NOTES
STRATEGIES
2.1 OBJECTIVES
The students will learn the basic aspects of Global Manufacturing Strategies.
The learn how the production distribution strategies work in Global business.
They will understand the relevance of Hayes and wheelwright stages of
manufacturing competitiveness and global supply chain management.
2.2 MEANING
Global Manufacturing Strategies (GMS) is a community, serving senior

manufacturing and operations executives from major worldwide corporations,
providing independent business critical intelligence, cutting edge innovations,
and peer-to-peer benchmarking and networking.
2.3 PRODUCTION-DISTRIBUTION NETWORKS
• Production-distribution networks provide an effective approach in

modeling global firms. In this type of a network, nodes represent the
semi-finished/finished product plants, distribution center and warehouses
whereas, arcs represent the flow of items.
• Firms implement their manufacturing strategies via the following
decisions at each node of their production-distribution system: -
• facility location,
• - capacity acquisition,
• - technology selection,
• - product mix,
• - time-phasing of investments, and
• - financial planning.
Global Manufacturing
Strategies 9
Global Business Strategies 2.3.1 FCT MODEL
• Global firms have facilities located in different countries. This requires
treatment of several additional factors such as price and exchange rate
NOTES uncertainty, imposed by the international environment. (FCT Model)
• Facility location,
• capacity acquisition and
• technology selection decisions as building blocks for the management to
design manufacturing strategies.
2.3.2 DISCRETE LOCATION MODELS FOR DISTRIBUTION

PLANNING
• Aikens (1985) presented a survey of discrete location models for
distribution planning. He reviewed 23 models covering a wide range of
problems from the single-commodity, un-capacitated facility location to
the multi-commodity, capacitated, multi-echelon versions.
• the objective is to locate facilities so as to minimize a cost expression
which is a function of the facility-customer and/or facilityfacility travel
distances (or times).
2.3.3 PLANT LOCATION UNDER UNCERTAINTY

• SPLP provides two types of decisions simultaneously: - Location
decisions; the number and locations of plants to be opened, - Allocation
decisions; the assignment of markets to open plants.
• In practice, there is a time lag between the investment decision and
completion of plant construction.
• Length of the time necessary for having the plant in place and operating
is not totally controllable by the firm.
• That is, the locational decisions are made prior to the realization of
quantities demanded, prices and costs. Since at least one of the above
factors is exogenous, it is more realistic to analyze the plant location
under uncertainty.
• This requires addressing the firm's attitude toward risk.
• Presuming the firm can predict the future cost structure relatively easily,
Jucker and Carlson (1976) addressed different control strategies for
dealing with price and demand uncertainty.
• Their classification is based on exogenous versus controllable variables
and ex ante (before resolution of the uncertainty) versus ex post decisions.
• They recognized four types of firms: - Quantity-setting firm
(agribusiness), -price-setting firm producing to order (monopoly), - price-
taking firm producing to order (public utility), -price-taking firm
10 Strategies producing a perishable good (newsboy).
• Market prices are functions of these quantities and uncertainty. Global Business Strategies
• This seems to be a valid assumption for modeling firms when the product
markets are not regulated.
NOTES
2.3.4 CAPACITY EXPANSION PROBLEM
• Capacity expansion problem (CEP) involves decisions about the sizes,
locations and times of capacity expansions to serve a spatially distributed
set of customers.
• When there are more than one product, type of the acquired capacity is
also important.
• Capacity contraction may turn out to be optimal, given the existing
capacity and the demand pattern.
• Capacity expansion problem (CEP) involves decisions about the sizes,
locations and times of capacity expansions to serve a spatially distributed
set of customers.
• When there are more than one product, type of the acquired capacity is
also important.
• Capacity contraction may turn out to be optimal, given the existing
capacity and the demand pattern.
2.3.4 TECHNOLOGY SELECTION

• Firms pursue their capacity expansion plans by choosing among a set of
alternative technologies. Since manufacturing technology is subject to a
continual improvement process, the set of alternative technologies
changes over time.
• Hence, selecting the best time for adoption of a new technology is a
problem by itself.
• The interested reader is referred to Fine (1991) and the references therein
for the literature on optimal timing of technology adoption.
2.4 HAYES AND WHEELWRIGHT STAGES OF

MANUFACTURING COMPETITIVENESS
• Stage I
Stage I companies consider their manufacturing organisation to be
internally neutral, in that its role is simply to "make the stuff", without
any surprises. Such companies believe that their product designs are
so unusual or their marketing organisation so powerful that if the
product can simply be delivered to customers, as advertised, the
company will be successful. Strategies 11
NOTES
• Stage II
Stage II companies look outward and ask their manufacturing
organisation to be externally neutral, that is, able to meet the standards
imposed by their major competitors. Such companies tend to adhere
to industry practice and industry standards. They buy their parts,
materials and production equipment from the same suppliers that their
competitors use, follow similar approaches to quality and inventory
control, establish similar relationships with their workforce, and regard
technicians and managers as interchangeable parts - hiring both, as
needed, from other companies in the industry.
• Stage III
Stage III companies have a manufacturing organisation that is
internally supportive of other parts of the company, with a co-ordinated
set of manufacturing structural and infrastructural decisions tailored
to their specific competitive strategy.
• Stage IV
Stage IV companies regard their manufacturing organisation as
externally supportive, that is, playing a key role in helping the whole
company achieve an edge over its competitors. Such companies are
not content simply to copy their competitors, or even to be the
"toughest kid on the block" in their own neighbourhood. They seek to
be as good as anybody in the world at the things they have chosen to
be good at - that is, world-class.
2.5 GLOBAL SUPPLY CHAIN MANAGEMENT
• National governments provide subsidized financing (as well as low tax

rates) to attract multinational companies to locate production plants in
their country.
12 Strategies
• Multinational companies on the other hand, use foreign financing Global Business Strategies
packages to hedge against international price and exchange rate
fluctuations.
• Thus, financing decisions are an integral part of IPLP due to risk NOTES
reduction strategies as well as locational incentives via subsidized interest
rates.
• Global Supply Chain Management, also known as the value chain or
logistics network management, consists of a network of suppliers,
manufacturers, warehouses, distribution centers, wholesalers and
retailers. It also includes a variety of specialized facilitating systems, such
as transportation and information systems.
• Competitive pressures and changes in the economic climate have forced
management of international companies to evaluate afresh the operation
and structure of international supply chains.
• Swings between “local for local” and “international supply centre”
strategies for manufacturing and distribution have dramatic implications
for organisation, structure, control systems and costs to serve the
customer.
• Efficient global supply chain management allows a company to source
materials and service customers in other countries.
• The supply chain affects a product's entire life cycle, from the planning
stages to the sale.
• The company must be able to find the materials it needs to create its
products, transport them to the production facilities and ship the finished
goods to the retail outlets or end user of the product.
• Service Level Agreement and Supply Chain Operation Reference Model
those are used for analysis of SC performance in global scale
• The emergence of the global marketplace necessitates that supply chain
management (SCM) must be refocused into a global or network context.
• The globalization process that is underway is viewed as a network of
contemporaneous events, options, and constraints, which requires the
development of a systemic concept of supply chain strategy development
and implementation2 . It is anticipated that globalization will be an
enduring phenomena due to the reduction of entry barriers into industries,
technological advancement, increased information/knowledge transfer,
and emerging markets becoming a viable alternative for rejuvenating
mature products and industries. Dornier et al.3 identified the following
forces that collectively drive the trend toward globalization:
• Global market forces,
• Technological forces,
• Global cost forces,
• Political and economic forces.
Strategies 13
Global Business Strategies • Global market forces involve the pressures created by foreign
competitors, as well as the opportunities created by foreign customers.
• Technological forces are related to the products themselves. Various
NOTES subcomponents and technologies are available in different regions and
locations around the world, and many successful firms need to have the
ability to use these resources quickly and effectively.
• Cost forces often dictate global location decisions. In the past, the low
cost of unskilled labor was a decisive factor in determining factory
location.
• Political and economic forces may greatly affect the drive toward
globalization. There are also several other political and economic factors.
For example, regional trade agreements may drive companies to expand
into one of the countries in the regional group.
• E.G. Jerusalem as Israel's capital
• E.g. US not signing on Food sufficiency
2.6 ETHICAL DILEMMA –SUPPLIER RELATIONS

APPROACH THAT YIELDS BEST RESULT
• The social, environmental or economic criteria within the specification

need to be shaped by: • buyer objectives (as set by their corporate
governance, business principles, corporate social responsibility or
sustainable development programme), and
• The specific vulnerabilities of the supply chain.
• For example, the buyer may have a corporate policy of procurement only
from production sites which meet minimum standards set out in the
International Labour Organisation’s core conventions, or use fair trade
criteria.
• The buyer may also seek statutory declarations from suppliers that
minimum standards are upheld.
• The use of these standards or codes of conduct can progress ethical
procurement when supported by the economic and business parameters
negotiated in a contract.
• Specifications which are output-based rather than input-based can
increase supplier innovation, reduce waste, and minimise harmful social
and environmental impacts.
• Engage with suppliers to assess:
• Are there suppliers which meet the organisation’s desired standards, or
14 Strategies should the buyer ask suppliers to progress towards these standards?
• What are examples of good practice amongst current or potential Global Business Strategies
suppliers?
• What issues have suppliers identified? What expertise can they bring to
a discussion about improvements? NOTES
• Which suppliers have the awareness and skills needed to improve?

• Do suppliers understand what the buyer considers to be high priority or
high risk areas?
• Have multi-stakeholder initiatives (involving organizations with relevant
expertise) been established to address problematic practices within a
supplier country or a sector? How effective have they been?
• Which suppliers are working with internationally respected independent
trade unions or NGOs?
• Is there current or recent research pointing to critical concerns in an
industry or country?
• What standards or codes of conduct are currently in use?
• Have multi-stakeholder initiatives (involving organizations with relevant
expertise) been established to address problematic practices within a
supplier country or a sector? How effective have they been?
• Which suppliers are working with internationally respected independent
trade unions or NGOs?
• Is there current or recent research pointing to critical concerns in an
industry or country?
• What standards or codes of conduct are currently in use?
2.6.1 GOOD RELATIONSHIPS WITH SUPPLIERS

• Given the business case for good relationships between management and
workers, buyers can:
• select suppliers who have collective bargaining agreements formed
between management and worker representative or an independent trade
union
• discuss with preferred suppliers the value of a modern human resources
approach, which recognizes the value of effective dialogue between
management and worker representative or unions.
• In situations where suppliers are hostile to representative structures for
workers, establishing a health and safety committee can demonstrate the
benefits of discussing production processes with workers, often achieving
rapid results
• Sign an international framework agreement with an international trade
union. For example, Inditex, an international garment retailer, signed such Global Manufacturing
Strategies 15
Global Business Strategies an agreement with the International Textile, Garment and Leather
Workers’ Federation
• Take measures to ensure the labor hire matters are addressed, and that
NOTES migrant workers have specific protections. Have fraud control measures
in place.
Q 1. Discuss the production and distribution network strategies in Global
Business .
Q 2. Explain with the help of examples the relevance of Hayes and
wheelwright stages of manufacturing competitiveness.
Q 3. What is Global supply chain management process and what are the
ethical dilemmas associated with this.
Q 4. Write short note on the role of technology in production and
distribution network.
*****
16 Strategies
UNIT - III
CONTROL STRATEGIES
NOTES
3.1 OBJECTIVE
The students will understand the strategies involved in Planning,

Organizational Structure, Location of Decision making, Control in process of
Internationalization, Control Strategy Mechanisms Corporate Culture & Co-
ordinating Methods, Control in special situations Acquisitions, Shared ownership.
3.2 PLANNING FOR CONTROL STRATEGIES
Divided into two major categories

• (i) research on pure International Management, which is concerned with
aspects of management that do not exist in domestic firms (Ricks, 1991);
and
• (ii) research on cross-national or cross-cultural studies, which includes
comparative studies on management practices designed either cross-
nationally or cross-culturally.
• parent-subsidiary relationships in MNCs
• environmental, corporate, subsidiary, control and human resource
characteristics Bartlett and Ghoshal) .
• Martinez and Jarillo (1989) had distinguished between global companies,
i.e. companies labelled by a high degree of centralisation, and
multinational firms, who rather enjoy a laissez-faire doctrine and a great
deal of latitude.
3.2.1 AGENCY THEORY USED IN CONTROL STRATEGIES

• Agency theory reestablishes the importance of incentives and self-interest
in organizational thinking (Perrow, 1986).
• Agency theory reminds us that much of organizational life, whether we
like it or not, is based on self-interest.
• Agency theory also emphasizes the importance of a common problem
structure across research topics.
CONTROL STRATEGIES 17
Global Business Strategies • As Barney and Ouchi (1986) described it, organization research has
become increasingly topic, rather than theory, centered.
NOTES
3.3 CONTROL STRATEGIES
• Aligning headquarters' and subsidiary company's goals is through the use

of financial incentives, in which a portion of subsidiary management's
compensation is outcome-based (O'Donnell, 2000).
• 1980s onwards research increasingly started dealing with informal,
subtler mechanisms such as socialization, acculturation and informal
communications. From a contingency perspective both authors argue that
changes in the internationally competitive environments forced strategic
adaptations and adequate internal differentiation by Multinational
Corporations and hence the described evolution in theory was driven by
an occurred evolution in practice Martinez and Jarillo (1989).
• Homo economicus” who is opportunistic, individualistic and mainly self-
serving (Donaldson & Davis, 1991). Such an “economic view” of utility
maximization and own expenditure minimization causes agency
problems such as moral hazards (attempt to exert less effort) and adverse
selection (refers to the mispresentation of an agent's abilities).
3.3.1 (JENSEN’S AND MECKLING’S 1976) AGENCY

MODEL OF CONTROL
• Werner (2002) points out that type and degree of control is, inter alia,
related to and moderated by the role played by subsidiary, the
– level of interdependence,
– degree of ownership or
– MNC nationality
• Jensen’s and Meckling’s (1976) agency model. Private ownership and
owner management not only reduce the effectiveness of external control
mechanisms, they also expose firms to a “self-control” problem created
by incentives that cause owners to take actions which “harm themselves
as well as those around them” (Jensen 1994, p. 43).
• Thus, shareholders have incentive to invest resources in curbing both
managerial and owner opportunism.
18 CONTROL STRATEGIES
3.4 ORGANIZATIONAL STRUCTURE

NOTES
• Global strategy is appropriate for global industries which are defined as
those in which a firm's competitive position in one national market is
significantly affected by its competitive position in other national
markets.
• Such interactions between a firm's positions in different markets may
arise from scale benefits or from the potential of synergies or sharing of
costs and resourses across markets.
• However, as argued by Bartlett (1985), Kogut (1984) and many others,
those scale and synergy benefits may often be created by strategic actions
of individual firms and may
• Perlmutter's categorization scheme was the worldview of a firm, which
was seen as the driving force behind its management processes and the
way it structured its world-wide activities (see Robinson, 1978 and
Rutenberg, 1982 for detailed reviews and expositions).
• In much of the current literature, in contrast, the focus has been narrowed
and the concept of global strategy has been linked almost exclusively
with how the firm structures the flow of tasks within its world-wide
value-adding system.
• The more integrated and rationalized the flow of tasks appears to be, the
more global the firm's strategy is assumed to be (e.g. Leontiades, 1984).
• On the one hand. this focus has led to improved understanding of the fact
that different tasks offer different degrees of advantages from global
integration and national differentiation and that, optimally, a firm must
configure its value chain to obtain the best possible advantages from both
(Porter, 1984).
• Creating polar alternatives between centralization and decentralization,
or between global and multidomestic strategies (e.g. Hout et al., 1982).
Complex management tasks have been seen as composites of simple
global and local components.
• Levitt (1983) emphasized the importance of rationalizing the flow of
components and final products within a multinational system, the
importance of internal flows of people, technology, information, and
values has been de-emphasized.
• According to him, the core of a global strategy lies in developing a
standardized product to be produced and sold the same way throughout
the world.
Global Business Strategies • According to Hout, et al. (1982), Global strategy requires the approach
not of a hedgehog, who knows only one trick, but that of a fox, who
knows many. Exploiting economies of scale through global volume,
NOTES taking pre-emptive positions through quick and large investments, and
managing interdependently to achieve synergies across different activities
are, according to these authors. some of the more important moves that
a winning global strategist must muster
• Hout, et al.'s (1982) global strategist is the heavyweight champion who
knocks out opponents with scale and pre-emptive investments.
• Kogut's (1985b) global strategist is the nimble-footed athelete who wins
through flexibility and arbitrage. He creates options so as to turn the
uncertainties of an increasingly volatile global economy to his own
advantage. Multiple sourcing, production shifting to benefit from
changing factor costs and exchange rates, and arbitrage to exploit
imperfections in financial and information markets
• Hamel and Prahalad's (1985) prescription for a global strategy contradicts
that of Levitt (1983) even more sharply. Instead of a single standardized
product, they recommend a broad product portfolio, with many product
varieties, so that investments on technologies and distribution channels
can be shared. Crosssubsidization across products and markets, and the
development of a strong world-wide distribution system
• A multinational has three sets of tools for developing such competitive
advantage. It can exploit the differences in input and output markets
among the many countries in which it operates. It can benefit from scale
economies in its different activities. It can also exploit synergies or
economies of scope that may be available because of the diversity of its
activities and organization.
• The strategic task of managing globally is to use all three sources of
competitive advantage to optimize efficiency, risk and learning
simultaneously in a world-wide business. The key to a successful global
strategy is to manage the interactions between these different goals and
means.
• Organizational structure (often called organizational design) is its basic
vehicle through which strategy is implemented and through which the
work of the organization is actually implemented. In, fact, strategy,
determines the structure needed for implementation.
• A firm cannot function unless its various components are appropriately
assembled. Through its design, the firm shall allocate organizational
resources, assign tasks to its employees, instruct employees about the
firm’s rules, procedures, and expectations relating to their jobs; and
collect and transmit information necessary for problem solving and
decision making.
BASIC ORGANIZATIONAL STRUCTURES Global Business Strategies
• International Division Structures
• Global Division structure
NOTES
• Geographic Area Structure
• Product Organization
• Mixed Structure
• Matrix structure
• Networked Structure
1. International Division Structure
As the foreign operations of a company grow, businesses often realize

the overseas growth opportunities and an independent international
division is created which handles all of a company’s international
operations (Fig. 17.3). The head of international division, who directly
reports to the chief executive officer, coordinates and monitors all
foreign activities. The in-charge of subsidiaries reports to the head of
the international division. Some parallel but less formal reporting also
takes place directly to various functional heads at the corporate
headquarters.
The corporate human resource department coordinates and implements
staffing, expatriate management, and training and development at the
corporate level for international assignments. Further, it also interacts
with the HR divisions of individual subsidiaries.
The international structure ensures the attention of the top management
towards developing a holistic and unified approach to international
operations. Such a structure facilitates cross-product and cross-
geographic co-ordination, and reduces resource duplication. CONTROL STRATEGIES 21
Global Business Strategies Although an international structure provides much greater autonomy
in decision-making, it is often used during the early stages of
internationalization with relatively low ratio of foreign to domestic
NOTES sales, and limited foreign product and geographic diversity.
2. Global Division Structure
It aims to focus the attention of key functions of a firm, as shown in

Fig. 17.4, wherein each functional department or division is
responsible for its activities around the world. For instance, the
operations department controls and monitors all production and
operational activities; similarly, marketing, finance, and human
resource divisions co-ordinate and control their respective activities
across the world.
The major advantages of global functional division structure
include:
i. Greater emphasis on functional expertise
ii. Relatively lean managerial staff
iii. High level of centralized control
iv. Higher international orientation of all functional managers
3. Global Geographic area structure

Under the global geographic structure, a firm’s global operations are
organized on the basis of geographic regions, as depicted in Fig. 17.6.
It is generally used by companies with mature businesses and narrow
product lines. It allows the independent heads of various geographical
subsidiaries to focus on the local market requirements, monitor
environmental changes, and respond quickly and effectively.
NOTES
4. Global Product Structure
Such a structure is extremely effective in carrying out product

modifications so as to meet rapidly changing customer needs in diverse
markets. It enables close coordination between the technological and
marketing aspects of various markets in view of the differences in
product life cycles in these markets, for instance, in case of consumer
electronics, such as TV, music players, etc. Such a structure is
extremely effective in carrying out product modifications so as to meet
rapidly changing customer needs in diverse markets. It enables close
coordination between the technological and marketing aspects of
various markets in view of the differences in product life cycles in
these markets, for instance, in case of consumer electronics, such as
TV, music players, etc.
Global Business Strategies 5. Mixed Structure
NOTES
Mixed structure is a form of hybrid structure or hybrid design which

most of the firms are now following which best suites their purpose
as dictated by size, strategy, technology, environment and culture. The
primary advantage of the mixed structure is that it allows the firms to
create the specific types of design that best meet its needs. But the
problems emerge with the communication flows, chains of command,
and groups going their own way.
6. Global Matrix Structure
It is an integrated organizational structure, which super-imposes on

24 CONTROL STRATEGIES each other more than one dimension. The global matrix structure might
consist of product divisions intersecting with various geographical Global Business Strategies
areas or functional divisions (Fig. 17.7). Unlike functional,
geographical, or product division structures, the matrix structure shares
joint control over firm’s various functional activities. It facilitates ease NOTES
of technology transfer to foreign operations and of new products to
different markets leading to higher economies of scale and better
foreign sales performance. Matrix structure is used successfully by a
large number of MNEs, such as Royal Dutch/Shell, Dow
Chemical, etc.
7. Transnational Network Structure
This form of organization is not defined by its formal structure but by

how its processes are linked with each other, which may be
characterized by an overall integrated system of various inter-related
sub-systems. The trans-national network structure is designed around
‘nodes’, which are the units responsible for coordinating with product,
functional and geographic aspects of an MNE. Thus, trans-national
network structures build-up multi¬dimensional organizations which
are fully networked.
3.4.1 GLOBAL STRATEGY: AN ORGANIZING FRAMEWORK

BY SUMANTRA GHOSHAL
• Sources of competitive advantage
• Strategic Scope objectives differences economies
• Achieving efficiency in Benefiting from Expanding and exploiting
Sharing of investments current operations
Global Business Strategies • differences in factor potential scale economies and costs across products.
• Costs-wages and cost of in each activity markets and businesses capital
• Managing risks
NOTES
• Managing different kinds Balancing scale with Portfolio diversification
of risks arising from strategic and operational risks and creation of market
or policy-induced flexibility options and side-bets changes in
comparative advantages of different countries
• Innovation learning and adaptation Learning from societal differences in
Benefiting from experience-cost reduction
• Shared learning across organizational components organizational and and
innovation in different products.
3.4.2 LOCATION OF DECISION MAKING

• Local stakeholders to defend themselves against more efficient global
competitors.
• The advantage of P&G as a multinational is that it is exposed to these
different operating environments and has learned, in each environment.
the skills and knowledge that coping with that environment specially
requires. Liquid Tide is an example of the strategic advantages that accrue
from such diverse learning.
• The resource-based perspective on the firm;
• transaction-cost economics;
• institutionalism;
• the network approach; and
• the actor-centred perspectives.
• It is argued that research on MNC strategies, insofar as it is aimed at
informing trade unions and worker representatives and at evaluating the
impact of their activities, should be based on frameworks that bring
together these disparate paradigms.
3.4.3 LOCALIZATION FACTORS IN DECISION MAKING OF

LOCATION OF SELECTED ENTERPRISES
• Localization in the corporate setting is the extent to which expatriate
managers are replaced by local employees originally held by expatriate
managers. Also company support and top management's commitment as
two sets of factors that predicted localization success. (Law, KS., Song,
LJ., Wong, CS., & Chen, DH. 2009).
• “Location of economic activity means the activities related to production,
exchange and consumption of goods, services and information on the
26 CONTROL STRATEGIES rotating earth and in universe. The location where these activities take
place is called the location of economic activity.“ Cambers, Currie, Global Business Strategies
(2002) states that“The factors that influence the location of economic
activities vary. The enterprises or business companies often weigh up the
advantages and disadvantages of a number of locations before deciding NOTES
where to build.”
3.4.4 RELATIONSHIP BETWEEN STRUCTURE AND

LOCATION DECISIONS
• Buček, (2010) states that: “Although it might seem that firms due to cost
savings are searching for the optimal location in the area of inputs, large
part of the business sector focuses its operations on the areas of the
realization of outputs - markets.”
• Quality and quantity also affect the socio – economic processes
• Formation of the spatial structure have the strongest impact businesses
and their localization decisions. In connection with the structuring of the
space, companies decide where and at which point in a particular area
will develop its manufacturing, trading, development or administrative
activities. Each enterprise can focus all their activities in one location
(one enterprise operation) or may be distributed in multiple locations
(company with more operations or so-called subsidiaries).
• In achieving the corporate goals, all business operations together must
coordinate its activities through supplier, information and control
relationship between them.
• Location decisions also affect the running of the businesses.
• They decide on the sales network, who are their purchasers and how the
deliveries will be carried out, or about warehouse management system
such as materials storage or just-in-time- system. Effective tool for the
spatial structuring is the wage policy of the enterprises. Rates of corporate
wages affect the amount of regional income and thus define the labor
market for a given company. For any business, of course, is very
important where will be located.
3.4.5 DECISION MAKING CRITERIA FOR LOCATION

• Type of product,
• type of technology,
• degree of localization and
• mobility.
• All factors that are important for a particular enterprise must meet specific
requirements for quality, quantity and price.
• Types of technology or innovations which are used to produce a certain
Global Business Strategies product are those which are not exhausted yet and matured technology
such as biotechnology, development of new materials, engineering,
electronics, production of working tools and others.
NOTES • The most important is the quality and price of land. Environmental
factors nowadays do not have a fundamental importance in locating of
manufacturing companies.
• Category labour force acts as an important factor that can affect the
localization of production entities.
• Ability to attract and retain workers is one of the major factors which are
necessary to bear in mind when selecting suitable localities for businesses
location. While the importance played two kinds of labour.
• On the on hand, in every company there are required highly skilled
workers, scientists, engineers, managers and on the other hand, cheap
labour for the sphere of services and for simple production.
• Both firm and location-specific factors, firm's competitive advantage,
company's management attitudes and profit growth were the main drivers
of internationalization.
• Further, the study reveals that the predevelopment of world region,
country, city, and site qualitative and quantitative location factors was
elemental to attain profitable foreign market choice.
• Accordingly, these findings have significant theoretical and practical
implications to the internationalization and foreign market entry decisions
of international firms.
• Cross-cultural challenges.
3.4.6 CONTROL IN PROCESS OF INTERNATIONALIZATION
UPPSALA INTERNATIONALIZATION MODEL Global Business Strategies
• Swedish researchers (Johanson and Wiedersheim-Paul, 1975; Johanson
and Vahlne, 1977) from Uppsala University had vast criticisms of the
theories at the time, which explained international involvement. NOTES
• The Uppsala Internationalization Model distinguishes four different steps
of entering an international market, which cannot be viewed
independently of a company’s situation, market and the market
knowledge. (See Fig. 1:1 below)
• Step 1: No regular export activities (sporadic export).
• Step 2: Export via independent representative (export mode).
• Step 3: Establishment of a foreign sales subsidiary.
• Step 4: Foreign production/manufacturing.
(Hollensen 2007)
UPPSALA INTERNATIONALIZATION MODEL AND CONTROL
3.4.7 CONTROL STRATEGY MECHANISMS

• International management control (IMC) refers to a set of control
mechanisms that an international business engages in to direct, monitor,
evaluate, regulate, and integrate its international trade and/or global
activities to achieve its desired purpose(s).
• IMC mechanisms can be classified into three types: regulative, financial,
and normative.
• International businesses following different internationalization strategies
– such as international, multinational, global, and transnational strategies
– use different sets of control mechanisms to integrate their activities
(PW Beamish, 2015).
Global Business Strategies CASE STUDY OF ZARA
• This case study on Zara elucidates the expansion strategies used by both
born-global and gradual global fast-fashion retailers based on theories of
NOTES internationalization.
• Aspects related to knowledge sharing, resource-based theory, and psychic
distance are overlaid with Zara's internationalization strategies to advance
understanding of the role fashion plays in dynamic internationalization.
Zara employs a high-risk, high-reward model of internationalization to
defend its unique merchandise and retail position by remaining
completely vertical.
• Zara's born-global expansion strategy engendered a psychic distance
paradox in that it was very successful in distant markets early on. It is
proposed that fashion retailers may take note of Zara's success through
the proposed ‘dynamic strategic planning process’ for expansion in
international markets. Researchers can test the proposed framework
empirically to investigate the theoretical constructs for both gradual- and
born-global firms.
3.5 CORPORATE CULTURE & CO-ORDINATING METHODS
• Nationally specific institutions and culture have to be interpreted as

particularistic but universally practicable facilitators of internationally
competing organizational practices.
• Enterprise activities are internationalized through exposure to customers,
suppliers or alliances outside a society or domestic economy of origin,
and regulation by common and relatively homogeneous institutions.
• Gooderham et al. (1999), we use convergence and divergence in the sense
of the intratemporal prevalence of either tendency, measured by results
achieved
• Mueller’s treatment thus allows for more differentiated pictures of effects,
the empirical foundation for the argument in favour of increasing
organizational and globalization effects is restricted. It is based on
specific cases rather than a methodologically controlled comparison of a
number of multinationals from different countries.
• The internationalization of activities evokes the reproduction of specific
institutions and cultural habits at the international level. Multinationals
will therefore be strongly influenced by institutions and predispositions
arising in the country of origin, even at the international level.
• ‘Globalization effect’: Divergence versus convergence in multinationals
can be developed at different geographic levels. The most aggregate level
is the world level, where we find studies on multinationals the world over.
3.5.1 CONTROL IN SPECIAL SITUATIONS ACQUISITIONS Global Business Strategies
• The model follows the internationalization literature with its emphasis
on internal organizational processes (such as learning and network
development) that drive foreign market expansion, but are also outcomes NOTES
of it.
• These internal processes (which feed into the so-called strategic
foundation) are linked to the company's strategy mechanisms, thus tying
internationalization and strategic management into an interrelated cycle.
• Networks are analyzed as a subset of the conceptual model, illustrating
many of the challenges of taking a strategic approach to
internationalization. Although the paper is exploratory in nature,
managerial implications of the model in terms of effective servicing of
foreign markets are discussed.
• Variables that are influenced by the universalistic factors — mostly
subsidiary size and industry — are primarily those that reflect the
subsidiary’s local presence.
• In addition, the subsidiary’s position in the corporate network in terms
of being an important node in the corporate production network —
through a high level of sales to either the HQ or subsidiaries — does
seem to be affected more by universal contingencies than by the country
of origin.
• Multinationals from European countries exhibit any institutional or
cultural isomorphism and concomitant convergence that would allow
them to be treated as a homogeneous group.
• Control mechanisms, on the other hand, are more clearly and directly
related to country of origin. They are not mediated by size and industrial
structures.
• Tata Tea’s acquisition of Tetley, Tata Steel’s of Corus, Lupin’s acquisition
of Gavis or Motherson Sumi’s multiple acquisitions.
• Raghuram Rajan, in the Report of the Committee on Financial Sector
Reforms, merger is a clear measure to integrate banks with the global
economy and aid them in achieving fuller capital account convertibility.
• Acquisitions can either be in the form of share purchase
• Backward/forward integration: The auto industry is one such example
where suppliers cut down the price per unit on a continuous basis.
However, when the back-end supplier is acquired by a front-end company
where the management is more focused on sales and marketing rather
than cost controls, there is a likelihood of inefficiencies creeping in over
a period of time
• Eliminate competition/increase market share
Global Business Strategies • Many transactions are undertaken to increase market share and/or
eliminate competition. These types of transactions, in our experience, do
give the envisaged results, at least in short period of time. E.g. Coca Cola,
NOTES where Coke still runs Coke and Thums Up as successful brands in India.
• It is clearly easy to cull a product or a brand and move ahead but
managing brands and products which may end up competing with each
other is a rather difficult thing to do.
3.5.2 CORPORATE CONTROL MECHANISMS

• Corporate control mechanisms can be defined as the instruments that are
used to make sure that all units of the organization strive towards
common organizational goals.
• Several constituent elements were defined for each of the four control
mechanisms.
Expatriate control was added to the direct personal control category, because
creating mini-headquarters at subsidiary level will be an important way for
multinationals to realize direct supervision or centralization of decision-making.
3.5.3 PERSONAL/CULTURAL
• Direct/Explicit Centralization, Direct Supervision, Expatriate control
• Indirect/Implicit: Socialization, Informal Communication, Management
Training
• Impersonal/Bureaucratic/Technocratic:
– Direct/Explicit: Standardization, Formalization
– Indirect/Implicit: Output Control, Planning
3.5.4 CONTROL MECHANISMS

• With regard to control mechanisms, the balance between convergence
and divergence — between country of origin and universalistic variables
— is tilted more clearly in one direction.
• First, however, the level of direct personal control does not seem to be
explained by either the country of origin or any of the universalistic
factors.
• Country of origin has the largest impact on the other two types of control:
impersonal control and indirect personal control. Subsidiary size also
influences the level of indirect personal control.
• Larger subsidiaries are more likely to experience a high level of indirect
personal control from HQ. Although direct personal control does not
seem to vary with the country of origin or the universalistic factors, a
particular type of direct
• Personal control in multinationals, the level of expatriation, is strongly Global Business Strategies
influenced by the country of origin of the multinational. This is true for
all three measures of expatriate presence in subsidiaries.
• The managing director is more likely to be a parent country national in NOTES
the automobile industry and more likely to be a host country national in
the food and beverages industry. Finally, subsidiaries of larger
multinationals are more likely to have a large number of expatriates in
top-5 positions.
• Country-of-origin effect is much stronger: total workforce and the
nationality of the managing director: subsidiary age
3.5.5 SHARED OWNERSHIP:
• analyze the direct and simultaneous effects of internationalization on the
ownership structure
• results support the negative relationship that is predicted by principal-
agent theory when analyzing the effect of ownership on the degree of
internationalization
• ownership structure as a determinant of outward foreign direct investment
(FDI)
• different forms of ownership structure and the composition of the board
of directors, affect their FDI strategies
• family firms and firms with concentrated ownerships are less likely to
invest overseas than other types of firms
• how ownership structure is affected by (a) ownership concentration and
(b) different forms of shareholders presences, including financial
institutions, professional/business groups, families/individuals,
investment funds and governments.
Q 1. What is agency theory used in control strategies.
Q 2. Explain the Jensen’s and Meckling’s agency model of control with the
help of example.
Q 3. What is the relevance of organizing framework by Sumantra Ghoshal.
Q 4. Discuss the control process mechanism in internalization.
Q 5. Explain Uppsala Internalization model and control.
Q 6. Recognize the nature of international organizational design
Q 7. Classify the factors influencing organizational structure
Q 8. Identify the basic organizational structures
Q 9. Write short notes on:
(a) Location decision making
(b) Corporate Control mechanisms
(c) Shared ownership
*****
UNIT - IV
ROLE OF LEGAL STRUCTURE
NOTES
IN CONTROL STRATEGIES
4.1 OBJECTIVE
The students will understand how the role of legal structure in control
strategies. They will learn about the foreign market entry strategies.
4.2 INTRODUCTION
Foreign market entry strategies differ in degree of risk they present, the
control and commitment of resources they require and the return on investment
they promise.
There are two major types of entry modes:
• 1) non-equity mode, which includes export and contractual agreements,
• 2) equity mode, which includes joint venture and wholly owned
subsidiaries.
• import and export of goods, materials and services.
• Licensing is another way to enter a foreign market with a limited degree
of risk.
• Franchising is similar to licensing except that the franchising organisation
tends to be more directly involved in the development and control of the
marketing programme.
• Foreign joint ventures have much in common with licensing.
• A strategic alliance is a term used to describe a variety of cooperative
agreements between different firms, such as shared research, formal joint
ventures, or minority equity participation (Campbell E., Reuer J.J. 2001).
• − they are usually between firms in high
• - industrialized nations
ROLE OF LEGAL
• − the focus is often on creating new products and technologies rather than
STRUCTURE distributing existing ones
IN CONTROL • − they are often only created for short term durations.
34 STRATEGIES
4.3 CONTROLS IN PROCESS OF INTERNATIONALIZATION

NOTES
• Not all firms will sequentially go through all stages of the
internationalization process.
• Some may withdraw
• Some may be born global uAt different stages, firms are measurably
different in:
• problems faced
• capabilities and experience
• type of assistance needed
4.4 CONTROL OR NO CONTROL CONSTANT BALANCING ACT
• Singapore Airlines is widely regarded as an exemplar of excellence in an

industry whose service standards are tumbling. What's not so well known
is that the company is also one of the civil aviation industry's cost leaders.
• SIA's success in executing a dual strategy of differentiation and cost
leadership is unusual.
• Indeed, management experts, such as Michael Porter, argue that it's
impossible to do so for a sustained period since dual strategies entail
contradictory investments and organizational processes.
• Yet SIA, and a few other emerging-economy companies, view the
dualities as opposites that form part of a whole.
• SIA executes its dual strategy by managing four paradoxes:
– Achieving service excellence cost-effectively,
– fostering centralized and decentralized innovation,
– being a technology leader and follower, and
– using standardization to achieve personalization.
• The results speak for themselves: SIA has delivered healthy financial
returns; it has never had an annual loss; and except for the initial
capitalization, the Asian airline has funded its growth itself while paying
dividends every year.
• Singapore Airlines' Balancing Act (PDF Download Available). Available
from: https://www.researchgate.net/publication/271013925_Singapore_
Airlines%27_Balancing_Act [accessed Dec 22 2017].
Q 1. Discuss the control in process of internalization.
Q 2. Explain control or no control constant balancing act with the help of ROLE OF LEGAL
example. STRUCTURE
IN CONTROL
***** STRATEGIES 35
UNIT - V
COLLABORATIVE STRATEGIES
NOTES
OBJECTIVES
The students will understand different collaborative strategies involved in
global business and the motives for these collaborative arrangements. Different
modes of foreign entry will be discussed with the help of examples and cases.
5.1 MOTIVES FOR COLLABORATIVE ARRANGEMENTS
• Collaborative arrangements are assuming greater importance because

cost advantages are becoming more pronounced and greater number of
firms that operated formerly only in domestic markets are becoming
global competitors (Harrigan, 1988).
• Since the early 1980s, there has also been a dramatic increase in the
number of international strategic alliances (Chen, 2003).
• This has made collaborative arrangements an important research focus
for academicians and a strategic focus for industry practitioners
• Gain Access to Resources
• Gain Access to New Markets including International Access
• Gain Access to Technology & Speed to market
• Gain Access to Knowledge
• Economies of scale
• Risk Sharing
• Cost sharing
• Shaping Competition & Market power.
5.1.1 TRANSACTION COST ECONOMICS THEORY

• transaction cost theory focuses on efficiency and cost containment.
• Transaction cost explanation for cooperative arrangements involves the
question of how a firm should organize its boundary activities with other
firms (Kogut, 2004). Firms choose how to transact according to the
COLLABORATIVE criterion of minimizing the sum of production and transaction costs.
36 STRATEGIES
• Production costs may differ between firms due to scale of operations, Global Business Strategies
location advantage, learning or proprietary knowledge. Transaction costs
also vary and include expenses associated with arranging, managing and
monitoring transactions across markets (Child, Faulkner & Tallman, NOTES
2005). Opportunism, bounded rationality, small numbers, uncertainty and
complexity and information impacted-ness have been identified as five
factors that are relevant for the choice between internalizing the
governance of transactions within the firm.
5.2.2 COLLABORATIVE STRATEGIES

• A gradual process by which most firms get involved in international
marketing
• Uninterested Partially interested
• Exploring/trial
• Experimental
• Experienced/committed
5.3 CONSIDERATIONS IN COLLABORATIVE ARRANGEMENTS
• Resource Dependence Theory

• Resource dependence theory focuses on resources that must be obtained
from external sources for an organization to survive or prosper. The need
to acquire resources creates dependencies between organizations and
outside units. Organizations try to increase their power relative to other
organizations in the environment by acquiring control over critical
resources to decrease. their dependence on other organizations and
acquire control over resource that increase the dependence of other
organizations on them (Thorelli, 1986; Das & Teng, 2000). Collaborative
relationships provide access to a wider scale and scope of information,
technology, manufacturing capabilities, financial resources, products, and
markets than would be available if a firm operated independently.
Collaboration benefits include sharing costs, acquiring tacit knowledge,
commercializing complex technology, expanding into new markets,
entering new industries, complementing product lines, and increasing
market power (Mitchell and Singh, 2005).
• Resource Based Theory
• A firm’s competitive position is defined by a bundle of unique resources
and relationships, which require renewal as time, competition and change
erode their value (Rumelt, 1984). A company can achieve and sustain
competitive advantage by configuring its tangible and intangible assets COLLABORATIVE
STRATEGIES 37
Global Business Strategies in a manner that is difficult to imitate perfectly (Barney, 1991). A
collaborative arrangement can legitimately provide access to codifiable
capabilities, assets or systems without necessitating acquisition in which
NOTES one firm is required to relinquish proprietary skills and resources.
5.3.1 MOTIVES
Organizational Learning Theory
• Firms form partnerships to capitalize on opportunities for organizational
learning in order to enhance their competitive positions (Hamel, 1991;
Doz, 1996). Conceiving of the firm as a portfolio of core competencies
and disciplines suggests that inter-firm competition as opposed to inter-
product competition is concerned with acquisition of skills. Thus
competitiveness is a function of the firm’s pace, efficiency and extent of
knowledge accumulation. Core competencies and value creating
disciplines are not distributed equally among firms. Based on analysis of
nine international alliances, Hamel (1991) proposed that a collaborative
arrangement might develop a collaborative membrane through which
skills and capabilities flow between the partners, facilitating access to
people, facilities, documents and knowledge through a collaborative
exchange. This may provide an opportunity for one partner to internalize
the skills of the other and improve its position both within and without
the alliance.
5.3.2 COMPANY READINESS TO EXPORT

• Competitiveness in domestic market u Managerial readiness
• Management commitment to internationalization
• Knowledge and skills required to export u Product readiness
• Unique technology, compatibility, adaptability u Organizational readiness
• Human, financial resources
• Manufacturing capacity
5.3.3 MAJOR MODES OF FOREIGN MARKET ENTRY

• Exporting: produce at home, sell abroad.
• Licensing: grant a foreign firm the right to use a patent or trademark for
a fee.
• Franchising: provide a whole system of product and management to a
foreign firm for a fee.
• Joint Venture: Two International firms jointly set up a separate legal entity
and share the management and returns.
• Wholly-Owned Subsidiary: a foreign subsidiary owned (100%) by the
COLLABORATIVE
investing firm.
38 STRATEGIES
5.3.4 EXPORTING Global Business Strategies
• Advantages
– Minimal Risk
NOTES
– Limited Commitment
– Flexible
– Easy to implement
• Disadvantages
– Lack of control
– Tariff barriers
– Vulnerable to trade disputes
5.3.5 LICENSING
Advantages
Limited capital requirement.
• Limited risk.
• Protect patent or trademark registration
Disadvantages
• Hard to determine the value of intellectual property.
• Little control u Least profitable.
5.3.6 FRANCHISING
Advantages
• Access local capital, labor, and skills.
• Limited commitment and risk
• Flexible
• Some control
• Welcome by local governments
Disadvantages
• Limited profits
• Hard to keep consistent standards
• Potential future competition
5.3.7 JOINT VENTURE

Advantages
• Shared risk
• Shared commitment.
COLLABORATIVE
STRATEGIES 39
Global Business Strategies • Combining complementary skills/resources
• Better relationships with local firms
• Maximizing leverage of invested capital
NOTES
Disadvantages
• Inflexible u Lack of total control
• May be hard to work with the local partner
• Profit repatriation - reinvestment problem
• Dissolution problem
5.3.8 WHOLLY-OWNED SUBSIDIARY

Advantages
• Complete control
• Protection of proprietary assets
• Potential high profits
Disadvantages
• Most risky
• High resource commitment
• May not be feasible in some countries
5.3.9 BARGAINING POWER THEORY OF ENTRY MODES

Key Assumptions
• MNCs and host countries goals may be incongruent
• MNCs prefer high-control mode
• Host countries prefer low-control modes Argument
• The actual mode of entry is determined by the relative bargaining power
of the MNCs and host countries.
5.3.10 INCONGRUENT GOALS OF MNCS AND HOST COUNTRIES

MNCs Safeguard proprietary advantages
• Access local market
• Globalize operations
• Profits Host Countries
• Transfer of skills and technologies u Require exporting
• Localize operations
COLLABORATIVE • Social interests (jobs)
40 STRATEGIES
Basis of Bargaining Power Global Business Strategies
• The higher the stake in the foreign market venture, the lower the
bargaining power.
NOTES
• The more alternatives to the host country, the higher the bargaining
power.
5.3.11 EQUITY ALLIANCE

• It is based on equity purchased from a company
• It will depend upon the share and equity holders’ stake on the company
Q 1. Why collaborative strategies are important in today’s global
environment.
Q 2. What are the different modes of entry in Global business environment.
Q 3. As International Business student which strategy or strategies do you
think is relevant in today’s environment wherein the global trade wars
are the major cause of concern.
*****
COLLABORATIVE
STRATEGIES 41
UNIT - VI
PROBLEMS OF COLLABORATIVE
NOTES
ARRANGEMENTS
6.1 INTRODUCTION
• The many positive attributes of networks are often featured?the capacity

to solve problems, govern shared resources, create learning opportunities,
and address shared goals?
• and a literature focused on the challenges networks pose for managers
seeking to realize these net work attributes is developing.
6.2 PROBLEMS OF COLLABORATIVE ARRANGEMENTS
• The many positive attributes of networks are often featured. The capacity
to solve problems, govern shared resources, create learning opportunities,
and address shared goals?
• and a literature focused on the challenges networks pose for managers
seeking to realize these net work attributes is developing.
• A commitment to governance with government to govern within the rules
yet think creatively
• A commitment to network as mutual-aid partnerships with society
• An acceptance that an agent can be someone without an official
government portfolio
• An understanding of the intrinsic inseparability of performance and
accountability in wicked problem settings
• A persistent commitment to the collaborative process A Commit.
6.3 COLLABORATIVE IMPORTANCE
• The issues of trust, partner selection, knowledge transfer through co-

PROBLEMS OF
COLLABORATIVE operative business ventures, complementarities and synergies between
42 ARRANGEMENTS partners have dominated the scientific discourse.
• In general the contributions to the field of inter-corporate strategic Global Business Strategies
alliances focus either on an in-depth analysis of a selected narrow issue
- such as the effect of knowledge ambiguity on technological knowledge
transfer in strategic alliances (Simonin, 1999), and methodological issues NOTES
of construct validity in measuring strategic alliance performance (Arino,
2003), or swiping generalizations of more general magnitude – such as
Bensimon’s executive guidelines (1. assimilate the competencies of your
partner; 2. think of your partner as today’s ally and tomorrow’s
competitor; 3. Share power and resources, but share information wisely;
4. structure your alliance carefully) (Bensimon, 1999).
6.3.1 DIFFERING OBJECTIVES

• ‘theory of co-operation’
• At the top are hierarchical authority relations in which one firm takes full
control, absorbing another’s assets and personnel into a unitary enterprise.
In between these extremes of market and hierarchy are eleven general
strategic alliance forms, or “hybrids” that combine varying degrees of
market interaction and bureaucratic integration (Williamson 1975).
• A strategic alliance involves at least two partner firms that: (1) remain
legally independent after the alliance is formed; (2) share benefits and
managerial control over the performance of assigned tasks; and (3) make
continuing contributions in one or more strategic areas, such as
technology or products (Yoshino and Rangan 1995:5).
6.3.2 CONTROL PROBLEMS AND CULTURAL DIFFERENCE

• Strategic Motives, Intents, and Choices. Firms undertake strategic
alliances for many reasons: to enhance their productive capacities, to
reduce uncertainties in their internal structures and external
environments, to acquire competitive advantages that enables them to
increase profits, or to gain future business opportunities that will allow
them to command higher market values for their outputs (Webster 1999).
• Partners choose a specific alliance form not only to achieve greater
control, but also for more operational flexibility and realization of market
potential. Their expectation is that flexibility will result from reaching
out for new skills, knowledge, and markets through shared investment
risks. The strategic motives for organizations to engage in alliance
formation vary according to firm-specific characteristics and the multiple
environmental factors. As summarized in Table 2, this diversity has
triggered the development of several classification schemes in the
theoretical literature.
6.3.3 COMPATIBLE PARTNERS

PROBLEMS OF
• Bleeke and Ernst (1993) summarize the generic needs of firms seeking COLLABORATIVE
alliance as cash, scale, skills, access, or their combinations. Such ARRANGEMENTS 43
Global Business Strategies motivational diversity characterizes alliance formation in many
industries, and theorists have proposed several explanatory schemes to
classify and analyze the range of collaborative solutions adopted by firms.
NOTES • The level of cooperation between businesses seems much less influenced
by internalized costs and benefits than by: the history of the partnering
firms’ relationships; the current market positions of each firm; their joint
resource capabilities; and informational asymmetries relative to firms
engaging in arm’s-length market transactions (Dietrich 1994). In other
words, forming business networks and contractual or relational alliances
is driven less by firms’ retrospective economic rationalities.
6.3.4 STEPS TO KNOW HOW INNOVATION BREEDS

COLLABORATION
• Organizational success in achieving alliance learning objectives depends
on several dimensions of knowledge and organizational structure. In
particular, both organizations’ absorptive capacities--their interwoven
human resources, finance capital, social capital, and organizational belief
systems--constrain their effective information processing, acquisition of
partner expertise, and adoption of innovations.
• In a survey with high-tech firms, the most significant determinant of
knowledge transferability was tacitness, defined as knowledge “which
cannot be easily communicated and shared, is highly personal and deeply
root in action and in an individual’s involvement with a specific context”
(Simonin 1999:469). Moreover, the impacts of partner cultural distance,
asset specificity, and past experience on knowledge ambiguity were
moderated by alliance duration, firm size, and collaborative experience.
Questions to be Discussed
Q 1. What are the various problems of collaborative arrangements >
Q 2. Explain the different steps to know how innovation breeds collaboration.
*****
PROBLEMS OF
COLLABORATIVE
44 ARRANGEMENTS

MBA IB04 Global Business Strategies Subject

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BHARATI VIDYAPEETH

(Deemed to be University), Pune, India

School of DiStance eDucation

MBA/MBA HR/ MBA E

School of Distance education

Prof. Dr. R. G. Takawale Member

Prof. Dr. V. S. Prasad Member

Prof. Dr. B. P. Sable Member

Dr. Masood Parveez Member

Prof. Dr. Anuradha Deshmukh Member

Yashwantrao Chavan Maharashtra Open University, Nashik

Dr. Deepak Shikarpur Member

Dr. Sachin Vernekar Member

Dr. V. V. Kulkarni Member

PUNE : RESEARCH INSTITUTES

MANAGEMENT INSTITUTE • Medical College

• Institute of Management and Entrepreneurship • Dental College & Hospital

• Yashwantrao Chavan Institute of Social Sciences, • Yashwantrao Mohite Institute of Management

Studies & Research

1 Dr. S. B. Sawant Director BV(DU), School of Distance Education, Pune

academic Study centres

Author Unit No.

Kamaljit Kaur Sahadev 1 to 6

EDITOR & REVIEWER

MBA/MBA GLOBAL BUSINESS STRATEGIES

Export and Import Strategies

GLOBAL MANUFACTURING STRATEGIES

ROLE OF LEGAL STRUCTURE IN CONTROL STRATEGIES

PROBLEMS OF COLLABORATIVE ARRANGEMENTS

The main objective of understanding these strategies is to make students

1.2 OPENING CASE: GRIEVE CORPORATION—A SMALL

A small firm located near Chicago, Grieve Corporation manufactures

Export and Import

B. Why Companies Export

C. Stages of Export Development

D. Potential Pitfalls of Exporting

E. Designing an Export Strategy

1.2.3 IMPORT STRATEGY

1.2.4 THIRD-PARTY INTERMEDIARIES

B. Direct Exporting through the Internet and Electronic Commerce

D. Export Management Companies

E. Export Trading Companies

F. Foreign Freight Forwarders

1.2.5 EXPORT FINANCING

1.3 ETHICAL DILEMMA

1.4 LOOKING TO THE FUTURE

How Will Technology Affect Exporting?

Export and Import

Global Manufacturing Strategies (GMS) is a community, serving senior

2.3 PRODUCTION-DISTRIBUTION NETWORKS

• Production-distribution networks provide an effective approach in

2.3.2 DISCRETE LOCATION MODELS FOR DISTRIBUTION

2.3.3 PLANT LOCATION UNDER UNCERTAINTY

2.3.4 TECHNOLOGY SELECTION

2.4 HAYES AND WHEELWRIGHT STAGES OF

2.5 GLOBAL SUPPLY CHAIN MANAGEMENT

• National governments provide subsidized financing (as well as low tax

2.6 ETHICAL DILEMMA –SUPPLIER RELATIONS

• The social, environmental or economic criteria within the specification

• Which suppliers have the awareness and skills needed to improve?

2.6.1 GOOD RELATIONSHIPS WITH SUPPLIERS

The students will understand the strategies involved in Planning,

3.2 PLANNING FOR CONTROL STRATEGIES