STRATEGY AND

ORGANIZATION IN
THE
INTERNATIONAL
Your Title Here

More.. FIRM
STRATEGY
A planned set of actions that managers employ to make
best use of the firms resources and core competencies to
gain competitive advantage.
Once the managers understand the firm’s strengths,
weaknesses, opportunities and threats, they decide:
 Which customer to target
 What product lines to offer
 How best to deal with competitors
 How generally to configure and coordinate the firm’s
activities around the world.
Barlett and Ghoustal argued the firm should simultaneously
strive to develop:

 Global-scale efficiency in its value-chains activities.

 Multinational flexibility to manage diverse country-level
risks and opportunities
 Learn from operating internationally and exploit the
learning on a worldwide basis.
STRATEGIC OBJECTIVES
Efficiency
The firm must build efficient international value chains.
Efficiency refers to lowering the cost of the firms operations and
activities on a global scale.
Flexibility
The firm must develop worldwide flexibility to accommodate
diverse country-specific risks and opportunities.
STRATEGIC OBJECTIVES
Learning
The firm must create the ability to learn from
operating in international environments and
exploit this learning on a worldwide basis.
Figure 1. Five Key
Dimensions of Successful
International Firms Strategy

Visionary Organizational
Leadership The Structure

Global
Firm

Organizational Organizational
Culture Processes
VISIONARY LEADERSHIP
A quality of senior management that provides
inspirational guidance and motivation to personnel, leading
the firm to a better future.
 Leaders vs. Managers
 visionary and hold a long-  focus on directing the
term perspective on the firm’s day-to-day
challenges and opportunities operations
that confront the firm  responsible for
 invest substantial energy in administering or
developing skilled managers controlling specific
and fostering employee activities in the firm
engagement
 exceptionally skilled at
motivating people and at
setting the tone for how the
firm will pursue its goals and
objectives
FOUR MAJOR TRAITS OF
VISIONARY LEADERS
1. International mind-set and cosmopolitan values
Visionary leadership requires managers to acquire an
international mind-set—an openness to, and awareness of,
diversity across cultures.
2. Willingness to commit resources
The complexities of foreign markets imply that
international ventures take more time than domestic ones
to become profitable. Visionary leaders commit to them and
believe the firm will eventually succeed.
3. Strategic vision
Visionary leaders communicate a strategic vision—what
the firm wants to be in the future and how it will get there.

4. Willingness to invest in human assets

Visionary leaders must nurture the most critical asset of
any organization—human capital.
Figure 1. Five Key
Dimensions of Successful
International Firms Strategy

Visionary Organizational
Leadership The Structure

Global
Firm

Organizational Organizational
Culture Processes
ORGANIZATIONAL
CULTURE
The pattern of shared values,
behavioral norms, systems,
policies, and procedures that
employees learn and adopt.
Companies that proactively build a global organizational
culture:
 Value and promote a global perspective in all major
initiatives.
 Value global competence and cross-cultural skills among
their employees.
 Adopt a single corporate language for business
communications.
 Promote interdependency between headquarters and
subsidiaries.
 Subscribe to globally accepted ethical standards.
Figure 1. Five Key
Dimensions of Successful
International Firms Strategy

Visionary Organizational
Leadership The Structure

Global
Firm

Organizational Organizational
Culture Processes
ORGANIZATIONAL
PROCESSES
The managerial routines, behaviors, and mechanisms that
allow the firm to function as intended.

GLOBALIZING MECHANISMS
• global teams
• global information systems
 Global Team
An internationally distributed group of employees
charged with a specific problem solving or best-practice
mandate that affects company operations, or a major aspect
of company operations, worldwide.

Strategic Global Teams Operational Global Teams

Identify or implement Focus on the efficient and
initiatives that enhance the effective operation of the
long-term direction of the business across the whole
firm in its global industry network
Distinction between Multi-
domestic and Global Industry
Multidomestic Global industry
industry An industry in which
An industry in which competition is on a
competition takes regional or worldwide
place on a country-by- scale.
country basis.
The Integration-Responsiveness
Framework
Global Integration
Coordination of the firm’s value-chain activities across
countries to achieve worldwide efficiency, synergy, and cross-
fertilization to take maximum advantage of similarities
between countries.
Local Responsiveness
Management of the firm’s value-chain activities on a
country-by-country basis to address diverse opportunities and
risks.
Figure 2. Integration-
Responsiveness
Framework
Why do firms undertake global
integration?
1. Seek cost reduction through scale economies
2. Capitalize on converging consumer trends and universal
needs.
3. Provide uniform service to global customers
4. Conduct global sourcing of raw materials, components,
energy, and labor.
5. Monitor and respond to global competitors
6. Take advantage of media that reaches buyers in multiple
markets
Why do firms undertake local
responsiveness?
1. Leverage natural endowments available to the firm
2. Cater to local customer needs
3. Accommodate differences in distribution channels
4. Respond to local competition
5. Adjust to cultural differences
6. Meet host government requirements and regulations
Figure 3. Four Distinct
Strategies Emerging
from the IR Framework
Home Replication Strategy
An approach in which the firm views international
business as separate from, and secondary to, its domestic
business.
Multidomestic Strategy
An approach to internationalization in which headquarters
delegates considerable autonomy to each country manager,
allowing him or her to operate independently and pursue
local responsiveness.
Global Strategy
An approach in which headquarters seeks substantial
control over its country operations to minimize redundancy
and maximize efficiency, learning, and integration
worldwide.
Transnational Strategy
An approach in which headquarters seeks substantial
control over its country operations to minimize redundancy
and maximize efficiency, learning, and integration
worldwide.
Figure 1. Five Key
Dimensions of Successful
International Firms Strategy

Visionary Organizational
Leadership The Structure

Global
Firm

Organizational Organizational
Culture Processes
ORGANIZATIONAL
STRUCTURE
Describes the reporting relationships inside the firm that
specify the links between people, functions, and processes
that allow the firm to carry out its operations.
It is a tool that facilitates implementation of strategy and
firms strategic vision.
Centralized and Decentralized
Structure
Centralized approach gives headquarters considerable
authority and control over the firm’s activities worldwide.

A decentralized approach means that substantial

autonomy and decision making authority are delegated to
the firm’s subsidiaries around the world.
Organizational Structures for
International Operations
Organizational structure is a tool that facilitates the
implementation of strategy and ultimately the firm’s
strategic vision. As the firm’s involvement in international
business increases, it adopts increasingly complex
organizational structures.
Major Types of Organizational
Structure
• Charged with
EXPORT DEPARTMENT managing export
operations
• Won’t be
CEO required unless
export sales
become vital part
General
Administratio
R&D and
Manufacturin IT & Logistics Marketing Export
Department
of total sales
n g
INTERNATIONAL DIVISION STRUCTURE
• Design in which
CEO international
activities are
centralized
within one
Domestic International division in the
Division Division
firm, separate
from domestic
unit
Europe,
Asia, Latin
Middle East,
America
North America
GEOGRAPHIC AREA STRUCTURE
• Management and
control are
decentralized to
CEO
the level of
individual
geographic regions
VP North VP South
VP Europe
and Middle
VP Asia
VP Africa
• Usually, users of
America America Pacific
East this structure are
mature industries
with narrow
product line
PRODUCT STRUCTURE

• Arrangement in
which
APPLE management
of international
operation is
organized by
Iphon major product
Ipod Ipad line
e
 FUNCTIONAL STRUCTURE

• Centralized
structure in
which
CEO
(Petroleum Company)
management of
international
operations are
VP
Exploration
VP
Development
VP
Production
VP Gas
Marketing
VP Retail
Operations
organized by
functional
activities
(production and
marketing)
GLOBAL MATRIX STRUCTURE
• Arrangement that
blends geographic
area, product and
functional structures
to leverage the
benefits of purely
global strategy while
keeping the firm
responsive to local
needs
Figure 1. Five Key
Dimensions of Successful
International Firms Strategy

Visionary Organizational
Leadership The Structure

Global
Firm

Organizational Organizational
Culture Processes
STRATEGY
  A general direction set for the company and its
various components to achieve a desired state in the
future.
FOREIGN MARKET ENTRY STRATEGYChoice of entry strategy
is one key decision
management make in
international business
EQUITY OR
TRADE OF PRODUCTS CONTRACTUAL
OWNERSHIP BASED
AND SERVICES RELATIONSHIPS
INT’L ACTIVITIES
• Generally, home • Foreign Direct • Firms allow foreign
based activities Investment and partners to use its
• Global sourcing, equity based intellectual property
exporting and collaborative in return for other
countertrade ventures royalties or
• Investing capital compensation
• Licensing and
franchising
FACTORS TO CONSIDER TO DECIDE WHAT
ENTRY STRATEGY IS BEST FOR THE FIRM
CONTROL- ability to influence decision, operation and strategic resources
involved in foreign venture
• In addition to control, characteristic of product and service
such as fragility, perishability and ratio of value to weight can
strongly influence choice of entry strategy
• As firm ventures abroad, managers weigh potential profit,
revenue and goal achievement of internationalization against
investment of time, money and other resources.
• Managers risk taking preference determine firms initial
investment and tolerance for delayed returns
TYPICAL STAGES IN INTERNATIONALIZATION
https://www.titandpm.com/become-better-mortgage-sales-leader/
https://www.visualcapitalist.com/iceberg-organizational-culture-change
/organizational-culture-change-iceberg/