MSC Strategy Presentation
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5StrategiesintheGlobalEconomy.pptxChapter 5 Strategies in the Global Economy
What is Strategy? Coherent courses of actions that: 1. identify the long-term direction for an organization 2. guide resources & capabilities 3. ultimately result in sustainable competitive advantage
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What is Strategy for MNCs & Global Firms?
Generic Strategy Framework in Business
AMBITION
What do we want to achieve in the long-term? (e.g., vision)
CAPABILITIES
POSITIONING
Where do we compete?
(Choice of segments/industries)
How do we compete?
(What is our value proposition? Cost leadership or differentiation?)
Business System Architecture: - Which resources, assets,
and competences we need to invest in?
How do we develop our capabilities?
- Organic
- Joint ventures
- Acquisitions
How to implement
Which people?
Which organization model?
Which systems?
ORGANIZATION
What is Strategy?
Fundamental Choices:
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Business Strategy
Corporate Strategy
Competing in one
industry
Competing in several
industries and/or
industry segments
Business definition
Mission/Vision
Long-term objectives
Business definition
Mission/Vision
Long-term objectives
Relative importance of
businesses/industries
Which customer segments?
Which countries?
Our value proposition?
Which businesses/industries to be in?
Degree of integration
Our competitive principles (Differentiation/Costs)
New product development
Merger and Acquisitions (M&As),
Joint ventures, alliances?
Resource allocation among businesses & industries
M&As, alliances, etc.
New entries to or exit from
an industry
HRM development
Structure
Processes
Policies
Values and culture
Corporate internal governance
Corporate HRM
Structure
Policies
Values and culture
Global Strategy
Competing in several countries
Business definition
Mission/Vision
Long-term objectives
Relative importance of regions and countries
Which Regions/Countries to be in?
Degree of integration
Competitive principles (Global/Local)
Resource allocation among regions/countries
Designing global value chain
M&As, alliances, etc.
New entries to or exit from a country
Corporate internal governance
Corporate HRM policies
Degree of autonomy of subsidiaries
Integration / Coordination of subsidiaries
Values and culture
AMBITION
CAPABILITIES
POSITIONING
ORGANIZATION
Different Strategic Levels in Global Firms
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GLOBAL AMBITION
GLOBAL POSITIONING
INVESTMENTS
IN GLOBAL
BUSINESS SYSTEM
GLOBAL ORGANIZATION
Relative importance of
region and key countries
in corporate portfolio
Choice of:
Value proposition
Countries
Investment in assets, resources and competencies
to create a global value chain
Development of global capabilities through alliances
and acquisitions
Global structure
Global processes
Global coordination
Global human resource management
GLOBAL
STRATEGY
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Market-driven vs. resource-driven motives behind internationalization
Market-driven
Resource-driven
Capture
growth opportunities
of the region to
expand global sales
Capture resources
(natural, human,
knowledge) for global
competitiveness
AMBITION
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| 2016 | GDP (Current $) | GDP PPP |
| East Asia & Pacific | 22,480 | 39,067 |
| North America | 20,160 | 20,225 |
| European Union | 16,487 | 20,377 |
| Latin America & Caribbean | 5,300 | 9,813 |
| Middle East & North Africa | 3,145 | 8,548 |
| Sub-Saharan Africa | 1,513 | 3,855 |
| Russian Federation | 1,283 | 3,397 |
AMBITION
27% GDP
17% PPP
30% GDP
32% PPP
7% GDP
8% PPP
2% GDP
3% PPP
Source: Data from
World Bank Development Indexes
22% GDP
17% PPP
2% GDP
3% PPP
4% GDP
7% PPP
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3
Average Growth
Yearly Rate
(1993-2016)
GDP per Capita (2016)
(Bubble size proportional to GDP, 2016)
Countries Life cycle
Source: Data from World Bank. World Development Indicators
AMBITION
‹#›
| Industry | America | Europe | Asia | Africa |
| Construction | 29 | 25 | 40 | 6 |
| Consumer electronics | 27 | 19 | 46 | 8 |
| IT hardware | 40 | 16 | 40 | 4 |
| IT services | 59 | 24 | 15 | 2 |
| IT software | 72 | 25 | 1 | 2 |
| Life insurance | 26 | 36 | 37 | 1 |
| Major appliances | 26 | 26 | 44 | 5 |
| Mobile telephone | 29 | 26 | 33 | 12 |
| Motor vehicles | 41 | 28 | 29 | 2 |
| Pharmaceutical | 41 | 29 | 28 | 3 |
| Retailing | 32 | 26 | 35 | 7 |
| Tires | 31 | 30 | 35 | 4 |
| Percentage contribution to global GDP (2015) | 33 | 28 | 36 | 3 |
AMBITION
Distribution of the world market by regions in selected industries, 2015 (as a percentage of US$ value)
Global Distribution of Markets (2015)
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42%
41%
36%
29%
22%
31%
NOVARTIS
Distribution of revenues is moderately balanced, with a deficit in Asia and rest of the world (GRI= 0.55)
Industry Share in Region
Company Share in Region
AMBITION
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37%
41%
26%
29%
38%
31%
SANOFI
A better-balanced distribution of revenues, with a bigger share in Asia and rest of the world (GRI= 0.66)
Industry Share in Region
Company Share in Region
AMBITION
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37%
41%
30%
29%
32%
31%
ROCHE
A geographically well-balanced distribution of revenues (GRI= 0.86)
Industry Share in Region
Company Share in Region
AMBITION
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Exporter
Regional
Global
Sourcer
Domestic
Sales
(Number of
Countries)
Production
and Supplies
(Number of
Countries)
What kind of “global player”?
Global company mapping
AMBITION
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Ratio of Foreign Sales /Total Sales
Ratio of Foreign Assets /
Total Assets
Circle size proportional to total sales
Global company mapping
AMBITION
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Global Companies Globalization Index
Scores from UNCTAD
Pharmaceuticals
| Roche | 80.4 |
| Teva | 79.0 |
| GlaxoSmithKline | 78.0 |
| AstraZeneca | 75.8 |
| Novartis | 67.8 |
| Sanofi | 65.4 |
| Allergan | 55.4 |
| Pfizer Inc | 50.1 |
Food & beverage
| Nestlé | 92.5 |
| Danone | 90.5 |
| Anheuser-Busch | 82.1 |
| Unilever | 81.4 |
| Coca-Cola | 68.6 |
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KEY COUNTRIES: MNCs have to be there
EMERGING COUNTRIES (window of opportunities) :
It is time for MNCs to go there
PLATFORM COUNTRIES: Entry and support
MARKETING COUNTRIES : No need to invest/only sales
SOURCING COUNTRIES:
Manufacturing base
Source of raw materials
Purchasing office
Countries Portfolio
- more on this in Chapter 6 -
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Countries Choice
Business
Opportunities
Market Size
Market Growth
Market Quality
Resources Quality
Resources Costs
Geographical facilities
Infrastructures
Ease of Doing Business
Risks of Doing Business
Political
Economical
Competitive
Operational
H
L
H
L
GLOBAL POSITIONING
Strategic
country
priority
investments
Ad hoc
investments
Cautious
investments
Limited & null
investments
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Building Global Competitive Advantages
TRANSFERABILITY OF COMPETITIVE ADVANTAGES
What is the value of our existing advantages in local markets?
e.g., new product development
To what extent do we need to adapt our products and
management approaches?
e.g., establishing a new R&D center in a foreign country?
What new capabilities need to be acquired and how?
e.g., top-notch scientists, creative design
GLOBAL CAPABILITIES
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Building Global Competitive Advantages
TRANSFERABILITY OF COMPETITIVE ADVANTAGES
What is the value of our existing advantages in local markets?
To what extent do we need to adapt our products and
management approaches?
What new capabilities need to be acquired and how?
Our
competitive
advantages
To what extent
are they
transferable?
Which new
capabilities to
create and how?
GLOBAL CAPABILITIES
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