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  • 1. STRATEGY & STRUCTURE Strengths and Weaknesses of the Multinational Enterprises strategies Anne-Charlotte Bazoud Gabrielle Colombier Franziska Guehlcke Marcus Bormann Arnaud Katz
  • 2. This presentation can be downloaded online www.slideshare.net User: Group4Business
  • 3. Structure
    • Context
    • Aims Objectives
    • Strengths and Weaknesses of the strategies adopted by MNEs
    • Case study: Procter & Gamble
    • Managerial implications
    • Conclusion
    • Sources
  • 4. I. Context To be successful in an increasingly globalised world, companies have to enter into new foreign markets and to adapt their strategies.
  • 5. II. Aims - Objectives
    • Objectives
    • Describe the international, multi-domestic, global and transnational strategies with practical examples
    • Show the strengths and weaknesses of each strategy
    • Illustrate the theories by describing P&Gs strategy
    Aim Identify and analyse the different strategies adopted by MNEs to coordinate the international operations
  • 6. III. Strengths and Weaknesses of the strategies adopted by MNEs
  • 7. Typology of strategies Efficiency Responsiveness Learning Efficiency Learning Responsiveness
  • 8. Typology of strategies LEARNING International strategy Miniature replica of parent Centralised decision making I.E. Hilton Carrefour Production and marketing function in each host Trying to create value by transferring core competencies to foreign markets where indigenous competitors lack those competencies.
  • 9. Typology of strategies International strategy WEAKNESSES STRENGTHS
    • Facilitates transfer of core competencies
    • Moderation of operational costs
    • Great amounts of profits
    • No integration economies
    • Little local responsiveness
  • 10. Typology of strategies EFFICIENCY Global strategy Centralised decision making Global integration I.E. Standardized product The wireless industry, the credit card industry (American Express) Dispered value/supply chain Strategy focusing on increasing profitability by reaping cost reductions from experience curve and location economies.
  • 11. Typology of strategies Global strategy WEAKNESSES STRENGTHS
    • Strong production orientation
    • Scale economies
    • Creation of a virtuous circle
    • Lacks local responsiveness
    • No customization of the product
  • 12. Typology of strategies RESPONSIVENESS Multi-domestic strategy Strategic and operating decisions are decentralized to Strategic Business Units in each country to allow products to be tailored to the local market. De-centralised decision making Local operations I.E. Johnson & Johnson
  • 13. Typology of strategies Multi-domestic strategy WEAKNESSES STRENGTHS
    • Difficulty in transferring knowledge across countries
    • High costs (tailored products + duplication of resources)
    • Control and coordination problems
    • No global efficiency
    • Ability to adapt products to local market conditions
    • Strong marketing orientation
    • Locally responsive
  • 14. Typology of strategies Transnational strategy EFFICIENCY RESPONSIVENESS LEARNING A combination of the multi-domestic and global strategies. Firms seek to achieve both global efficiency and local responsiveness. Joint decision making Dispersed value chain Flexibility I.E. Verifone, a subsidiary of Hewlett-Packard
  • 15. Typology of strategies Transnational strategy WEAKNESSES STRENGTHS
    • Difficulty to implement this strategy (complex structure)
    • Ability to adapt to local market
    • Ability to attain economies of scale
    • Ability to increase learning
    • Global competitiveness
  • 16. IV. Case study: Procter and Gamble
  • 17. Case study: Procter & Gamble
    • Founded: 1837
    • Headquarters: Cincinnati, Ohio, USA
    • Chairman and CEO: A.G. Lafley
    • Products: consumer goods
    • Slogan: Touching lives, improving life
    • Employees: 138 000 worldwide
    • 25th largest US company by revenue, 81th in the world (2006)
    Procter & Gamble Presentation
  • 18. Case study: Procter & Gamble Procter & Gamble products
    • Three categories:
    • Beauty
    • Household Care
    • Health & Well-Being
    • More than 250 brands , including 23 brands which have
    • more than a billion dollars in net annual sales
    • I.E.
  • 19. Case study: Procter & Gamble P&Gs strategies
  • 20. Case study: Procter & Gamble
    • Long time to internationalize: almost 100 years before P&G undertook operations internationally
    • 1930: P&G began to sell its products overseas (International Strategy)
    • 1950s: P&G focused on the largest emerging market in the world (China) with a multi-domestic strategy
    • 1980s: P&G chose to benefit from the large experience of the company (more than a century) by using a transnational strategy
    International expansion of Procter & Gamble
  • 21. Case study: Procter & Gamble Strengths of P&Gs international strategy
    • Ability to respond effectively to the new and complex demands of their international business environments (emerging markets)
    • Ability to attain economies of scale
    • Ability to increase learning
    • Global competitiveness
  • 22. Case study: Procter & Gamble Weaknesses of P&Gs transnational strategy
    • Time: The transnational strategy is not easy to build and the history of P&G shows that the transition from a strategy to a transnational strategy requires time.
    • Management: There were also big managerial challenges for Procter & Gamble in order to have a transnational strategy
  • 23.
    • A transnational strategy confronts managers to three main challenges:
    • Coordinate the decision making between each subsidiary and the parent company
    • Transfer knowledge
    • Set up a strong marketing strategy which meets the local customers requirements
    V. Managerial implications
  • 24. VI. Conclusion
    • The strategys choice depends on the industry or the product.
    • This strategy is not static
  • 25. VII. Sources
    • Procter and Gambles website : www.pg.com
    • John D. Daniels, Lee H. Radebaugh, Daniel P. Sullivan, (11th Edition, 2007), International Business: environments and Operations
    • Bartlett & Ghoshal, (1998), Managing Across Borders: The Transnational Solution