P3：International Strategies

ACCA P3考試：International Strategies

1. Global-Local Dilemma

As international diversity grows, organisations have to tackle the global-local dilemma because it influences their market selection and choice of entry.

2. Management Orientation

Howard Perlmutter identified three orientations in the management of international business:

2.1. Ethnocentric (home country orientation)

This management style is characterised by a bias in favour of the home country's way of doing things and a tendency to place managers from the home country in positions of authority to run the overseas operation. Ethnocentric companies tend to market the same products with the same marketing mix in overseas countries as at home. As a consequence, market opportunities may not be fully exploited and customers might not like it.

2.2. Polycentric (total adaptation to local environments)

In this case the home country favours the practices and values of the host country in running its operation and adopts the product and marketing mix to each local environment. Polycentric companies believe that each country is unique. Thus the various subsidiaries of multinationals are free to come up with their own objectives and plans. As a consequence, economies of scale might be lost.

2.3. Geocentric (synthesis of the two previous approaches)

This orientation takes the view that there is an emerging world culture that transcends nationalities by blending. In such a firm neither the home nor host country dominates but the firm seeks to exploit the best of both. Geocentric companies try to create a global strategy that is fully responsive to local differences: "Think globally, act locally." A strong globally recognised brand is necessary for successful international activities.

3. Organisation Type

Christopher Bartlett and Sumantra Ghoshal argue that companies base their choice of international strategy on:

the strength or weakness of pressure to globalize; and

the need for local adaptation.

They identified four designs for global business based on an organisation's response to these factors:

3.1. An international organisation has some dealings with customers, suppliers or trade partners outside its country of domicile (where it "lives"). These companies operate in industries that require little local differentiation and are not under pressure for globalisation. They will be structured with an international or export division.

3.2. A global organisation takes a global perspective on customers, technology, sourcing, strategic alliances, competition and location of production. These companies are likely to be structured around product divisions with a global scope.

3.3. A multinational organisation:

operates internationally;

has local operations and management structures in more than one country; and

operates as if it has "no domicile".

These companies drive a polycentric orientation with largely independent local operations.

3.4. A Transnational organisations tries to respond to the global scale of its operations but local conditions require a differentiated approach. (See Session 9 for further discussion.) Some headquarter functions (e.g. research and development) will be diffused across the organisation; other regional or national units will work independently and share their competences with others. The strategic apex needs to promote a corporate culture that focuses on shared values and co-operation.