One of the expansion goals is to build a knowledge and competency base related to the local market needs including identifying the institutional voids and the opportunity it offers to build and improve custom services in the long run. Creating talent and cultivating the culture of innovation are top concerns for the company among other political, economic risks and government regulations. Further, XBdi want its subsidiary units integrated into the overall corporate structure and each of these units to become a source of specialized units thus eliminating redundancies between subsidiary units.
Archana Singh Presented By: CASE Select two large multinational enterprises, one consumer-oriented and one industrial. Then discuss the pressures for local responsiveness and global integration faced by each firm. Which experiences the greater pull toward local responsiveness?
Which faces a greater need for global standardization?
To integrate value chain activities globally. To create products and processes that are responsive to local market needs. The discussion about the pressures on the firm of achieving global integration and local responsiveness is known as integration-responsiveness IR framework.
Two primary factors behind pressures for global integration are: The globalization of markets The efficiency gains of standardization. The resulting economies of scale translate to: Lower prices Higher quality standardized goods More homogenization of consumer demand 5 Objectives of Global Integration: Objectives of Global Integration Global integration seeks economic efficiency on a worldwide scale, promoting learning and cross-fertilization within the global network, and reducing redundancy.
Headquarters personnel justify global integration by citing converging demand patterns, spread of global brands, diffusion of uniform technology, availability of pan-regional media, and the need to monitor competitors on a global basis.
Companies in such industries such as aircraft manufacturing, credit cards, and pharmaceuticals are more likely to emphasize global integration. Local Responsiveness Local responsiveness refers to meeting the specific needs of buyers in individual countries. It requires a firm to adapt to customer needs, the competitive environment, and the distribution structure.
Companies in such industries as food and beverages, retailing, and book publishing are likely to be responsive to local differences.
Pressures for Local Responsiveness Unique resources and capabilities available to the firm. Diversity of local customer needs. Differences in distribution channels.
Local competition Cultural differences. Host government requirements and regulations. Home Replication Strategy Export Strategy or International Strategy The firm views international business as separate from, and secondary to, its domestic business.
Such a firm may view international business as an opportunity to generate incremental sales for domestic product lines. Products are designed with domestic customers in mind, and international business is sought as a way of extending the product lifecycle and replicating its home market success.
The firm expects little knowledge flows from foreign operations. With this strategy, managers recognize and emphasize differences among national markets. Country managers tend to be highly independent entrepreneurs, often nationals of the host country.
They function independently and have little incentive to share knowledge and experiences with managers elsewhere. Products and services are carefully adapted to suit the unique needs of each country.
Advantages of Multi-Domestic Strategies If the foreign subsidiary includes a factory, locally produced goods and products can be better adapted to local markets. The approach places minimal pressure on headquarters staff because management of country operations is delegated to individual managers in each country.
Firms with limited international experience often find multi-domestic strategy an easy option as they can delegate many tasks to their country managers or foreign distributors, franchisees, or licensees, where they are used.
Managers have little incentive to share knowledge and experience with those in other countries, leading to duplication of activities and reduced economies of scale. Limited information sharing also reduces the possibility of developing knowledge-based competitive advantage. It leads to inefficient manufacturing, redundant operations, a proliferation of products designed to meet local needs, and generally higher costs of international operations than other strategies.Oct 21, · The Integration Responsiveness (IR) Grid (Daniels et al, ) illustrates for instance that bulk chemicals require high standardization and central control regarding global integration, whereas local responsiveness is of minor necessity.
3) “National responsiveness” and “global integration” constitute the two fundamental factors of the economic (value created) and financial (value captured) performance of the MNC. 4) “National responsiveness” refers to how the MNC responds to the economic, political, and organisational forces.
Managing for Global/Regional Integration and Local Responsiveness Global Strategy and Organization Global Integration Low High. Low High. Local Responsiveness. Integration-Responsiveness Global Integration Low High Low High Local Responsiveness between regional integration and national responsiveness.
The project leaders (Meyer and. Global strategies and the multinational corporation The opportunities and challenges of operating internationally are substantially different to the domestic context.
Thus, to understand strategy in a global context, we focus on the multinational corporation and discuss strategic terms like foreign entry mode, location strategies, global integration/local adaptation, and distance.
The Integration-Responsiveness Framework: A Review and Application of the Concept The integration-responsiveness framework is one of the most widely used frameworks to explain the according to the key driving factors for global integration and local responsiveness came to a halt in.
Jan 27, · In looking at Integration Responsiveness (IR) Framework and its four distinct business strategies, transnational strategy seems compelling and offers maximum flexibility although it .