978-1305500891 Chapter 13 Lecture Note

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CHAPTER 13

STRATEGIZING, STRUCTURING, AND

LEARNING AROUND THE WORLD

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. describe the relationship between multinational strategy and structure.

2. explain how institutions and resources affect strategy, structure, and learning.

3. outline the challenges associated with learning, innovation, and knowledge management.

4. participate in two leading debates concerning multinational strategy, structure, and

learning.

5. draw implications for action.

GENERAL TEACHING SUGGESTIONS

Use a brief “pass the message” experiment.

(Everyone goes out of the room except for one person who must listen to a brief message that

you read but cannot ask any question. You then call another person in and the first person is

supposed to pass on that brief message who must listen as did the first person. Then another

person is called in – and the process continues until the last person tells the class what he or she

thought was said. The message will likely have changed significantly.)

You can then point out that communication can be a problem even in a small group in a situation

in which information is being passed on almost immediately. Ask the students to what extent

communication of what is working in one part of the organization will necessarily reach those in

other parts or has information technology solved that problem? If it has not, is it possible that it

could? How can that problem relate to developing effective strategies and organizational

structures?

OPENING CASE DISCUSSION GUIDE

Emerging Markets: Mickey Goes to Shanghai

McDonald’s is facing serious challenges to its supremacy of the fast food industry. To fight back,

McDonald’s has introduced new menu items that were developed in restaurants located far away

from corporate headquarters. McDonald’s was interested in the McWrap because it is searching

for fresh, healthy menu items. Last, McDonald’s has invested significant experimentation,

learning, and innovation in the process of improvement.

CHAPTER OUTLINE: KEY CONCEPTS AND TERMS

Sections I through V of Chapter 13

I. MULTINATIONAL STRATEGIES AND STRUCTURES

1. Key Concept

Governing multinational strategy and structure is an integration-responsiveness

framework. There are four strategy/structure pairs: (1) home replication

strategy/international division structure, (2) localization strategy/geographic area

structure, (3) global standardization strategy/global product division structure, and (4)

transnational strategy/global matrix structure.

2. Key Terms

Center of excellence is an MNE subsidiary explicitly recognized as a source of

important capabilities, with the intention that these capabilities be leveraged by,

and/or disseminated to, other subsidiaries.

Country (regional) manager is the manager of a geographic area, either a country

or a region.

Geographic area structure is an organizational structure that organizes the MNE

according to different geographic areas (countries and regions).

Global matrix is an organizational structure often used to alleviate the disadvantages

associated with both geographic area and global product division structures,

especially for MNEs adopting a transnational strategy.

Global product division is an organizational structure that assigns global

responsibilities to each product division.

Global standardization strategy is a strategy that focuses on development and

distribution of standardized products worldwide in order to reap the maximum

benefits from low-cost advantages.

Home replication strategy is a strategy that emphasizes the duplication of home

country-based competencies in foreign countries.

Integration-responsiveness framework is a framework of MNE management on

how to simultaneously deal with the pressures for both global integration and local

responsiveness.

International division is an organizational structure that typically set up when firms

initially expand abroad, often engaging in a home replication strategy.

Local responsiveness is the necessity to be responsive to different customer

preferences around the world.

Localization (multidomestic) strategy is a strategy that focuses on a number of

foreign countries/regions, each of which is regarded as a standalone local (domestic)

market worthy of significant attention and adaptation.

Transnational strategy is a strategy that endeavors to be cost efficient, locally

responsive, and learning-driven around the world.

Worldwide (global) mandate is a charter to be responsible for one MNE function

throughout the world.

II. HOW INSTITUTIONS AND RESOURCES AFFECT MULTINATIONAL STRATEGIES,

STRUCTURES, AND LEARNING

1. Key Concept

MNEs are governed by external and internal rules of the game around the world.

Management of MNE structure, learning, and innovation needs to take VRIO into

account.

2. Key Terms

Organizational culture is the collective programming of the mind that distinguishes

the members of one organization from another.

III. WORLDWIDE LEARNING, INNOVATION, AND KNOWLEDGE MANAGEMENT

1. Key Concept

Knowledge management primarily focuses on tacit knowledge. Globalization of R&D

calls for capabilities to combat a number of problems associated with knowledge

creation, retention, outflow, transmission, and inflow.

2. Key Terms

Absorptive capacity is the ability to recognize the value of new information,

assimilate it, and apply it.

Explicit knowledge is knowledge that is codifiable (can be written down and

transferred with little loss of richness).

Global virtual team is a team whose members are physically dispersed in multiple

locations in the world and often operate on a virtual basis.

Knowledge management is the structures, processes, and systems that actively

develop, leverage, and transfer knowledge.

Micro-macro link is the micro informal interpersonal relationships among managers

of various units that may greatly facilitate macro, intersubsidiary cooperation among

these units.

Open innovation is the use of purposive inflows and outflows of knowledge to

accelerate internal innovation and expand the markets for external use of innovation.

Social capital is the informal benefits individuals and organizations derive from their

social structures and networks.

Tacit knowledge is knowledge that is noncodifiable, whose acquisition and transfer

require hands-on practice.

IV. DEBATES AND EXTENSIONS

1. Key Concept

The debates are (1) corporate controls versus subsidiary initiatives and (2)

customer-focused dimensions versus integration, responsiveness, and learning.

2. Key Terms

Global account structure is a customer-focused dimension that supplies customers

(often other MNEs) in a coordinated and consistent way across various countries.

Solutions-based structure is a customer-focused solution in which a provider sells

whatever combination of goods and services the customers prefer, including rivals’

offerings.

Subsidiary initiative is the proactive and deliberate pursuit of new opportunities by

a subsidiary.

V. MANAGEMENT SAVVY

1. Key Concepts

Savvy managers must understand and master the external rules of the game governing

MNEs and home-country/host-country environments. Managers must understand and be

prepared to change the internal rules of the game governing MNEs. “Act local, think

global” means developing learning and innovation capabilities to leverage multinational

presence as an asset.

2. Key Terms

None