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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
