International Busines Strategy - Chapter 5

9 flashcards · Other · by Daniel F.

1. What do Bartlett and Ghoshal state

   Problem: homogenization (MNEs treating all their subsidiaries the same) and centralization (MNEs making all their strategic decisions at central headquarters). Causes bounded rationality Solution: electively decentralizing elements of strategic decision making and control subsidiary autonomy depends on the strategic importance of each market how strong are the subsidiaries resources like labor, technology, marketing, R&D

2. United Nations model - homogenization

   MNEs treat each subsidiary the same in terms of the roles and responsibilities, and the coordination and control systems, regardless of these subsidiaries’ specialized resources or the strategic importance of the host market important markets and subsidiaries are treated in the same way as unimportant ones -> opportunities they provide are not optimally exploited e.g.: complete subsidiary independence in multi-centred MNEs complete dependence in entralized exporters or international projector

3. Headquarters hierarchy syndrome - centralization

   senior management views the organization as consisting of two distinct levels: one dominant and one subordinate subsidiaries with a distinct, specialized resource base are unable to escape from an implementer role and unleash their entrepreneurial abilities

4. solution to the UN model and Headquarters hierarchy syndrome

   senior corporate management should assess each market according to its strategic importance senior corporate management should rate each subsidiary’s resource base in terms of sales and marketing achievements, production capabilities, R&D, or any other strength contributing to competitiveness Select type: Black Hole Implementer Strategic Leader Contributor

5. Black Hole

   rather weak unit in terms of specialized resources located in a strategically important market can be used to maintain a presence in a key market to keep up with new innovations or strategic moves by competitors, despite a lack of specialized resources or even profitability in the local subsidiary unit itself. an undesirable competitive position in a key market. In the longer run, MNEs may want to commit more resources to such markets in order to build up their subsidiary, or they may want to e…

6. Implementer

   weaker specialized resources located in a market of lesser importance The authors suggest that most MNE subsidiaries are in this category. Implementers are often key to a firm’s overall success, however, because they may generate a steady stream of cash flow, and may help build competitive advantage by contributing to company-wide scale and scope economies

7. Strategic Leader

   highly competent local subsidiary strategically important market. The role of this type of business unit is to assist corporate headquarters in identifying industry trends and developing new FSAs in response to emerging opportunities and threats.

8. Contributor

   highly competent national subsidiary located in a less important market. This subsidiary type has typically developed new FSAs, often as the result of an entrepreneurial host country management team. Its subsidiary-specific, specialized resource base might then benefit other units in the firm if corporate headquarters understands its potential economic value to the entire MNE.

9. solution to the UN model and Headquarters hierarchy syndrome

   senior corporate management should assess each market according to its strategic importance senior corporate management should rate each subsidiary’s resource base in terms of sales and marketing achievements, production capabilities, R&D, or any other strength contributing to competitiveness Select type: Black Hole Implementer Strategic Leader Contributor