Global Strategy

Agenda
Sustainable Industrialization
Institutional Voids
Emerging Markets
Strategies for Expansion
SUSTAINABLE
INDUSTRIALIZATION
 Sustainable Industrialization
Sustainable industrialisation is a long-term process of transformation
towards a desired vision of an industrialised economy that contributes
to wealth creation, social development and environmental
sustainability.

Stages of Industrialization
Resource-based industries (for instance : processed food, wood, leather, refined
petroleum & rubber products);
Low technology industries (for instance : textiles, garments, footwear, furniture,
glassware, toys);
Medium technology industries (for instance : automotive industry, chemicals, metal
products, machinery);
High technology industries (for instance : electronics, pharmaceuticals, biotechnology,
precision instruments, aerospace ).
 Sustainable Industrialization

Wealth Creation

Industrial
innovation

Social Environmental
Development Sustainability
 Sustainable Industrialization
Resource Low Tech Medium Tech High Tech
based

High value
added
segments

Low value
added
segments
INSTITUTIONAL VOIDS
What is an Institutional Void
 Types of Institutional Voids

Macro Voids
Political and social systems
Openness

Micro Voids
Product market
Labor market
Capital markets
Types of Institutional Voids
Positioning of Firms
EMERGING MARKETS
What is an Emerging Market
Market Segments
Responding to Emerging Markets
STRATEGIES FOR
EXPANSION
 Factors Influencing the Choice of
Strategy
Pressures for Global Integration
Transfer of Skills & Practices
One-way or Two-way Flow
Bureaucratic Costs

Pressures for Local Responsiveness

Global Learning

Pressures for Local Responsiveness

Adaptation / Customization to local
environment
Product & Services satisfying unique
preferences
Distinct competencies

Pressure for Global Integration

 Modes of International Expansion

High

Wholly Owned
Subsidiary

Joint Ventures or
Degree of Risk

Mergers

Licensing or
Franchising

Exporting or
Sales Subsidiary
Low

Low Degree of Control / Investment High

 Strategies for Global Expansion

High Multidomestic Strategy Transnational Strategy

Local Differentiation Advantage Both Differentiation & Low Cost

Lowest Bureaucratic Costs Highest Bureaucratic Costs
Pressures for Local Responsiveness

Autonomous Centralized & Decentralized

Subsidiary develops Value Creating Activities Highly Integrated, Two-way Flow
Financial Relationship with HQ Global Learning
Example Ford, Philips Example P&G

International Strategy Global Strategy

Global Differentiation Advantage Low Cost Advantage

Bureaucratic Costs are Low Bureaucratic Costs are High
Centralization of R&D, Marketing etc. Centralization of Production
Production Decentralized World Unit of Analysis
Attempts to Replicate Practices Economies of Scale
Example Coca Cola Example Sony, Toyota
Low

Low Pressure for Global Integration High

 Implications

Multidomestic Strategy Transnational Strategy

High
Decentralized Integrated Network
Federation
Pressures for Local Responsiveness

Large Flows of
Financial Flows Resources, Knowledge
& Capabilities
Loose, Simple
Control Complex Integration

International Strategy Global Strategy

Coordinated Centralized Hub

Federation
Flows of
Knowledge Flows Goods

Formal System Tight, Simple

Controls Control
Low

Low Pressure for Global Integration High