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Chapter 6

BUSI 3103 Chapter 6: Chapter 6

Course Code
BUSI 3103
Rumisa Shaukat

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Motivations for Global Expansion: Economies of Scale and Scope (product variety), Low-Cost
Production Factors
International Investment Stage 1: New Product(fresh idea or business, produce locally)
International Investment Stage 2: Maturing Product(target 2 or 3 countries, thinking expansion)
International Investment Stage 3: Standardized Product (Stable demand, cost containment,
produce globally)
Other ways of Internationalization: Mgmt Contracts, Strategic Alliances/Joint Ventures,
Mergers(common) and Acquisitions
International Development Stage 1: Domestic(locally oriented, initial foreign involvement,
domestic structure and export department)
International Development Stage 2: International(export oriented, competitive positioning,
domestic structure with international department, multi-domestic)
International Development Stage 3: Multinational(Multinational, Explosion, Worldwide product)
International Development Stage 4: Global(Global, Matrix, transnational, Whole world)
Globalization Strategy: product design, manufacturing and marketing are standardized around the
Multi-Domestic Strategy: competition in one country is handled independent of competition in
other countries
International Division Structure: organized based on geographic interests and has an export
strategy. Global Integration and National Responsiveness are low.
Global Product Structure: product divisions are responsible for global operations and has a
globalization strategy. Global Integration is high and National Responsiveness is low.
Global Geographic Structure: each division is responsible for own geographic area and has a multi-
domestic strategy. Global Integration is low and National Responsiveness is high.
Global Matrix Structure: There has to be pressure for a balance between GI and NR. There also has
to be pressure to distribute scarce resources. GI and NR are high and uses a combo of globalization
and multi-domestic strategy.
Global Coordination Mechanisms: GLT, SHP, SCR
Global Teams: cross-border work groups made up of multiskilled, multinational people whose
activities span several countries
Stronger Headquarters Planning: More active role for headquarters in planning, scheduling and
control to keep global pieces of organization working together in the same direction.
Specific Coordination Roles: Organizations may implement structural solutions to achieve stronger
coordination and collaboration. Create specific roles and jobs in the organization for coordination is
a way to do this.
National Value Systems: Effective managers develop cultural fluency. Dimensions like power
distance and uncertainty avoidance are used to distinguish between countries
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