Introduction:
PEST: political, economics, social, tecnology
--> trade, investment, strategy and policy of MNC
political: government policies, political stability, tax regulations, trade policies, etc.
political volatility and uncertainty/environmental regulations and sustainability policies
economics: economic growth rates, inflation, interest rates, exchange rates, unemployment
rates, etc.
economic slowdown and recession/Rising inflation and interest rates/Disruptions in supply
chains/Increased cost
social: cultural aspects, demographics, lifestyle trends, and attitudes of the population that the
organization serves or operates within.
Demographic shifts/social responsibility and ESG/workplace culture and employee expectations/
digital literacy and technology adoption
tecnology: technological innovations, advancements, and barriers
AI/Cybersecurity thereat
Trade:
-political: trade tensions-> trade barriers( tariffs, quotas)-> global supply chain/Geopolitical
conflicts
-Economic: Economic slowdowns-> reduce/ Fluctuations in exchange rates 汇率变化
-social: Changing consumer preferences/sustainable and locally sourced products/Workforce
shortages
-Technological: e-commerce and digital platforms/Automation and robotics
Investment:
-political: Political instability, policy changes-> risk perception for foreign direct investment (FDI)
-Economic: downturns->a decline in both domestic and international investment.
Rising interest rates and increase cost
-social: consumer preferences -> sustainable and socially responsible investments
-Technological: renewable energy, digital infrastructure, and innovative industries->opportunities
Strategies and policies of MNC’s：
-political: diversify their supply chains-> reduce risks of trade barriers and geopolitical conflicts/
foucus on proactive government relations/ consider stability and regulatory environment of
different countries.
-Economic: adjust their pricing and product portfolios-> consumer purchasing power and
demand patterns/ renegotiate supply contracts and supply chains-> reduce cost/investments in
automation and digitalization -> enhance productivity and operational efficiency
-Social: social responsibility (CSR) and sustainability/ talent management strategies/ marketing
and branding efforts to better resonate with the changing demographics
-Technological: digital transformation/ partnerships with technology startups/ cybersecurity
measures and data governance policies
L2 The Strategy of International Business
Factors to push globalisation:
1. Political Factors （GATT 关税与贸易总协定 EEC FDI)
2. Social Factors
3. Competitive Factors
4. Technological Factors （R&D research and development)
Loalization:
adapting a product, service, or content to meet the specific language, cultural, and other
requirements of a particular target market or locale. (resonates with the local audience)引起共鸣
Importance of Localization：
1. Market Penetration 市场渗透
2. Customer Satisfaction
3. Competitive Advantage
4 waves of globalizations
1.1850-1914 Driven by the technology of the day (Steamships Telegraph)
2.1945-1985 A Multi-Local Structure
3. 1986-2009 global structure (refers to a centralized approach where a company standardizes its
operations, products, and marketing strategies across all markets)
efficiency and uniformity
multi-local strategy
The ‘home’ HQ does not control all actions
All activities not performed in all countries
Different locations take on different strategic roles
Requires a much greater degree of co-ordination and control
Benefit of global structure:
reduce costs and increased efficiency
improved quality
international learning
competitive leverage 竞争优势
drawbacks of global structure:
high communication costs
worldwide reliance on individual nodes
limited local responsiveness
Benefits of a multi-local strategy:
market relevance
competitive edge
cultural sensitivity
Drawbacks of a multi-local strategy
higher costs
inconsistent quality
management challenges
Globalisation Drivers
Cost drivers depend on the economics of the business.
- Continuing push for economics of scale
- Accelerating technological innovation
- Advances in transportation
- Emergence of newly industrializing countries with productive capability and low labor cost (e.g.
China, India and Indonesia)
Government drivers depend on the rules set by national governments.
- Changes in market drivers
- Convergence of lifestyles and tastes
- Increaseing travel creating global consumers
- Organization beginning to behave as global customers
- Establishment of world brands (e.g. Coca-Cola, Levi’s, Microsoft)
- Push to develop global advertising
- Spread of global and regional media (e.g. CNN)
Competitive drivers depend on the actions of competitor.
- Continuing increase in level of world trade
- Increased ownership of corporations by foreign acquirers
- Rise of new competitors intent upon becoming global competitors (e.g. Japanese firm in the
1970s, Korean firm in the 1980s, Taiwanese firms in the 1990s, Chinese firms in the 2000s)
- Rise of ”born global” Internet and other companies
- Growth of global networks making countries interdependent in particular industries
- Increased formation of global strategic alliances.
Market drivers depend on customer behaviour.
LEC3 Global Marketing
International Market Assessment
• Initial screening: basic need and potential
• Second screening: financial and economic conditions
• Third screening: political and legal forces
• Fourth screening: sociocultural forces
• Fifth screening: competitive environment
• Final selection
Market Segmentation
identify different customers from
• Geography
• Demography
• Sociocultural factors
• Psychological factors
Universal or global segments (A)
Regional segments (B-D)
Unique segments (C-E-F)
Product Attributes
Culture:
• Tradition
• Social structure (social calsses)
• Language
• Religion
• Education
Levels of economic development:
highly developed countries->extra performance attributes in their products
less developed nations->basic products
Product and Technical Standards:
government-mandated standards ->mass production and constrain globalization of markets
Regional trade agreements -> more globalized
Distribution Strategy
Differences between Countries
1. Retail Concentration:
Concentrated system->few retailers supply most of the market
fragmented system->many retailers, none of which
has a major share of the market
2. Channel Length:
number of intermediaries between the producer and the consumer
3. Channel Exclusivity:
exclusive distribution channel is one that is difficult for outsiders to access
Retailers tend to prefer to carry the products of established manufacturers
eg:Japan’s distribution system
4. Channel Quality:
A poor-quality channel can impede market entry
Distribution Strategy
a link between channel length, final selling price and profit margin
• If price is important, a shorter channel is better
• If a retail sector is very fragmented, a long channel is better
Communication channels:
• Social media
• Direct selling
• Sales promotion
• Forms of advertising
Barriers to International Communication
1. Cultural Barriers
2. Source and Country of Origin Effects:
Source effects: when the receiver of the message evaluates the message on the basis of
status or image of the sender
Country of origin effects: the extent to which the place of manufacturing influences product
evaluations
3. Noise Levels
Global Advertising
Standardized Advertising:
• Significant economic advantages
• Creative talent is scarce—one large effort to develop a campaign will be more successful
than many smaller efforts
• Brand names are global
Against Standardized Advertising
• Cultural differences among nations are significant
• Country differences in advertising regulations block the implementation of standardized
advertising
Pricing Strategy
Price Discrimination:
maximize profits
The firm must be able to keep national markets separate
Different price elasticities of demand must exist in different countries
Regulatory Influences on Prices:
Antidumping regulations and Competition policy
Configuring the Marketing Mix
L4 Global Human Resource Management
Staffing Policy
Selecting people with the right skills for a particular job
Developing and promoting the corporate culture of the firm: the organization’s norms and value
systems
Categorize employees:
Home country nationals
Host country nationals
Third country nationals
Types of Staffing Policies:
1. Ethnocentric approach
Attractive when:
Lack of qualified individuals in host country for management positions
Unified corporate culture
transfer knowledge of core competencies to the foreign operation
Unattractive because:
Limits the advancement of host country nationals
cultural myopia(文化近视）
2. Polycentric approach
Attractive because:
less likely to suffer from cultural myopia
less expensive to implement
Unattractive because:
not gain foreign experience
cannot progress beyond senior positions in their own subsidiaries
3. Geocentric approach
Advantages:
best use of human resources
Builds a cadre of international executives who feel at home working in a number of different
cultures
Disadvantages:
• Difficulties with immigration laws
• Costs associated with implementing the strategy
Selection and repatriation:
International screening criteria:
• Adaptability
• Self-reliance
• Age, experience, and education
• Health and family status
• Motivation and leadership
Selection procedure:
• Interviews (often including spouse)
• Tests
Expatriate Failure Rates
Main reasons:
• Inability of spouse to adjust
• Inability of manager to adjust
• Other family problems
• Manager’s personal or emotional maturity
• Inability to cope with larger overseas responsibilities
Repatriation of Expatriates 外籍人士遣返
This involves HRM planning to determine
• the role of the employee in the home country at the end of the assignment
• how to utilize the knowledge the employee acquired while abroad
• A formal ‘repatriation agreement may be made, prior to sending employee overseas’
Training and Management Development
Environmental briefings
Cultural orientation
Cultural assimilators
Language training
attitudinal flexibility
Field experience
Management Development and Strategy
• Management education
• Rotation of managers through jobs
Compensation
Two key issue:
Adjusting compensation to reflect the national differences in economic circumstances and
compensation practices
How to pay
The problem does not raise in firms pursuing ethnocentric or polycentric staffing policies in
National Differences in Compensation
In ethnocentric firms, the issue can be reduced to that of how much home-country
expatriates should be paid.
In polycentric firms, the lack of manager’ mobility among national operations implies that
pay can and should be kept country-specific.
Expatriate Pay
Base salary: base salary for a similar position in the home country
Foreign service premium: 交通费
Allowances: Hardship Housing Cost-of-living Education
Taxation: pay income tax to both the home country and the host-country governments
unless a host country has a reciprocal tax treaty
Benefits:
International Labor Relations
[Link] union bargaining power by threatening to move production to another country
2. Multinationals will keep highly skilled tasks in the home country and farm out only low-
skilled tasks
3. Imported employment practices and contractual agreements will reduce union influence
and power
Current Issues
Offshoring: Impact on home and host country workers
Collaborative Arrangements: Strategic alliances and JV’s
‘Roving’ Expatriates
Ethical Policies
Skills Shortage
L5 Global Production and Supply Chain Management
The Production Cycle 1: Research and Development
product development --> one center or many? --> R&D duplication or not (是否重复研发）
--> manage knowledge networks efficiently to take advantage of size
speed to market: Time-to-market accelerators
1. Market Oriented Research and Development
2. Concurrent engineering: The process of having design, engineering, and manufacturing people
working together to create a product, in contrast to working in a sequential manner.
The
Production Cycle 2: Sourcing
make or buy?
make: better to qc but more cost
buy: reduce cost but not easy to qc
One supplier or many?
one: Build strong partnerships and negotiate prices but Supply cut-off issue
many: reduce risk of cut off but High management and coordination costs
Developing relationships with suppliers
Porter’s diamond model – ‘best’ locations to buy from
– Factor Endowments
– Demand Conditions
– Related and Supporting Industries
– Firm Strategy, Structure, and Rivalry
Need to use ‘local sources’ requirement of FDI in many countries
Reliance on sourcing ‘nodes’
The Production Cycle 3: Manufacturing
Where to Produce:
Country Factors:
• Location economies
• Location externalities: skilled labor pool and supporting industries
• Formal and informal trade barriers
• Transportation costs
• Regulations affecting FDI
• Expected future movements in exchange rates
Technological Factors:
• Fixed Costs
• Minimum Efficient Scale
The larger the minimum efficient scale of a plant relative to
total global demand, the greater the argument for centralizing
production in a single location or a limited number of location.
• Flexible Manufacturing and Mass Customization 柔性制造与大规模定制
flexible manufacturing: quick response/ shared equipments / reduce cost
mass customization: individualized / Scaling effect 规模化效应/ satisfaction
Product Factors:
• Value-to-weight ratio
• Locating Production Facilities
• Centralized location and Decentralizing close to major markets
Hidden Costs of Foreign Locations
• High employee turnover
• Shoddy workmanship
• Poor product quality
• Low productivity
The Production Cycle 4: Inventory Management 库存管理
The Production Cycle 5: Associated Services
Increasingly profits come from associated services
The Production Supply Chain 6: Global Logistics
• Transportation (weight-price ratio)
For example: ocean shipping and air shipping
• Choice criteria of transportation
• Time, predictability, cost
• Packaging
• Storage
Reverse logistics and Transportation