This presentation is prepared for the subject of globalisation and social challenges. (Budapest Business School)

1. :1009080706050403020100
Strategy in the Global Environment
ort break
Budapest Business School
Global economy and social challenges
Gocha Sharvashidze
Gocha.sharvashidze.1@iliauni.edu.ge

2. Global organizationMultidomestic organization

3. 1–3
Step by step globalization
• Globalization 1900–1941
 sales was made only specific places near the see
• Globalization 1945–2000
Duplicating business functions overseas
Create subsidiary
Buy another company
• Globalization 21st century
MNEs become global collaboration networks

4. origin
Developed product
Come from…
These corporations
originated early in the 20th
century and expanded
after World War II
A multinational corporation
developed new products in
its native country and
manufactured them abroad
Almost all the earliest and largest
global firms were either American,
Japanese, or West European
History of international organizations

5. Earn more return
from their
distinctive
competencies
Location
economies
Ride down the
experience curve
“Going global”
frequently requires
little or no
adaptation of your
products
What is the profit from
global expansion?

6. International corporate strategies
 International corporate-level strategies
1. Multidomestic organization
A multidomestic strategy makes most sense when there are high pressures
For local responsiveness and low pressures for cost reduction

7. Offers standardized products across coun
try markets
Strategic und operating decisions centralized
at home office
Produces lower risk
Is less responsive to local market oppo
rtunities
Cost advantage and aggressive pricing
ALLPPT
 International corporate-level strategies
International corporate strategies
2. Global strategy
A multidomestic strategy makes most sense in those cases where there are strong
pessures for cost and demands are minimal

8. International corporate strategies
3. Transnational strategies
Seeks to achieve both global efficiency and local responsiv
eness
A
B
C
D
Requires both global coordination and local flexibility
with this strategy/structure combination
Challenging, but becoming increasingly necessary to co
mpete in international markets
Increasingly used as a strategy
Transnational companies are much more complex organizations. They have invested in foreign
operations, have a central corporate facility but give decision-making, R&D and marketing
powers to each individual foreign market.

9. The chose of entry made
 Exporting
 Licensing
 Franchising
 Joint ventures
 Wholly owned subsidiaries

10. • Maintain leadership in Retail sector
• Roll out a network in the US and the
world
• creating a positive brand image and
increase awareness of the organization
• Open new retail branches in the network
• Create a convenient menu types
• Take away costumers from the local small
competitors
• Use Menu differentiation and decrease prices,
expenses and create healthy product
• Develop a network of restaurants and daily discounts to
attract new customers.

11. 1–11
Wal-mart Retreats
from Germany
• Wal-mart entered Germany
 Acquisition of 21 stores and 74 hypermarkets
• Wal-mart duplicated its U.S. policies and applied them in Germany
 Employees refused to accept those policies
• Wal-mart faced significant cultural differences
• Wal-mart could not develop efficient economies of scale and distribution
centers to drive cost down
• The result is a defeated Wal-mart that sold its stores to Metro.
• ALDI, another of Wal-mart’s competitors in Germany, is now expanding
aggressively in the U.S.

12. International Sales as % of Total
Data from 2010
10–12

13. Corporate Tax Rates
Institutional Difference Matters
10–13

14. CRITICIZM OF GLOBAL
ORGANIZATIONS
 Invasive advertising and corporate lobbying
 Creation of monopolies in the market and elimination of
local competitors.
 Depletion of resources due to their continuous use by
these corporations.
 Centralization of R&D operations in their home country.
 Low consideration for human rights and welfare.
 The problem of Dumping