Opening Case: Toyota Way

Toyota gunning for top exporter or cars, amongst other competitors such
as GM, Ford
Toyota faced many problems with quality assurance
EM2: everything matters exponentially
- Toyota Way: continuous improvement and respect for others
- Beefed up training in all areas including overseas production areas;
retained older talents
- Facilitate learning and knowledge transfer between all overseas
subsidiaries
Multinational Strategies and Structure

Pressures for cost reduction and local responsiveness integration-

responsiveness framework
Cost pressures global integration (lowers cost but no local adaptation);
worldwide convergence of consumer taste
Local responsiveness adapt locally (local adaptation but higher costs)

Ford One Size does not fit all

Tried to have a universal car but it did not work out as customers from
different countries had different preferences
i.e. Europeans preferred engine performance while Americans preferred
rider comfort
Integration-Responsiveness Framework
Home Replication Strategy export strategy

international replication of home country based competencies

replicate production scales, distribution efficiencies and brand power
Goods export strategy; service license/ franchise

: Perfect when low pressures to respond locally; easy to implement esp. when
first venturing abroad
: When need to expand overseas, high pressures to respond locally
Localisation Strategy

Focuses on a number of foreign countries/ regions, each of which is

regarded as a standalone local (domestic) market worthy of significant
attention and adaptation
Low cost pressures, high pressure to adapt locally
Clear differences between national and regional markets

Clear differences between national and regional markets, high pressure to

adapt locally
Shoulder high costs due to duplication of efforts
Too much local autonomy, difficult to incorporate corporate level changes
Global Standardisation Strategy

Global strategy that relies on the development and distribution of

standardised products worldwide to reap the maximum benefits from low-
cost advantages
High cost pressure, low pressure to adapt locally
Reap low cost advantages with standardised products
Centers of excellence MNE subsidiaries explicitly recognised as a source
of important capabilities, with that intention that these capabilities be
leveraged by and/ or disseminated to other subsidiaries
Worldwide mandate the charter to be responsible for one MNE function
throughout the world
sacrifices local adaptation
can reap low-cost advantages
Transnational Strategy

Achieve cost saving and adapt to local culture

Promote global learning and diffusion of innovation
Innovation flows both ways from between home country and host country

- Organisationally complex and difficult to implement

- Too much information and too hard to coordinate between everyone, may
slow down decision speed
Strategy and Structure
1. Home Replication Strategy International Division

Foreign managers are not given enough voice

International Division is not coordinated with the rest of the local operations
2. Localisation Structure Geographic Area Structure

Foreign managers given a lot of voice

Difficult to control and coordinate
3. Global Standardisation Strategy Global Product Division Strategy
 : greatly facilitates cost savings because it consolidates production on a
worldwide basis
sacrifices local adaptations
4. Transnational Strategy Global Matrix
Sharing and coordination of responsibilities between product divisions and
geographic areas in order to be cost efficient and locally responsive

Strategy Tripod to explain different firms different structures

 1. Industry-Based Considerations
Different nature of the industries
- Industrial-product firms: favour technological innovations, not location
specific
- Consumer-based product firms: need deep knowledge about consumer,
location-specific
- 5 forces framework: entry barriers (larger production scale to act as
deterrent)
- Bargaining power of buyers demand integrated offerings push for
globalisation strategy
2. VRIO Framework Value, Rarity, Imitability, Organisation
3. Institutional Considerations
Knowledge Framework

Definition structures, processes, and systems that actively develop,

leverage and transfer knowledge
 Debate 1: Corporate Controls vs Subsidiary Initiatives

Centralisation vs Decentralisation
Central control vs Subsidiary Initiatives

Definition of Subsidiary Initiatives:

- Proactive and deliberate pursuit of new opportunities by a subsidiary to
expand its scope of responsibility
- Hard to distinguish between good-faith subsidiary initiative and
opportunistic empire building