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An Organizing
Framework
Exploiting
economies
of
scale
through global volume,
taking pre-emptive positions through
quick and large investments,
and managing interdependently to
achieve synergies across different
activities are
some of the more
important moves that a winning
global strategist must muster.
THE FRAMEWORK
GLOBAL STRATEGY
Thus, it differentiates its products to
enhance the exchange value of its
outputs, and seeks low cost factors to
minimize the costs of its inputs. It
also tries to enhance the efficiency of
its throughput processes by achieving
higher scale economies or by finding
more efficient production processes.
All based on the underlying notion of
maximizing efficiency rents of the
MANAGING RISKS
Most
existing
theories
of
the
multinational corporation view it is an
instrument to extract additional rents
from capabilities internalized by the firm.
A firm goes abroad to make more profits
by exploiting its technology, or brand
name, or management capabilities in
different countries around the world.
It is assumed that the key competencies
of the multinational always reside at the
centre.
NATIONAL DIFFERENCES
The
concept
of
comparative
advantage is quite clear, available
evidence on its actual effect on the
overall competitiveness of firms is
weak and conflicting.
While comparative advantages of
countries can provide competitive
advantages to firms, the realization of
such benefits is not automatic but
depends on complex organizational
factors and processes.
SCALE ECONOMIES
SCOPE ECONOMIES
Certain economies arise from the fact
that the cost of the joint production of
two or more products can be less than
the cost of producing them separately.
.
CONCLUSION
This paper has proposed a framework
that can help MNC managers in reviewing
and analyzing the strategies of their
firms. It is not a blueprint for formulating
strategies.
Three arguments underlie the construct
of the framework:
First, in the global strategy literature, a
kind of industry determinism has come to
prevail not unlike the technological
determinism
that
dominated
management literature in the 1960s. The
structures of industries may often have