Large firms operating globally develop organizational strategies based on the ty

Question

Large firms operating globally develop organizational strategies based on the type of industries and businesses in which they compete. Explain the four basic international business organization strategies discussed in the course on-line lectures and the Hill text. Then identify which of the four strategies Avon and P&G are trying to implement. After identifying the strategies Avon and P&G are using please describe and explain how and why each is pursuing the organizational strategy it has selected to penetrate certain markets and meet global competition in the consumer products industry. You should explain and compare the successes and/or failures of two firms’ approaches and implementation as stated in the text and case presentation and how they may have modified their organizations, supply or marketing over time given changes in their global markets, suppliers and the consumer products industry’s competitive structure.

Explanation / Answer

International strategy:

Create value by transferring valuable core competencies to foreign markets that indigenous competitors lack

Centralize product development functions at home

Establish manufacturing and marketing functions in local country but head office exercise tight control over it

This strategy is effective if firm faces weak pressures for local responsive and cost reductions.

Multi domestic Strategy

Main aim is maximum local responsiveness

Customize product offering, market strategy including production

Possess high cost structure

Global Strategy

Focus in on achieving a low cost strategy by reaping cost reductions that come from experience curve effects and location economies

Production, marketing and R&D concentrated in few favorable functions

Effective where strong pressures for cost reductions and low demand for local responsiveness

Transnational strategy

To meet competition firms aim to reduce costs, transfer core competencies while paying attention to pressure for local responsiveness

Valuable skills can develop in any of the firms worldwide operations

Difficult task due to contradictory demands placed on the organization

Please submit another question for the other questions

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