Global integration, global strategic coordination, and local responsiveness

1
Global integration, global strategic
coordination, and local responsiveness
2
Issues addressed

• Beginning premise
• what are the sources of pressure for global
  integration?
• what are the sources of pressure for global
  strategic coordination?
• what are the sources of pressure for local
  responsiveness?

3

• The source for this material is The multinational
  mission Balancing local demands and global
  vision, by CK Prahalad YL Doz, 1987.

4
Beginning premise

• Multinational corporations (MNCs) routinely face
  simultaneous pressures for the global integration
  of activities, for global strategic coordination,
  and for local responsiveness.
• Addressing conflicting pressures to both
  centralize and decentralize management control
  within the firm is one of the central strategic
  dilemmas facing MNCs.

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What are the sources of pressure for global
integration?

• Pressures for global integration are synonymous
  with pressure to centralize management of the MNC
  in corporate HQ, in practice.
• Pressure to centralize management of the MNC
  often revolve around pressures to reduce cost, or
  perhaps to standardize quality or some other
  aspect of product features or related services.

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What are the sources of pressure for global
integration?

• Sources of pressure for global integration
  include
• Strong advantages from global sourcing which use
  geographically dispersed low-cost factors of
  production
• The presence of strong economies of scale and a
  strong learning curve effect
• Products that meet a universal need and require
  little adaptation across national markets
• The need for access to raw materials

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What are the sources of pressure for global
strategic coordination?

• Pressures towards global strategic coordination
  refer to pressures to have strategic coordination
  across and among national subsidiaries.
• In practice, it is very difficult to have global
  strategic coordination without having a
  significant degree of centralized decision making
  at corporate HQ.

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What are the sources of pressure for global
strategic coordination?

• Sources of pressure for global strategic
  coordination include
• importance of multinational customers
• presence of multinational competitors
• investment intensity
• technology intensity

9
What are the sources of pressure for local
responsiveness?

• Local responsiveness involves allocating
  resources and authority to those who take
  responsibility for some geographically-bounded
  portion of the world.
• Local responsiveness requires a significant
  degree of decentralization of management control.
  

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What are the sources of pressure for local
responsiveness?

• Sources of pressure for local responsiveness
  include
• differences in customer needs
• differences in distribution channels
• availability of substitutes and the need to adapt
• market structure
• host government demands