Chapter 1: International Business Enviroment: Globalization

Definition: Globalization refers to the shift toward a more integrated and interdependent
What is
world economy.
Globalizatio
Facets of Globalization: Globalization has several facets, including the globalization of
n?
markets and the globalization of production.
Definition: The globalization of markets refers to the merging of historically distinct and
separate national markets into one huge global marketplace.
Characteristics
Globalizatio
- Falling barriers to cross-border trade have made it easier to sell internationally.
n of
- Tastes and preferences of consumers in different nations are beginning to
markets
converge on some global norm, thereby helping to create a global market
Example: Coca, Starbuck…: benefactors + facilitators by providing the same basic
product worldwide => global market
Definition: The globalization of production refers to the sourcing of goods and services
from locations around the globe to take advantage of national differences in the cost
and quality of factors of production (such as labor, energy, land, and capital).
Globalizatio
Characteristics:
n of
- companies hope to lower their overall cost structure or improve the quality or
production
functionality of their product offering, thereby allowing them to compete more
effectively
Example: Some 30 percent of the Boeing’s 777, by value, is built by foreign companies
Globalization history is divided into three phases by Thomas L. Friedman:
Stage 1 Stage 2 Stage 3
Version 1.0 2.0 3.0
Time frame 1492 -1800 1800 - 2000 2000 – now
Competition Globalization of Globalization of Globalization of
countries companies individual and small
groups
The Stages Historical Nautical (haỉ lý) Great Depression Communication
context development World Wars I, II reform 1980s
of
Industrial revolution
Globalizatio
Forces Big countries seek for The international Individual and the flat
n
accumulation of operation of world platform
capital in other multinational
countries. companies
Effect on the Large => Medium Medium => Small Small => Tiny
world’s size
Historical Colonialism Imperialism Globalization
evidence
-
Two macro factors underlie the trend toward greater globalization
- The first is the decline in barriers to the free flow of goods, services, and capital
Drivers of
that has occurred since the end of World War II. (Theoretically possible)
globalizatio
- The second factor is technological change, particularly the dramatic developments
n
in recent decades in communication, information processing, and transportation
technologies. (Tangible reality)
Declining - 1920s -30s: countries created barriers against international trade and FDI =>
trade and attribute to Great Depression 1930s
investment - GAAT, WTO: free flows of goods, service, capital, lower the barrier
barrier
- Since the end of World War II, the world has seen major advances in
The role of communication, information processing, and transportation technology, including
technologic - the explosive emergence of the Internet and World Wide Web.
al change - Telecommunications is creating a global audience.
- Transportation is creating a global village.
The
Globalizatio
n Debate
- New production and business opportunities
- New markets, new production sources
For - Lower prices for goods and services.
- Greater economic growth
- Higher consumer income, and more jobs
- Firms collapse, job losses in developed countries
- Wealth - Poverty gap
- Child, women labor
Against - Environmental degradation
- The cultural imperialism of global media and MNEs
- Financial crisis
- Country sovereignty (chủ quyền)
Chapter 2: Differences in Political systems and Legal systems
Definition: Political system is the system of government in a nation
Dimensions: Political systems can be assessed according to two dimensions.
Political
+ The first is the degree to which they emphasize collectivism as opposed to
Systems
individualism.
(political
+ The second is the degree to which they are democratic or totalitarian.
system of a
These dimensions are interrelated;
country
+ systems that emphasize collectivism tend toward totalitarian,
shapes its
+ those that place a high value on individualism tend to be democratic.
economic
However, a large gray area exists in the middle.
and legal
+ It is possible to have democratic societies that emphasize a mix of collectivism and
systems)
individualism.
+ Similarly, it is possible to have totalitarian societies that are not collectivist.
Collectivism: (Chủ nghĩa tập thể)
- Definition: refers to a political system that stresses the primacy of collective goals
over individual goals.
- Characteristic: the needs of society as a whole are generally viewed as being more
important than individual freedoms
Socialism (Chủ nghĩa xã hội)
- advocate the state ownership of the basic means of production, distribution, and
exchange
- benefit society as a whole, rather than individual capitalists
Collectivism o Communism: (Chủ nghĩa cộng sản) socialism could be achieved only
and
through violent revolution and totalitarian dictatorship
individualis
o Social democrats: (dân chủ xã hội) achieving socialism by democratic
m
means, turning their backs on violent revolution and dictatorship.
Individualism
- individualism refers to a philosophy that an individual should have freedom in his
or her economic and political pursuits.
- interests of the individual should take precedence over the interests of the state
- individual diversity and private ownership are desirable
- individual economic and political freedoms are the ground rules on which a society
should be based
- implies democratic political systems and free market economies
Democracy Democracy and totalitarianism are at different ends of a political dimension.
and Democracy:
totalitariani - Definition: Democracy refers to a political system in which government is by the
sm people, exercised either directly or through elected representatives.
- usually associated with individualism
- pure democracy is based on the belief that citizens should be directly involved in
 decision making
- most modern democratic states practice representative democracy where citizens
periodically elect individuals to represent them
Totalitarianism
- Definition: Totalitarianism is a form of government in which one person or
political party exercises absolute control over all spheres of human life and
prohibits opposing political parties.
- Communist totalitarianism – the communist party monopolizes power (VN,
China…)
- Theocratic totalitarianism - monopolized by religious principles (Islam in Iran
and Saudi Arabia)
- Tribal totalitarianism occurs when a political party that represents the interests of
a particular tribe (and not always the majority tribe) monopolizes power (African
countries: Uganda, Tanzania, Keyna..)
- Right-wing totalitarianism: Right-wing totalitarianism generally permits some
individual economic freedom but restricts individual political freedom, frequently
on the grounds that it would lead to the rise of communism
Definition: The legal system of a country refers to the rules, or laws, that regulate
behavior along with the processes by which the laws are enforced.
Legal There are three types of legal systems
systems - Common law - based on tradition, precedent, and custom (UK,USA)
- Civil law - based on detailed set of laws organized into codes (80 countries)
- Theocratic law - based on religious teachings
Common law is based on tradition, precedent, and custom.
+ Tradition refers to a country's legal history
+ Precedent to cases that have come before the courts in the past
Common
+ custom to the ways in which laws are applied in specific situations
law (don’t
Characteristics:
need to
- Flexibility
learn by
- Judges in a common law system have the power to interpret the law so that it
heart, learn
applies to the unique circumstances of an individual case.
the above)
- each new interpretation sets a precedent that may be followed in future cases
- As new precedents arise, laws may be altered, clarified, or amended to deal with
new situations.
Definition: A civil law system is based on a detailed set of laws organized into codes.
When law courts interpret civil law, they do so with regard to these codes.
Characteristic:
- less adversarial than a common law system, since the judges rely upon detailed
Civil Law legal codes rather than interpreting tradition, precedent, and custom.
- Judges under a civil law system have less flexibility than those under a common
law system
- Judges in a common law system have the power to interpret the law, whereas
judges in a civil law system have the power only to apply the law.
Theocratic A theocratic law system is one in which the law is based on religious teachings.
Law
- Property rights: legal rights over use to which a resource is put and income derived
Internation - Intellectual Property Rights: patents, copyrights, trademarks: major bone of
al legal contention especially in info-based economies
Issues - Product safety and liability: standards protecting consumers
- Enforcement of national and international laws
Political - Discontinuities
Risks - Uncertainty
- Political forces
- Business impacts
- Macro
 - Micro
- Administrations procedures
- Xenophobia (Bài ngoại)
Sources - Social Unrest/disorder
Political - Internal rebellion
Risks - Armed conflicts between nations
- Local business groups
Chapter 3: Differences in Economy and Society/ nationals Differences in economic Enviroment
Economic Definition: The totality of economic factors, such as employment, income,
enviroment inflation, interest rates, productivity of a nation
- Traditional economy: Family or community-based economy (tribes). Systems
relies on custom or ritual. Decision made by the elders. (Eg: Amazon tribes)
- Market Economy: a free-market (capitalistic) economy built upon the private
ownership and control of the factors of production. System relies on consumption
choices (Demands – supply principle) (Eg: USA, Japan)
- Command Economy: a centrally-planned economy built upon government
ownership and control of the factors of production. System relies on
Government decision. Eg: Cuba, North Korea.
- Mixed Economy: an economy in which economic decision are largely market
Types of
driven and ownership of largely private, but significant government
economic
intervention is still evident. Eg: Most modern economies
system Ownership and control System basis Decision maker
Traditional economy Family or community- custom or ritual Elders
based economy
Market Economy private ownership and consumption choices Private owners
control of the factors of
production
Command Economy government ownership Government decision Government
and control of the
factors of production.
Mixed Economy ownership of largely market driven
private, but significant
government intervention
is still evident
- Preindustrial countries: income< $400, limited industrialization, low literacy
rate, high birth rate, heavy reliance on foreign aid, political instability.
- Less developed countries: income between $401 and $1.635. Early stages of
Stages of industrialization, growing domestic market.
economic - Developing countries: income ($1.626 – $5.500). Decrease in percentage of
developmen agricultural workers, industrialization, rising wages, high literacy rates
t - Industrialized countries: income ($5.501 and $10.000), post industrialization,
high standard of living.
- Advance countries: income >$10.000, post industrialization, knowledge based –
less machine based
- GNI: measures the income generated by both total domestic production and the
intrenational product activities of national companies
GDP and
- Per capita income: GNI is changed by the number of people living in a country
GNI
- GDP: is the total value of all goods and services produced within a nation’s
borders.
The key ingredients of economic freedom are:
- Personal choice
Economic
- Voluntary exchange coordinated by markets
freedom
- Freedom to enter and compete in the markets
- Protection of person and their property form aggression by others
Purchasing - Number of units of a country’s currency required to buy the same amounts of
Power goods and services in the domestic market that one unit of income would buy in the
Parity other country.
(PPP) - Big Mac Index – Big Mac Theory
o If a Big Mac cost 3.38 in countries that use the euro and 3.73 in the US,
 then the implied PPP rate is 3.38/3.72 = 0.91.
o If the actual exchange rate for the euro is lower that the implied PPP rate,
the Big Mac theory suggests that the value of the euro might go up until it
reaches the implied PPP rate.
o If the actual exchanges rate is higher, then you might expect the euro to go
down until it hits the implied PPP rate
 Relationship btw exchanges rate and implied PPP rate
- Developed by Parkistan economist Mahbub UI Haq (1990)
Human - Measures the average achievements in a country on three dimensions.
Developmen o Longevity: life expectancy at birth
t Index
o Knowledge: adult literacy rate
(HDI)
o Standard of living: GNI per capita
- Growing concern for the ecological welfare of the world spurs calls for green
Green measures of GNP.
issues of - Pollution, climate change
developmen - Recycling
t - Green products
- Corporate social responsibility
- Developed in an attempt to define an indicator that measures quality of life or
Gross
social progress in more holistic and psychological terms than GDP
National
- Coined in 1972 by Bhutan’s fourth Dragon former King, who has opened Bhutan
Happiness
to age of modernization
(GNH)
- VN: 96 (2010)
- Inflation/ deflation: price index and cost of living
- Unemployment: civilian labor force, labor regulations
- Debt: internal and external debt
Implication
- Income distribution/ inequality: globally, within the country, GINI index, urban vs
for
rural
managers
- Poverty, Labor costs, Prod
- Balance of Payments
-
- High inflation
- Protectionism
- Unstable exchange rate
Economic
- Trade deficit
risks
- The euro zone breaks up
- The global economic recession
- Public debt spirals out of control
Chapter 4: Differences in National Culture
- Perceptions of each other
- Telling the truth
- Queuing
What can - Transportation
differ btw - Child
national - Senior’s daily life
culture - Noise level inside a restaurant
- Connections and Contact
- Punctuality
- Boss
What is - Culture: a system of values and norms that are shared among a group of people
culture? and that when taken together constitute a design for living.
o Values: abstract ideas about what a group believes to be good, right, and
desirable.
o Norms: social rules and guidelines that prescribe appropriate behavior in
 particular situations.
- Society: group of people who share a common set of values and norms.
- Religion
- Language
Elements of - Aesthetic
culture - Political-economic philosophies
- Education
- Social structure
Working in - chủ nghĩa cá nhân – chủ nghĩa tập thể (individualism – collectivism);
cross - mức độ e ngại rủi ro (uncertainty avoidance);
cultural - khoảng cách quyền lực (power distance)
workplace - masculinity-femininity (định hướng công việc - định hướng cá nhân)
Hofstede - định hướng dài hạn (long term orientation),
model - sự tự thỏa mãn (các nhu cầu bản thân) so với sự tự kiềm chế của con người.
- The extent to which the less powerful members of institutions and organizations
within a country except and accept that power is distributed unequally
- Nó đề cập đến sự bất bình đẳng tồn tại giữa các cá nhân có quyền lực và không có
quyền lực. Chỉ số thấp hơn cho thấy mọi người đang đặt câu hỏi về quyền lực và cố
gắng phân phối quyền lực. Ngược lại, một chỉ số cao hơn biểu thị rằng hệ thống
phân cấp đã được thiết lập trong xã hội mà không còn nghi ngờ gì nữa.
- Measure by the orientation towards authority

8 Low power distance High Power Distance

Inequalities Minimize the inequalities Inequalities among people are
among people both excepted and desired

Dependency Interdependence btw less and Less powerful people should be

more powerful people depended on the more powerful

Power Hierarchy Flat Slope

distance pyramid
Power Decentralization Centralization
Salary rage Narrow Wide
Subordinates’ Be consulted To be told what to do
expectation
Ideal boss Resourceful democrat Benevolent autocrat or good
father
Privileges and Disapproved Expected and popular
status
Communications Tips for Countries with low power distance (Ausitra) enter high
power distance (VN)
- Give clear and explicit direction to those working with them
- Deadlines should be highlighted and stressed
- Do not expect subordinates to take initiative
- Be more authoritarian in his management style
- Show respect and deference those higher up the ladder
The extent to which members of a society feel threaten by uncertain or unknown situation
Uncertainty
Measure by desire for stability: High: VN – Japan – France – Korea- Arab _ US- UK -
avoidance
India_ Denmark – Singapore Low
8 Weak uncertainty Strong uncertainty
avoidance avoidance
Define uncertainty Normal part of life that Continuous threat that
expect and accepted must be fought
 Stress level Low stress: subject High stress: subject
feeling well-being feeling of anxiety
Aggression and emotion Must not be shown May be shown at proper
time
Comfortability with ambiguous Comfortable Fear
situation ns unfamiliar risk
Need for rules Should not be more Emotional need for rules,
rules than necessary even if they never work
Precision and punctuality Have to be learned Come naturally
Attitude toward innovation Tolerance Resistance
Motivation By achievement Security
Communication tips for the country that have high uncertainty avoidance (France) enter
low uncertainty avoidance (Denmark)
- Try to be more flexible or open in his approach to new ides than they may be used
to
- Be prepared to push through agreed plan quickly as they would be expected to be
realized as soon as possible
- Allow employees the autonomy and space to execute their tasks on their own, only
guidelines and resources will be expected of them
The tendency of people to look after themselves and their immediate family and neglect
the needs of society
6 Low individualism High individualism
Think in term of we I
Diplomas Provide entry to Increase economic
higher status group worth, self-respect
Employer- employee Moral terms Contract based
Family Mutual advantage
Basis of hiring and Take employees’ Based on skill and
Individualis promotion decision ingroup into account rules only
m Management management of groups Management of
individuals
Relationship vs task Relationship>task Relationship<task
Communication tips for manager of high individualism (UK) to low individualism
(Mexico)
- Note that individuals have a strong sense of responsibility for their family
- Remember that praise should be directed to a team rather than individuals
- Understand that rewards depend upon seniority and experience
- Be aware that the decision-making process will be rather slow, as many members
across the hierarchy need to be consulted
Masculinity The tendency within a society to emphasize traditional gender roles
Chiều hướng nam tính so với nữ tính còn được gọi là “cứng rắn so với dịu dàng” và xem
xét sự ưa thích của xã hội đối với thành tích, thái độ đối với bình đẳng giới tính, hành vi,
v.v.
7 Low masculinity High masculinity
Dominant values Caring for others and preservation Material success and
progress
Importance People Money
Warmth relationship Things
Sympathy For the weak For the strong
Gender role in family Father + mother both deal with Father: facts
facts and feelings Mother: feeling
Emphasis Equality Equity
Solidarity (đoàn kết) Competition among
Quality of work life colleagues
 Performance
Expectation of Use intuition and strive for Decisive and assertive
manager consensus
Resolution of conflict Compromise Fighting
method negotiation
Communication tips for the low masculinity (Denmark) to high masculinity (Mexico)
- Be aware that people will discuss business anytime, even at social gatherings
- Avid asking personal questions in business situations
- Take into account that people are not interested in developing closer friendships
- Communicate directly, unemotionally, and concisely
- In order to assess others use professional identity, not family or contacts
A basis orientation towards times that values patience
5 Short term Long term orientation
orientation
Attitude toward tradition Respect Adaptation of traditions to a
modern context
Money available for Little Much
Long- term
investment
orientation
Expectation of result Quick result Perseverance towards slow result
expected
Respect for social and status Regardless of cost Within limits
obligation
Concern Possessing the Respecting the demands of Virtue
Truth
Chapter 5: Analysis of international business opportunities (evaluating, selecting countries when
doing international business)
A lot opportunities but resources are limited, the benefits of doing country evaluation and
market selection:
Why should - Seeking new market and business opportunities
we do the - Realizing potential opportunities
country - Identify and analyze scope of market
evaluation - Build up business plan along with the real situation of the global market.
and market - Collect and analyze customer and market data which would be used for decision
selection? making
- Cut off im-potential markets
- Optimize resources
Identify
What - Sequence of International market entry
should IB - Proportion of resources allocation among markets
organizatio Decide
ns do? - Where they sell their products/services
- Where they produce
IB Market
Selection
Process

Initial research (Scanning technique)

- Focus on identifying opportunities and risks
- Using available and cheap statistical data
Eg: Governments’ official statistics, reports of NGOs, researches and journals.
- Do not have to evaluate too many countries and markets
Internation
- Eliminate and cut off im-potentials
al Market
Research
Feasible Research (Detailed Examination)
- Business visits for real situation research and examination: Workshop, conference,
trade – fair.
- Findings will be used for final decisions
Prevent of getting bogged down to no future market.
The availability of statistical data:
Difficulty in (Due to the expensiveness of conducting market research)
doing IB The accuracy of data
market - Researches mostly conducted by Government officials  out of date, may be
evaluations adjusted or edited to support inappropriate purposes.
- The influence of culture and living style.
What is PEST Analysis?
• PEST Analysis is a simple and widely used tool that helps you analyze the
Political, Economic, Socio-Cultural, and Technological changes in your business
environment.
• This helps you understand the "big picture" forces of change that you're exposed to,
and, from this, take advantage of the opportunities that they
PEST Analysis is useful because….
1. It helps you to spot business or personal opportunities, and it gives you advanced
PEST
warning of significant threats.
Analysis
2. It reveals the direction of change within your business environment. This helps you
shape what you're doing, so that you work with change, rather than against it.
3. It helps you avoid starting projects that are likely to fail, for reasons beyond your
control.
4. It can help you break free of unconscious assumptions when you enter a new
country, region, or market; because it helps you develop an objective view of this
new environment

Chapter 6: The strategy of International Business

Strategy actions that managers take to attain the goals of the firm.
Value
creation
The firm's value creation is measured by the difference between V and C
A company can create more value (V - C) either by lowering production costs, C, or by
making the product more attractive through superior design, styling, functionality,
features, reliability, after-sales service, and the like, so that consumers place a greater
value on it (V increases) and, consequently, are willing to pay a higher price (P increases).
 a firm has high profits when it creates more value for its customers and does so at a
lower cost.
 strategy that focuses primarily on lowering production costs as a low-cost strategy.
 strategy that focuses primarily on increasing the attractiveness of a product as a
differentiation strategy

Efficiency frontier
Strategic - efficiency frontier shows all of the different positions that a firm can adopt with
Positioning regard to adding value to the product (V) and low cost (C) assuming that its
internal operations are configured efficiently to support a particular position
- convex shape because of diminishing returns
- Diminishing returns imply that when a firm already has significant value built into
its product offering, increasing value by a relatively small amount requires
significant additional costs
- When a firm already has a low-cost structure, it has to give up a lot of value in its
product offering to get additional cost reductions.
- To maximize its profitability, a firm must do three things:
o (a) pick a position on the efficiency frontier that is viable in the sense that
there is enough demand to support that choice;
o (b) configure its internal operations, such as manufacturing, marketing,
logistics, information systems, human resources, and so on, so that they
support that position; and
o (c) make sure that the firm has the right organization structure in place to
execute its strategy
Chapter 7: The Organization of International Business
Means three things:
- First, the formal division of the organization into subunits such as product
divisions, national operations, and functions (most organizational charts display
this aspect of structure);
- Second, the location of decision-making responsibilities within that structure
Organizatio
(e.g., centralized or decentralized);
nal
- Third, the establishment of integrating mechanisms to coordinate the activities
structure
of subunits, including cross-functional teams and or pan-regional committees.
Organizational structure can be thought of in terms of three dimensions:
- Vertical differenttaion
- Horizontal differentiation
- Intergarting mechanism
Vertical Definition: refers to the location of decision making responsibilties wthin a tructure
differentiati
on
Centralized decision Decentralized
making decision making
Location of decision centralized at the may be made at all
making respnsibility headquarter level of organization
Decision making Decisions are Relieves the burden of
process process consistent and go centralized decision-
through the whole making for the head-
organization’s body quarter
organization’s
objectives
Lower managers Lower managers do Motivate individuals
not have right to and personal
change the upper level innovation
decisions
Flexibility Tight – control in all Greater flexibility
decisional actions
Nature of the Decision Avoids the duplication Decision suitable with
of activities and the real situation of
decisions market
- Quản lý tập trung: Là quyết định được ban hành tập trung tại cấp cao nhất trong hệ
thống quản lý và tại một địa điểm, thường là trụ sở chính
- Tập trung quyền lợi vào tay 1 người, 1 nhóm người, hội đồng quản trị (hình tròn ở
giữa). Những nốt nhỏ là những cá nhân đều phải tập trung vào người ở giữa
- Bản chất:
- (1) Mỗi quyết định tập trung vào 1 người, 1 nhóm người
- (2) Các quyết định được thực thi xuyên suốt từ trên xuống dưới trong tổ
chức và đảm bảo cấp dưới phải tuân thủ mọi quyết định từ trên xuống dưới.
- (3) Có 1 cơ chế kiểm soát chặt chẽ những qd đc ban hành và đảm bảo
những quyết định đó được thực thi.
- Lợi thế:
- Do tất cả mọi quan điểm đều tập trung 1 nhóm ng, rất ít qd đc ban hành, tránh sự
chồng chéo trong tổ chức
- Các qd đc đảm bảo thực thi
- Bất lợi:
- Khó khăn và khoảng cách không gian và thời gian: Việc xin ý kiến giữa 2 địa
điểm: Cty ở Hà Nội và Sài Gòn đã khó xin ý kiến r, nói j ở cacsddija phương khác
nhau
- Cac qd đc ban hành nhiều khi ko phù hợp vs tình hình thực tế của địa phương
- Quá nhiều dánh nặng đặt trên vai trụ sở chính/người đưa ra qd
 - Triệt tiêu sự sáng tạo và linh hoạt của các cá nhân trong tổ chức
- Trong hệ thống quản lý, các cá nhân tuân theo các chỉ dẫn của người giám sát trên
lĩnh vực trách nhiệm đã được vạch rõ trong sơ đồ tổ chức. Lý thuyết quản lý truyền
thống cho rằng mỗi cá nhân chỉ có một thủ trưởng, mỗi đơn vị có một người lãnh
đạo. Đây là tính trực tuyến của cơ cấu, điều này có nghĩa là thống nhất mệnh lệnh.
Thống nhất mệnh lệnh là cần thiết để tránh sự rối loạn, để gắn trách nhiệm với
những người cụ thể, và để cung cấp những kênh thông tin rõ ràng trong tổ chức.
Nếu không như vậy, khi có sự cố xảy ra, các nhà quản lý sẽ cố gắng trốn tránh
trách nhiệm và đổ lỗi cho người khác.

- Quản lý phân cấp: Là việc ra quyết định được thực hiện ở các cấp thấp hơn trong
hệ thống quản lý, thương là tại các công ty con
- Bản chất:
- Quyền ra qd đc phẩn bổ cho cá nhân trong tổ chức dựa trên chức năng nhiệm vụ.
Trưởng kết toán được quyết định các vấn đề liên quan tới tài chính kế toàn chứ
không phải giám đốc
- Lợi thế:
- Các cá nhân có động lực, linh hoạt hơn; các qd đc ban hành phù hợp hơn, tiết kiệm
thời gian
- Gỡ bỏ gánh nặng cho trụ sở chính
- Bất lợi:
- Quá nhiều quyết định được ban hành  Dễ dẫn tới chồng chéo
- Có tình trạng lạm quyền, vượt quyền, xung đột quyết định
- So sánh:
- Quản lý tập trung Quản lý phân
cấp
• Bảo đảm các quyết định phù hợp với mục tiêu Có khả
năng đưa ra những quyết định phù hợp
• Dễ thực hiện những thay đổi lớn Chủ động, linh
hoạt ứng phó với những thay đổi
• Tránh trùng lặp trong hoạt động Tinh thần trác
nhiệm và động cơ làm việc cao hơn, lãnh đạo đỡ bị quá tải
• Tạo điều kiện phối hợp hoạt động Gia tăng kiểm
soát
• Điều kiện áp dụng:
• Môi trường chung và của riêng ngành yêu cầu chuẩn hóa về sẩn phẩm,
Môi trường chung và riêng yêu cầu địa phương hóa
Yếu tố đầu vào, phương pháp và chính sách
• Các công ty côn độc lập nhưng có chung hoạt động tạo giá trị, đối thủ hoặc khách
hàng Công ty có địa điểm và hoạt động phân tán
• Giám đốc cấp thấp không có kinh nghiệm như giám đốc cấp cao
Giám đốc cấp thấp có năng lực và kinh nghiệm trong việc ra quyết định
• Chiến lược toàn cầu: Mực độ phân quyền tập trung
• Chiến lược đa quốc gia: Phân quyền
• Chiến lược quốc tế: Tập trung quản lý các năng lực cốt lõi, phân quyền các hoạt
động khác
• Chiến lược xuyên quốc gia: Tập trung quản lý các trung tâm sản xuất toàn cầu,
phân quyền các hoạt động khác (kể cả phát triển năng lực, kỹ năng)

Horizontal - Defition: which refers to the formal division of the organization into subunits
differentiati
on: the
design of
structure
 - Functional Structure
- Organization is split into functions reflecting the firm’s value creation
activities
- Tend to be centralized
- Example: e.g., production, marketing, R&D, sales).

After the organiztaion significantly diversifies its product offering, the functional Structure
no longer fitting as it is: clumsy, peblems of coordination and control when different
business areas are managed within the framework of a functional structure.
- Product Divisional Structure
The - Each division is responsible for a distinct product line (business area)
structure of - Each product division is set up as a self-contained, largely autonomous
Domestic entity with its own functions
Firms - Tend to be decentralized to product division
- Example Dutch multinational Philips Electronics NV began as a lighting
company, but diversification took the company into consumer electronics
(e.g., visual and audio equipment), industrial electronics (integrated circuits
and other electronic components), and medical systems (MRI scanners and
ultrasound systems). Philips created divisions for lighting, consumer
electronics, industrial electronics, and medical systems

Go Global! The International Division (Bộ phận quốc tế)

- When firms initially expand abroad
- They often group all their international activities into an international division
- tended to be the case for firms organized on the basis of functions and for firms
organized on the basis of product divisions
- Regardless of the firm's domestic structure, its international division tends to be
organized on geography.
 - In export stage: subsidiaries in countries 1 and 2 would sell the products
manufactured by divisions A, B, and C.
- In time, however, it might prove viable to manufacture the product in each country,
and so production facilities would be added on a country-by-country basis
- For firms with a functional structure at home, this might mean replicating
the functional structure in every country in which the firm does business.
- For firms with a divisional structure, this might mean replicating the
divisional structure in every country in which the firm does business.
Example: Walmart, which created an international division in
1991 to manage its global expansion
Problems:
- Inherently in Dual structure (conflict + cordination)
- Head of foreign sub not have much voice as heads of domestic function.
Diviisons
- The
International division in the slide
Defintion When they group all of their international activities into an
international division
Manner -firms with a functional structure at home would replicate the
functional structure in the foreign market
- firms with a divisional structure would replicate the
divisional structure in the foreign market
Illustration

Condition - When firms initially expand abroad

for - When firms have only a few product lines or market
application - When firms largely export and import products
Advantages - Reduce burden for heasquater
- Start to enter international market
- Prepare experience for international manager
 Disavantages -
Inherently in Dual structure (conflict + cordination)
- Voice not equal
- Lack of coordination btw domestic and
international
Worldwide product divisional structure
Defintion Divide subunits according to geogarphical areas for each
product line
Illustration

Conditions for application Adopted by firms

+ are reasonably diversified
+ that already have domestic product divison
Advantage  allows for worldwide coordination of value
creation activities of each product division
 Transfer core competencies among subsidiaries
 Helps realize location and experience curve
economies
 Effective where the local responsiveness low
Disavantages  Not good for local responsiveness (limited voice
it gives to area or country managers- subservient
to product division managers)
Example  Microsoft đi theo phát triển dòng sản phẩm,
không có sự phát triển giữa các thị trường, không
có nhiều khác biệt giữa các thị trường. DN chia
công ty theo các dòng sản phẩm chính, dưới các
dòng sản phẩm chia thành các khu vực để bán
hàng, marketing mà thôi.
Worldwide area structure
Defintion - divides the world into autonomous geographic areas
- each area establishes its own set of value creation
activities.
- decentralizes operational authority for those activities
Illustration

Conditions favored by firms with

for + low degree of diversification and
 application + domestic structure based on function
Advantages Effective where the local responsiveness high: localization
strategy
Disavantage fragmentation of the organization where it can be difficult
s + transfer core competencies and skills between areas
+ to realize location and experience curve economies.
Firms structured on this basis may encounter significant
problems if local responsiveness is less critical than reducing
costs or transferring core competencies for establishing a
competitive advantage
Example
Global Matrix Structure
Defintion is an attempt to minimize the limitations of the worldwide area
structure and the worldwide product divisional structure
horizontal differentiation proceeds along two dimensions: product
division and geographic area
Illustration

Condition for build "flexible" matrix structures based more on enterprisewide

application management knowledge networks, and a shared culture and vision,
than on a rigid hierarchical arrangement.
Within such companies the informal structure plays a greater role than
the formal structure.
Advantages - allows for differentiation along two dimensions - product division
and geographic area
- has dual decision–making - product division and geographic area
have equal responsibility for operating decisions
Disavantages - can be bureaucratic and slow
- can result in conflict between areas and product divisions
- can result in finger-pointing between divisions when
something goes wrong
Integrating Formal integrating mechanism
mechanism
The formal mechanisms used to integrate subunits vary in complexity from simple direct
contact and liaison roles, to teams, to a matrix structure.
the greater the need for coordination, the more complex the formal integrating mechanisms
need to be
- Simplest formal integrating mechanism is direct contact between subunit
managers, followed by liaisons
- When volume of contacts between subunits increases, coordination can be
improved by giving a person in each subunit responsibility for coordinating with
another subunit on a regular basis. liaisons
- temporary or permanent teams composed of individuals from each subunit is the
next level of formal integration
- the matrix structure allows for all roles to be integrating roles
 Informal Integrating Mechanism: Knowledge Networks
A knowledge network is a network for transmitting information within an organization
that is based not on formal organization structure, but on informal contacts between
managers within an enterprise and on distributed information systems.

The great strength of such a network is that it can be used as a nonbureaucratic

conduit for knowledge flows within a multinational enterprise.
For a network to exist, managers at different locations within the organization must be
linked to each other at least indirectly

Strategy –
Structure

Chapter: Modes of entry

- Early entry: When a firm enter a foreign market before other firms
Timing of
- Late entry: when a firm enter a foreign market after other firms have already
entry
estalished themselsve in the market
First mover Pros Cons
The ability to preempt rivals by The pioneering cost as the foreign
 establishing a strong brand name market is different from the domestic
Example: Tesco market
The ability to build up sales volume The expense to learn the new rule of
and experience curve the business game
Example: auto company enter China
1997 when it is still small
The ability to tie people to the products The cost of failures and mistakes
and services and make it difficult for The cost of promoting and educating
other to win the marekt after that customer
Exporting
Mostly the fisrt step to enter a gobal market
Pros
- It avoid establishing a local manufactor operation
- It helps build experience curve and relaize location economies
- Example: This is how Sony came to dominate the global TV market, how
Matsushita came to dominate the VCR market, how many Japanese automakers
made inroads into the U.S. market, and how South Korean firms such as Samsung
Modes of gained market share in computer memory chips
entry Cons
- Exporting from the firm's home base may not be appropriate if lower-cost locations
for manufacturing the product can be found abroad
- High transportation cost and tariff can make export becomes uneconomical
- Agent in the forgien market mightnot act in the best interest of the exporter
- Types of exporting
o Indirect exporting (export merchant, agents, EMC)
o Cooperative exporting (piggy back exporting)
o Direct exporting (firms set up their own exporting departments)

Licensing
Definition:
- A licensing agreement is an arrangement whereby a licensor grants the rights to
intangible property to another entity (the licensee) for a specified period, and
- in return, the licensor receives a royalty fee from the licensee.
Choose licensing
- The firm avoids development costs and risks associated with opening a foreign
market
- It avoids barriers to investment
- Capitalize on market opportunities without developing those applications itself
Not choose licensing
- The firm doesn’t have the tight control over manufacturing, marketing, and
 strategy that is required for realizing experience curve and location economies
- ability to coordinate strategic moves is limited (dùng lợi nhuận chỗ này đắp vào
chỗ khác)
- proprietary (or intangible) assets could be lost
o Under a cross-licensing agreement, a firm might license some valuable
intangible property to a foreign partner, but in addition to a royalty
payment, the firm might also request that the foreign partner license some
of its valuable know-how to the firm. Such agreements are believed to
reduce the risks associated with licensing technological know-how, since
the licensee realizes that if it violates the licensing contract (by using the
knowledge obtained to compete directly with the licensor), the licensor can
do the same to it.
o link an agreement to license know-how with the formation of a joint
venture in which the licensor and licensee take important equity stakes.

Franchsing
Franchising is basically a specialized form of licensing:
- The franchisor not only sells intangible property to the franchisee
- But also insists that the franchisee agree to abide by strict rules as to how it does
business
franchiser typically receives a royalty payment, which amounts to some percentage of the
franchisee's
revenues.
Normally apply by service firm
 Choose franchising
 it avoids the costs and risks of opening up a foreign market
 firms can quickly build a global presence
Not choose exporting:
 it inhibits the firm's ability to take profits out of one country to
support competitive attacks in another
 the geographic distance of the firm from franchisees can make it
difficult to detect poor quality
- Example: Starbuck
 
Turnkey project
 the contractor agrees to handle every detail of the project for a foreign client,
including the training of operating personnel.
 At completion of the contract, the foreign client is handed the "key" to a plant that
is ready for full operation-hence, the term turnkey
 Choose turnkey project
 Way of earning economic returns from the know-how required to
assemble and run a technologically complex process
 Less risky than conventional FDI
 Not choose turnkey project
 No long-term interest
 May create a new and direct competitor
 If the firm's process technology is a source of competitive
advantage, then selling it through a turnkey project is also selling
competitive advantage to potential and/or actual competitors

Joint venture
A joint venture entails establishing a firm that is jointly owned by two or more otherwise
independent firms.
 Choose JV
 Benefit from a local partner's knowledge of local culture, political
systems, and business systems
 The costs and risks of opening a foreign market are shared
  Satisfy political considerations for market entry
Not choose JV:
 Risks giving control of its technology
 May not have the tight control to realize experience curve or
location economies
 Shared ownership can lead to conflicts and battles for control if
goals and objectives differ or change

Wholly owned subsidiary

the firm owns 100 percent of the stock. Establishing a
wholly owned subsidiary in a foreign market can be done two way s. The firm either can
set up a new operation in that country, often referred to as a greenfield venture, or it can
acquire an established firm in that host nation and use that firm to promote its products.
26 For example, ING's strategy for entering the U.S. insurance market was to acquire
established U.S. enterprises, rather than try to build an operation from the ground floor.
“Green field”: firm build a subsidiary from the ground up
 Greenfield venture may be better when the firm needs to transfer
organizationally embedded competencies, skills, routines, and
culture
Merger & Acquisition: acquire an existing company
 Acquisition may be better when there are well-established
competitors or global competitors interested in expanding
Choose wholly owned subsidiary
 Reduces the risk of losing control over core competencies
 Gives a firm the tight control over operations in different countries
that is necessary for engaging in global strategic coordination
 May be required in order to realize location and experience curve
economies
Not choose wholly owned subsidiary
 Bears the full cost and risk of setting up overseas operations
Strategic alliance
Relationship between two or more parties to pursue a set of agreed upon goals or to meet a
critical business need while remaining independent organizations
Strategic alliance attractiveness
 facilitate entry into a foreign market
 allow firms to share the fixed costs and risks of developing new
products or processes
 bring together complementary skills and assets that neither partner
could easily develop on its own
 help a firm establish technological standards for the industry that
will benefit the firm