CHAPTER 12
GLOBAL
t
PENG
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Chapter 12 LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the relationship between
multinational strategy and structure
2. Explain how institutions and resources affect
structure, learning and innovation
3. Outline the challenges associated with learning,
innovation, and knowledge management
4. List three things you can do to make a
multinational firm successful.
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LO1: MULTINATIONAL
STRATEGIES AND STRUCTURES
MNEs confront two sets of pressures:
 Cost reduction – calls for global integration.
 Local responsiveness – calls for local adaptation.
Integration Responsive Framework
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LO1: MULTINATIONAL
STRATEGIES AND STRUCTURES
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LO1: FOUR ORGANIZATIONAL
STRATEGIES
International division: Typically used when firms
engage home replication strategy
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LO1: FOUR ORGANIZATIONAL
STRATEGIES
Geographic Area Structure: appropriate for
localization strategy.
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LO1: FOUR ORGANIZATIONAL
STRATEGIES
Global product division structure: Highly
responsive to pressure for cost efficiency;
Reduces inefficient duplication in multiple
countries.
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LO1: FOUR ORGANIZATIONAL
STRATEGIES
Global matrix: Designed to be both cost efficient
and locally responsive; Difficult to deliver in
practice.
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LO2: EFFECT OF INSTITUTIONS
AND RESOURCES
Institution-Based Considerations
External
relationships
Internal
relationships
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LO2: EFFECT OF INSTITUTIONS
AND RESOURCES
Resource-Based Considerations
 Does a structural change add value?
 Strategy must be rare.
 Inimitability – formal structures are easier to
observe, making informal structures more popular.
 Organization of MNEs, formal and informal.
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LO3: CHALLENGES ASSOCIATED WITH
LEARNING, INNOVATION, KNOWLEDGE
MANAGEMENT
Knowledge management:
the structures, processes, and systems that actively
develop, leverage, and transfer knowledge.
Two categories of knowledge:
 Explicit knowledge – codifiable.
 Tacit knowledge – non-codifiable. Transfer
requires hands-on practice.
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LO3: KNOWLEDGE MANAGEMENT IN
FOUR TYPES OF MNEs
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DEBATE: CORPORATE CONTROL vs.
SUBSIDIARY INITIATIVES
Subsidiary control:
Subsidiary initiatives may inject a spirit
of entrepreneurship throughout the
larger corporation.
Corporate control:
Hard to distinguish between good-faith
subsidiary initiative and opportunistic
empire-building.
Subsidiary initiatives are not necessarily
compatible with corporate-wide goals.
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LO4: THREE THINGS TO DO
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