International strategy for MNEs

Home replication

Advantage- leverages home-country-based advantages.  Relatively easy to implement

Disadvantage- lack of local responsiveness.  May alienate foreign customers.

Localization

Advantage- maximizes local responsiveness. 

Disadvantage- high costs due to duplication of efforts in multiple countries.  Too much local autonomy.

Global standardization

Advantage- leverages low cost advantages

Disadvantage- Lack of local responsiveness.  Too much centralized control

Transnational

Advantages- cost-efficient while being locally responsive.  Engages in global learning and diffusion of innovations

Disadvantage- organizationally complex.  Difficult to implement

Four organizational structures

·         International division

·         Geographic area

·         Global product division

·         Global matrix

Tom and jerry Example article

Toyota, Honda Lose U.S. Edge

For the past three decades, Japanese auto makers Toyota Motor Corp. and Honda Motor Co. have experienced almost uninterrupted success in the U.S., their market share rising as they built plants, expanded their model lines and were held up, usually in tandem, as the industry's benchmarks for quality.

Now, as a result of Toyota's recall crisis earlier this year and the narrowing quality gap by rival auto makers, their long run in the driver's seat appears ready to come to an end.
Barring a surge in sales in the last two months of this year, both Honda and Toyota are likely to suffer drops in their U.S. market share. Through the first 10 months of 2010, Toyota's share is down 1.5 percentage points at 15.2%, according to Autodata Corp. So far this year, Honda's U.S. share is down six-tenths of a point at 10.6%.

This year, Hyundai, Nissan and a revived Ford Motor Co. have all increased their U.S. market share. Hyundai's went to 4.7% from 4.3%, Nissan's increased to 7.8% from 7.4% and Ford's rose to 16.7% from 15.2%.

In 2009, Toyota's share reached a record high of 17%. Then it recalled more than eight million vehicles world-wide to correct defects that could cause its vehicles to suddenly accelerate. It also briefly was required to stop making and selling several models in the U.S., and was further humbled when it was fined by U.S. safety regulators and its executives were called before Congress.
Quality had long been Toyota's top selling point, but the crisis gave consumers reasons to look elsewhere. And what some have found is that other auto makers are now only a half a step behind Toyota and Honda in quality, and in some areas are ahead. The most recent Consumer Reports survey found that while Toyota and Honda still ranked high among the most reliable vehicles, Hyundai and Ford were nearly equal.
In the family-car segment, the Ford Fusion beat sales leaders Toyota Camry and Honda Accord, and sales are up 21% this year, while sales of the Toyota and Honda are off.
Honda's stall out is partly the result of a lull in new model launches. Its redesigned Odyssey minivan is out now and sales are just ramping up. At the same time, it is struggling to sell the Crosstour wagon, which went on sale early this year, and the CR-Z, a hybrid sports car. Its Insight hybrid, released last year, hasn't sold as well as the company had hoped.

VRIO framework

VRIO Analysis is a good tool that helps us establish whether a resource is of competitive advantage or not.

V stands for valuable. First question to ask if the resource is valuable. If we own something that nobody wants then probability is that resource is not valuable.

R stands for rare. Rarity provides competitive advantage. Aircraft engine technology is example of rarity.

I stands for immitable. Only variability and rarity does not provide competitive advantage. A resource must be difficult to immitate otherwise competitors can easily immitate our resource and we will loose our competitive advantage. For example, in drug industry patents provide protection for few years but after that anyone can copy the drug formula and provide the same drug to the market.

O stands for organization. Suitable organization is needed to support a valuable, rare and difficult to immitate resource to ensure maximum benefit utilization of such resource.