Global Product division structure contains the functions necessary to the specific goods or services a product/service division produces. The parental organization has headquarters divisions for different major product categories with respective resources, human and others. Overseas subsidiaries producing a particular product or class of product have to report to headquarters division responsible for that product or class of products. Global Product Division Structure locates manufacturing and value creation activities in appropriate global locations to increase responsiveness to competitive opportunities, efficiency, quality, or innovation. Global product divisions are responsible for Global Product Design and operate in divisional, cluster, or holding company formats. Global Product divisions have little in common. They are highly independent of each other. Following figure gives a simple model of Global Product Division Structure. Ford adopts this structure, abandoning its Global Geographic Structure. Today most of the multinational enterprises with their diverse acquisitions world-wide have diverse product portfolios. Continue reading
International Business Strategies
Case Study: An Assessment of Wal-Mart’s Global Expansion Strategy
Founded in the year 1962, by Sam Walton, Wal-Mart was a single discount store in Rogers situated in the state of Arkansas. Then the growth of the Wal-Mart chain of stores has been tremendous. Initially the chain consisted of 9 stores amounting to a total sale of 1.4 million US dollars and the growth exploded with a overall sale of 118 billion US dollars in the year 1998 and the number of stores amounted to over 2,316 stores. The company also includes discount stores, warehouse outlets offering deep discounts, the whole sale club, supercenters of Wal-Mart. The success story of Wal-Mart is unique in the history of retailing and this success could greatly be attributed to the dynamic leadership of Sam Walton. Its innings in the international arena started when the company inaugurated a store in Mexico in the year 1991. Then the international chain kept on expanding to many Continue reading
Case Study: The Merger between Daimler and Chrysler
DaimlerBenz AG of Stuttgart, Germany, and the Chrysler Corporation of Auburn Hills, Michigan, surprised the business world at a press conference in London on May 7, 1998, when they announced their “merger of equals made in heaven.” This major cross-border transaction, with an equity value of $36 billion, was the largest merger of its kind to date. Robert Eaton and Jürgen E. Schrempp, co-chairmen of DCX, announced their expectation that this deal would be “not only the best strategic merger or the best prepared merger, but also the best executed merger.” Daimler-Benz Chief Executive Jürgen Schrempp had concluded as early as 1996 that his company’s automotive operations needed a partner to compete in the increasingly globalized marketplace. Chrysler’s Eaton was drawing the same conclusion in 1997 based on two factors emerging around the same time: the Asian economic crisis, which was cutting into demand, and worldwide excess auto manufacturing capacity, Continue reading
Case Study on Business Strategies: Kodak’s Transition to Digital
Kodak is one of the oldest companies on the photography market, established more than 100 years ago. This was the iconic, American organization, always on the position of the leader. Its cameras and films have become know all over the world for its innovations. Kodak’s strength was it brand — one of the most recognizable and resources, that enabled creating new technologies. Since the formation of Kodak, the company has remained the world’s leading film provider with virtually no competitors. That is until the arrival of Fuji Photo Film, which now surpasses Kodak in earnings per share and is viewed as the industries number two. It is evident that there has been a significant shift from the use of traditional film cameras to a market fully fledged and saturated with modern and updated digital cameras and digital photographic tools. However over the time, the situation started to change for Kodak, Continue reading
Achieving a Sustainable Competitive Advantage
“If you don’t have a competitive advantage, don’t compete.” – Jack Welch A company has a competitive advantage when its profit rate is higher than the average for its industry, and it has a sustained competitive advantage when it is able to maintain this high profit rate over a number of years. Maintaining a competitive advantage requires a company to continue focusing on the four generic building blocks of competitive advantage – efficiency, quality, innovation, and customer responsiveness – and to do whatever is necessary to develop distinctive competencies that contribute toward superior performance in these areas. “Competitive advantage is at the heart of a firm’s performance in competitive markets. After several decades of vigorous expansion and prosperity, however, many firms lost sight of competitive advantage in their scramble for growth and pursuit of diversification. Today the importance of competitive advantage could hardly be greater. Firms throughout the world face Continue reading
Steps in Conducting a Foreign Market Analysis
International businesses have the fundamental goals of expanding market share, revenues, and profits. They often achieve these goals by entering new markets or by introducing new products into markets in which they already have a presence. A firm’s ability to do this effectively hinges on its developing a through understanding of a given geographical or product market. To successfully increase market share, revenue, and profits, firms must normally follow three steps, Assess alternative markets Evaluate the respective costs, benefits, and risks of entering each, and Select those that hold the most potential for entry or expansion. 1. Assessing Alternative Foreign Markets In assessing alternative foreign market a firm must consider a variety of factor including the current and potential sizes of the markets, the levels of competition the firm will face, their legal and political environment, and socio-cultural factors that may affect the firm’s operations and performance. Information about Continue reading