International business strategy_Home replication strategy

HOME REPLICATION STRATEGY

Hanoi, Vietnam

Characteristics

Hanoi, Vietnam

1. Characteristics

• Centralizes product development functions in home country

• Developed products transferred to foreign markets to capture additional value

• The company must posses a distinctive competence that local companies lack

• Headquarters maintains tight control over marketing & product strategy

• Subsidiaries leverage home country capabilities

Hanoi, Vietnam

Hanoi, Vietnam

Advantages:

• Cut the production cost down in the first stage of investment

• Engage in the home replication strategy as it initially expands into foreign markets

• In local market, not need to implement manufacturing but importing finished goods and apply marketing model

• For business, can be a competitive strength for newcomers

• Can leverage home country-based advantages.

Hanoi, Vietnam

Disadvantages

Hanoi, Vietnam

Disadvantages:

• No integration economies• A firm most often adjusts its structure to include

an international division. • International division is separate from all other

divisions and oversees activities (exporting, franchising, and licensing ) =>leads to critical problems

• The primary drawback is its low dedication to local responsiveness => alienation of foreign customers

• Lack of local responsiveness

Hanoi, Vietnam

Case Study

Hanoi, Vietnam

Procter & Gamble (P&G)

Hanoi, Vietnam

Procter & Gamble

• The large U.S. consumer products company - the world’s best marketers

• A dominant global force in laundry detergents, cleaning products , personal-care products

• Expanded abroad in the post-World War II years • The strategy was flawed began to emerge in the

1970s• By 1985, after thirteen years in Japan, losing $40

million a year there

Hanoi, Vietnam

Procter & Gamble• Since the late 1980s: Attempting to delegate far

more to its major firms in Japan & Europe• Summer of 1991: Entered the Polish with Vidal

Sasson Wash & Go, a bestseller in the United States & Europe

At first: captured more than 30% of the market for shampoos in Poland. Early 1992 sales suddenly plummeted. The rumors—Wash& Go caused dandruff and hair loss => allegations P&G has strenuously denied.

Hanoi, Vietnam

“I washed my car with Wash & Go, and the tires went bald.”

Where did P&G go wrong?

Procter & Gamble

Hanoi, Vietnam

Procter & GamblePromoted Wash & Go too hard in a

country has little enthusiasm for brash American-style advertising

Some believe Wash& Go was developed for U.S. consumers

Marketing strategy wholesale from the US to another country without modification accommodate the tastes and preferences of local consumers.

Hanoi, Vietnam

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