International Business Chapter Fifteen Control Strategies

InternationalInternational Business Business

Chapter FifteenChapter Fifteen

Control StrategiesControl Strategies

ControlControl

Control is management’s planning, Control is management’s planning, implementation, evaluation, and correction implementation, evaluation, and correction of performance to ensure the organization of performance to ensure the organization meets its objectivesmeets its objectives

Management must balance global needs Management must balance global needs while adapting to country-level differenceswhile adapting to country-level differences

Control keeps a company’s direction or Control keeps a company’s direction or strategy on trackstrategy on track

Control in International BusinessControl in International Business

EXTERNAL INFLUENCES

PHYSICAL AND SOCIETAL FACTORS

Political policies and legal practicesCultural factorsEconomic forcesGeographical influences

COMPETETIVEENVIRONMENT

CONTROL OF OPERATIONS

OBJECTIVES

STRATEGY

MEANS

Assurance that objectives are met

Control Difficulties in International Control Difficulties in International BusinessBusiness

DistanceDistance DiversityDiversity

Market sizeMarket size Type of local competitionType of local competition Nature of productNature of product Labor costLabor cost CurrencyCurrency

International Control ProcessInternational Control Process

PlanningPlanning Organizational structureOrganizational structure Location of decision makingLocation of decision making Control mechanismsControl mechanisms Special situationsSpecial situations

Organizational StructureOrganizational Structure

Separate vs. Integrated International Separate vs. Integrated International structuresstructures

Dynamic Nature of structuresDynamic Nature of structures Mixed Nature of structuresMixed Nature of structures Nontraditional structuresNontraditional structures

Separate vs. Integrated Separate vs. Integrated International StructuresInternational Structures

1.1. International Division StructureInternational Division Structure

2.2. Functional Division StructureFunctional Division Structure

3.3. Product Division StructureProduct Division Structure

4.4. Geographic Division StructureGeographic Division Structure

5.5. Matrix Division StructureMatrix Division Structure

Organizational StructureOrganizational Structure

Separate vs. Integrated International Separate vs. Integrated International structuresstructures

Dynamic Nature of structuresDynamic Nature of structures Mixed Nature of structuresMixed Nature of structures Nontraditional structuresNontraditional structures

Nontraditional StructuresNontraditional Structures

1.1. Network organizationsNetwork organizations

2.2. Lead Subsidiary OrganizationsLead Subsidiary Organizations



Location of Decision-makingLocation of Decision-making

Pressures for Global Integration vs. Loacal Pressures for Global Integration vs. Loacal responsivenessresponsiveness

Capabilities of Headquarters vs. Capabilities of Headquarters vs. Subsidiary personnelSubsidiary personnel

Decision Expediency and QualityDecision Expediency and Quality

Pressures for Global Integration vs. Pressures for Global Integration vs. Loacal responsivenessLoacal responsiveness

1.1. Resource TransferenceResource Transference

2.2. StandardizationStandardization

3.3. Systematic Dealings with Systematic Dealings with StakeholdersStakeholders

4.4. Transnational StrategyTransnational Strategy

Location of Decision-makingLocation of Decision-making

Pressures for Global Integration vs. Loacal Pressures for Global Integration vs. Loacal responsivenessresponsiveness

Capabilities of Headquarters vs. Capabilities of Headquarters vs. Subsidiary personnelSubsidiary personnel



1.1. Cost and ExpediencyCost and Expediency

2.2. Importance of the DecisionImportance of the Decision



Control MechanismsControl Mechanisms

Corporate cultureCorporate culture

Coordinating MethodsCoordinating Methods

ReportsReports

ReportsReports

1.1. Types of ReportsTypes of Reports

2.2. Visits to SubsidiariesVisits to Subsidiaries

3.3. Management Performance EvaluationManagement Performance Evaluation

4.4. Cost and Accounting ComparabilityCost and Accounting Comparability

5.5. Evaluative MeasurementsEvaluative Measurements

6.6. Information SystemsInformation Systems



Control in Special SituationsControl in Special Situations

AcquisitionsAcquisitions

Shared OwnershipShared Ownership

Changes in StrategiesChanges in Strategies

International Planning ProcessInternational Planning Process

Set long-range strategic intentSet long-range strategic intent Analyze internal corporate resourcesAnalyze internal corporate resources Set international corporate objectivesSet international corporate objectives Analyze local conditionsAnalyze local conditions Implement strategyImplement strategy Select alternatives and prioritiesSelect alternatives and priorities

Analyze internal corporate resourcesAnalyze internal corporate resourcesI.I. Financial resourcesFinancial resources

a. Immediate and future cash flow and needsa. Immediate and future cash flow and needsb. Capital availability, including borrowingb. Capital availability, including borrowingc. Ability to transfer fundsc. Ability to transfer fundsd. Profit and divident targetsd. Profit and divident targets

II.II. Human resourcesHuman resourcesa. General versus product skillsa. General versus product skillsb. Specific functional skillsb. Specific functional skillsc. Transferability of peoplec. Transferability of peopled. Capacity used. Capacity usee. Ability to acquire additional resourcese. Ability to acquire additional resourcesf. Attitudes toward foreign activityf. Attitudes toward foreign activity

III.III. Product resourcesProduct resourcesa. Capacity use and bottlenecksa. Capacity use and bottlenecksb. Monopolistic characteristicsb. Monopolistic characteristicsc. Adaptations needee for foreign salesc. Adaptations needee for foreign salesd. Primary versus derived demandd. Primary versus derived demande. Transport practicalitye. Transport practicalityf. Cost savings through scale and scopef. Cost savings through scale and scope

IVIV Environmental effectsEnvironmental effectsa. Supply and cost changes, including foreign tradea. Supply and cost changes, including foreign tradeb. Long-run and cyclical changes in demandb. Long-run and cyclical changes in demandc. Comparison with competitionc. Comparison with competitiond. Societal attitudesd. Societal attitudes

Set international corporate objectivesSet international corporate objectives

I.I. Sales objectivesSales objectivesa. Maintain volumea. Maintain volumeb. Expand volumeb. Expand volumec. Increase markupc. Increase markupd. Spread fixed costsd. Spread fixed costs

II.II. Resource acquisition objectivesResource acquisition objectivesa. Reduce direct costsa. Reduce direct costsb. Gain tax advantagesb. Gain tax advantagesc. Gain complementary resourcesc. Gain complementary resources

III.III. Diversification objectivesDiversification objectivesa. Diversify marketsa. Diversify marketsb. Diversify suppliesb. Diversify supplies

IV.IV. Competetive risk minimization objectivesCompetetive risk minimization objectivesa. Acquire scarce resourcesa. Acquire scarce resourcesb. Prevent competitors’ advantageb. Prevent competitors’ advantage

Analyze local conditionsAnalyze local conditionsI.I. Same factors as in Analyze internal corporate resources, plusSame factors as in Analyze internal corporate resources, plusII.II. Financial factorsFinancial factors

a. Local evalutaion methodsa. Local evalutaion methodsb. De facto and de jure tax systemsb. De facto and de jure tax systemsc. Timing of receivables and pavablesc. Timing of receivables and pavablesd. Needs for financing cuppliers and customersd. Needs for financing cuppliers and customerse. Governmental priorities for funds’ usee. Governmental priorities for funds’ use

III.III. Marketing factorsMarketing factorsa. Cost and availability of market dataa. Cost and availability of market datab. Distribution methods and costsb. Distribution methods and costsc. Nature of competitionc. Nature of competitiond. Government regulation of price, advertising, etc.d. Government regulation of price, advertising, etc.

IV.IV. Other factorsOther factorsa. Attitudes toward business in generala. Attitudes toward business in generalb. Attitudes toward foreign businessb. Attitudes toward foreign businessc. Political and economic stabilityc. Political and economic stability

Select alternatives and prioritiesSelect alternatives and priorities

I.I. AlternativesAlternatives

a. Location of value-added activitiesa. Location of value-added activities

b. Location of sales targetsb. Location of sales targets

c. Level of involvementc. Level of involvement

d. Product/services strategyd. Product/services strategy

e. Global versus multidomestic e. Global versus multidomestic marketingmarketing

f. Country moves as part of global f. Country moves as part of global strategystrategy

g. Factor movement and start-up g. Factor movement and start-up strategystrategy

II. Setting priorities among alternativesII. Setting priorities among alternatives

Implement strategyImplement strategyI.I. Set target results/goalsSet target results/goals

a. Production amounta. Production amountb. Costsb. Costsc. Salesc. Sales

II. Do reports showing deviations from targetII. Do reports showing deviations from targetIII. Do environmental analysis that might III. Do environmental analysis that might

change resultschange resultsIV. Make corrections if possibleIV. Make corrections if possibleV. Move to contingency planV. Move to contingency plan

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International Business Chapter Fifteen Control Strategies