Internationalization of Large Companies

Subject: Strategic Management
Pages: 60
Words: 16947
Reading time:
59 min
Study level: Undergraduate


The research on the internationalization of the large companies explored the relations between the adoption of a global orientation and strategic thinking. However, there was difference in opinion between those arguing that there is a positive relationship between the two variables and others who contended that large companies may internationalize by adopting a passive or reactive approach to the external environment. Within this context, this study sets out to further the discussion by comparing the experience of large companies with their medium and small-scale counterparts. In doing so, it draws upon the findings of survey of 1,000 internationalized enterprises located in the main urban conurbations. The results suggest that overall there is little disparity in strategy development among internationalized enterprises of different sizes. However, whereas the incidence of strategic behavior among medium and large businesses increases with the complexity of international operations, this is not the case for large companies.

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Even though internationalization makes a positive contribution to retailers’ sales volumes its impact is small; this effect is not impacted by the moderating factor of the degree of retailer specialization along product lines; while another moderating factor, namely the identity of the retailer’s country of origin, does make a difference. Research limitations/implications – The research methodology and the nature of the data precluded the use of more “soft” measures such as measures of managerial cognitions, perceptions and attitudes to analyze their impact on the effectiveness of internationalization for retailers. The research used cross-sectional data and further research should compare results in additional time points to capture the possible dynamic changes in this industry. Practical implications – Retailers seeking to expand their sales volumes should not rely too much on internationalization but consider also other strategic options. They should therefore analyze carefully whether large investments in overseas operations are justified. This is particularly relevant for US retailers. Originality/value – This paper focuses on the issue of internationalization as a viable retail strategy to achieve larger sales volumes. The study reaches its conclusions on the basis of an analysis of data from a large population of diverse, domestic-only and international retailers from around the world from different sectors and countries of origin, which – the international retailers – operate in different countries.



There is a universal conformity taking into account the positive impacts that entrepreneurship implies on company’s efforts for creating wealth. Entrepreneurship is classified as a context, reliant social procedure by the means of which personalities and teams create prosperity by arranging unique packages of reserves to advance marketplace capabilities. This description offers that if a company attains access to a diversity of resources and knows how to control them imaginatively, it provides the firm two core consumerist functions; 1) strategic management which is classified as a context, precise procedure that entails pledges, conclusions, and actions required for a company to make profit, and 2) studying how to expand, raise, and utilize competitive advantages when applying the tactical management procedures. Efficient tactical management processes maintain new performances to classify and chase competitive capabilities that were not beforehand distinguished or utilized. (Ansoff, 1979)

Both strategic management and entrepreneurship are dealing with decisions made by general executives who have the accountability for a business in general. While strategic management is connected with elements impacting the company’s performance (e.g., tactics, surroundings, and the resources of sustainable competitive benefits); entrepreneurship (relating independent firms and corporate entrepreneurship) is linked with procedures leading to venture creation. Furthermore, entrepreneurship makes accent on expansion and novelty, while strategic management concentrates on competitive advantage. Nevertheless, the most convincing outcome of incorporating entrepreneurship and strategic management is to make wealth.

Research Questions

Regarding the matters of strategic management in the context of internationalization, it would be necessary to define the answers on the following research questions:

  • Strategic approaches to the internationalization processes within the Honda company
  • What stimulates and drives the processes of internationalization
  • The implementation of internationalization principles.


The aim of this paper is to analyze the approaches of strategic management by particular company, and define the specialties of the approaches and implementation of the strategic principles.


This paper can provide important information to students, researcher and decision makers about the various levels of internationalization process and also about relevant models and theories.

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Since Internationalization processes involve many different levels, inside and outside the company, it is essential to understand the dynamics between these levels. This is especially true for small companies where the role of the individual, often an entrepreneur, is vital for the process of Internationalization. Before presenting and analysing six case studies, we will therefore discuss in more detail Internationalization as a multilevel process, where strategic management must include individual, company, industry and national aspects.


The contribution of this kind of analysis to the process of internationalization is rather limited; these analyses do not tell us about the sequence nor logic of events, i.e. the process, in internationalization, but they may provide information about the possible international strategies the firms may have.

If the firm’s degree of international orientation is studied against external resource dependence insightful results can be found. First, compared to the other engineering firms the advanced firms seem only to rely a little on the externally available resources. One hypothetical interpretation of this is that these firms have created some kind of advantage internally and they have used it as a driving force for internationalization. Thus, the advantage may have more potential in explaining the firm’s behavior than the possibly externally available resources.



Though, the most convincing outcome of incorporating entrepreneurship and strategic management is to create wealth, the means of internationalization have been generally applied in the researches of internationalization, the pointers of external reserve reliance, i.e. the domestic and overseas assistance and data application, were collective measures submitting to a diversity of activities that firms may have and these activities have rarely ever been examined with regard to internationalization. The motive why it is significant to comprise domestic and foreign collaboration and data application when internationalization tactics and behavior of firms is analyzed is that internationalization can be viewed as development of firm resources by the means of interaction within a network. According to the learning-by-doing rule, which is often referred to in internationalization study, it is significant to regard firms in their surroundings; it is the environment that supplies the resources for internationalization. This procedure may take place either through supportive behavior or by the means of the using of other externally attainable resources. (Dunning, 1988)

Moreover, it has to be taken into account that the data analyzed here is a snap of the situation in which the firms were at one point of time. Since internationalization is a process it should be studied longitudinally over time. However, cross sectional analyses can be used to produce classifications considering the firms’ behaviour and other characteristics.

Qualitative Research

International strategy study has conventionally been grounded on the dichotomy between case studies, or methodologies, and record reviews, or coarse-grained methodologies. While methodologies lack oversimplification, replication and statistical severity, they have the benefits of concentration to significant details and access to multiple perspectives. Alternatively, coarse-grained methodologies are generalizing, analogous and often suited to cross-sectional researches of the market. Though, they fail to include the nuances in a firm’s approach.

Research Design

Secondary research techniques are used for writing this research paper. Works by various authors have been used to discuss the research questions. Some theories emphasize how important it is for the company to consider political aspects, cultural factors within a country and market conditions. Although studies have also been made of the linkages between the strategic image of the company and the corporate culture, only in exceptional cases has there been any theoretical integration of these two areas.

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The field of culture in theoretical work is treated in a very heterogeneous manner. Aspects of company culture, cultures of regions, culture of industries, etc., are mixed with dimensions of national culture and used in an endeavor to understand company behavior better. Inasmuch as the social, economic, and political environments of countries define the fundamental conditions for international business activities, we consider such dimensions of the national culture to be the meta-framework. Within this national culture framework, the importance of values and norms within industries and companies must be observed in combination with the role of individuals. Below we discuss central cultural aspects of nation, industry, company, and individual in the context of international business.

The work provides various theoretical viewpoints in order to enlarge alterations o hypotheses taking into account the instruments and principles applied to administer foreign auxiliaries of Multinational Corporation.

But the industrial company advance offers that Multinational Corporations face some difficulties when competing with local corporations such as market deficiencies (in the goods and feature markets): special marketing capability, local firms’ benefits in raising resources, advantage of management or special copyrights and general superiority in technology. Furthermore, other disadvantages are linked with interior and external financial systems of scale and governments’ meddling with production or trade. In order to surmount these difficulties, multinationals must possess some type of possession benefits in order to compete with local companies. Such benefits may entail superior skills, management or marketing skills, charge efficiency, steady market and economic power strength. Having these advantages they make a competitive attitude over the local companies and augment their market authority.

Theoretical Background

Process of Internationalization

It is offered, that the sluggishness of the process described in traditional internationalization literature, may be a signal of management’s loathing to risk-taking and their incapability to obtain relevant skills and data. The fact that the procedure seems to be rated up now, may partly be defined by the so called born global management being less risk-reluctant and / or they having simpler admission to relevant data.

One driver of globalization and internationalization is regarded to be the expansion of advanced communication technology i.e. a manufacturing explained as having high extent of globalization will by classification be featured by having data transmitted easily and quicker than in industries with lesser internationalization extent. This augmented access to data may diminish the psychic among states and companies, which have before been regarded as a key obstacle for international development of companies. (Dunning, 1988)

Type of product may also possess an impact on the tactics selected for going international. The growing worldwide competition, jointly with raised speed in the expansion of new technologies, has led to shorter product life cycles and higher innovation power. The shorter product life cycles have reasoned the more accents on research and development, and on recognizing new capabilities and exploiting them rapidly with successful timing (ex. PCs and cellular phones). Product features, thus, are another aspect to be regarded. The shorter the product life cycle is the shorter the time in which revisits on investment in product expansion can be earned. Therefore, specifically companies with small household markets need global quantities over which these costs can be split. (Johanson, and Vahlne, 1990)

There are generally two measurements, which symbolize the key strategic choices in relation with a company’s internationalization, (1) international market assortment, and (2) alternative of entry mode. With observe to the market choice aspect, companies often start functioning in many markets simultaneously and not always in close markets originally. The product is often expanded for a global market. It is defined that this in the following way: “psychical distance has become much less important as global communication and transportation infrastructures recover and as markets turns to be gradually more consistent”, the evidence of a speeding up of the internationalization procedure and posit propose that: “the organization and growth strategies on foreign marketplaces are changing towards more straight and rapid entry modes than those entailed by theories of measured and slow internationalization procedures”. (Mintzberg, 1987)

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Since accent for the notion is the process and distinguished success issues of internationalization, less accent will be put on the causes for internationalization, market selection and the choice of entry mode. They are still rather pertinent as the examination will reveal and could therefore not be prohibited.

Companies tend to internationalize for some motives; too small domestic market, outside proposals to spread the production, built into the business perception, for individual motives, out of accident etc. Selection of market is generally done after systematic market research; these days a simpler assignment than it was some years ago, most numerals and facts about markets and states are effortlessly attainable by the means of Internet or concentrated research corporations. Other issues that might be of significance dependent on where in the world the market admission will take place are grounded on cultural and language dissimilarities as well as political constancy. The existence of a working technological and distribution infrastructure can for most corporations also be significant features. When it comes to tactics for the international expansion it is generally the mode of entry that magnetizes the most attention and reserves from the planning. The selections can be regarded as a scale of rising promise to the selected market.

A key point in internationalization hypothesis is that various procedures within a company cannot be clarified without researching the networks that a company unswervingly or circuitously is a part of. The positions of networks have attracted a lot of attention in the last decades. For a corporation, both business and economic networks play a significant role during the internationalization process. An industrial network typically entails various players engaged in production, distribution and convention of services and results. Financial networks are frequently of significance for companies since these companies generally need to finance their development with external capital. In some cases it might be easier to find financing in the country of expansion rather than on the domestic market. This has to do with the fact that some undertaking capitalists prefer to advance in their own home region, where they have an improved understanding of the market.

Uppsala Model

The Uppsala model identifies four steps in the establishment and extension of its operations, a process referred to by its authors as ‘the establishment chain’:

  • No regular export activities;
  • Export via independent representatives or agents;
  • The establishment of sales subsidiaries;
  • Foreign production and manufacturing.

According to this model, initial movement abroad is carried out by independent exporting agents or representatives. This entails the producer in a limited resource commitment and a lesser risk than immediately setting up a wholly owned sales subsidiary (stage three) in a market of which the incumbent has little knowledge. Indeed, underpinning this model generally is the assumption that moving through the different phases of development depends on the acquisition of the expertise and knowledge that enables the firm to move onto the next internationalization stage. Firms only move to the final stage of the establishment chain (foreign production and manufacturing) when they have international expertise through other activities and specific knowledge of a particular location. (Anderson, 1993)

The authors do not claim that the model applies in all circumstances. They point out that there may be good reasons why firms do not follow the establishment chain exactly. For example, firms with extensive experience in other foreign markets may well jump stages in the establishment chain and invest in production facilities in a particular location without prior knowledge of it. However, the model is useful. First, it points out that firms are more likely to seek international opportunities when their founders or senior management already have international business experience or are internationally minded in some way. Second, and more importantly, it establishes the principle that firms engage in international activity in a way that gradually commits them to more intensive and extensive involvement. The model sets out a four-stage process. In a sense, the precise details of each stage of the process do not matter as they vary from case to case. What does distinguish each stage of the process though is the degree of involvement.

Internationalization and FDI

Company internationalization by the means outward overseas direct speculation (FDI) is not innovative to Japanese firms. Japanese companies, large and small, invest abroad for different reasons. They do so to recover competitiveness and to enlarge their market accomplishment. The lion’s share of Japanese outward FDI is headed to western states. Geographical immediacy and cultural similarity impacted these outward FDI position conclusions. The moderate policy surroundings and institutional support initiated in recent years have also heartened outward FDI by Slovenian ventures.

Generally, Japanese companies are more internationally adjusted than those from developing states. Compared to other changeover financial systems, Japan has moderately more homegrown TNCs. This is as the country assumed an open economy principles before the transition period and had a strong export orientation, while its companies started spending abroad at an earlier stage. Actually, they started investing abroad before an essential amount of inward FDI started pouring in. (Gustavsson, Mac Donald, 1994)

The most general theoretical framework is Dunning’s eclectic paradigm, or OLI theory. It explains why firms decide to start investing abroad, the preconditions (firm specific advantages), where they invest (where the location advantages complementing their ownership-specific advantages are available), and why they select FDI out of many forms of foreign market entry (maximization of their rents). The important aspect of OLI theory is that the location and ownership advantages are necessary, but not sufficient, conditions for FDI. They should be complemented by internationalization, which helps in taking the advantage of such conditions. (Porter, 1996)

The openness of the East Asian sub-region and gradually more India is featured mainly by “production fragmentation”, classified as the decoupling of formerly incorporated goods into their sub-element elements, constituents and accessories (PCAs), which in turn are allocated among several states on the grounds of relative improvement. This cross-border multi-staged construction process in turn has been assisted immensely by key developments in transportation, harmonization and statement technologies.

IDP Model

Internationalization advantages can be informational advantages and access to local deposit bases. Another theory with approach to eclectic paradigm is IDP (investment development path paradigm), the dynamic paradigm proposed by Ozawa (1992) based on Japan experiences. Inward and outward FDI are regarded as development catalysts. Ozawa claims that firms that start losing comparative advantages, because of the growth of wages for instance, start to invest abroad in order to keep their competitiveness by taking advantage of low wages abroad. The dynamic paradigm is very similar to IDP model. This theory has been used in working out relocation models explaining the behaviour of multinationals. (Reuber and Fisher, 1997)

Originally it looked only at which firms start to invest abroad and in which forms they enter foreign market. It also partly answered the question of why internationalization in certain activities takes place earlier than in others and where such internationalization happens. The basic idea is that internationalization follows stages, that firms start the process through less-demanding, simple activities (export) and their sales functions and only later, through accumulating experiences, do they enter into more sophisticated forms of activities, in more-distant countries. First, they internationalize mostly in neighbouring countries, countries with similar cultures and in simple products and activities. Only later are more sophisticated products and forms of internationalization started. The first activity to be internationalized is the marketing function and the last is the production function.

Recently, more attention has been given to the network approach to internationalization since it was established that many firms’ international activities are strongly interconnected. Swedish researchers have developed this approach (Johansson 1986). Yet it is impossible to talk about one stream of this theory; there are several approaches. Not least among them is a more sociological approach, which concentrates on the types of relationships within the network and not only on why such networks are established.

The theory of multinational banking was first developed by Grant (1991) and later researchers tried to answer some of the questions posed in his paper (Ansoff 1979). This theory of international banking was based on the theory of FDI in manufacturing. According to this theory, multinational banks have some comparative advantages. Banks go abroad to better serve their domestic clients, who have also gone abroad; this is called the ‘gravitational pull’ effect. Banking internationalization grows in parallel with FDI as banks try to meet the demand for banking services of multinational firms abroad. This bank behavior of moving abroad is seen as a defensive strategy necessary to assure the continued business with the domestic parents of foreign subsidiaries so that the existing flow of information resulting from the bank-client relationship will not be preempted by a competitor bank. Second, multinational service banks also do some business with local and wealthy individuals by offering them specialized services and information required for trade and capital market dealings within their native countries.

The internationalization of banks has been significantly affected by structural changes in world trade, the growth of direct investments into foreign countries, development of military aid programs and so on. The 1973 oil crisis was one example of these macroeconomic factors. Because of the crisis, monetary resources began to accumulate in the oil-exporting countries where they remained idle, but the oil-importing countries suffered money scarcity due to the deficit in their balance of payments. The disproportion between the location and demand of money resources gave a powerful boost to the internationalization of banks – with the banks setting up subsidiaries in the oil states. Thus, an opportunity was given to pump money from the oil-producing countries back to the oil-importing countries.

In the last decade, the end of the Cold War and the breakdown of the socialistic world camp have become especially important factors for the internationalization of companies. The Western banks rush to conquer the emerging markets, especially the largest, European market. The recent wave of bank internationalization is characterized not only by following their existing clients. According to De Wit and Meyer (1999) the ‘follow the clients’ determinant for bank internationalization is only relevant for small banks, while the behavior of larger banks is determined by more complex diversification policies.

There are some recent works that try to establish a pattern of expansion for the recent wave of banking internationalization. One of the most common explanations is related to the effects of the increase in banking competition caused by financial deregulation. As margins and fees are tightened in domestic financial markets, banks seek to expand cross-borders to generate higher returns. Thus, with banks’ net interest margins under downward pressure due to the increase of banking competition, and as the big financial institutions, in general, have a low potential for growth, some banks seek to diversify geographically in markets with potential of growth and/or with greater net interest margins.

Service Sector Internationalization

Important input into the analyses about the specific aspects of service-sector internationalization was given by Evans (1992) and Porter (1993). He classified internationally traded services into two groups: soft services and hard services, which serve as a useful tool in analysing the pattern of internationalization of services. Hard services could be exported in a similar manner to manufactured goods. Soft services require close contact and physical proximity between producers and consumers (trade, financial services). Firms producing soft services are typically not able to enter foreign markets by exporting initially. Therefore they have to use more sophisticated methods (franchise, investments) from the beginning of the internationalization process. Consequently, they do not gain prior experience and knowledge and have to face the risks of foreign markets at the beginning of their internationalization process (Reuber 1997). It means that, in the case of soft services, the pattern of internationalization can hardly fit the Scandinavian sequential model.

Management theories are also to be taken into account when designing policies of internationalization. What seems particularly important is the development of a global mindset, a state of mind able to understand a business, an industry sector or a particular market on a global basis. Firms from evaluated transition economies seem to be more ambitious than simply aiming to become a regional multinational. Some among them have already taken a more global approach, are expanding outside the region, into wider Europe, and other continents. What is still lacking, however, is the strategic management approach according to which all the firms’ activities are to be intertwined in one system, in one decision-making process, regardless of the location of the activity. Besides the macroeconomic factors that rule the internationalization of banks, the ambitions of bank managers also play an important role.

Osborne and Tricker (1995) compared the practices of Japanese and U.S. exporters in a Korean context. They evaluated Korean importers’ perceptions of such key variables as product characteristics, reputation, and negotiation style for both groups of exporters. Osborne and Tricker (1995) found that the Japanese were rated more favorably on almost all of the dimensions measured.

Oster (1992) followed up initial study with a comparative effort that focused on influences for Japanese import managers. Although both the Japanese and U.S. samples viewed the variables of interest as important, several important differences between the groups were noted. Japanese importers valued product-specific elements such as product quality and product safety much more so than their U.S. counterparts. The U.S. importers, on the other hand, viewed such service-oriented elements as timely delivery and dependability as more significant than their Japanese counterparts. In yet another replication of this study, Osborne and associates (1996) found that import managers in Thailand were most concerned about product quality, price, and timely delivery.

Similarly, in another recent work, Johanson and Vahlne (1990) explored the forces that stimulated Bahraini importers to trade with U.K. exporters. They found that non-economic considerations such as effective communication and after-sales support were quite important to these importers.

The effect of a product’s country of origin has led some researchers to question the role of product-origin bias in the import process. Evans (1992), for example, concluded that a country’s ethnocentric tendencies had a significant impact on the development of importers’ marketing strategies. This finding is in concert with earlier studies by Mintzberg (1987), who found that national origin created immediate product stereotypes.

Other researchers have investigated the nature of power structure in the exporter-importer dyads involving exporters from a developing country and importers of a developed country (Johanson and Vahlne, 1990), concluding that importers generally exercise a higher degree of power over the exporters. Gustavsson (1994) concluded that neophyte exporters from a developing country such as the People’s Republic of China are influenced by their home country business environment and culture in their dealings with U.S. importers. Other empirical research confirmed that buying firms in developed countries often are willing and even prefer to engage in long-term relationships with the supplying firms (Gustavsson, 1994). In a more recent research study, Egan and Mody (1992) found that cultivating buyer-seller links is essential for export development.

In the few research studies that specifically addressed the implications of importers’ perspectives for export marketing effectiveness, the major focus has been on exporters from developing countries and importers in developed countries. This stream of research has established the usefulness of identifying and analyzing importers’ perspectives for developing effective export marketing strategies. However, to develop and implement effective export marketing strategies, it is imperative that an investigation encompasses examination of overseas importers’ needs, expectations, and satisfactions/dissatisfactions with exporters from various countries (Rugman, 2004). Such detailed understanding of foreign importers’ country-wise comparative evaluations of exporter business practices need to be developed in a competitive context, which then includes the alternate sources of supply to overseas importers. The identification of importers’ perceptions about competing exporters from other countries will provide critical information about exporters’ customer-oriented performance, which will help formulate export marketing strategies and strengthen the importer-exporter long-term relationships.

In view of the increasing importance of relationships between importers and exporters, an analysis of the marketing strengths and weaknesses of exporting countries should involve product offer characteristics as well as the more subjective perceptions of exporter characteristics (Evans 1992). The primary purpose of this research is to assess the dual roles of importer experience and affiliation with a primary trading partner on Taiwanese importers’ satisfaction with the practices of U.S., Japanese, and Western European exporters.

Strategic Management and Internationalization

In 1999, Bob de Wit and Ron Meyer proposed an elegant set of constructs that encompassed most of decisions corporations (and their CEOs) face (de Wit, Meyer,1999). They stressed that most of such decisions, whatever there are routines, as indeed “solutions to wicked problems – complicated issues without a clear problem definition and without a fixed set of remedies.” De Wit and Meyer also pointed out that at the heart of each wicked problem are strategy tensions, created by conflicting demands that are pulling the organization in opposite directions (de Wit, Meyer, 2006).

De Wit-Meyer’s set of constructs really embraces managers’ prepositions (assumptions) that separately or in combination grip every corporate action. They are assumptions about:

  • Organizational purpose – do managers tend to benefit only shareholders or they are accountable for interests of all stakeholders.
  • International context – do managers believe their markets to be truly global or they see their marketplaces as a bunch of locally specific “bazaars”?
  • Industry context – do managers see the industry dynamics as uncontrollable evolutionary process that requires playing by the rules to adapt to, or firms may manipulate industry demands and changes the rules?
  • Network level strategy – do managers view their company as a discrete organization to which only tactical carefully calculated alliances are suitable or they wish to make their company an embedded organization, which enter the long-term relations based on trust and reciprocity?
  • Corporate level strategy – is the corporation is designed to be a set of independent business units under the loose financial control or there is a place for a corporate center as a holder of core competencies?
  • Business level strategy – is competitive strategy is about the market share or about building distinctive strategic resources?
  • Organizational change – may the corporation sustain radical, dramatic and comprehensive changes or any change must be gradual, steady and constant?
  • Organizational context – do top managers exercise the full command over the corporation and may initiate, direct and lead strategic change of any depth and magnitude or organizational development is uncontrollable evolutionary process where new behavior emerges not from superimposed rules, but from interactions?
  • Strategy formation – does the strategy itself is viewed as deliberate formally structured hierarchical process or the strategy is gradually shaped by experimentation and parallel initiatives?
  • Strategic thinking – should the strategist prefer deductive and computational thinking while designing a strategy or inductive and imaginative thinking provides better results?

De Wit and Meyer (2006) state that there are several tools to use when look at the threats and opportunities in the market and position a company in relation to the competitors.

Some of the tools are custom tools for analyzing the external setting and an example of these tools is the PEST(EL)-analysis. There are a considerable amount of attributes that makes a country more attractive than others. Not only the price on labour or the set up cost of the factory has to be considered, characteristics like the logistical issues, political stability, vicinity to new markets and qualified workforce are all examples of essential aspects that needs to be reviewed.

De Wit and Meyer (2006) further state that there must be a match between an organization and its environment where the internal strengths and weaknesses should align with the external opportunities and threats. The adaptation to the environment is a vital requirement for the success of any company. It is explained that when an actor has entered a new market it is exceptionally difficult to compete with the already existing firms. For example the fact that other firms on the market have established loyalties among customers will be a tough issue to deal with and needs to be cautiously considered when the evaluation is completed.

According to De Wit and Meyer (2006) the political factor refers to that the company needs to consider dealing with responsible organizations for setting or influencing rules and regulations in the environment where the company is operating. Rugman and Verbeke (2004) argue that the political factors conclude in what manner the foreign company is able to exercise its recourses and capabilities in the foreign market. Examples of these organizations are governments and political parties.

De Wit and Meyer (2006) explain that the economic factor refers to that there might be organizations influencing the macro economic environment in which the company operates.

Examples of organizations that influence the macro economical environment are tax authorities and central banks. The social factor includes individuals or organization that has an influence on values and beliefs for example media and religious organizations. Rugman and Verbeke (2004) explain that social factors determine which value adding business is best suited for the market. For example the availability of cheap labor may be the reason for choosing a certain country but if the labor force in this nation is not willing to work in the specific field of business the country might not be as attractive.

De Wit and Meyer (2006) state that technological factors refer to organizations that develop new knowledge for instance Universities and Research Institutes. These institutes are important for a nation since the general level of knowledge within the country depends on the quantity and quality of these establishments.

The environmental factors refer to external surroundings of a company. An example can be how a company handles ecologically harmful waste. Mintzberg (1985) explains that managers in foreign companies regularly should monitor the environmental factors of a nation, especially if they have a large impact on the environment. It is also advisable for managers to monitor external environment for example surrounding countries since opportunities and threats can occur anywhere in the world in a rapid pace.

Miroshnik (2002) continues explaining that the legal factors refer to legal traditions, effectiveness of the legal system and treaties with foreign nations and patent trademark laws.

Rugman and Verbeke (2004) explain that the demand conditions are normally determined by the purchasing power and the level of industrial development in the market. Porter (1996) is of the opinion that three major parts is vital when observing the demand conditions of a nation; the composition of home demand, size and pattern of growth of the home demand and the mechanism by which a nation’s local attributes are spread to foreign markets.

Related and supporting industries are a determinant that includes the presence of local suppliers or local industries that are needed in order to fulfil the operational production.

De Wit and Meyer (2006) state that the multinational organization uses full scale host nation subsidiaries which are self sufficient from the parent company in the home nation. Most activities are decentralized and coordinated within the host country.

Bartlett and Ghoshal (1998) explain that the subsidiaries are viewed upon as a portfolio of national businesses which can be described as a decentralized federation of asset and responsibilities.

The multinational organization has a low global efficiency but a high local responsiveness.

Mintzberg (1985) explains that the multinational organizational firms have given their subsidiaries plenty of space to address local issues for example customer preferences, political pressures and economic trends that may occur in different regions of the world. The subsidiaries are run and managed as independent companies.

This structure refers to a highly centralized organization in which the subsidiary initially may only manage the export of products form the parent company. De Wit and Meyer (2006) state that in the international organization the subsidiary have a close relationship with headquarter. Most of the core competencies, technologies and products are developed centrally while some other less complicated activities are managed by the local subsidiary. Bartlett and Ghoshal (1998) explain that subsidiary is highly dependent of the parent company for transfer of knowledge and information. The International Organization has a low local responsiveness as well as low global efficiency.

According to De Wit and Meyer (2006) the global organization has national subsidiaries that are relatively unimportant to the company. This structure is a highly centralized approach. When it comes to products and services the same strategy is generally used when expanding to all foreign markets without making any differentiation. The subsidiaries are required to implement the policies from headquarter in the local market. Bartlett and Ghoshal (1998) explain that the global organization structure is applied by the company in order to reach foreign markets and build economies of scale and attain global efficiency. The global organization has a high global efficiency but a low local responsiveness. Subsidiaries are often used for sales or services even though local assembly plants may occur due to economic or political pressures. The subsidiary has little freedom to create new products or strategies or even modify existing ones.

De Wit and Meyer (2006) explain that an integrated network, also known as transnational organization have subsidiaries which are tightly connected to the parent company in the home nation which enables the organization to have high global efficiency. These organizations also have a high local responsiveness which enables them to better satisfy the local market. This is done through little centralized activities from headquarters. Each subsidiary becomes a global institution for special competence, technology or products.

De Wit and Meyer (2006) state that the multinational organization uses full scale host nation subsidiaries which are self-sufficient from the headquarters in the home nation. From our nine respondents four used the multinational structure.

De Wit and Meyer (2006) explain that an integrated network, also known as transnational organization have subsidiaries which are forcefully connected to parent company in the home nation which enables the organization to have high global efficiency. They are also manufacturing for the local market with customization which makes them highly market responsive. Atlas Copco was the only respondent who was able to reach this strategy with 38 percent export. They produced their products in high volumes for both the local and international market and were also able to adjust them to the different markets. The rest of our respondents did not use this structure even though all of them had the aim to be highly market responsive and attain a high global efficiency. Seen from the theoretical point of view this is the preferable structure to use but it is also highly complicated to achieve practically.

In its simplest conception strategy is regarded as a unifying idea which links purpose and action. For de Wit and Meyer (1998), in an intelligent treatment of the subject, strategy is any course of action for achieving an organization’s purpose(s). In the words of Alfred Chandler, the first modern business strategy theorist, strategy in the area of business is defined as ‘the determination of the basic, long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for those goals’ (Chandler, 1999). Although still tentative and preliminary as a definition, it is possible to advance a little further and say that strategy is ‘a coordinated series of actions which involve the deployment of resources to which one has access for the achievement of a given purpose.

Strategy therefore combines the articulation of human goals and the organization of human activity to achieve those goals. The setting of goals involves the identification of opportunity. Strategy is a process of translating perceived opportunity into successful outcomes, by means of purposive action sustained over a significant period of time. Strategy is complex, dealing in highly intricate systems of cause and effect. It is concerned with what have been called, rather aptly, ‘wicked problems of organized complexity’ (de Wit and Meyer, 1998). Strategy is itself holistic in that it recognizes the many interconnections between superficially different aspects of business activity and different problems. Strategy integrates all the functional business activities – marketing, finance, human resource management, information systems – and gives them coherence.

Theories of Multinational Organization

The study of organizations in international business has focused almost exclusively on the multinational enterprise (MNE). Its fundamental feature as an organization is that it maintains multiple units operating in multiple environments, although even within the IB field there is no consistency on the number of countries in which a company must operate to qualify as a multinational.

An essential feature of this form is that Internationalization of activities is a process that unfolds across time and space. The basic assumption that the activities and features of its organization change predictably with Internationalization gives models of the MNE a strongly evolutionary character. The organizational changes include the structure and design of the organization, the distribution of power and the nature of internal conflicts, and the cognitive and normative patterns within the organization.

Both the theories on which studies of MNE organization have been grounded and the phenomenon of the MNE itself have changed over the past three decades in significant ways, and show signs of even more radical transformation in the near future. In this chapter, we survey the changing models of MNE organization over the last three decades, examine their theoretical underpinnings, and assess their potential for understanding the future evolution of organizations in international business.

Change over time has been a central feature of models of the MNE because Internationalization is an incremental process. A company typically starts as a domestic enterprise and becomes more and more international over time, as the number of countries in which it operates, the number of sub-units which it must manage, and the range of activities in which it is engaged, expand. Although evolutionary theory has often been associated with highly deterministic theories of environmental selection, there are many variants that allow for strategic choices and for multiple evolutionary paths. Evolutionary theories of organization are in the broadest sense theories about patterned change over time, where changes are driven by selection pressures that move organizations in a direction common to other organizations that share the same trajectory (as in life cycle theories) or environment. Those pressures can be either internal (i.e. attributable to the dynamics within the organization) or external, or both.

Internationalization provides the basis for the selection forces that characterize the evolutionary models of the MNE. Internal selection pressures arise from the increasing scale, growing complexity and internal diversity, and intensifying coordination requirements that accompany international expansion. These strain the existing organization to the point that key features of the organization must change if it is to continue to grow or perhaps even survive. External selection pressures, those rooted in the environment, can be attributed to two different levels of analysis. The first and often the most salient, are the multiple country environments, including both home and host nations. There is also a global meta-environment, whose selection mechanisms can operate at the industry or supranational institutional levels.

The most notable work in this area was done by Johanson and Vahlne (1977). They define the different stages through which MNE organization evolved, starting from Chandler’s three-stage model of evolution of domestic firms from the enterprise run by the individual entrepreneur to a functional organization to a divisional structure (driven first by increasing scale and then by growing product diversity). Stopford and Wells portray firms as beginning their international expansion by putting foreign activities into a separate international division, followed by a move to either an area organization or a worldwide product organization or some hybrid of the two.

This model did not go unchallenged. Chris Bartlett’s dissertation (1998) found the international division structure to be viable at very high levels of product diversity and international sales. Grant (1991) found that firms that moved from an international division to a global product organization actually experienced a drop in sales abroad. Such research implicitly argued against a unilinear model of MNE evolution. Other researchers proposed alternative models of structural evolution.

The second approach paid little attention to formal organization structure and focused instead on the evolution of MNE activities in terms of value-adding activities (from export to sales offices to production facilities to full value-chain subsidiary), mode of operations (from arm’s length transaction through partnerships with locals to wholly-owned operations), and location (from more familiar to less familiar country locations). The force moving a firm across these stages was what we would now call the enhancement of capabilities: the incremental development of managerial skills and knowledge and of organizational routines and processes that enabled a firm to diversity geographically. In the words of two of its earliest proponents, it is a model of the Internationalization process of the firm. The model focuses on the development of the individual firm, and particularly on its gradual acquisition, integration and use of knowledge about foreign markets and operations and on its successively increasing commitment to foreign markets.

As with the structure approach, the primary drivers of change across stages were internal to the organization, in this case being the growth in experiential knowledge that changed the calculation of the risks and rewards of Internationalization.

All three approaches built evolutionary models that were essentially unilinear, in which the features of the MNE itself (its expanding international activities, its product diversification, its changing level of collective experience and knowledge) created the impetus to move from stage to stage. The first two focused on different aspects of organization design: one on formal structure, the other (the learning model) on the distribution and ownership of value-adding activities across locations. Both approaches were extended in the succeeding decade. Robinson Pearce (1988) in particular drew on Galbraith’s information-processing paradigm of organization design to provide a more theoretically grounded approach to the evolution of MNE formal structure, in terms of the kind of information flows facilitated by each type of formal structure. Applying information-processing theory to the MNE was easier conceptually than empirically, as Gustavsson (1994) has pointed out: the complexity of information processing and the number of units in the MNE made the actual measurement of flows extremely difficult. The second approach, the analysis of incremental Internationalization, was expanded in the 1980s by Morrison (1996), who pointed out that MNEs not only add activities in an existing location; they also often deepen them by, for example, increasing the sophistication and complexity of products manufactured in an established foreign plant. The third approach – Perlmutter’s focus on mind-sets and managerial culture—was frequently invoked through subsequent years, as the focus on MNE organization in terms of its culture or social construction became an increasingly important aspect of the work on the MNE. Influential as the ethnocentric-polycentric-geocentric model proved to be, by its very nature it did not lend itself to significant extension and further development.

Both the design and the cultural aspects of MNE organization received considerable attention from the IB field in these early years. However, there was relatively little focused and systematic exploration of the political aspects of MNE organization. But in the late 1970s and early 1980s, the potential for conflict and contention for influence over decision-making from different sets of actors within the MNE provided the touchstone for some major developments in the analysis of the MNE as an organization.

Empirical research


The evidence of the impact of strategic planning/management on organizational performance is examined, both from private and voluntary nonprofit sector perspectives. It is important to understand the difficulties involved in defining effectiveness; the evidence for the effectiveness of strategic management in the private sector; the evidence for the effectiveness of strategic management in the voluntary nonprofit sector; the need for further research in this area.

Case Study

Honda’s internationalization process started in 1959, when it founded the subsidiary “Honda Motor Co. Inc.” in the United States. Cars were produced in Japan and then sold into the United States. Therefore, Honda Motor Co. Inc. was functioning as an intermediary for Honda of Japan. In the beginning of its global operations, Honda had low assurance, as it wished to avoid risk. Due to the notion that Honda was a late applicant in the automobile sphere and therefore had complexities in competing in Japan, Honda had to branch out its resources of sales. So, Honda pushed with its internationalization ahead and consequently it had to see the world as its market. In the late 1970s, Honda had to challenge new troubles: The American government limited imports of Japanese cars. Honda responded on this circumstances by diversification of its production and assumed an FDI and founded “Honda of America Manufacturing”, which began car manufacture in 1981 with assembling of the Honda Accord. Nevertheless, the parts for the cars were still produced in Japan, only the assembling took place in the United States. In this time, Honda followed a global tactics: The same cars were sold all around the world, so Honda was capable to sell cars very inexpensively because of economies of scale. (Banerji and Rakesh, 1996 )

The increasing requirement for fuel-efficient Japanese cars in the 1970s offered Japanese producers with capabilities to embark on full-scale globalization tactics which were grounded on domestic construction in export market states, transcending the frames of sales from Japan.

Full-fledged joined schemes with foreign producers marked the initial stage of this new perspective. At the time, the U.S. producers GM and Ford were beginning to support their “world car” plans aimed at producing passenger cars on a global scale to meet the rising requirement for these cars.

Joint ventures were originated with European producers during this period: between Honda and British Leyland in the United Kingdom, between Nissan and Motor Iberica in Spain, and between Nissan and Alfa Romeo in Italy. And in early 1984, Nissan was to start construction of Volkswagen’s Santana at its Zama plant in Kanagawa, Japan.

When strategists discuss the distinctive opportunities they rapidly turn to talk of how to create them. This is obviously significant, and most individual capabilities have, in some meaning or other, been created by the companies which hold them today. Yet the effort to establish typical capabilities tackles its own version of wish-driven tactics. Creating distinctive capabilities should be a task of outstanding complexity, otherwise, the capability would soon stop being distinctive. (Bartlett, Ghoshal 1998)

Nevertheless, at the beginning of the 1990s it was obvious that these types of internationalization, regarded to be the most archetypal and pertinent within the tactics accepted by auto producers, while being significant, were not comprehensive, since they all rotated around a single feature: the one grounded on the degree of manufacturing incorporation attained by automakers in the state to which the end product was followed. Such incorporation was minimal when there was export of complete cars, but maximum with local manufacturing of parts and concluding assembly. With the modification in industry balances that took place mostly in the 1990s, it became obvious that internationalization is a fact that presents a range of shapes which cannot in the central be narrated to the degree of manufacturing incorporation. It entails an increasing set of characteristics which are inclined to play a higher role relating chiefly to organizational, economic and decision-making aspects

Universal Criteria to assess organization

It is hard to find agreement on universal criteria to assess organizational performance in the private sector (Oster, 1992). If an organization is successful on key results indicators and has well-developed strategic planning processes, that does not prove that it was the planning that caused the success. It may indeed be that only successful organizations can afford to employ consultants and planners to develop sophisticated strategic planning processes, or both things may be the result of a third factor altogether.

Mintzberg (1987) concludes that ‘the assumption that the final number on some bottom line has an identifiable and therefore measurable relation to some process the organisation happens to use – one among hundreds – would appear to be, if not extraordinarily arrogant, then surprisingly naïve’.

Honda was a good leader who was capable to deal with every team work issue. He comprehended that even though team work and team building presume lots of challenges, the final result from a high routine team is worth all the endeavors and time spent on attaining it. Honda realized the way a team acts as a whole concludes its achievement and he treated surrounding people as equal and often worked in a workshop with his workers being the proprietor of a company.

For the previous two decades the idea of company culture has a wide reception as a means to realizing human structures and as one of the key notions in the human resource management. The research of the data reveals that every component of company culture can be regarded as a significant environmental order impacting the system and its subsystems. One of the key matters of tactical leaders is to create and support the managerial components that make up the communal work.

Soichiro Honda is a typical leader. He was a simple man and employees followed him as he motivated them. He demanded realistic results, and he stated how to accomplish these results. Honda was a person with vision and obsession. He could to see breakdowns as essential steps toward success. Soichiro Honda inspired in his workers the drive to study without fear of failure, having created the road to success.

The organizational capacities that are being duplicated at suppliers comprise a structure of performed customs that are rational. ‘Routines’ refer widely to the way things are performed in an organization, and may entail not only well-specified technical customs, but also ‘the comparatively constant natures and strategic heuristics that formulate the advance of a company to the non-routine matters it challenges. In so far as such routines entail a significant component of communication and regulation among personalities, organizational capacities are not completely reducible to personal skills. Knowledge is generally distributed in dissimilar parts of the company. One significant capacity in supplier expansion is continuous enhancement. In a Schumpetarian or evolutionary circumstance, firms may satisfy, in retort to an unsure and complex world. Such satisfying behavior is removed by expanded acting aspiration and by re-igniting learning through steady enhancement. The performance of steady improvement amounts to an attempt to re-ignite the requirement for development in organizational routines ‘so regularly that the flame burns pervasively and continuously’, rather than starts and stops in contacts to the recognition and solving of a specified matter. Steady improvement is intrinsically firm-precise in its submission and products, and therefore is part of the insubstantial assets for which no stable market exists. The typical and difficult-to-replicate feature of such assets is essential to the nourishment of a firm’s competitive benefit. It also clarifies why companies differ, even in the same sphere in the same state.

Company takes great pleasure in being the originators in incorporating Intercultural management notions viewpoints into the worldwide agencies and the minds of world business leaders. Honda’s work has provided a track record equaled by none though the company has not had much time to write about it or to issue its discoveries and results. Honda goes on seeing “new” approaches, perceptions, and replicas from others that have been performed for years. Nevertheless, company is most proud of the marvelous success that its consumers have enjoyed in the expansion of their multicultural associations with the intercultural management capabilities they studied from us. It is in their attainments and from their approval that we enjoy our furthermost achievement, which is in fact their success.

Strategic Options for Global Integration

It is significant to identify that worldwide integration is a highly complex commotion fraught with cultural, political, economic, and technological deliberations. As a result, the proposals that follow are established on the standard that integration is best advanced gradually – element by element – rather than in one fell pounce.

Analyzing the current state of the studying function, it is necessary to state Businesses should charge their studying function to classify which components of the function are local, regional, or global. Officials should take into account why certain components are more incorporated than others. A global research staff poll, which emphasizes the staff’s capabilities and linguistic abilities, should be entailed in the estimation. (Banerji and Rakesh, 1996)

Strategy begins with the realization of what these distinctive capabilities are. A capability can only become distinctive if it is gained from a feature which other firms are short of. Yet it is not sufficient for that characteristic to be distinctive. It is important also for it to be sustainable and appropriable. A distinctive capability is sustainable only if it perseveres over time. Honda’s attainment was not only to redefine the US motor cycle sphere, but to linger leaders in that market. A distinctive capability is appropriable only if it completely or predominantly advantages the company which keeps it. Frequently the advantages of a distinctive capacity are corrected instead by workers, by purchasers, or by competitors. There are comparatively few types of distinctive capability which meet these situations of sustainability and appropriability. There are three which persist in analysis of the presentation of successful corporations. Innovation is an understandable resource of distinctive capability, but it is less frequently a sustainable or appropriable resource as successful innovation rapidly magnetizes replication. Keeping a benefit is most simply probable for those few novelties for which patent construction is efficient. There are others where procedures confidentiality or other characteristics make it complex for other companies to follow. More often, turning an innovation into a competitive benefit necessitates the development of a influential range of supporting tactics.

What turns to be competitive benefit derived from modernization is regularly, actually, the return to a structure of arrangement capable of manufacturing a series of modernizations. This is an instance of a second distinctive capability which is called architecture. Architecture is a structure of relations within the company, or between the company and its contractors and customers, or both. Commonly, the system is a complex one and the content of the associations implied rather than explicit. The structure is grounded on steady mutual pledge to monitor and empower its terms. A firm with individual planning gains power from the capability to transport company product and market explicit data within the company and to its consumers and providers. It can also retort rapidly and flexibly to altering circumstances. It has frequently been by the means their greater capability to expand such planning that Japanese companies have established cutthroat advantages over their American adversaries.

A third distinctive capability is status. It is, in a wide sense, a kind of planning and arrangement but it is so extensive and so significant, that it is best to regard it as a dissimilar basis of competitive benefit. Easier to maintain than to make, repute meets the necessary provisions for sustainability. Actually, a significant component of the strategy of many successful firms has been the alteration of an original distinctive capability grounded on innovation or planning, to a more lasting one derived from repute.

For Honda, the streams of worldwide integration are initially electronic, informational; they synchronize creative commotion through hubs and swellings allocated in a net of collaboration and competition advancing across the world. The regional centers of the United States, Europe and Japan – what economist Kenichi Ohmae calls the “Triad” – make up the densest part of the network, which acts in real time. Associations between the hubs, and chiefly the “global cities” of New York, London, and Tokyo, are the spines of this global space, while smaller districts gain significance by the means the specialized donations they can make to the general structure. The space of flows includes all the exchanges that link together the world’s locations and inhabitants, including those of raw materials and engineering productions, as well as associations of people: but data is the initial layer of the structure, tending toward independence from the rest. This independence of the data subject is reflected – or required – by the appearance of managerial elites, whose attentions are global. They press for the creation of homogeneous spaces of statement and exchange, which have the consequence of separating them from place-bound inhabitants. Articulation of the elites, segmentation and incompetence of the masses seem to be the twin instruments of social control in the communities. In this regard, postmodern structure, with its seamless joint of styles and periods, symbolizes and embodies the “timeless time” and the “spaceless space” in which the elites measure themselves against each other: a dynamic familiarity of global rivalry, overriding customary customs and even biological successions.

Step by step, the world financial system has become a single stage with leading roles performed by transnational companies.

Global financial integration is ruled by ongoing advances in science and technology. For much of today’s industry, physical distance is irrelevant: contemporary telecommunications links the world by voice, visual image, and documentation in less than a second.


Era of Internationalization

The early 1980s saw the development of a highly influential framework that brought the environment to the fore as a selection mechanism for MNE evolution (the Integration-Responsiveness framework), and shifted the analysis of organization design from formal structure to managerial processes. The 1980s was a particularly fertile period for organizational studies of the MNE, and the concepts and frameworks developed then have provided much of the grounding for research and teaching about MNE organization to the present day.

The integration-responsiveness framework was developed by C. K. Prahalad, Yves Doz, and Chris Bartlett, who all came to the doctoral program at the Harvard Business School in the 1970s with backgrounds as managers in international companies, and who shared both an experience-based understanding of the complex internal workings of MNEs and a strong commitment to managerial relevance. Individually and jointly they produced a series of papers in which the reader can see the gradual emergence of a new framework of the environment confronting MNEs, which provided an analytical grounding for the tension noted by Brooke and Remmers as early as 1970: ‘A characteristic of the multinational company is the conflict between the geographical and the product-group projections of the organization.

In his earliest work, C. K. Morrison Ricks (1996) portrayed this conflict in terms of internal forces conflicting demands for managerial diversity and managerial interdependence. He also put the locus of the conflict in the environment, attributing it to the tension between the political imperative (defined as ‘adjustments made necessary by the demands of host governments’) and the economic imperative (‘requirements for economic survival and success’). By 1981, an article jointly authored by De Wit, and Mayer described the parameters of the conflict as ‘the often contradictory demands for global competitiveness and national responsiveness’ (De Wit, and Meyer 1999). The terminology changed somewhat in later work, but this identification of two dimensions of environmental forces paralleled the contingency theory of Lawrence and Lorsch.

By identifying two orthogonal sets of environmental forces, the Integration-Responsiveness framework made it possible to map industries into a more complex conceptual space and allowed greater scope for managerial choice than did a single continuum from domestic (or multi-domestic) to global.

Reviewing the strategy

The strategic management process can be broken down into three main activities: strategic analysis, strategic formulation, and strategic implementation. Here we explore some of the ways that the board and staff of voluntary non-profit organizations might review themselves as part of their strategic analysis.

Strategic analysis

The strategic management process can be broken down into three main activities: strategic analysis, strategic formulation, and strategic implementation. Here we explore some of the ways that the board and staff of voluntary nonprofit organizations might review themselves as part of their strategic analysis. Review tools that have proved useful in other sectors, as well as a number of tools that have been specifically designed for the public sectors, will be examined. Some of the models and tools that have been developed by strategic planning practitioners and writers over the last thirty years to help evaluate organizations and their internal environment are given below.

The central factors necessary for future success should be analyzed in depth: strategic positioning of services; service charging; classification of the services which will increase the market; victorious bundling of services; the best route to attaining world coverage; the communications challenges which are required to be overcome; and the most efficient methods of configuring in-car hardware.

Regarding the matters of internationalization, it is necessary to highlight the problems encountered by those producers that originated sophisticated – but too often expensive, poorly designed and over-complex – telematics services, and the optimistic experiences of the car makers which have thrived in stating systems within their model varieties. It is necessary to provide pragmatic proposals that reposition telematics as an active instrument that can be applied by producers to keep their vehicle production, vends and servicing processes.

The essence of global strategy of auto industry entails the global car manufacturing and allocation tactics, global resourcing strategy, and worldwide product expansion tactics. Managing globalization is also one of the central issues from the regard of creating strategic conclusion. On the other managing globalization is directly connected with managing localization. Chasing worldwide tactics, all of the auto corporations have to resolve this matter: how they can coordinate and link their global strategy with the strategy of localization.

Since 1986, Japanese car manufacturers set up domestic transfers by various ways in Western states. In early stages of this procedure, Japanese car producers tended to relocate their production and part procurement structures and their production with some local changes. In 1990s, they were challenged with higher Yen’ appreciation and the validation of their production. Throughout this term their strategy has been modified gradually from domestically directed one to more worldwide directed one. They attempted to build a local construction network linked to the transnational division of labor. The local manufacture network tended to manufacture worldwide productions which can be exported to the world and lastly achieve the worldwide network. These network global tactics were chased not only by car assemblers but also by part contractors. Japanese part contractors maintained car assembler’ localization and later their worldwide networking as they were also approaching globalization tendencies. After 1990, this globalization process has been more accelerated.

In early 1980s the auto trade hostility turned to be more powerful and local manufacturing was appearing as a center of Japanese car production strategy. In early step local production began as an ancient localization advance of how the Japanese could just transport the Japanese structure (such as the production system and part purchasing system) to other states and become accustomed to the local situation. In this phase, local production was an export alternate as they couldn’t augment car export. Basic constituents such as the engine, transaxle, platform and so on were vended from Japan and assembled in each transplant. After 1985 G5, the Yen’ valued radically, causing the increase of local production and part local contents. It appeared clear that car groups would be obtainable for either export or domestic production. Basic mass manufactured cars were assembled for local production and high charged luxury car or sporty roader such as niche produces turned to be export directed. This result signaled that the Japanese car producers had begun a new strategic advance which modified from export direction to local production global network direction.

Empowering this tendency, product expansion localization by Japanese corporations also expanded with augmenting local contents ratio in their local places. They founded local R&D office and employed local designer and design engineer. This office started from corpse design which could be flexible for local requirements, and soon it provided a sample. During this early phase, R&D localization possessed the essential motive to appraise local parts for level up local parts excellence and manufacturing capacity and to replicate the car design in a corresponding Japanese R&D office. Soon this phase moved to more globalizing product expansion and production structure, which obviously distinguish the car expansion and created in Japan, providing more local companionable concept along with domestic production ratio expansion.

After the second fundamental reevaluation of the yen, in 1990s, the globalizing R&D manufacture, and parts procurement network, turned to be more central as the new tactics to reduce car export with augmenting local manufacture in the ongoing rearrangement of auto industry in Japan. In North America, Japan’s largest market and manufacture base of Honda, improved their local contents ratio almost same as U.S. Big Three with engine domestic production, and their manufacture capabilities also enlarged up to 600 thousands or 700 thousands. In U.S. their R&D structure has expanded further and their R&D middle launched innovative car reproductions – medium size car and station wagon which totally changed body design, interior, axis and so on, but still having common features with Japanese model. Moreover to the Honda Accord wagon, Honda Accord, are principally developed by the U.S. R&D office and manufactured in local plants. Some of them are exported to Japanese market, Europe or Latin America and other Asian markets.

Localization and worldwide networking were hastened by the Yen’ more steady appreciation, and on behalf of Japan-U.S. auto cooperation Japanese auto makers formed their global vision; it turned to be more important. In this regard, they proclaimed that they would discontinue their car export and generally they still react for domestic market with their domestically assembled car. They would also reinforce product expansion localization and local parts procurement. This worldwide vision revealed that Japanese auto makers wished to solve auto trade in equilibrium with U.S. and original big flow of globalization in the business world. They would endeavor an innovative challengeable tactics in which they could arrange world-wide with finest position and optimum manufacture in a global network. In this plan they would equally supply their cars and constituents – worked out and assembled in locations defined by the market for both domestic use and export. Consequently, Japanese auto-makers wish a grand strategic target in which they can counter to the exchange rate transform in every region.

Stakeholder analysis

One of the most powerful and relevant techniques that can be applied in the voluntary nonprofit sector is stakeholder analysis, also developed by John Bryson (1995) for public and voluntary nonprofit sector organizations from the work of Freeman (1984). ‘Stakeholders’ are all those who are affected by the activities of the organization or who have expectations of the organization. Stakeholder analysis is not only concerned with internal analysis, as the stakeholders will include both internal and external players, who will have views about both the internal aspects of the organization and the implications of changes in the external environment. However, stakeholder analysis is invaluable in assessing the views of internal and external stakeholders about the current state of the organization.

Typically the first step in the process is for the board and staff to identify exactly who these stakeholders are in relation to the organization and to prioritize them in relation to their importance to the organization. The second step is to determine what the needs and expectations of each of the most important stakeholders are in relation to the work of the organization. The board and staff of the organization can do this by engaging in thoughtful guesswork, but a much more valuable approach is to ask the key stakeholders directly what they think and expect of the organization and how it is currently doing. This is central to Social Auditing, and is often part of an evaluation process. It is also a crucial part of quality management initiatives. The third step involves deciding on which of those actions will help the organization to fulfill the expectations and aspirations of the stakeholders.

Portfolio analysis

This technique was developed by the Boston Consulting Group, normally considered to be in the Positioning School. It is a way of evaluating the programs that an organization currently runs in preparation for deciding what place they have in the organization’s future plans.

In many respects small firms are linked with the environment – as subcontractors to larger companies or woven into a tight network in a specific industry. Small companies are usually also dependent on certain individuals – the owner-manager or other significant actors – and have limited resources concerning R&D, production or marketing. A situation of multi-dependence seems obvious for the small firm, which further underlines the importance of using a multilevel approach when studying this category of company.

One of the most evident findings is the absence of difference that can be attributed to country of origin. The company is located in Japan. Trade among these countries is common, and there is a tradition of cooperation, even if there are barriers, such as different languages, between Japan, the USA and European states.

From the cases it is evident that the companies, whether within the conventional or the innovative group, do not differ across countries. There seems to be a sort of logic that is related more to the companies’ operations as such than to country of origin. The role of national culture, for strategic management in Internationalization processes at least, seems thus to be quite small. Other influences, such as characteristics of specific industries, are of greater interest.

Competitiveness is derived from external factors – or positional advantage – and internal factors – or resources and assets used. The latter is the effect of the competencies of the firm. Thus, a definition of competitiveness might be: competitiveness is a measure of the ability of the company to deliver value to the customer divided with the resources used relative to the competitors of that particular company.

This measure of competitiveness is not an operational measure and should not be taken as such. However, it does focus attention on two different issues that must be seen in connection in strategic management: the position enjoyed by the firm and the internal competencies of the firm, which together form the basis for judging the competitive advantage of the firm. Evidently, both measures must be taken relative to the competitors of the company.

Finally, to add even more to the complexity of this issue a note on competitors is called for. Regarding product offerings it may be relatively easy to deduce who the competitors are even though the multi-element conception of products may render this quite difficult. For instance, substituting products may be in vast numbers and kinds. Furthermore, regarding internal measures, Quinn advises us to consider each competence area as an area where the company must excel in competition with all the companies that offer this competence as a product offering. For instance, one may consider outsourcing all sorts of competence areas (e.g., R&D, finance, inventory control) if one’s internal productivity is too low compared with others.

When Honda was seeking ways to enhance their e-learning training program, we developed this immersive learning bay environment. Different from the standard page-turner e-learning model, this lesson, which guides mechanics in how to perform a Honda-standard brake inspection, includes several different types of content and interactions, from standard animations, to interactive montages, and a fully immersive mechanic’s bay in which students can interact with different components and tools in the environment. All interactions feature detailed remediation. As well, the module features two tests, a pre-test with qualifying knowledge, and a post-test. After completing both tests, the results are compared, side-by-side, with the student. The module is fully integrated into Honda’s larger learning management system.

Competitive Advantage

At this point in the discussion of competitive advantage, two important issues are of interest. First, the conception of competitiveness as dictated by the customers alone may be questioned from a number of sides, perhaps most notably from the environment side, for example do customers know, or even care, what is good for the environment? Second, what creates sustainable competitive advantage? This may be either products or underlying competencies. Even though a much more adequate discussion follows later, I argue that sustainable competitive advantage is created in the interplay between so-called product-market and competence considerations.

According to the preceding discussion and most theory on strategic management, the customer is the ultimate judge of competitiveness; that is, by buying the products of a firm, the customer indirectly decides which firms will continue to exist and which firms will go bankrupt. This corresponds to the famous slogan by Soichiro Honda: doing better by doing good; that is, if a firm makes money then that is good for society. However, quite a few scholars have questioned this, for instance, the entire line of research in vision management (Andersen, 1995; Campbell & Yeung, 1990, to name a few of the seminal references), which claims that a corporation has more than just economic responsibilities. In fact, Andersen claims that taking no responsibility for larger societal issues equals lack of responsibility (Andersen, 1995), a rather serious claim toward managers of today. And, in fact, there are some serious questions to be asked regarding the entire set of stakeholders in a firm and their claims. For instance, one very hot topic of today is that of sustainable environmental development, which in many cases will not correspond to sustainable economic development – environmental protection costs money.

This discussion is divided into two parts: first, the shareholders, who may or may not share interests with customers, and, second, all other stakeholders, who may or may not have noneconomic stakes in the firm.

Although both competitiveness and shareholder value are typically measured in economic terms, there has been considerable argument regarding whether either should be the key to managing a firm. Typically, management is said to have to do with the fact that shareholders focus on short-term profits, while competitive advantage—and strategic management – should focus on long-term profitability of the company. Thus, this discussion has to do with strategy (mostly of Japanese corporations) being focused on short-term issues instead of long-term issues. This focus has been blamed to be, at least partly, the cause of the decline of U.S. competitiveness.

The problems of shareholder value versus sustainable competitive advantage are related to the problems discussed previously regarding accounting methods, which seem to show an imprecise picture of the economic state of a corporation. Furthermore, Rappaport devotes an entire Harvard Business Review article to the demonstration of the fact that: “…establishing competitive advantage and creating shareholder value…stem from a common economic framework…” (Rappaport, 1992, p. 84). Rappaport’s basic argument is that shareholders evaluate the prospects of long-term profitability of a firm when they decide to buy or sell stocks, and that it is only unexpected short-term results, such as a bad quarterly report, that make them change their minds.

It has now been established that shareholder value and customer value are two sides of the same coin. This may also be the case for other stakeholders of a corporation, for instance, suppliers, who have a natural interest in the long-term competitiveness of their customers. However, there may be other interests besides economic results. An excellent example is that of sustainable environmental protection that may cost more money than it saves, which works against the maximization of the above equation. A number of other examples like this one may be cited: employee well-being, philanthropy, and so on; and the question is what can be done to incorporate such issues in the equation of, and thinking behind, total productivity? This interesting question may not have a simple answer.

In a “mathematical” way of thinking, the concept of constraints can be of great assistance. If issues such as environmental protection are formulated as constraints to the original equation of total productivity, such issues can be taken into consideration without fundamentally changing the thinking behind competitive advantage. Total productivity is still supposed to be maximized, but now with regard to some constraints; that is, solving the equation yields a local, not global, optimum point.

Of course, this is a simplistic way of looking at such difficult problems as environmental protection, mainly because the equations of this section are not solvable, “hard” equations, but rather conceptual ones. However, it is of crucial importance that a link is established between competitive advantage and societal responsibilities, a link that can be established by using (conceptual) constraints to the economic equation of total productivity.

At this point in the discussion, an interesting question is, what is competitive advantage? And how is it created? Any firm is interested in competitive advantage; actually it may be said to be the very purpose of strategic management, especially if the advantage proves to be sustainable. Hall defines this: “…companies have sustainable competitive advantage when they consistently produce product/delivery systems with attributes which correspond to the key buying criteria for the majority of customers in their targeted market. Thus, if a company has sustainable competitive advantage, customers will prefer its product offerings to those of the competition; that is, external and internal productivity will be greater than that of other firms in the targeted market.

Of course, this is a simple view of competitive advantage. For instance, what about substituting products, that is, other offerings that may be preferred to the offering of the corporation? This and many other examples must remind one that competition and strategy offered to the wrong customers, long-term performance is likely to be elusive. For instance, what competencies contribute to a given product line? What are the demands for competence development resulting from expanding this product line? On the other hand, what possibilities result from the development of a new core competence, for example, high-speed manufacturing? The questions illustrate that while product-market strategy cannot explain sustainable competitive advantage, competence development does not automatically lead to the creation of business. There is, therefore, a need for an integration of the two approaches to strategic management in order to secure sustainable competitive advantage.

If one takes competence-based strategy as a part of strategy theory that has the basic premise that strategy must be directed inside the corporation toward resources, capabilities, and/or competencies, a scan of the literature will reveal that different authors have different names for the issues to be dealt with in strategic management. A more precise literature analysis and synthesis will follow, but in this section my intent is to illustrate the diversity and complexity of the literature.

Some authors refer to the new view of the corporation as the resource-based view of the firm, even though most recent publishers generally attribute: “…the intellectual roots of the resource-based view of the firm.” Conner has summarized the main idea of the resource-based view of the firm as: “…a resource-based approach to strategic management focuses on costly-to-copy attributes of the firm as sources of economic rents and, therefore, as the fundamental drivers of performance and competitive advantage. …According to this perspective, a firm’s ability to attain and keep profitable markets segments depend on its ability to gain and defend advantageous positions in underlying resources important to production and distribution”. This corresponds to Penrose’s theory of the firm as a collection of productive resources, which is decided upon by administrative decisions (Penrose, 1959). These resources range from the physical resources of the corporation, financial resources, human resources, reputation, technological resources and intellectual probate, and organizational resources. A number of authors subscribe to the resource-based view of the firm and attempt to define strategic management in terms of resources.

However, others seem to have evolved from the resource-based view of the firm into something slightly different. For instance, Aaker defines that sustainable competitive advantage must be derived from: “… assets or skills possessed by the business. An asset is something your firm possesses such as a brand name or a retail location that is superior to the competition. A skill is something that your firm does better than competitors such as advertising or efficient manufacturing…” (Aaker, 1989, p. 91). From this quotation it is easy to see that a distinction has been made between “hard” and “soft” resources. This is taken one step further by, for instance, Amit and Schoemaker (1993) who make a distinction between resources and capabilities. To these authors, resources are transferable, while capabilities are firm specific. Consequently, sustainable competitive advantage is more likely to be derived from capabilities than from resources; this is also clear from Barney (1991) and others. In my view, the main difference between Penrose’s resource-based view of the firm and the contributions treated here is the question of the conditions under which a resource or capability can constitute the basis of competitive advantage. Penrose and others following her make no distinction between the different kinds of resources, whereas Aaker et al. and others clearly subscribe to the view that truly sustainable competitive advantage flows from firm-specific, difficult-to-imitate, resources.

Finally, there is a third trend within this area of research—the contributions on core competencies. Their origin, or at least the origin of the term core competence, can be traced to 1990. Most of the contributions on core competencies either acknowledge the work of Penrose as an inspiration or account for why it is not taken into account. If the latter, the concept of core competencies is presented as the invention of different authors; generally, the concept is attributed to Prahalad and Hamel (1990, 1993). In 1990, they defined core competencies as: “…the collective learning in the organisation, especially how to co-ordinate diverse production skills and integrate multiple streams of technologies” (p. 82). It should be noted, though, that in his 1992 book James Brian Quinn attempts to attribute the invention of core competencies to himself. His explanation is that Harvard Business Review delayed publication of his articles introducing core competencies until Prahalad and Hamel’s work was published first (Quinn, 1992). Still, in his 1992 book it is difficult to find any concrete definition of core competencies. Apart from the sad, but still rather amusing, story of authors’ “copyright” to new fads, what can be concluded from this third approach to resource/capability/competence strategy is that it has contributed to lack of clarity. For instance, the notion of core competencies has quite a lot in common with more recent definitions of technology, to such a large extent that later I will argue that core competencies and strategic management of technology deal with basically the same issues, and consequently must be one and same. However, it is time for a more concrete and in-depth analysis of the literature.

Summary and Conclusion

Honda has comprehended how to create small assemblage plants that are advantageously assembling as few as 20,000 units a year. The furthermost confront every assembler has is to stabilize capability drop ally rather than by replica or market, and it turns to be that Honda may be close to making that. Instead of restricted scarcities and surpluses that decrease the productivity of other creators, Honda will maximize returns on financial inflow. Honda has concentrated on the essentials. It has never permitted itself to get sidetracked by fads or the assertions from participants about the strictures for achievement in the future. But it also seems to have paid accent to those who highlighted its size restrictions. Honda’s retort has been to turn the notions of optimal production volumes and congregation elasticity upside down.

Japanese diffusion of world markets is a subject of key significance in worldwide business. The market for cars in the United States is a case in point. In 1971, the Big Four Japanese automakers; Honda, Nissan, Toyota and Mazda held an insignificant split of the United States (U.S.) local car market. As conservative wisdom would possess it, Detroit is chasing the old rule: charge whatever the traffic will impose maximize advantages on each car vended rather than sell more automobiles while Japanese companies may be discounting profits while inflowing all their reserves into development.

Protecting market share is meant to be the motive for such “pricing to market” performance. It is stated in a duopoly replica that pricing to market is reliable with profit increase if the duopolists do not reduction the future too much.

The notion that Japanese exports were restricted under the Voluntary Export Restraint (VER) accords attained in 1981 and amended in 1983 surely restricts the level to which market share maximizing performance can be imitated in actual market share expansion for Japanese car producers. Thus, until the yen’s approval made manufacturing in the United States just as cost effectual as manufacturing at home, Japanese market diffusion is restricted by the VERs. But this does not signify that the matter of pricing tactics is arguable. Actually, the Japanese could value below profit maximizing extents prior to 1987 in expectation of increased creative capability in the United States and the capability to avoid the VERs by creating domestically. Or they could impose prices to maximize short run benefit made on the restricted contribute of Japanese automobiles prior to 1987. It is well defined that VERs led to quality increase by Japanese automakers, and this augmented costs. But it is also stated that the trade command, by making a false shortage, did have an increasing influence on Japanese car costs over and above the price increases that are featured to quality increase. However, Japanese car costs overall are lower than those performed by the Big Three, and though this is due at least in part to product joint dissimilarities, it could also be pointing to a pricing regulations that errands market infiltration. The low prices performed by the Japanese, at least in the early 1980s, may also reproduce a distinguished requirement by Japanese car producers to recompense for such elements as a comparative lack of image in the U.S., or customer anxiety over spare parts achievability. Such component would define a shift internal and a probable annihilation of requirement for the Japanese product as contrasted to a corresponding U.S. produce. If this were the case, low pricing by the Japanese would be a retort to the exacting demand situations they challenged, and could well be profit exploiting in the face of command circumstances that were less positive than those enjoyed by their U.S. rivals. But profit maximization also involves that charges be taken into account.

It is known that Japanese car producers have a cost benefit over U.S. automakers. In defining selling price the Japanese will choose on the markup that will be applied to the price that they challenge. The Japanese are inclined to think in terms of marking down price to define cost rather than marking up cost to define price. This is nonetheless companionable with profit maximization as profit can be increased by using the correct markdown to selected price as it can by applying the right markup to programmed charges. Applying a markup to costs that are low provides costs that are low even if the markup applied turns to be income increasing. It is imaginable, then, that the gain in Japanese car producers’ market share after 1987 when manufacturing in the U.S. permitted Japanese automakers to sidestep the export restrictions, is due to their cost benefit over U.S. rivals, and their resulting capability to maximize profit while performing low prices relative to their contestants. This offers comparing U.S. and Japanese gross borders. A high gross margin does not, in and of itself, specify profit maximization since the profit maximizing level depends on the price elasticity of demand challenged by a company. But if the Japanese are found to perform high gross restrictions relative to their U.S. opponents, they must be sacrificing at least some of their charge advantage for profit rather than market share.

The latest decade has presented an increasing amount of research on the internationalization of firms. One prominent representative of this development is the Uppsala internationalization model, which sees the internationalization of the firm as a process in which the firm gradually increases its international involvement and engagement. The model stresses objective knowledge, which can be taught, and experimental learning through “learning by doing.” The model implies that market commitment and expansion develop in small steps. The model sets out to explain two patterns in the internationalization process of the firm: (1) The firm engages in a specific country as a development of the establishment chains. (2) The firm enters new markets with successively greater psychic distance, that is, start internationalization by going to the markets most easily understood by them.

As such, this internationalization model explicitly deals with export engagements. Johanson and Vahlne (1990) exemplify the model by using the term stages: “at the start no regular export activities are performed, then export takes place via independent representatives, later through a sales subsidiary, and eventually manufacturing may follow” (p. 13). Implicitly, this model may be applied to several function areas of the firm, not just marketing. The internationalization of other function areas like finance, management, and procurement may partly or fully follow the pivot point in the Uppsala internationalization model; hence, the internationalization process of the firm could be described as the gradual acquisition of knowledge about and the successive commitment to foreign markets. The internationalization of the procurement activities of the firm, but in the light of the internationalization model of the outward-bound activities described and seen from the procuring firm’s perspective.

In summary, the national culture represents the specific setting of language, values, norms, etc. in a country that is of ultimate importance for international strategic management. Within the frame of a national culture, every company is in turn involved in a cultural context typical of the specific industry. Furthermore, every organization has a company culture and on the individual level certain people, some with culturally different traits, are significant actors in the activities of the company. This line of reasoning implies that cultural aspects are important for the Internationalization process, and that these aspects are seen on many levels. Because we are interested in comparing companies in three countries and companies in different types of business (conventional and innovative) we need to study Internationalization processes on all the levels mentioned above: nation; industry; company; and individual. We argue, consequently, that a multilevel approach to studying the process of Internationalization in small firms is preferable.

In traditional management accounting costs of assets used are labelled “overhead,” and a peculiar situation arises when overhead can no longer be ignored. For instance, consider a multiproduct factory with a substantial amount of total costs as overhead. Then one has to add overhead to a given product to determine internal productivity. But overhead costs are of an elusive nature that may not be directly connected to each product. For instance: what about R&D costs? Should R&D costs be split equally among all products or merely on “new” products? Not even the cost of “hard assets” like a milling machine that is only used for one product can easily be split this way. If the number of products manufactured decreases, the prices on the remaining products will have to increase to cover the overhead costs of the milling machine. There are numerous problems like these in management accounting today, where more than 95% of internal costs may be outside of the physical transformation of materials and other resources, that is, outside manufacturing (Quinn, 1992). Quinn calls all nonmanufacturing resources “services” and claims that these constitute the major part of the U.S. and European economy (Quinn, 1992). Of course, this has not been unnoticed in academic circles and a lot of attempts to deal with overhead costs have been thought out, for instance activity-based costing. See Johnson and Kaplan (1987) for an excellent review of much of this debate or Kaplan (1990) for a proposal for new measures and methods for improvement of management accounting.

Despite measurement problems and their varying solutions it can be concluded that internal productivity leads us to look at core competencies as a source of competitive advantage. Consider the example of a firm that derives competitive advantage from manufacturing products at low cost. This we can objectively see (in stores or in the marketplace), but we cannot see how firms achieve low cost. It may be because of positional advantage. For instance, the firm may have access to cheap labour or resources or may be government subsidized. But again this may not be the case. The history of strategic management is full of cases in which it has been impossible to explain the apparent competitive advantage of firms by means of positional advantage; some firms simply perform better than other firms with similar positional advantages. In fact, I would call it the great failure of the school of product-market strategy that it has failed to explain such cases.

The latest school of thought about strategic management has provided an explanation. No matter the name given to the concepts at work, it is possible to explain why some firms have competitive advantage over others with similar positional characteristics and advantages, because the former firms have learned to combine their resources and assets more efficiently than the latter firms. Our low-cost manufacturer may be extremely good at planning production, have a superior quality program, be able to integrate product development and manufacturing in superior ways compared with other firms in the industry. The more competitive firm has one or more core competencies that it can use to create value for its customers and/or achieve lower internal costs, thereby creating overall competitive advantage relative to its competitors.

International strategy issues can be usefully analyzed with the tools of classic strategy frameworks, but also constitute a domain in their own right. To a certain extent, international strategies reflect extreme versions of the market segmentation, size-related efficiencies, market imperfections, and powerful competition that are concerns in all strategies. However, differences in political, legal, currency, macroeconomic, competitive, and technological regimes are so much greater in international markets than domestic markets that they really represent a new environment. The growth of regional multilateral economic unions has created a world of multi-tiered regulatory regimes that vary dramatically from region to region, exacerbating any differences and increasing the complexity of the international business environment significantly. Likewise, capabilities at handling highly diverse customers in many places, coordinating production across a widespread and highly diverse set of subsidiaries, financing operations in many currencies, and managing widespread and highly independent subsidiaries go beyond a simple scaling up of ordinary corporate practices. The idea behind the ‘transnational’ of Bartlett and Ghoshal, that MNEs must become adept at satisfying demands for efficiency, adaptation, and technological competency simultaneously but to a degree that varies across industry, location, and firm, suggests the complexity of global strategy. Domestic firms just do not need to manage the same degree of complexity.

The pressures of the ‘new economy’ for the information age business can only make this analysis more difficult and more important. As we have said, Internet firms are ‘born global’, and must deal with the strategic conditions, issues, and choices presented here for the large and experienced firm, while still new and inexperienced. At the same time, their information basis suggests a strong cultural and language component to their content, and the resulting need to adapt from market to market. Finally, their essential attachment to technology suggests that rapid worldwide organizational learning, both from competitors in many markets and from successful subordinate units, is the essential component, the key source of competitive advantage for such companies. Isolation in a single market is a recipe for failure, but so too is a message that cannot be adapted to sophisticated audiences in many markets.

Several issues require further research. First, the issue of performance remains central, as it does in the broader field of strategy. Second, the performance issue is tied up with the continuing debate of national versus regional versus global strategies. It is also related to both home country and choice of foreign markets, as strategies interact with institutional factors and macro conditions to generate different levels of performance for the same or similar strategy and governance structure. Third, how can MNEs effectively make transitions from one type of international strategy to another, without incurring huge costs and delays? Fourth, is size an essential attribute of the successful MNE, or can global strategies be effectively pursued by lesser competitors? Finally, issues of strategy implementation lie behind most of our questions and concerns. Many more strategies are destroyed by poor implementation than are disrupted by poor analysis and planning.

Honda stays one of the few mass dealers capable to sell most of its productions line without inducements. Because of unsurprisingly high residual charges, Honda is capable to offer consumers leases with monthly payments below those of less exclusive models. Honda has not counting on fleets or rental car corporations to arrange of surplus capability – the company is capacity restrained even though it has lifted capability in North America and increased local manufacture with imports. Honda Cars appeal to young consumers, even as loyal older clients move up market into more luxurious near-luxury Honda models.

When Honda lastly pierced the full-size minivan market, it effortlessly stole share away from each of the local manufacturers despite their decade-long head start in the group. Nobody has doubts that the new Pilot mid-size SUV will cut into the vends of opponents without the discounting that triumphs today in the sphere. Honda’s model, the Acura MDX, still sells at a finest over list price, and traders have a six-month waiting list for the model – offering once again that one do not have to be first in a segment to be victorious.

Even in Japan, Toyota is taking notice. It was forced to cut the price of its popular small car, the Vita, as the Honda Fit appeared to be the top seller. Joined with superior engine technology it has founded the solid basement that is enabling it to move almost naturally into new states and new market sections in the U.S. and Japan.

More amazingly, Honda appears to have resolved the challenge of competent capability application that turns to be the primary handicap for slighter, broad-line assemblers. Simply put, Honda has aimed car design so that some models can be simply assembled in any of its plants allover the world. This permits it to exploit vends by setting production to satisfy global requirement for lots Honda cars.


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