Management of Multinational Corporations ( MNCS )

Chapter 4 : Strategy and MNCs

The Firm as a Value Chain
The Role of Strategy
Transferring Core Competencies
Realizing Location Economies

Realizing
Experience Curve Economies

Pressures for Cost Reductions and Local Responsiveness

Multinational Strategy

Decentralized Federation
Personal Control
Multinational Mentality

International Strategy

Coordinated Federation
Administrative Control
International Mentality

Global Strategy

Centralized Hub
Operational Control
Global Mentality.

Chapter Summary

A firm may be regarded as a chain of activities that add value to the final product. The activities may be divided into primary and support activities. Primary activities include manufacturing and marketing, sales and service, while support activities include management of materials, research and development, human resources, information systems and infrastructure.

Firms should find ways to improve the efficiency of each activity to enhance the value of the final product. Firms operating in international markets develop different strategies to cater to different markets. These strategies can be classified as multinational, global and international strategies. These strategies try to strike a balance between the conflicting demands of customization and cost reduction.

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