Questions for Discussion
1. Describe one or two corporate strategies described in our chapter for multinational firms to conduct business in multiple areas of the globe.
The retrenchment strategy is the most interesting corporate-level strategy. It represents the point at which a company realizes that something they are doing is not sustainable, and that reducing size (and thus, costs) is the best course of future action. In my experience, it is extremely uncommon for companies to purposefully take this strategy. Whenever I have been around reduction, it is almost always completely unplanned and not well thought out. Generally, these companies have not been managed by “professionals,” but rather by technicians specialized in the company’s business. If more companies re-evaluated their value-chain frequently, and put thought into the company direction, there would be more success out there.
2. Types of Organizational Structures (page 287)—select one of our text examples of organizational structure and then find a corporation that you feel is descriptive of the text’s material.
General Motors (GM) has what can best be described as a global product structure. GM maintains several product divisions around the world based on the cars they manufacture. Even in the United States, different makes (i.e., products) are manufactured by separate divisions. This has the effect of allowing each manufacturer to be independently creative with their brand. At the same time, GM maintains centralized support functions, such as purchasing, to gain the benefits of economies of scale (Jones, 159).
3. After listen/reading our media story for Lesson/chapter 11, you will know something about Burger King and Starbuck’s strategic alliance for serving Settle Best Coffee (SBC) on BK new breakfast menu. Using material from Chapter 11 or prior chapters, why would BK decide on Starbuck and SBC instead of a firm like Café Britt? Develop your answer/explanation.
When deciding which coffee brand to serve in the US fast food restaurants, Burger King has based their decision on regional preferences. Seattle’s Best Coffee offers two perks for Burger King. The first is brand recognizability, the SBC brand is well known the US. Additionally, it’s parent company, Starbucks, is even better known. American consumers will immediately recognize that this is a quality cup of coffee. Secondly, SBC offers a style of coffee (“mellow”) that is more agreeable to the American palate than other brands, including Starbucks. Not only has Burger King chosen a brand that is recognizable across the country, but they have chosen a flavor that will be well-received.
Burger King would likely not have made a similar choice in their Australian restaurants (Hungry Jack). Australians have a more European taste for coffee. In fact, finding a “regular” cup of coffee in Sydney is darn near impossible. Australian coffee is mostly espressos and cappuccinos. Seattle’s Best Coffee would definitely not suit the Australian palate.
Jones, J. (2013). Organizational Theory, Design, and Change. (7th ed.). Pearson: Boston.
Wild, J. & Wild, K. (2013). International Business: The Challenges of Globalization. (7th ed.). Upper Saddle River, NJ: Pearson.