THERE ARE FOUR CORPORATE STRATEGIES COMPANIES COULD IDENTIFY THEMSELVES WITH - INTERNATIONAL, MULTINATIONAL, GLOBAL AND TRANSNATIONAL STRATEGIES
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Part 1: There are four corporate strategies companies could identify themselves with – international, multinational, global and transnational strategies. International strategies can be viewed as outcome of the interrelationship between industry characteristics, strategic flexibility and organizational capability. The development of deliverable across international borders is the most complex and dynamic context (Segal-Horn and Faulkner 1999, p. 1). The strengths companies can draw from international strategies include the independence of the country market while providing local needs and services offshore, maximise and centralised operational scale, the limitations of the direct presence in overseas markets with respect to sales and marketing and build and develop interdependent networks worldwide (p. 9). The weaknesses for international strategies is that it involves modern factors of production, different types of international trade; international polices, regulations and laws compliance; the role by the governments and the role of risk in international strategy.
The growth of multinational companies conforms to the expansion of industry across national boundaries. The purpose of multinational strategies is to seek opportunites in nations and regions new to the firm. Multinational companies are always triggered by the organizations’ viability, flexibility and feasibility to respond with geographic distance differences, national loyalties and barriers (Leontiades 1985). The strong points of multinational strategies agree with the width of supply and distribution networks and the alliances between the competitors. There are six forms of separation that could also benefit the multinational enterprises as political, physical, relational, environmental, developmental and cultural separations. However the weak points include the volatility of the movement of goods (customs), people (immigration), money (currency exchange), capital (regulation and taxation) and ideas (censorship and firewalls). There are also natural barriers to such movements and transportation, travel and communication would be too costly (Head 2007).
The integration of globalisation of basically every industry directly underpins the emergence of global strategies. In the concept of mass customization, comparative advantage became the most important element of global strategies to gain a competitive advantage. The strengths of global strategies reflect the efficiency, strategic, learning and reputation aspects of a firm. Efficiency is explained by the economies of scale achieved from access to customers and markets, exploitation of another country’s resources, extension of product life cycle and the operational flexibility. The strategic advantages of global initiatives are the first-mover advantage and the only provider of the products, the cross-subsidisation between countries and the transfer of prices. Further, learning and reputation benefits dealt with the broadening of learning opportunities because of the diversity of operating environments and the crossover of customers between markets through brand identification. However, global strategies have diversity microeconomic and diversity operational risks. The diversity in macroeconomic depicts the business cycles that are not perfectly correlated among countries and the diversity in operations refer to labour problems, necessary compliances and natural phenomenon (Global Strategic Management).
Transnational strategies refer to the adaptation of environmental situations while achieving flexibility through capitalizing on knowledge and communication. As a management approach, the strengths of transnational strategy are manifested in the integration of overseas components into the overall corporate structure across several dimensions and the empowerment of each component as sources of specialized innovation. Other attributes of transnational strategies is the organizational integration of global business activities through close-collaboration and interdependence between its headquarters, operations and international subsidiaries and the use of suitable global information technologies (Zwass 1998). Conversely, transnational strategies exhibit pressure on local responsiveness, inevitable conflicts on decision-making and value-added mechanisms due to differentiated contributions and divergence on standardized and knowledge generation and distribution.
International strategies are the opposite of multinational strategies. Transnational strategies are the combination of global and multinational strategies. Prior to global strategies, most firms are converging to multinational or multidomestic strategies first (Hines 2007). The differences among these strategies are as follows: international strategies deal with imports and exports and they do not invest outside their home countries; multinational strategies correspond to external investments but not on coordination of products and services in each region or local market segment; global strategies focus on investing in many countries with the same coordinated image/brand in all markets and puts emphasis on volume, cost management and efficiency; and transnational strategies act in accordance with investing in foreign operations with a central corporate facility and decision-making and emphasis on research and design (R&D) and market powers in each foreign market (Hines 2007).
Microsoft Company – International Strategy
Basically, Microsoft is committed to mergers and acquisitions as a way to expand globally and reach new markets. Other effort includes a massive advertising of Microsoft products. The purpose of the unified adverting strategy, through the launch of Microsoft Digital Advertising Solutions, is to bring together the various Microsoft products and services into a logical offering for advertisers. The proposal included the application of broad set of assets and relationships that could reach customers across many digital touch points (Jacobs 2006). To drive the international strategies, Microsoft developed and established a new group – Media/Entertainment & Technology Convergence Group – to consolidate the strategies for the digital convergence to home entertainment technologies, personal computing and media, technical and intellectual property (IP) policy and industry-standards initiatives. The Convergence Group is responsible for ensuring the effective business relationships, technologies and polices to meet the consumer demand (Microsoft PressPass).
General Motors Company – Multinational Strategy
The competitive threat of Japanese automobile invasion over the United States moved the General Motors (GM) to expand their markets. To protect the home market, GM followed an expansion strategy in penetrating the rest of the American market while going after several market segments offshore. They are protecting their luxury market but also allowing expansions on low-cost markets. In fact, GM is concentrating on key markets like China and the Asia-Pacific region through consistent product innovations. Though GM faces domestic and foreign competition, consumer lawsuits, foreign legislation and regulation difficulties and the declining quality of the infrastructure, GM is still expanding and building a strong global presence. Their knowledge was carefully disseminated through joint ventures from Saturn experience and Toyota (Nummi) while also changing the consumer demand for new model types. Operations strategies now include public acceptance and reduction of cycle time and vertical and horizontal integration (General Motors 2007).
Intel Company – Global Strategy
In reality, Intel is already expanding innovations globally from the introduction of personal computer microprocessors chips to laptop and desktop computers chips. The company innovated into servers and data storage equipments and wireless communications as well. Being the market leader in the chip industry, Intel’s global strategy was dubbed as “Intel Everywhere”. From what the tag suggests, Intel aimed at putting Intel products in every home on earth. Their focus is on the supply chain strategy that could strengthen the production schedule. What came to be known as the microprocessor chip provider penetrated in the low-end servers market and merchandisers in effort to expand farther. The marketing program that started in 1991, “Intel Inside” as the prime global strategy, is the reason why Intel is now one of the top-ten known brands in the world (Wharton School, 2004).
DuPont Company – Transnational Strategy
DuPont continued their transnational expansions through strategic acquisitions of local companies such as Devon USA and investing in warehousing and logistics center in addition to its seven domestic facilities. The company emphasises transportation access and building strong relationships with the community (Commonwealth of Virginia 2001). The main goal of the company is transnational expansion through increasing the revenues from non-petroleum products. The company emphasises the role of crossfunctional teams, engineering departments and the designs for manufacturing and the environment. DuPont is also engage in franchising and joint ventures and strategies on flexibility of competitive pricing (DuPont 2007).
Part 2: The elements of strategic management in DuPont Company
The role of strategic management incorporates the corporal understanding of the application of strategic positioning, the power of strategic choices and putting such strategies into practice. Such strategies are inherent for the companies which are diverting their attention from a domestic marketplace into the international scene.
I. Strategic Position
Strategic positioning illustrates the implications of strategies on the external environment, the strategic capability of the organisations and the corporate expectations (Johnson and Scholes 2002). According to the Chemical Market Associates, Inc., DuPont is generally considered as one of the most diversified companies in chemical industry. The DuPont family holdings were more extensive and more valuable compared to its rivals. DuPont owned strategic positions in more than 70 countries worldwide. Their strategic positioning conforms to ‘going where the growth is’, ‘put Science to work’ and ‘capitalize on the power of one DuPont’.
The sources of competitive advantage for DuPont refer to its internal work processes, the core technology, strategic alliances and corporate capability. Throughout history, the politics of DuPont reveals the hazardous effect of its chemical residue on the environment. Activists named DuPont as one of the worst polluters and one of the most monopolistic companies in the world and in America, respectively. The company’s economics deal is organized into five business platforms and the operational structure focuses on the board and the role of the workforce. The social performance dealt with working closely with stakeholders and recognizing their attributes. The collective reputation of the business is evidence by its ‘right to operate’ within society in general. A culture of innovation is always in existence within the company accompanied by efforts to maximize benefits and minimize risks. The commitment of the company directly points to safety, health and environmental (SHE) commitments through policy- and systems-compliance to manage the upstream and downstream performance.
2) Strategic capability
DuPont Company envisions itself as the world’s most dynamic science company that creates sustainable solution that facilitates a healthier living. Science and innovation is the primary competitive advantage of the company in all its products, technologies and businesses. The company draws strengths from the dynamicity of science as it strengthens polymer, chemistry, physics and engineering. In addition, the company had recently converged in biotechnology research in agriculture, bio-based materials and nanoscale science and an ongoing research and development on pipelines as well. In terms of its operation, employees are expected to leverage market access, scientific capabilities, customer relationships and functional competencies. Geographic markets and product markets are of highest priority in DuPont. The company believed that collaboration, productivity and quality improvements are the by-products of the company’s capability in creating value-added opportunites.
3) Expectations and Purposes
The company aimed at organizing people of all backgrounds that can contribute and achieve their full potential to facilitate organizational and individual excellence. The corporate governance ensures that the workforce is adequate to answer the needs of the employees. Practices in human resourcing, in particular, underpin a culture of non-discrimination and respect. DuPont’s philosophy is dedicated at improving the quality of life and enhancing the vitality of their internal and external communities. The body of corporate governance exercise power accordingly and is comprised on a multi-cultural group of global leaders. In fact, seventeen of the highest ranking officials 24% are women and of people of color. In this way, the diverse perspectives in global and local could create higher value solutions in more productive and less capital-intensive ways and experiences could lead to the transformation of the company as a whole.
II. Strategic Choices
Strategic choices provide an array wherein the companies could decide what approaches, directions, or methods use in achieving business-level and corporate-level objectives. Expansions purport a greater profit for the company through business and corporate-levels strategies towards cost leadership, differentiation and competitive advantage. DuPont is engage in strategic direction by means of the global business portfolio.
1) Business-level strategies
DuPont recognizes that their employee workforce differs from region to region. However, the employee population is honed to meet the business needs of the company that reflects in the global customer base. DuPont, in exchange, build on creating, promoting and supporting an inclusive culture that attracts and retains both employees and customers. The business-level strategies manifest governance structure and management systems that put emphasis on its mission and core values. Their mission is to create shareholder value and societal value and their core values are the SHE commitment, highest ethical behaviour and respect for people. The governance has an active responsibility on corporate policies. Business-level strategies are as follows: internal recruitment of board members; linking executive compensation with organization’s financial and non-financial goals; policies on audit; an open bulletin for shareholders for suggestions and recommendations; management of direct impact of operations; and employee programs integration and work/life balance.
2) Corporate-level and international
DuPojnt businesses are strategically aligned by market growth platforms via increasing speed and effectiveness to meet the customer needs. Strategic alliances in different countries made available the products and services offer on electronic and communication technologies, performance materials, coating and color technologies, safety and protection and agriculture and nutrition. DuPont has joint ventures and acquisitions in Korea, China, United States, United Kingdom, Japan, California and Belgium. The wide array of products and services include clad laminates, circuit fabrication materials, ethylene copolymers manufacturing, nylon filaments, resin manufacturing, powder coatings, flouroadditives, crop protection and etc. DuPont also has 129 worldwide subsidiaries and affiliate companies.
3) Development direction and methods
Basic development processes in DuPont include new products in agriculture and nutrition, productivity improvements, growth in security applications, tapping market opportunities and penetrating the emerging and expanding markets. Evidently, the direction of DuPont moves from internal to external, from domestic to wide-reaching, offshore and from home country to host country. In meeting the growing global demand, DuPont employs specific methods such as increasing global farming productivity, strengthening polymers and packaging, shaping the fabric of security and driving new initiatives forward through introductions of latest safety innovations.
III. Strategy into Action
The structure of the board is comprised of 11 subordinates from the chairman and 6 committees as strategic direction, environmental policy, audit, compensation, corporate governance and science and technology. They are guided by the business ethics policy and conduct guide. There are also senior leaders, business unit leaders, regional and country leaders and selected function vice presidents. The leadership’s role mainly focuses on driving growth and sustainability thus it requires a close contact with different committees and units.
Communication is the key for DuPont leaders and employees. Semiannual meetings are held during winter and summer. Such assemblies provide an opportunity to address issues and opportunites through development of closer relationships with peers, networks with external community and discussing topics of interest for the company and the teams. Regular interactions between assignment managers, program directors, unit managers and peer groups. The interfaces facilitate working in businesses that ensures quality assignments for subordinates, finding right rotations and scheduling and career assignments and informal coaching and mentoring.
3) Managing change
In becoming model for safety and operational excellence DuPont is always faced with transitioning efforts. Change management is a challenge since the structure involves many subordinates and stakeholders. When faced with changes, the company first introduces or reintroduces their philosophy in ways that it demonstrates value for people both in their daily lives and the organization as a whole. Changes are then carefully monitored through quarterly employee reviews to facilitate a continual and demonstrated reinforcement of such principles. All managers begin to use values as a guide in undertaking day-to-day activities.
IV. Strategy Development Processes
Strategy development involves the continuous reports on what must be develop, why and how. Annual monitoring and evaluation and reviews are proofs of these reports. Aside from financial findings, DuPont also includes information and reviews on governance and management, economic performance, environmental performance and social performance. Reports include description of major divisions, operating companies, subsidiaries and joint ventures; and significant changes in size and structure, significant changes in measurement methods and significant changes on internal policies.
Part 3: Conclusions
The four strategies discussed herein are intertwining concepts of corporal strategies. What is common among the four strategies are: 1) to expand market reach; 2) to explore new market segments; 3) strategically position products and services towards establishment of brand and image; 4) innovations; 5) continuous support on interdependence; 6) providing quality needs, services and products; 7) adding value to the brand or image and 8) formation of worldwide networks. Likewise, the challenges faced by theses fours strategies are: 1) pressures on local responsiveness; 2) geographic and legal compliances; 3) entrants, trades and tariff barriers; 4) localization/customization and/or standardization of products and services and 5) considerations on decision-making and control structures.
The implications of strategic positioning emphasize the knowledge on the internal and external factors that influences strategic decisions. Capabilities and expectations of the organisation are thoroughly examined to facilitate strategic choices. Strategic choices empowers organisations en route for the attainment of sound strategies that are embedded on separate yet connected business-level and corporate-level strategies. Strategic choices take into account the direction that drives the company and the methods used by the company. Putting a strategic choice into practice ensures a proper structuring, enabling and managing of changes.
Prior to converging into the idea of penetrating the foreign markets, the organisations must first seek to psyche the capability and the availability of the facilities and resources. Growth and changes are costly, conflict-leaden and possess risks that may lead to either success or failure for the company. Corporate strategies start with internal evaluation followed by estimation. There are so many avenues to choose from; thus, companies must strategically plan ahead. Strategic planning is situational analysis of what the current performance of the organisation is and how the organisation could pursue a global strategy. Remember, pursuing a corporate strategy involves not only the top management but the whole organisational hierarchy.
Aside from strategic planning, DuPont could converge into a closed-loop decision-making that maximizes the employee involvement. This can be done through forming quality circles that will serve as watchdogs and facilitators of employee engagement from the lowest to highest level of hierarchy. A diverse culture also inhibits the communication and in effect sacrifices the personal interaction. This process could produce conflict and in addressing them the company could follow the contingency theory wherein practices could be reconsider and restructured and only appropriate processes and systems will be left.
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