MNE strategy Flashcards
strategizing in the globalized world
market environment: interactions between the firm and other parties that are intermediated by markets or private agreements.
non-market environment: interactions that are intermediated by the public, stakeholders, government, the media and public institutions.
stands of MNE strategy
CSR - companies effort to contribute positively to the society
CPA - firms action to shape the external policy environment
The logic of market strategy: strategic fit
fit the strategy into the business environment. accept the environment as it is and work around it. strategies that are not aligned with the given environment will fail.
The logic behind nonmarket strategy: influence
the environment is volatile and constantly changing. influence the environment to make it suitable for your strategy. do not accept the environment as it is. inability to influence the environment will cause uncertainty and impair market strategy.
Trend extroplation
use data analysis to predict the future
assumes that factors are fairly constant and major changes are unlikely to occur - assumes data is accurate.
works better when there is sufficient historical data to accommodate seasonal and cyclical fluctuations. no guarantee historical patterns will continue
Scenario writing
painting picture of future. description of future developments and how they’ll impact the business should they occur. helps managers to anticipate potential changes and consider appropriate reponses - helps with contingency planning.
What is nonmarket strategy?
Concerted pattern of actions taken in the nonmarket environment by a firm to improve its overall performance (Baron 1995)
Aimed to shape the environment within which firms do business
Not directly linked to profitability or economic peformance
Strands of nonmarket strategy
CPA - environment (political,legal), activity ( firm attempt to shape their regulatory and political environments)
CSR - environment (social), activity (firms attempt to influence society which in turn influences political actors responsible for policy making)
Corporate political activity
Why do CPA? - politicians shape and control the institutions that stipulate the rules of the game for businesses
Should MNEs be allowed to influence government and public policies?
Who has more power and more money may have a bigger say to change policies to benefit them.
All government policies frame policies as for the nation - so the people have the power to make political or governmental policies.
CPA - yes or not?
Yes: firms are stakeholders, firms pay taxes hence should have a voice, affected but gov. policy so should have influence.
No - firms are not citizens and od not have a vote in elections, firms are more resourceful than individual citizens, large firms can exclude smaller firms from democratic process.
Strategies for influencing the political environment
financial and logistics - financial donations, campaign contributions
informational - lobbying
constituency building - press conferences, PR
relational - employment of former politicians
organizing nonmarket strategy - departments and units
external relations, public affairs, global affairs, corporate affairs, PR, government affairs, regulatory affairs
The 4Is of nonmarket strategy formulation
institutions, issues, interests, information
interests - institutions: identification of targets, preparation for opposition.
issue - information: environmental scanning, research and persuasive arguments.
benefits of CPA
firm performance, risk reduction, lower taxes, low interest rates, access to loans
