Chapter 12: Read the end-of-chapter case study and answer the following questions: After reading the different types of MNEs, which form of MNE is best designed to create value and why? How can international companies reconcile the pressures of global integration and local responsiveness to ensure success?

hout how hard you can CHAPTER 12 The Strategy of international Business producing its own. Upon entering Russia, the suppliers required opening the McComplex, a full-scale pro- auction system outside of Moscow. Making ingredient from scratch at the McComplex required rethink- to reconfigure activities to tap Russia's unique Besides building better lack of local virtually every 333 figu- Ows Now ing how market. 118 signs competencies ts eraged its Russian experiences surgers, McDonald's In worldwide pushback back against style, McDone % ley- new motivated by an entrepreneurial vision, leaving a large MNE and launching a firm that goes global from the get-go. 26 The micro-multinational moves from theory to practice precisely because circumstances let it do so. The ongoing globalization of markets, marked by falling trade barriers expanding demand for specialized products, and improving technologles, enables born-globals to implement their vi- sion cheaply and quickly. Micro-multinationals exploit these circumstances, building powerful platforms to develop and deliver innovations in niche markets that span the world. pro- Coffee Chains bus began by tapping nal itive metanational knowledge it developed with test runs in Russia. It opened McCafs there in 2003, fine-tuned its espresso-style drinks, and then successfully moved the concept to the United States in 2009 and, from there, to the world. 119 Which sorts of MNEs aspire to be a metanational? Gen- erally, those facing pressures for global integration and lo- al responsiveness yet seeing opportunities in prospecting, leveraging, and mobilizing knowledge that is fragmented across countries. Until recently, the metanational option attracted few companies. Communication and collabora fion barriers complicated sharing knowledge. Moreover, significant national differences, although shrinking, posed problems. Today, environmental conditions, institutional agendas, and technology trends, by easing sensing, mobi- Izing, and operationalizing knowledge, steadily support the 120 metanational's emergence, Ive that Rory onal les. in- as om of are ang Ced ms to The Glorecalizized MNE Advocates of regionalization endorse the awkward term "Glorecalization as the next logical step of global strat- 127 egy. Glorecalization, a portmanteau of Globalization- Regionalization- n-Localization, champions a global vision and customized local tactics through a value chain con- figured figured exploit location economies within a regional market. The glorecalized MNE leverages its regional net- work to gain the necessary operational efficiencies without forsaking local flexibility. Various conditions support the glorecalized MNE. First and foremost, regional trade blocs (e.g., AU, ASEAN, CARICOM, EU, NAFTA, and TPP) create ample location effects in terms of institutional structure, regulatory framework, and market integration. The Euro- pean Union, for example, unites 28 countries and creates a common "home" for more than 500 million who share simi- lar outlooks, overlapping national interests, and conver- gent consumption preferences. Efficient flows of people, capital , information, products, and processes throughout the EU streamline how an MNE acquires resources, de- pean ent velops capabilities, and crafts competencies. Similarly, re- gionalizing production exploits location effects and scale economies, but without sacrificing the flexibility to adapt goods and services. The Micro-Multinational The future frontier for the MNE is set by the matter of size, say others. 121 Historically, MNEs were colossi that straddled the globe. Today, the number of MNEs grows worldwide, but the average size is falling-many of the 80,000 plus firms that operate internationally employ fewer than 250 people . 122 This anomaly signals the era of so-called "mi- cro-multinationals": nimble, small firms that are born global, operating internationally from day one. 123 Unlike their big per counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global im- mediately. They go where they wish, typically following the dircuit paths of the Internet, but always targeting markets with plentiful customers and innovative environments. The tom-global does not see international markets as a refuge when sales slow at home. Rather, it begins with the belief that the domestic market is just one of the many opportuni- The micro-multinational's distinctive break from the past wm-global firms often have a strong international orien- llows from its global focus at start-up. Folks who found in gained from living or studying abroad. Logitech, the Swiss-based maker of computer devices like mice, key- wards, and speakers, was founded by a Swiss and an Walan who met while studying at Stanford University in the Ved States. Soon after start-up, Logitech was selling its countries 125 Often, too, we see a seasoned executive, ucts worldwide and now does business in more than les in the world. 124 The Cybercorp The cybercorp, a form unimaginable a generation ago, is increasingly a reality today. 128 The cybercorp does not or ganize products, consumers, or markets to reflect or re- spect the physical geography of lines on a map. Instead, the connectivity network of the Internet, not national bor- ders, defines its operational boundaries, Facebook, for in- stance, exists physically in its California headquarters, but its workforce of about 13,000 run a company that serves more than 1.5 billion customers" in more than 150 nations through a website interface translated into more than Cybercorps develop competencies that help them react in real time to changes in customers, markets, and environ- ments. They engage perspectives and strategies that bias value chains toward virtuality in order to link capabilities 100 languages