INTERNATIONAL BUSINESS

International Business

Table of Contents

1. Introduction3

1.1. Theoretical framework3

1.2. The Yip framework4

1.3. Global strategy in advertising agencies6

2. Methodology7

3. Environmental forces10

3.1. Cost factors10

3.2. Market factors10

3.3. Government and competitive factors11

3.4. Propositions11

Proposition 112

Proposition 214

Proposition 314

Proposition 415

Proposition 515

Proposition 616

4. Strategy implementation: the use of global levers16

4.2. Products and services18

4.3. Global marketing18

4.4. Location of activities20

4.5. Competitive moves21

4.6. Variance in strategy21

5. Conclusions and discussion22

International Business

1. Introduction

This study is based on the analysis of Yip's statement that “few markets and industries are truly global” for this purpose we will use examples to support the analysis and contains theories supporting Yip's statement and theories criticizing it. The conceptual framework developed by Yip (2003) and Yip (1992) is used to describe both strategic behaviour and its antecedents. When studying the factors affecting strategy, a distinction is made between the impact of the external industry environment and internal variables, such as firm resources. The analysis therefore makes a contribution to knowledge of the overseas operations of agencies and the debate on the impact of the environment versus idiosyncratic firm capabilities as antecedents to strategic behaviour.

1.1. Theoretical framework

The 'global strategy' concept has been interpreted in different ways, with initial discussion of the construct emphasising the idea that multinational firms should present a unified 'face' in overseas markets (Fayerweather, 1969), and the notion of 'the global village' with centralised manufacture of standard products for unified markets (Levitt, 1983). Bartlett and Ghoshal's (1995) influential work builds on this discussion, and they view global strategy as an efficiency-driven approach to competition in homogeneous overseas markets, realised through scale economies from concentrated production of standardised products. Hout, Porter, and Rudden (1982) suggested that strategic options range between the polar points of a fully 'global' or 'multi-local' approach. This view was endorsed by Prahalad and Doz (1987) and Jain (1989), who argue that companies need to balance the pressures for responsiveness and efficiency when setting a strategy.

At the firm level, strategic behaviour is now seen to embrace more than a focus on uniformity driven by a desire for cost efficiency, and the idea that coordination and integration across national boundaries is the key dimension of globalisation has gained currency. The Yip framework, used in this research, conceives global strategy as multi-dimensional in nature, based on an orientation 'that integrates and manages for worldwide business leverage and competitive advantage' (Yip, 1992, p. 7).

1.2. The Yip framework

The conceptual framework developed by Yip (1989, 1992, 2003) is not universally accepted, but has the important advantage of deriving from a comprehensive interpretation of 'global strategy' and its antecedents (Stonehouse, Hamill, Campbell, & Purdie, 2000; Zou & Cavusgil, 2002). A significant literature has developed around Yip's analysis (Kotabe & Helsen, 2004), including some empirical work (Johannson & Yip, 1994). As shown in Fig. 1, Yip identifies four sets of 'drivers' which represent the industry-level environmental factors determining the extent to which the adoption of global strategies is more or less rewarding. Variation in these factors across industries implies that greater or lesser use will be made of the five 'global strategy ...