Michael_A._Hitt,_R._Duane_Ireland,_Robert_E._Hosk

366 Part 3: Strategic Actions: Strategy Implementation

as though it was a stand-alone country (facilitating this choice is the fact that each of the

13 cities had a population of 10 million or more).

There is a key challenge associated with effectively using the multidomestic strategy/

worldwide geographic area structure match—namely, the inability to create global effi-

ciencies. This inability is a product of companies’ focus on serving unique customer

needs particularly well. The inability to create global efficiencies in this match challenges

firms to find ways to control costs while trying to serve local customers’ unique needs.

Will not being able to create global efficiencies be a problem for Uber? Perhaps. By the

same token, as long as the firm can continue to identify and serve the unique needs of cus-

tomers in different markets in ways that create value for them, being able to develop scale

economics will not be a fatal blow to Uber’s efforts to succeed in international markets.

In other instances, the nature of products companies seek to sell in international mar-

kets and market conditions themselves demand that a firm be able to develop economies

of scale on a worldwide basis. This need calls for firms to use the global strategy and its

structural match, the worldwide product divisional structure.

Using the Worldwide Product Divisional Structure to

Implement the Global Strategy

With the corporation’s home office dictating competitive strategy, the global strategy is one

through which the firm offers standardized products across country markets. The firm’s

success depends principally on its ability to develop economies of scale while competing

on a global basis and while serving customers without specific and unique needs relative

to the firm’s standardized product.

Figure 11.8 Worldwide Geographic Area Structure for Implementing a Multidomestic Strategy

Multinational

Headquarters Europe

Latin

America

Asia United

States

Australia

Middle

East/

Africa

Notes:

• The perimeter circles indicate decentralization of operations.


• Emphasis is on differentiation by local demand to fit an area or country culture.


• Corporate headquarters coordinates financial resources among independent subsidiaries.


• The organization is like a decentralized federation.