International corporate-level strategy is where the firm must select which products or services. It provides the various regions around the world, it also focuses on the scope of a firm’s operation through products and geographic diversification. A firm has to decide where to compete in a particular global region or across multiple regions. “A growing number of emergent market multinational companies. EMNCs or multinational with an emerging country of origin are transcending their home region to operate in their emerging and/or developed markets” (Ramamurti and Singh, 2009). The corporate level managers must take a decision to make a degree to which headquarter will guide the strategy of business outside the home country. These EMNCs are focused on merging their multinationalization and global scope through the different international corporate-level international strategy choices which are:
• Multidomestic strategy
• Global strategy
• Transnational strategy
There are also two dimensions used to decide on the type of international corporate-level strategy to use by a firm. They include:
• The need for global integration
• The need for local responsiveness
THE INTERNATIONAL CORPORATE-LEVEL STRATEGY CHOICES To discuss the corporate-level strategy choices that Pernod Ricard Group implemented was differentiated with the international strategy. This strategy explains the three (3) approaches or choices of international corporate-level strategy available to Pernod Ricard Group. Which are multidomestic strategy, global strategy, transnational strategy.
A firm using the multidomestic strategy compete in international markets with a worldwide geographic area organizational structure.it enables the firm to customize its products to meet the specific needs and preferences of local customers. Decentralizing the firm’s strategic and operating decisions to business units in each country so that product characteristics can be tailored to local preferences. This strategy is used to expand a firm’s local market share because it pays attention to the local market. This strategy becomes a choice for firms when they establish subsidiaries in several foreign markets or become multinational. “In a multidomestic strategy, strategic and operating decisions are decentralized to the subsidiary in each country so that each subsidiary
can tailor products to its local market” (Alfred and Swan, 2004; Ralson et al., 2008). Each subsidiary is designated to act independently and operate as a local firm with minimum coordination from the headquarter. “Firms that choose this corporate-level international strategy should be highly responsive to the specific needs and preferences of local customers (Connelly et al.,2007; Nachum, 2003).
The global strategy is use in competing in international market with a worldwide product divisional organisational structure. This strategy helps the firm to offer standardized products across country markets. The decision making authority is centralized and headquarter control. A global strategy can help a firm reduce the effectiveness of learning processes in a multinational firm because of the pressure to conform to a standard way of doing things. The global strategy produces standardization. This type of strategy is often used in rapid growing firms seeking to manage their diversified product lines effectively. “This strategy is followed by matured multinationals that become aware of the opportunities to be gained from integrating and creating a single strategy on a global scale (Frynas and Mellahi,2011) “The global strategy involves the standardization of products across markets (Buckely,2009; Li,2005; Temple and Walgenbach,2007). “The subsidiaries operating in each country are considered interdependent and headquarters attempts to achieve integration across them” (Moon and Kim,2009).
It is use in competing in international markets with a worldwide combination organizational structure. The strategy helps the firms seek to achieve both global strategy and local responsiveness. The mechanism and characteristics are drawn from both the worldwide geographic area structure and the worldwide product divisional structure. This type of strategy the assets and operation may be centralized or decentralized. The strategy has a global mandate which means that the subsidiary is responsible for supplying a particular good or services to all parts of the organization throughout the world. Firms that are following multidomestic strategy or the global strategy seeks to achieve both local responsiveness and global efficiency, which are the aims of transnational strategy. “An effective implementation of transnational strategy often produces higher performance than the implementation of either multidomestic or global strategy, although it is difficult to implement because of its conflicting goals” (Abbott and Banerji,2003; Child and Van,2001; Rugman and Verbeke, 2008)
THE INTERNATIONAL CORPORATE-LEVEL STRATEGY CHOICES OF PERNOD RICARD GROUP
The 2015/2016 annual report of Pernod Ricard Group explains that in 1805 Henri-Louis Pernod founded his distillery, the Maison Pernod Fils, in the French-Swiss border village of pontarlie and in 1932 Paul Ricard began in Marseille. The merger of the two French anise-based spirits created Pernod Ricard. Pernod Ricard Group started to grow worldwide through acquisition and greenfield investments. Pernod Ricard Group multidomestic strategy emerged as a choice when Pernod Ricard became a multinational enterprise. This strategy started in their home country France where they produced their traditional French spirits and processed to acquire the gin brand monkey 47 in 2016 which is produced from 47 botanical ingredients from the black forest of Germany which was sourced from local ingredients. Also the acquisition of Avion Spirits, a Mexican tequila producer in 2014 which produces tequila from local ingredients. Adapting to this local market became the concern of Pernod Ricard in each foreign markets. Picard Ricard Group became highly responsive to the local market. The operating and strategic decisions are decentralized to the operation in each country. The managers of each country had autonomy to customize their offers as needed to satisfy the specific need and preference of local consumers. The emerging markets such as India, Brazil, China, Russia and South Africa are playing important role in Pernod Ricard global strategy mostly in the spirits segment. The acquisition of Gowen Smith, 2008 a Swedish-based V&S group who were dominant in the spirits market in the Nordic countries who produced Absolut vodka that offer the same product across the market, also the acquisition of the UK-based Allied Domecq in 2005 which the key brands such as Ballantine’s Scottish whisky, Beefeater gin and Malibu liqueur offers a standardized product across country markets. Pernod Ricard Group used these products to achieve global integration across businesses and also gain economies of scale. The strategic and operating decisions are centralized. Pernod Ricard Transnational strategy was achieved through the greenfield operations, products which was based on their multidomestic strategy of being locally responsiveness for example in the case of the acquisition of the gin brand Monkey 47 in 2016 which sales increased from 5,000 bottles to 150,000 bottles because the level of the responsiveness was high and they offered the market with the specific needs and preferences of the local market which made Pernod Ricard Group more successful and also the use of the acquisition of production platforms was based on the global integration which they integrated into the companies different culture, governance traditions and management challenges. Pernod Ricard has managed to standardize its processes to offer wines and spirits efficiently while also managing to adapt its products in each country depending on the local tastes and culture which has brought Pernod Ricard to become the world no.2 in the wine and spirit industry. The aim of the firm is to maintain the specialized products that met consumer’s needs in each foreign market and also taking advantage of holding the cost down by standardization and economies of scale. Pernod Ricard also used the transnational strategy in India where they produced the spirits with their local raw materials and also having manufacturing units and subsidiaries to serve the spirit across the countries.
DISTINGUSHING CORPORATE FROM BUSINESS LEVEL STRATEGIES OF PERNOD RICARD GROUP
The difference and relation between the corporate-level strategy and the business-level international strategy. The international corporate-level strategy refers to the international strategy at its broadest level of analysis, usually that of a firm or a group of firms. It increases the level of profit of a firm, the valve of a firm and also the buying of brands while the business-level strategy is the competitive advantage of a firm. It refers to the international strategy at the country/business unit, levels usually within a firm or group of firms. “research and practice have shown that international corporate-level strategy should inform and guide business- level international strategy to ensure strategic coherence” (Volberda et al,2011). “if the firm is following a global strategy, the corporate level strategy dictates business level strategy in order to standardize the firm’s products and sharing of resources across countries.” (Temple and Walgnebach,2007). Also in the case of “multidomestic strategy the corporate-level strategy gives individual country/business subsidiaries or units the authority to develop their own business-level strategy. In the case of Pernod Ricard, the difference between the corporate-level strategy and business-level strategy was in Cuba who had the local responsiveness and raw material which they used in producing spirit to offer and satisfy the local needs and preference of the consumer which the corporate-level strategy while Pernod Ricard had a 50/50 venture with the Cuba government which is a business-level strategy.
The notion is that multinational enterprises continue to target international operation to focus on their home region through the multidomestic, global, or transnational international corporate-level strategy. Pernod Ricard Group chose to go through the three approaches of the international corporate-level strategy to entry into the market, which made them successful both in local responsiveness and global integration.
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