Royal Dutch Shell Essay Example

location economies by pursuing global division of labor based on wherever best of class capabilities reside at the lowest cost. The international strategy occurs when the company sells the same products or services in both domestic and foreign markets; pressures are low for both cost and local responsiveness.

However, the multi-domestic strategy attempts to maximize local responsiveness, hoping that local consumers will perceive them to be domestic companies; pressures for cost are low. While, transnational strategy attempts to combine the benefits of a localization strategy (high local-responsiveness) with those of a global-standardization strategy (lowest cost position attainable). Therefore, the integration-responsiveness framework is based on managerial perceptions of a company’s external forces.

It suggests that managers who perceive that their industry or business is pressured to globalize will maximize the central coordination and integration of activities across national boundaries. In contrast to the integration-responsiveness framework, which indicates the preferred organizational approach based on the external globalization or localization forces; The “AAA” framework suggests measuring the internal pressures that a company faces, specifically advertising, R&D and labor. Therefore, the AAA model answers the conflicting forces for integration and responsiveness.

In compare, arbitrage, one of the Ghemawat’s dimension, which intends to exploit differences between countries, often by establishing different parts of the value chain in different locations; the transnational strategy, one of the integration-responsiveness framework, had already included all of it in their description, but it had fused into one dimension with local responsiveness. Therefore, it seems that the integration-responsiveness framework its better, because it encompass the external forces of a company.