1) With respect to a high dispersion, high coordination strategy, a company is likely to be a “global scanner” whose product has high globalization potential and economies of scale which might not lend themselves to production in a few areas. Therefore, the typical product life cycle approach, an incremental sequencing of exporting at arm’s length from the home country to sales/service subsidiaries and later additional production facilities in dispersed locations, might not be the best approach. Rather, a high-commitment entry mode should be utilized because of the degree of control a company would have with respect to the consistency of a product in terms of various characteristics such as marketing/branding or distribution. An example of a highly dispersed, highly coordinated company is McDonalds, which tends to enter markets with higher levels of commitment (e.g. Russia) in the form of wholly owned stores and capital investment in distribution.
2) When distribution channels differ across countries and transportation costs of very high, a company is likely to lose the economies of scale and cost savings that come from a low dispersion strategy. Therefore, a higher dispersion strategy is needed. With regard to distribution channels, a company’s coordination needs may differ depending on its requirement for product quality. For example, to ensure its products (assuming production is dispersed) are created/distributed efficiently and with high quality, a company may need to adopt a higher coordination strategy despite the disparate distribution channels across countries. A company might also consider that because its home distribution expertise would not be successfully implemented in other countries, a lower coordination ...