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International business by czinkota 7ech12

Chapter 12
Strategic Planning

1


Learning Objectives
Outline the process of strategic planning in
the context of the global marketplace.
Examine both the external and internal
factors that determine the conditions for
development of strategy and resource
allocation.
Illustrate how best to utilize the environmental
conditions within the competitive challenges and
resources of the firm to develop effective
programs.
Suggest how to achieve a balance between local
and regional/global priorities and concerns in the
implementation of strategy.
2



Strategic Planning
Globalization
The Strategic
Planning
Process

3


Globalization
Globalization reflects a business
orientation based on the belief that
the world is becoming more
homogeneous and that distinctions
between national markets are not
only fading but, for some products,
will eventually disappear.
4


Globalization Drivers
Both internal and external factors
will create favorable conditions for
development of strategy and
resource allocation on a global basis.
These factors can be divided into:
Market Factors
Cost Factors
Environmental Factors
Competitive Factors
5


Market Factors
The world customer gains new meaning.
Developed infrastructures lead to
attractive markets for other products.
Similarities in demand conditions
facilitates product design.
Channels of distribution are becoming
more global.
Technology changes the landscape of
markets.
6


Cost Factors
Two powerful
cost-related
globalization
drivers.
Cost inefficiencies
Duplication of effort

7


Environmental Factors
Removal of physical, fiscal, and
technical barriers to further facilitate
globalization of markets.
Rapid technological evolution
contributes to globalization efforts.
Smaller bureaucracies of mininationals
facilitates new product development
and allows for opportunities to seize
new markets.
8


Competitive Factors
Companies may have to
be the first to do
something new, or to
preempt competitors’
moves.
Market presence may be
necessary.

9


The Strategic Planning Process
Formal strategic planning contributes to:

Financial Performance

Non-financial
Objectives

10


The Strategic Planning
Process Involves:
Adjusting the core strategy.
Formulating global marketing
strategy.
Developing global programs.

Implementing global programs.
11


Core Strategy
Assessing and Adjusting:

Forces determining business
success are common to
different countries.
Necessary Participants:
Executives from marketing,
production, finance, logistics
and procurement.

Companies must
assess their own
readiness for
necessary
moves

12


Formulating Global
Strategy
The choices:

Cost Leadership

Differentiation
Focus
13


Country-Market Choice
Three factors should determine
country selection:
The stand-alone attractiveness of a market.
Global strategic importance.
Possible synergies

14


Segmentation
The recognition that groups within
markets differ sufficiently to
warrant individual approaches.
Allows global companies to take
advantage of the benefits of
standardization.
Involves looking at markets on a
global or regional basis.
15


Developing Global Programs
Decisions involved in developing a
global program.
The degree of standardization in the

product offering.
The marketing program beyond the
product variable.
Location and extent of value-adding
activities.
Competitive moves to be made.
16


Product Offering
Product
standardization may
result in significant
cost savings.

17


Marketing Approach
Uniformity is sought especially in
elements that are strategic in nature,
whereas care is taken to localize
necessary tactical elements.

Glocalization
18


Location of Value-Added
Activities
Cost Reduction:

Pool Production

Exploit Factor Costs

Concentrate Activities
19


Competitive Moves
Global companies may
have to respond to
competitive moves a
variety of markets.
Cross-subsidization may
offer competitive
advantage.

20


Implementing Global
Programs
Successful companies strive to
balance local and global
concerns.
Too much local production may reduce
import positioning.
Too little planning involvement by the
country organization may lead to NIH.
21


Avoiding The
Not-Invented-Here Syndrome
Ensure that local
managers participate in
the development of
strategies and programs.
Encourage local managers
to generate ideas.
Maintain local and global
product portfolios.
Allow local managers to
control budget.
22


Localizing Global Moves
The role of headquarters staff should be one of
coordination, and leveraging the resources of the
corporation.
Globalization calls for the centralization of
decision-making authority beyond that of the
multidomestic approach.
Executing global account management programs
builds relationships with customers and allows
for development of internal systems and
interaction.
Decision-making in global companies supports
the goal of treating the world as a single market.
23



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