International business 7e czinkota moffett ch12

Chapter 12
Strategic Planning

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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.
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Strategic Planning
Globalization
The Strategic
Planning
Process

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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.

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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

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

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

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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.

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Core Strategy
Assessing and Adjusting:

Forces determining business Companies must
success are common to
assess their own
different countries.
readiness for
necessary
Necessary Participants:
moves
Executives from marketing,
production, finance, logistics
and procurement.
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Formulating Global
Strategy
The choices:

Cost
Cost Leadership
Leadership

Differentiation
Differentiation
Focus
Focus
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Country-Market Choice
Three factors should determine country selection:

The stand-alone attractiveness of a market.
Global strategic importance.
Possible synergies

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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.
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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
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Location of Value-Added
Activities
Cost Reduction:

Pool
PoolProduction
Production

Exploit
ExploitFactor
FactorCosts
Costs

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

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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.
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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.
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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.
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