Designing a global strategy.pptx

8/19/2019 Designing a global strategy.pptx

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Designing a global

strategy


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Framework for GlobalStrategy

• A global strategy is the way a company denes itslong-term objectives for the world market

• Selects its value proposition for the world market

• Builds integrates and co-ordinates its businesssystem to gain and sustain a global competitiveadvantage

• !uts in place an organisation to manage itsoperations worldwide

• Four major components" – A global strategic ambition

– A global strategic positioning

– A global business system

– A global organisation#


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Global strategy framework


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Global ambition

• $%presses the role a company wants to play inthe world marketplace

• &ow it views the future distribution of its sales

and assets in the key regional clusters of theworld

• Firms can play ve types of role" – Global player

–

'egional player – 'egional dominant global player

– Global e%porter

– Global operator#


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Global ambition

• Global player aspires to establish a sustainablecompetitive position in the key markets of the worldand to build an integrated business system of designsspread over those key markets

–

$%ample" Sony (nilever $ricsson Alcatel )otorola Shell*ero% +anon !rocter , Gamble +itibank etc#

• Regional player denes its role as to capture a strongcompetitive advantage in one of the key regions of theworld

– $%ample" !eugeot $+ Barclays

• A Regional dominant global player is a companywhose role is more than regional player but it is not yetselling across the key markets of the world#


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Global ambition• A Global exporter is company whose role is to sell across

the key markets of the world products manufactured orservices operated in its home country

• .hey build foreign operations only to support the e%portdrive

– $%amples" )ajor aerospace or defense companies like BoeingAirbus 'aytheon etc#

• A Global operator is a company that procures a largefraction of its product components in factories locatedoutside its base market and which concentrates its sales in

its domestic market • )any managerial issues of integration and co-ordination of

activities both in-house factories or long-termsubcontracting

• Firm/s distribution of sales assets and personnel should belooked at in order to assess the degree of global ambition


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Global ambition

• .he e%tent to which a company has followed a globalambition one can usefully utilise two globalisation indices"

– Global Revenue Index 0G'12" the ratio of the companydistribution of sales in the major world regions to the industrydistribution of demand in the same regions

– A company whose sales distribution matches the e%actdistribution of its industry market would have a G'1 of 344 percent#

– Global Capability Index 0G+12" the ratio of the companydistribution of assets for capital intensive industries or personnel

in the major world regions to the industry distribution of demandin the same regions

– 5+apability/ described here is in-house capability not capabilitywhich a rm can ac6uire through e%ternal sourcing likeoutsourcing sub-contracting or strategic alliances

– +ompanies which rely heavily on e%ternal sourcing will have alow G+1 score


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)apping of global ambition


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)apping of the consumer

electronics industry


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Global positioning

• +onsists of two types of choices" – .he choice of countries in which the

company wants to compete and the role

that those countries have to play in theglobal country portfolio

– .he denition of the various value propositions for the product or servicesof the company corresponding to thetype of segments and countries in whichthe company wants to compete


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Global positioning

• Key countries: – 7epending on the industries countries di8er in the

opportunities they o8er to companies for their strategicdevelopment

–

Some countries given their si9e growth or the 6uality oftheir human natural or locational resources are criticalfor companies/ long-term competitiveness

– 1n the automobile sectors :apan ;orea and in the future+hina can be considered as key

– 1n the pulp and paper industry in which natural resourcesare a key component of competitive advantage countrieslike 1ndonesia can be considered as key

– +alifornia 0Silicon


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Global positioning

• Emerging countries: – +ountries that e%hibit a high growth rate making them

strategically attractive in the near future

– .hey depend on opportunities which are industry-specic

–

+hina 1ndia Bra9il $ast $uropean countries some Africannations

• Platform countries: – +ountries with locational advantage good logistical nancial

regulatory and legal infrastructure or 6ualied personnel can

serve as a 5hub/ for setting up regional centres globalfactories etc

– Singapore &ong ;ong 1reland or .aiwan present thesecharacteristics 0+arrefour used .aiwan as a platform for itsstrategic development in Asia2


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Global positioning

• Mareting countries: – .he attractiveness of the market is good without being as

strategically critical as for the key countries

– Such countries should be assessed on its own merits

depending on the political economic and business conte%t – 1ndia +hina with huge middle class population for mass

market products

• !ourcing countries: – +ountries with a strong resource base but limited market

prospects – )alaysia for rubber or Saudi Arabia for petroleum

• A global company will control a portfolio of operationsin these di8erent categories of country


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Global positioning

• Value Proposition" 7ened ascustomer/s value attributes that thecompany is o8ering to the market – +hoice of value attributes

– +hoice of customer segments

– +hoice of degree of world

standardisation of the product=serviceo8ering#


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Global positioning

• "alue attributes are the elements of the productsor services that customers value when making theirpurchasing decision

– product design functionality performance 6uality

customisation and price the brand the availability andother features

– Dierentiated" proposition based on value-enhancingattributes such as performance 6uality servicecustomisation

– Cost leadership: proposition based on price forstandardised products or services

• +ompany can either position itself as a Globaldi#erentiator or a Global cost leader


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Global positioning

• Customer segments are the groups ofcustomers that have similar value curves – +ustomer groups can be identied by income level

geographical location age socio-psychometric

attributes in consumer goods and service industries – 1dentied by industry si9e purchasing behaviour in

B>B industries

• Strategic choice at this level is whether rm

concentrates on one or two customer groups0Focused2

• ?hether rm attempts to embrace many or allcustomer segments 0Broad2


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Global positioning

• !tandard vs$ %daptive 0value proposition2 – Firm adopts a similar or standardised value

attribute to the same type of customersegments across the globe 0Standard2

– Firm tries to di8erentiate value attributes andsegments according to the country or regions

– +oca +ola Swatch or S@ have a standardvalue proposition across the globe

– (nilever and !rocter , Gamble adjust theirvalue proposition and their segmentation indi8erent countries


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Global positioning

• ustainability of competitive advantage 0 ways2 – +ustomer loyalty

• !ni"ue products or services

• trong brand 0+oca +ola Apple2

• #igh switching costs 0)icrosoft2• $ocked%in#

– !ositive feedbacks• 5success brings success/ and produce increasing returns

– !re-emption of capabilities#• ;ey resources or assets in control of the rm that

competitors will nd diCcult to access or to thedevelopment of competencies that are 5time incompressible/


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Global business system

• Business system design consists ofdecomposing the company value chain intoelements that are spread and integratedacross the world 0depends on type of industry2

• major generic components of a value chain – &nnovative activities" ',7 knowledge creation

design

–

Productive activities" procurement manufacturingback oCce operations logistics

– Customer relationship activities" marketing salesdistribution customer services#


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Globalisation of


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• 'ole of partnership and strategic alliances inbuilding global capabilities

• Firms need to ac6uire and complement theircapabilities by setting up partnerships

– 'lobal alliances" 'ole is to pool complementingcapabilities to reach world markets or to achieve acritical mass in ',7 0Start Alliance @ne ?orld etcDFre6uently seen in aerospace life sciences oil

e%ploration etc#2 – Partnerships for market entry: :oint ventures

franchises licensing or may be to comply with localgovernment re6uirements 0&ero &onda2


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Global organisation

• 7esign of an organisationalarchitecture which is able to supportand implement the global ambition

global positioning and globalbusiness system

•


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Global organisation

Documents

Designing a global strategy.pptx