International Mgt 13 Strategy

7/31/2019 International Mgt 13 Strategy

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Planning and StrategyPlanning and Strategy

Planning is the process of Planning is the process of

identifying and selecting anidentifying and selecting an

organisations objectivesorganisations objectives

Strategy is the set of plannedStrategy is the set of plannedactions taken by managers toactions taken by managers to

fulfil the plansfulfil the plans



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A Strategic Approach A Strategic Approach

Step 1 Agree investment andStep 1 Agree investment and

set timescale possibly 5-10 year set timescale possibly 5-10 year

Step 2 Carry out environmentalStep 2 Carry out environmental

audit in target countriesaudit in target countries 1 PEST analysis1 PEST analysis

2 Competitors2 Competitors – – Porter Porter ’’s 5 Forcess 5 Forces

entrants, suppliers, buyers,entrants, suppliers, buyers,

substitutes (Industry Rivalry)substitutes (Industry Rivalry)

3 Customers (gap analysis)3 Customers (gap analysis)



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Basic Strategy QuestionsBasic Strategy Questions

What products/services will beWhat products/services will be

sold abroad?sold abroad?

How/where services will beHow/where services will be

delivered or products made?delivered or products made? Where/how will products be soldWhere/how will products be sold

What resources are necessary?What resources are necessary?

How will competitors beHow will competitors beoutperformed?outperformed?



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Strategic Approach continuedStrategic Approach continued

Step 3 Assess firms strengthsStep 3 Assess firms strengthsand weaknesses:and weaknesses:

Resource auditResource audit

Physical resourcesPhysical resources Human resourcesHuman resources

Financial resourcesFinancial resources

Intellectual resources - know-how,Intellectual resources - know-how,patents, trade markspatents, trade marks

Experience curveExperience curve



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Step 4Step 4 Agree on target countries Agree on target countries

Evaluate stability and growthEvaluate stability and growthfeaturesfeatures

Estimate long-term returnsEstimate long-term returns

SWOT analysisSWOT analysis

Step 5 Set annual sales budgetsStep 5 Set annual sales budgets

- base on likely growth patterns- base on likely growth patterns

- estimate likely market share- estimate likely market share

- may replicate previous records- may replicate previous records



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Step 6 Decide on marketing mixStep 6 Decide on marketing mix

per countryper country

StandardisationStandardisation

DifferentiationDifferentiation Competitive strategies by Porter Competitive strategies by Porter

cost leadershipcost leadership

differentiationdifferentiation

focusfocus



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Step 7Step 7 Establish manufacturingEstablish manufacturinglocationlocation

OptimisationOptimisation

Distribution patternsDistribution patterns Finalise incentives with Govt.Finalise incentives with Govt.

Step 8 Calculate expected cash-Step 8 Calculate expected cash-flowsflows

Sales volumes/trendsSales volumes/trends

Return on capitalReturn on capital



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Four International StrategiesFour International StrategiesHigh

Global Transnational

Strategy Strategy

Pressure to

Reduce costs

Low High

Pressure for local adaptionHill 2003

International

Strategy

Is low cost

Multidomestic

Strategy

Max.local impact

Transfer of core

competency

Home

production



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Four Strategic AlternativesFour Strategic Alternatives

Global StrategyGlobal Strategy::The firm views the worldThe firm views the worldas a single market placeas a single market placeand its goal is to createand its goal is to createstandardised goods thatstandardised goods thatwill meet the needs of will meet the needs of

worldwide customersworldwide customerse.g Toyota,e.g Toyota, GilletteGillette

Home ReplicationHome ReplicationThe firm uses the sameThe firm uses the samespecific advantages itspecific advantages itdeveloped at home as itsdeveloped at home as its

main competitive weaponmain competitive weaponin the foreign marketin the foreign market

e.g. KFC, Avivae.g. KFC, Aviva

TransnationalTransnationalThe firm attempts toThe firm attempts tocombine the benefits of combine the benefits of global scale efficienciesglobal scale efficiencieswith the benefits of localwith the benefits of localresponsivenessresponsiveness

e.g. Shell,easyJete.g. Shell,easyJet MultidomesticMultidomestic TheThe

firm views itself as afirm views itself as acollection of relativelycollection of relativelyindependent operatingindependent operatingsubsidiaries, each of subsidiaries, each of

which focuses on awhich focuses on aspecific domestic marketspecific domestic market

e.g. Tata, BUe.g. Tata, BUGhoshal & Nohria 1993



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Mission StatementMission Statement

Amazon Amazon

Amazon.com seeks to be the Amazon.com seeks to be the

worlds most customer-centricworlds most customer-centric

company, where customers cancompany, where customers canfind and discover anything theyfind and discover anything they

might want to buy onlinemight want to buy online



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3M Corporate `Objectives3M Corporate `Objectives

Growth in earnings per share of Growth in earnings per share of

more than 10% per year more than 10% per year

Return on invested capital amongReturn on invested capital among

the highest among industrialthe highest among industrial

companiescompanies

At least 30% of sales from products At least 30% of sales from products

introduced during the past 4 yearsintroduced during the past 4 years

8% productivity improvement per 8% productivity improvement per

year year



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3 Distinct Objectives by Porter 3 Distinct Objectives by Porter

Cost leadershipCost leadership where the firm iswhere the firm is

perceived as the best in cost levels andperceived as the best in cost levels and

controlcontrol e.g. Dell Computers, Nokiae.g. Dell Computers, Nokia

DifferentiationDifferentiation

where the firm has anwhere the firm has an

unique marketing mixunique marketing mix e.g. McKinseye.g. McKinsey

FocusFocus where the firm concentrateswhere the firm concentrates

specifically on one segment of the marketspecifically on one segment of the market

e.g.e.g. Michelin TyresMichelin Tyres



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McKinseyMcKinsey’’s 7-S Models 7-S Model

StrategyStrategy

StructureStructure

SystemsSystems

StyleStyle

Staff Staff

Shared valuesShared values

SkillsSkills



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Five Alternative MarketingFive Alternative Marketing

StrategiesStrategies

ONE PRODUCT ONE MESSAGEONE PRODUCT ONE MESSAGE

WORLDWIDEWORLDWIDE

Seeking universal salesSeeking universal sales

Few changes neededFew changes needed

Assumes wide cultural appeal Assumes wide cultural appeal

May have minor technical differencesMay have minor technical differences

E.g. Gillette, Philadelphia CheeseE.g. Gillette, Philadelphia Cheese



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Five Marketing StrategiesFive Marketing Strategies

cont.cont.

Product ExtensionProduct Extension

Communications AdaptionCommunications Adaption

Same basic customer needSame basic customer need

Promotional communicationsPromotional communicationschangechange

Brings manufacturing savingsBrings manufacturing savings

Assumes product is transferable Assumes product is transferable

Must redesign advertising andMust redesign advertising andpromotionspromotions eg Bicycles Consultancyeg Bicycles Consultancy



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Product AdaptionProduct Adaption

Communications ExtensionCommunications Extension

Communications remainCommunications remain

unchangedunchanged Assumes cultural understanding Assumes cultural understanding

Product is changed to meet localProduct is changed to meet local

needsneeds

Same advertising messageSame advertising message E.g. McDonaldE.g. McDonald’’s, Nescafe, Petrols, Nescafe, Petrol



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Product InventionProduct Invention

New need therefore new productNew need therefore new product

New communicationsNew communications

May be for new cultureMay be for new culture Need exists but no productNeed exists but no product

May be a cheaper productMay be a cheaper product

Often applies to Less DevelopedOften applies to Less Developed

CountriesCountries e.g. lamps, cosmeticse.g. lamps, cosmetics



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Dual AdaptionDual Adaption

Product is changedProduct is changed

Communications changeCommunications change

Takes new cultural environmentTakes new cultural environmentinto accountinto account

Time consumingTime consuming

CostlyCostly

E.g.Irrigation pumps Travel toursE.g.Irrigation pumps Travel tours

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International Mgt 13 Strategy