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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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Strategic Approach continuedStrategic Approach continued
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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Strategic Approach continuedStrategic Approach continued
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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Strategic Approach continuedStrategic Approach continued
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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Five Marketing StrategiesFive Marketing Strategies
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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Five Marketing StrategiesFive Marketing Strategies
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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Five Marketing StrategiesFive Marketing Strategies
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