2. contents…
1. Strategic Management
2. Approaches to Strategic Planning
3. Global vs. Regional Strategies
4. Elements of Strategic Planning
5. Specialized Strategies
3. Strategic Management
Strategic management
◦ Determining the firm’s basic mission and long-term
objectives, and developing and implementing an
appropriate plan of action
“Where are we going?”
“How are we going to get there?”
Strategic management growing in importance
because of the need to coordinate and
integrate diverse operations
4.
5.
6. Strategic Management
• the conduct of drafting, implementing and evaluating
cross-functional decisions that will enable an
organization to achieve its long-term objectives.
• It is the process of specifying the organization's
mission, vision and objectives, developing policies and
plans, often in terms of projects and programs, which
are designed to achieve these objectives, and then
allocating resources to implement the policies and
plans, projects and programs.
7. Strategic Management
• “Strategic management is an ongoing process
that evaluates and controls the business and the
industries in which the company is involved;
assesses its competitors and sets goals and
strategies to meet all existing and potential
competitors; and then reassesses each strategy
annually or quarterly [i.e. regularly] to determine
how it has been implemented and whether it has
succeeded or needs replacement by a new
strategy to meet changed circumstances, new
technology, new competitors, a new economic
environment, or a new social, financial, or
political environment.”
8. Strategic Planning Process
Mission and Objectives
Environmental Analysis /
Scanning
Formulate international
strategies
Strategy Implementation
Evaluation of the performance
and Control
9. Strategic Planning Process
• In today's highly competitive business environment,
budget-oriented planning or forecast-based planning
methods are insufficient for a large corporation to
survive and prosper.
• The firm must engage in strategic planning that
clearly defines objectives and assesses both the
internal and external situation to formulate strategy,
implement the strategy, evaluate the progress, and
make adjustments as necessary to stay on track.
13. Benefits of Strategic Planning
Perceived benefits
◦ Coordinate and monitor operations
◦ Streamline product lines and supply chains
◦ Manage political, currency, and competitive risks
Potential costs
◦ Micromanagement of subsidiary operations
◦ Misallocation of time and staff resources
◦ Over-planning and lower profitability
14. Benefits of Strategic Planning
Economic
Imperative
Economic
Imperative
Political Imperative
Political Imperative
Quality
Imperative
Quality
Imperative
Administrative
Coordination
Administrative
Coordination
15. Economic Imperative
• Strategy based on cost leadership,
differentiation, and segmentation
• Product mix
– Value added in the upstream activities of the
industry’s value chain
– generic good (not name brand or support service
dependent)
• Global sourcing to shorten the production or
buying cycle
16. Political Imperative
• Strategy country- responsive and designed to
protect local market niches
• Success of the product or service depends
heavily on marketing, sales or service
– Customer or client-focused
• Approach most often used by MNCs pursuing
a country-centered or multidomestic strategy.
17. Quality Imperative
• Two possible paths
– Change in attitudes to raise expectation for
service quality
– Implementation of practices to make quality
improvement an ongoing process
• “Total quality management” (TQM)
– Cross-training personnel
– Process re-engineering
– Reward systems designed to reinforce quality
18. Administrative Coordination
• Decision making based on the merits of the
individual situation rather than a
predetermined economic or political strategy
– Coordination of global supply chains
– Localized marketing of products and services
• Least common approach given the pressures
on MNCs to coordinate strategy both
regionally and globally
19. Global vs. Regional Strategies
• Global Integration
– Products and services homogeneous in terms of
type and quality
– Customers have common taste preferences
• National Responsiveness
– Segmented regional markets
– Need to respond to differing national standards
and regulations
– Adaptation of tools and techniques to manage
local workforces
20. Four Strategic Options
Global
strategy
Global
strategy
International trade
strategy
International trade
strategy
Transnational
strategy
Transnational
strategy
Multi-domestic
strategy
Multi-domestic
strategy
National responsiveness
Low High
Global
integration
Low
High
Adapted from Figure 8–1: Global Integration vs. National Responsiveness
21. Choosing an Option
The right strategy is tailored to particular country
and industry characteristics
Reasons to choose each strategy
◦ Global: low-cost strategy, commodification
◦ Multi-domestic: products and services differentiated
by market
◦ International: core competencies set the MNC apart
from local competitors
◦ Transnational:
Require management of contradictory pressures for cost
reductions and differentiation
Successful firms engage in “glocalization,” localizing their
activities while maintaining a global focus
22. Elements of Strategic Planning for
International Management
External Environmental
Scanning for MNC
Opportunities and Threats
External Environmental
Scanning for MNC
Opportunities and Threats
Internal Resource
Analysis of MNC
Strengths and
Weaknesses
Internal Resource
Analysis of MNC
Strengths and
Weaknesses
Strategic Planning
Goals
Strategic Planning
Goals
IMPLEMENTATION
IMPLEMENTATION
Adapted from Figure 8–2: Basic Elements of Strategic Planning for International Management
23. Environmental Scanning
Provide management with accurate
forecasts of trends that relate to external
changes in geographic areas where the
firm is currently doing business or
considering setting up operations
These changes relate to the economy,
competition, political stability, technology,
and demographic consumer data
24. Internal Resource Analysis
Evaluate managerial, technical, material, and
financial strengths and weaknesses
Determine ability to take advantage of
international market opportunities
Match external opportunities (environmental
scan) with internal capabilities (internal
resource analysis)
Key question: Do we have the people and
resources that can help us to develop and
sustain the necessary KFSs, or can we acquire
them?
25. Strategic Planning Goals
Goal formulation often precedes the first
two steps
However, more specific goals come out of
external scanning and internal analysis
Typically serve as an umbrella for subsidiaries
and international operations
Profitability and marketing goals almost
always dominate
Once set, the MNC will develop specific
operational goals and controls for the
subsidiary or affiliate level
26. Implementation
Selecting a country and location
◦ Country factors: market openness, infrastructure,
labor market flexibility
◦ Location: incentives, workforce, costs
Functional areas
◦ Marketing: usually country specific
◦ Production: domestic to foreign, foreign to domestic,
or foreign to foreign, dispersed or coordinated
◦ Finance: local sources, centralized control,
international markets, or barter trade
28. First-Mover Strategies
Useful in rapidly changing markets
◦ Market opening in developing economies
◦ Market reforms in transition economies
◦ Privatization of state-operated enterprises
Advantages and risks
◦ Capture benefits of learning
◦ Form alliances with attractive local partners
◦ Uncertain pace of reform
◦ Opportunity costs of premature entry
29. “Base of the Pyramid” Strategies
Targeting emerging market
◦ People making less than $2,000 p/year (4
billion)
Marketing requires smaller-scale strategies
◦ Building relationships with local governments,
small entrepreneurs, and nonprofits
◦ Less dependence on central governments and
large local companies
30. “Born-Global” Firms
Engage in significant international
activity a short time after being
established
Successful firms leverage a distinctive
mix of orientations and strategies
◦ Global technological competence
◦ Unique-products development
◦ Quality focus
◦ Leveraging of foreign distributor
competences
31. Implications for Managers
• The complexity and interdependence of the
global economy increases the need for firms to
plan strategically
• Effective strategies must balance tensions
between
– Top-down and bottom-up strategies
– Economies of scale and differentiation
• Managers need to anticipate the future
evolution of the firm and global markets
32. References…..
• Chapters 8, Hodgetts, Luthans and Doh, International
Management: Culture, Strategy and Behavior , 6th
edition
(New York: McGraw-Hill Irwin, 2006).
• Prof. Ashwathapa, International Business, TATA
McGrahHill.
