1. International Business
Management
International Strategic
Planning And Market Screening
Respectable Lecturer:
Dr. Hüda Hüdaverdi
Prepared By:
Fatemeh Hashemi 093014007
Fall 2010

2. What we will learn in this chapter ?

3. 1-1Introduction
 The meaning of International strategic planning : The process
through which worldwide companies evaluate past results, assess
their corporate strengths and weaknesses and map out future
resource allocation and strategic based on marketplace
opportunities and threats.
 Why International strategic planning is a complex process to
manage?
 The organizational complexity of International corporations
 Geographically far-flung nature of their commercial empires
 Example: Unilever ,the Anglo-Dutch consumer product
company,employs223000 people worldwide, and sell over 400
brands through subsidiaries in over 90 countries and sale over 70
other nation.

5. 1-The International Planning Process
1-2 The changing environment of
international planning : Historical perspective
•Since1945 as companies have internationalized their operations and integrated
them on the world wide basis, strategic planning role and philosophy have
changed.
During 1950s and early 1960s international planning was a centralized
activity:
- production-oriented activities.
- focus was on manufacturing level, expected revenues.
- little strategy were needed .
During 1960s and 1970s
- Japanese &European companies entered the world market place.
- competition heat up.
- development in tools for assessing (SWOT).
In1980s, global market expanded away from Triad to big emerging markets.
In 1990s:
- competition heightened
- central planning departments were cut .
- country subsidiaries were encouraged to “get close to customers”.
- new role of head office :coordination among divisions and subsidiaries and
monitoring global market.

6. 1- The International Planning Process
1-3 The evolution of the international corporate
planning processes
 International planning processes vary in complexity
according to the degree of strategic analysis involved
(Example: Japanese planning processes emphasized
budgetary mechanism while American firms have tended
to incorporate a wider variety of strategic elements in to
their plans)
 To understand evolution of planning processes, 4 stages of
corporate planning development have identified as
follow:
1. Financial planning
2. Long term (forecast-based) planning
3. Environmental planning
4. Integrative strategic planning

7. 2-Assessing Corporate position
2-1 Internal Assessments
Effective planning offer when firm have
definite ideas about where they want to be
and what has enabled them to get where
they are, to this end , mission statements
and reviews of core competencies guide
company efforts and provide continuity
between past and future planning efforts.

8. 2-Assessing Corporate position
2-1 Internal Assessments
2-1-1The corporate mission
Mission statements of most of the international
corporations encompass one or more following
features:
 Description of the business
 Strategic intent
 Perceived organizational strength
 Strategic elements
 Organizational values
The challenge for international corporations is to make
mission statements relevant to employees and
stakeholders worldwide.
McDonald's mission is: to be the world's best quick service
restaurant experience. Being the best means providing
outstanding quality, service, cleanliness, and value, so
that we make every customer in every restaurant smile."

9. 2-Assessing Corporate position
2-1Internal Assessments
2-1-2 Corporate Competencies
Core competencies are bundles of organizational skills and
corporate assets that produce winning marketplace formulas.
Core competencies have 3 characteristics:
1- They contribute to perceived customer benefits.
2- They are difficult for competitors to imitate.
3- They can be leveraged over variety of markets.
Types of competencies:
1- superior technological know-how and product innovation
( Microsoft , Intel )
2-reliable processes that produce consistent, efficient, quality products
and services in the world market.
( FedEx , Toyota )
3- Close relationships with suppliers, regulators, professional
organizations ,distributors and specially customers.( Unilever , Nestle)
4- building sufficient flexibility into worldwide operations to appeal to
local taste ( Unilever, IBM, Toshiba)

10. 2-Assessing Corporate position
2-2 External Assessments
( the marketplace situation)
The front end of planning process involves
evaluating corporate performance from a strategic
business unit (SBU) and from geographic
perspective.
The managerial aim is to identify those SBUs and
geographic regions where the company is strong and
those where corporate performance is weak.

11. 2-Assessing Corporate position
2-2 External Assessments
2-2-1 SBU evaluation
 Companies divide their businesses or product lines into
strategic business units.
 For example , GE has 13 business divisions worldwide
and requires its SBUs to be in the top 2 in their industry
sectors . how?
 First step is to identify SBUs that contribute positively to
group performance(by determining the above and below
average financial performers).
 And those that are competitive within their industry
sectors (by finding the above and below average
performers in their respective industries).

12. 2-Assessing Corporate position
2-2 External Assessments
2-2-1 SBU evaluation
Group assessments of SBUs ; Contribution to the group and performance in their industry

13. 2-Assessing Corporate position
2-2 External Assessments
2-2-2 Worldwide /regional evaluation
 The assessment of geographic strategies is a key
element in deciding where to allocate corporate
resources on the worldwide basis.
 The process begins with plotting regional
corporate performances on a market size market
growth matrix.

14. 2-Assessing Corporate position
2-2 External Assessments
2-2-2Worldwide /regional evaluation
Evaluating corporate regional performance on a market size –growth matrix

15. 2-Assessing Corporate position
2-2 External Assessments
2-2-3Regional / country assessments
Managing similar product lines across regions
and markets has become increasingly important
for international corporations.
Executives can consolidate data from national
subsidiaries into regional and worldwide context
and giving them critical yardsticks such as market
shares, sales, costs and margins.

16. 2-Assessing Corporate position
2-2 External Assessments
2-2-3 Regional / country assessments
Product division Analysis across countries and regions

17. 2-Assessing Corporate position
2-2 External Assessments
2-2-4 Assessing subsidiary contribution
to group performance
Subsidiary performance within product or
regional SBUs must also be evaluated to
identify above average contributors to SBU
profitability and those that are competitive
in their national markets.

18. 2-Assessing Corporate position
2-2 External Assessments
2-2-4 Assessing subsidiary contribution
to group performance
Assessing SBUs geographic performance: SBU ROI and national industry ROI

19. 2-Assessing Corporate position
2-2 External Assessments
2-2-5 Individual subsidiary analysis
Once management has assessed the relative
performance of its subsidiaries ,executive attention
can be focused on factors contributing to success
and failure at the national market level.
Two analysis contribute to this determination:
1- market share/momentum analysis
2- competitive benchmarking

20. 2-Assessing Corporate position
2-2 External Assessments
2-2-5 Individual subsidiary analysis
2-2-5-1 market share/momentum analysis
 Plot product performance against market
performance to ascertain which products are
underperforming market trends ( and losing market
share momentum) and which are out performing
market trends ( gaining market share momentum)

21. 2-Assessing Corporate position
2-2 External Assessments
2-2-5 Individual subsidiary analysis
2-2-5-1 market share/momentum analysis

22. 2-Assessing Corporate position
2-2 External Assessments
2-2-5 Individual subsidiary analysis
2-2-5-2 competitive benchmarking
Profiles the characteristics and strategies
of rival companies and their performances
along key competitive dimensions.

23. 2-Assessing Corporate position
2-2 External Assessments
2-2-5 Individual subsidiary analysis
2-2-5-2 competitive benchmarking

24. 2-Assessing Corporate position
2-2 External Assessments
2-3 corporate and industry resource deployments
 Industry behaviors are important reference points for
individual firms and company industry comparisons of
worldwide resource deployments give key insights for
strategic decision makers.
 using information derived from the global industry
analysis , corporate sales & manufacturing can be
mapped against global industry consumption and
production patterns to provide insights for market
expansion strategies and the sitting of manufacturing
and other facilities.

25. 2-Assessing Corporate position
2-2 External Assessments
2-3 corporate and industry resource deployments

26. 3-Formulation of strategic plan
Once management has assessed the current situation
and has evaluated competitors and environmental trends
,it is time to formulate plans for the future .
For most international corporations ,planning is done
with 3-5 year projection in future.
The process is involves making assumptions about
economic growth at the global ,regional and national
levels.
The role of senior management is :
To evaluate current and future plans against past
performances and expected future conditions.

27. 3-Formulation of strategic plan
3-1 subsidiary-level planning
Planning at the subsidiary level starts with
historical analyses of product line sales, costs and
margins being projected into the future .
To place results into perspective , market size ,
growth , and market share trends are taken into
account.
 Managerial assessments about effectiveness of
past strategies ,competitors , influential factors on
costs are added in this section

28. 3-Formulation of strategic plan
3-1 subsidiary-level planning with 3 years projection

29. 3-Formulation of strategic plan
3-2 Integrating national plans into
regional and global strategies
Once subsidiary managements have completed
their preliminary forecasts , discussions are held
with regional or head office executives to put these
plans into regional or global contexts.
In these plans , critical assumptions are laid out
(economic growth rates , industry market sizes , key
competitor responses , etc) are major strategic
decisions are outlined.

30. 3-Formulation of strategic plan
3-2 Integrating national plans into
regional and global strategies

31. 3-Formulation of strategic plan
Setting objectives : for many
firms ,financial objectives are
emphasized and employee
behaviors are oriented toward
satisfying share – holders and the
expectations of financial
community

32. 3-Formulation of strategic plan
Setting objectives : for many firms ,financial
objectives are emphasized and employee behaviors are
oriented toward satisfying share – holders and the
expectations of financial community
1-Financial perspective: are traditional business
measures that show how firms look to shareholders and
the financial community.
2-Customer perspective: concern how companies look
to their customers, and are measured by:
lead times , quality levels , performance/service level
3-Internal perspective: involve how firms are adapting
their organizations and procedures to maintain and
improve cycle times , quality levels, product/service
costs , technological capabilities and employees skill
levels

33. 3-Formulation of strategic plan
The benefits of well- executed planning processes
1. External benefits: good resource-deployment
decisions. once management has evaluated
corporate performance, market trends, and
projections , and has set goals, decision about
resource deployments must be finalized and
market priorities established.

34. 3-Formulation of strategic plan
The benefits of well- executed planning processes
This figure illustrates the process for the Asian division
of a hypothetical international corporation

35. 3-Formulation of strategic plan
The benefits of well- executed planning processes
2 . Internal benefits:
1-Defining the strategic direction of the corporation.
2-Providing insights into competitors strategies and
how to compete against industry rivals.
3-Systematic incorporation of political , economic ,
societal , and technological industry change drivers
into global , regional, and national strategies.
4-Concise guidance for geographic strategies and
international resource commitments.
5-providing direction at the subsidiary level by
identifying performance criteria for product lines by
benchmarking competitor strengths and weaknesses.

36. 4- Market Screening and risk assessments
Once managements have assessed past and
present company performances and looked at
future opportunities within their given industries,
they must assess the relative risks of operating in
different countries.
 This involves evaluating country risks on a
comparative basis(using the same criteria)and for
individual markets , to gain critical insights about
how to operate and manage risk in those countries.

37. 4- Market Screening and risk assessments
4-1 Seven types of risks :
4-1 Political Risks:
• fractionalization of the political spectrum
•Numerous linguistic, ethic , and religious
factions
•Restrictive means of retaining power
•Evidence of xenophobia , nepotism , or
corruption
•Poor social conditions
•Existence of radical , especially leftist, political
movements

38. 4- Market Screening and risk assessments
4-1 Seven types of risks :
4-2 Economic Risks:
Economic risk assessment involves evaluating the stability ,
openness , and market forces orientations of national.
4-3 Financial and Foreign Currency Risks:
Legal frame works for profit , dividend , fees and capital
repatriation
Balance of payments analyses as a currency movements into
and out of a country determine its ability to generate foreign
exchange.
International reserves are countries stocks of foreign
currencies accumulated from exports and capital inflows and
their gold holding.
Foreign debt assessments are evaluations of foreign debt
relative to country gross domestic product, with creditor
nations receiving the highest rating.

39. 4- Market Screening and risk assessments
4-1 Seven types of risks :
4-4 Operations Risks:
Political policy continuity
Attitude towards foreign investors
Degree of nationalization
Bureaucratic delays
Use and enforceability of contract
Labor cost and availability , including inclusiveness
or exclusiveness of education opportunities
Availability of professional services and contractors
Quality and cost of local communication
Infrastructure availability: road, rail, water system,
energy sources
Caliber of local managers , partners
Financial institutions and availability of short,
medium , and long term financing

40. 4- Market Screening and risk assessments
4-1 Seven types of risks :
4-5 Legal Risks:
Legal risks are important where companies rely
heavily on contracts (military , industrial , commodity
markets) and when legal recourse may be necessary
( medical products , counterfeit goods)
4-6 Taxation Risks:
Companies that move financial assets , money , and
components extensively through out world markets
are aware of needs to satisfy national tax authorities.
4-7 Security Risks:
For firms that depend on expatriates in their
management of local subsidiaries , personal security
must be evaluated

41. 4- Market Screening and risk assessments
4-2 Business risk evaluation methodologies
• Two commercial services, business risk services(BRS) and
world markets online (WMO) , are constructed.
•Market covered: BRS covers about 50 markets ; WMO
takes in about 150 countries.
BRS:
 assesses15 factors in its operations risk index and weights
them differentially
105 experts rates country conditions from 0 (unacceptable
conditions) to 4 (superior conditions) to total 100,the perfect
operating environment
WMO:
Provides measurement of 6 dimensions: political, economic,
legal, tax, operations, and security.
The sum and average of all six dimensions yields an overall
assessment of country risk, varying from 1-1.99(insignificant to
low risk) to 4 -5(very high to extreme risk)