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Microsoft PowerPoint - Inter Business Strategy
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Microsoft PowerPoint - Inter Business Strategy

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  • 1. International Business Strategy Mission Statement Goals SBU Portfolio Analysis Strategic Focus SWOT 5 Forces Model Vorravee Pattaravongvisut
  • 2. Mission Statement Most difficult job Restricts Flexibility Answers the Question:What Business are We In? Other possible questions: –Who are our –What business do customers? we want to be in? –How do we provide –How will we get them with value? there? –What is our competitive scope? (industry, technology, competency, segments, channels, geography)
  • 3. Mission Statements Organization Mission Goodyear Our mission is constant improvement in products and services to meet our customers’ needs. This is the only means to business success for Goodyear and prosperity for its investors and employees. Intel Corporation Do a great job for our customers, employees, and stockholders by being the preeminent building block supplier to the computing industry. (continued)
  • 4. Mission Statements Organization Mission Merck & Co., Inc. The mission of Merck & Co., Inc., is to provide society with superior products and services— innovations and solutions that satisfy customer needs and improve their quality of life—to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return. Marriott Grow a worldwide lodging business using total quality management (TQM) principles to continuously improve preference and profitability. Our commitment is that every guest leaves satisfied.
  • 5. Goals Must be measurable Must be at a defined time Sales, ROI, share, new products, satisfaction ratings, awareness… May involve sales forecast
  • 6. Portfolio Analysis Used for Resource Allocation across Strategic Business Units and/or across Products: How does the existing portfolio of SBU’s (or products) fit together? Should elements be added or dropped? Where should investment be made?
  • 7. Portfolio Analysis: BCG The original model Based on cash flow Premise: in the long run cash generation from operations must exceed cash usage. Where does each product in the product line sit on the generation / usage dimensions?
  • 8. BCG Portfolio Model High Cash use Low High Cash generation Low
  • 9. BCG Portfolio Model High Star Question mark or Problem Child Market Growth Cash Cow Dog Low High Market Share Low
  • 10. BCG Portfolio Model—Long term strategy High Star Question mark or Problem Child Market Growth Cash Cow Dog Low High Market Share Low
  • 11. BCG Portfolio Model—Resource Allocation Baht High Star Question mark or Problem Child Market Growth Baht Baht Cash Cow Dog Low High Market Share Low
  • 12. BCG Portfolio Model—Resource Allocation Requires a balanced portfolio Baht High Star Question mark or Problem Child Market Growth Baht Baht Cash Cow Dog Low High Market Share Low
  • 13. BCG Portfolio Model— An Unbalanced Portfolio $ High Star Question mark or Problem Child Market Growth Baht Cash Cow Dog Low High Market Share Low
  • 14. BCG Portfolio Model: Disaster Trajectories High Star Question mark or Problem Child Market Growth Cash Cow Dog Low High Market Share Low
  • 15. Product Portfolio Management by BCG - Limitations Requires constant supply of innovations that can be successfully turned into cash cows with less investment than existing cash cows generate Assumes reasonably well-behaved Product Lifecycles Assumes market share = profitability
  • 16. GE Portfolio Model Similar logic to the internal-external framework of SWOT Generalization of BCG matrix: more information used and presented Matches market attractiveness with business strengths evaluate many factors for each dimension and develop a composite index for both strengths (internal) and attractiveness (external)
  • 17. GE Portfolio: Allocate more resources to attractive markets where business has competitive strengths BUSINESS STRENGTH Strong Medium Weak MARKET ATTRACTIVENESS 100 75 25 0 100 Joints Low Medium High Hydraulic Aerospace pumps fittings 75 Clutches Fuel pumps Flexible 25 diaphragms Relief valve 0 Invest/grow Selectivity/earnings Harvest/divest
  • 18. GE Portfolio: Allocate more resources to attractive markets where business has competitive strengths BUSINESS STRENGTH Strong Medium Weak MARKET ATTRACTIVENESS 100 75 25 0 100 Low Medium High Invest to Protect 75 And Grow Selectively Invest/harvest 25 Harvest or Divest 0
  • 19. Strategic Focus: Porter’s 3 generic types of strategy Porter’s Contention: to be successful, a company must be very a good at least one of Overall Cost Leadership Differentiation Focus Invest resources according to strategy
  • 20. Strategic Focus: Porter’s 3 generic types of strategy Overall Cost Leadership Focus on reducing production and distribution costs Need to be good at engineering, purchasing, manufacturing, distribution Compete on price Difficult competitive advantage to sustain
  • 21. Porter’s 3 generic types of strategy Differentiation Build strength in an area that is important to many customers: (e.g.,service, quality, style, technology) and which is difficult for competitors to copy Easy Jet
  • 22. Porter’s 3 generic types of strategy Focus Get to know narrow segment(s) intimately and serve their needs well, either by differentiation or price—a niche strategy. Chartered flight
  • 23. Strengths and Weaknesses The company relative to the competition Competitor Strengths and Weaknesses Company Strengths & Weaknesses are the “internal” part of SWOT analysis
  • 24. Opportunities and Threats Customer Analysis: trends in behaviour, benefits desired and descriptive factors; segments Environmental: changes in PEST factors Competitor Analysis: Identification, S&W, Behaviour ; Actions-Likelihood- Consequences
  • 25. Opportunities - positive factors in the external environment that provide the possibility of enhancing growth and/or profitability. Threats - negative factors in the external environment that create barriers to future growth or profitability.
  • 26. The Role of the Macro environment Sociocultural/Demographic Technological Forces Forces Industry Environment Competitors Stockholders Employees Firm Suppliers Customers Creditors Communities Political- Economic Governments Legal Forces Forces
  • 27. Important Variables in the Macroenvironment Economic Technological Political-Legal Sociocultural / Demographic • GNP trends • Government • Antitrust • Lifestyle • Interest rates R&D regulation changes • Money supply expenditures • Environmental • Career • Inflation rates • Industry R&D protection expectations • Employment expenditures • Tax laws • Consumer levels • Patent • Foreign trade activism • Wage/price protection regulation • Cultural values controls • New products • Laws on hiring • Social mobility • Currency • Technology and promotion • Regional shifts valuation transfer • Stability of in population • Energy cost/ • Productivity government • Education levels availability improvements • Rate of family • Disposable and • Rates of formation discretionary obsolescence • Growth rate of income • Technology population infrastructure •Age distribution
  • 28. Competitive Advantage of Nations Strategy, structure, and rivalry National Factor Demand competitive endowments conditions advantage Related and supporting industries
  • 29. The Five Forces Model Risk of entry Risk of entry by potential by potential competitors competitors Rivalry Rivalry Bargaining Bargaining Bargaining Bargaining among among power of power of power of power of established established suppliers suppliers buyers buyers firms firms Threat of Threat of substitute substitute products products
  • 30. The Five Forces Model Risk of entry Risk of entry by potential by potential competitors competitors Rivalry Rivalry Bargaining Bargaining Bargaining Bargaining among among power of power of power of power of established established suppliers suppliers buyers buyers firms firms Threat of Threat of substitute substitute products products
  • 31. Potential Competitors • Definition: Companies that are not currently competing in an industry but have the ability to do so. • Barriers to Entry • Brand Loyalty • Absolute Cost Advantages • Economies of Scale • Government Regulation
  • 32. The Five Forces Model Risk of entry Risk of entry by potential by potential competitors competitors Rivalry Rivalry Bargaining Bargaining Bargaining Bargaining among among power of power of power of power of established established suppliers suppliers buyers buyers firms firms Threat of Threat of substitute substitute products products
  • 33. Rivalry Among Established Companies • Industry Competitive Structure • Demand Conditions • Height of Exit Barriers in the Industry
  • 34. Rivalry and Industry Life Cycle Demand Embryonic Growth Shakeout Maturity Decline Time
  • 35. The Five Forces Model Risk of entry Risk of entry by potential by potential competitors competitors Rivalry Rivalry Bargaining Bargaining Bargaining Bargaining among among power of power of power of power of established established suppliers suppliers buyers buyers firms firms Threat of Threat of substitute substitute products products
  • 36. Bargaining Power of Buyers is highest when: Many small sellers - few large buyers Buyers purchase in large quantities Buyer accounts for large percentage of sellers’ total orders Buyers can switch suppliers at low cost Buyers purchase from several sellers at once Buyers can vertically integrate
  • 37. The Five Forces Model Risk of entry Risk of entry by potential by potential competitors competitors Rivalry Rivalry Bargaining Bargaining Bargaining Bargaining among among power of power of power of power of established established suppliers suppliers buyers buyers firms firms Threat of Threat of substitute substitute products products
  • 38. Bargaining Power of Suppliers is highest when The sellers’ product has few substitutes and is important to buyer The buyers’ industry is not an important customer to the suppliers Differentiation makes it costly for buyers to switch suppliers Suppliers can vertically integrate and compete with buyer Buyers can’t vertically integrate backward and supply their own needs
  • 39. The Five Forces Model Risk of entry Risk of entry by potential by potential competitors competitors Rivalry Rivalry Bargaining Bargaining Bargaining Bargaining among among power of power of power of power of established established suppliers suppliers buyers buyers firms firms Threat of Threat of substitute substitute products products
  • 40. Threat of Substitute Products Forms of substitution: • Product-for-product • Substitution of need • Generic substitution • Doing without
  • 41. Strategic Groups • The Concept of Strategic Groups • Implications of Strategic Groups • Mobility Barriers
  • 42. Strategic Groups in the Pharmaceutical Industry High Proprietary Group Merck Prices Charged Pfizer Eli Lilly Generic Group Marion Labs Carter Wallace ICN Low Low High R&D Spending
  • 43. Strategic Groups in the U.S. Airline Industry (1996) High American Southwest United Delta Quality USAir Am. West Northwest Continental TWA Low Low High Cost
  • 44. Limitations of the Five Forces and Strategic Group Models • Innovation and industry structure • Industry structure and company differences
  • 45. International Business Plan Example Format Executive Summary Mission Statement Business Profile products, markets, performance(financial, production, quality, customer satisfaction), strengths and weaknesses Industry Structure recent history, sales & profits, major players(suppliers, competitors, customers),industry opportunities and threats Environmental and Competitive Analysis Political, Economic, Social-Cultural,Technological, Competitive Marketing Strategy and Plan Specific Objectives, Major Assumptions, Strategy and Tactics, Timetable, Budget Financial Results and Forecasts Risk Assessment Contingency Plans Evaluation Measurement, Evaluation timetable
  • 46. Executive Summary The executive summary is not an introduction to the plan. a preface. a random collection of highlights. The executive summary is the plan in miniature. is logical, clear, interesting. Leaves the reader saying “I get it”