2. 10-2
Learning Objectives
• LO1 Explain international strategy, competencies,
and international competitive advantage.
• LO2 Describe the steps in the global strategic
planning process.
• LO3 Explain the purpose of mission statements,
values statements, objectives, quantified goals, and
strategies.
• LO4 Explain home replication, multidomestic, global,
and transnational strategies and when to use them.
• LO5 Describe the methods of and new directions in
strategic planning.
• LO1 Explain international strategy, competencies,
and international competitive advantage.
• LO2 Describe the steps in the global strategic
planning process.
• LO3 Explain the purpose of mission statements,
values statements, objectives, quantified goals, and
strategies.
• LO4 Explain home replication, multidomestic, global,
and transnational strategies and when to use them.
• LO5 Describe the methods of and new directions in
strategic planning.
3. 10-3
The Competitive Challenge Facing
Managers of International Businesses
• Managers must
– quickly identify and exploit opportunities wherever
they occur, domestically and internationally
– fully understand why, how, where, and when to do
business in specific world markets
– know the company’s strategic mission, its strengths
and its weaknesses
• Managers must
– quickly identify and exploit opportunities wherever
they occur, domestically and internationally
– fully understand why, how, where, and when to do
business in specific world markets
– know the company’s strategic mission, its strengths
and its weaknesses
4. 10-4
What is International Strategy,
and Why is it Important?
• International
Strategy
– “the way firms make
choices about acquiring
and using scarce
resources in order to
achieve their
international objectives”
• International
Strategy
– “the way firms make
choices about acquiring
and using scarce
resources in order to
achieve their
international objectives”
• Strategy involves
– decisions about which
markets to enter with which
products, when and how
– all the various functions and
activities of the company and
how they interact
– ensuring that strategy is
consistent across functions,
products, and regional units
– a variety of unique demands
associated with operating
internationally
• Strategy involves
– decisions about which
markets to enter with which
products, when and how
– all the various functions and
activities of the company and
how they interact
– ensuring that strategy is
consistent across functions,
products, and regional units
– a variety of unique demands
associated with operating
internationally
5. 10-5
What is International Strategy,
and Why is it Important?
• Goal of International
Strategy is to
maintain
Competitive
Advantage
– “the ability of a company
to have higher rates of
profits than its
competitors”
• Goal of International
Strategy is to
maintain
Competitive
Advantage
– “the ability of a company
to have higher rates of
profits than its
competitors”
• Competitive
Competencies
– “skills or abilities to
adequately complete a task”
1. Create value for which s
customers will pay
2. Are rare – shared
competencies are no basis for
competitive advantage
3. Difficult to imitate or
substitute
4. Organized so company can
exploit and capture value
from competitive potential
• Competitive
Competencies
– “skills or abilities to
adequately complete a task”
1. Create value for which s
customers will pay
2. Are rare – shared
competencies are no basis for
competitive advantage
3. Difficult to imitate or
substitute
4. Organized so company can
exploit and capture value
from competitive potential
6. 10-6
Global Strategic Planning
• Why Plan Globally?
– To deal with
environmental forces
that are
• Complex
• Global
• Subject to rapid
change
• Why Plan Globally?
– To deal with
environmental forces
that are
• Complex
• Global
• Subject to rapid
change
• Strategic Planning
– “a process by which
an organization
determines where it
is going, how it will
get there, and how it
will assess whether
and to what extent it
had achieved its
goals”
• Strategic Planning
– “a process by which
an organization
determines where it
is going, how it will
get there, and how it
will assess whether
and to what extent it
had achieved its
goals”
7. 10-7
Global Strategic Planning Process
1. Analyze the company’s external environments
2. Analyze the company’s internal environments
3. Define the company’s business and mission
4. Set corporate objectives
5. Quantify goals
6. Formulate strategies
7. Make tactical plans
1. Analyze the company’s external environments
2. Analyze the company’s internal environments
3. Define the company’s business and mission
4. Set corporate objectives
5. Quantify goals
6. Formulate strategies
7. Make tactical plans
9. 10-9
Global Strategic Planning Process
• Analyze domestic,
international, and
foreign environments
• Analyze domestic,
international, and
foreign environments
• Analyze Corporate
Controllable
Variables
1. Who are the company’s
target customers?
2. What value does the
company want to deliver
to these customers?
3. How will this customer
value be created?
• Analyze Corporate
Controllable
Variables
1. Who are the company’s
target customers?
2. What value does the
company want to deliver
to these customers?
3. How will this customer
value be created?
11. 10-11
Knowledge as a Controllable
Corporate Resource
• Knowledge Management
– “practices that organizations and their managers use for
identification, creation, acquisition, development, dispersion, and
exploitation of competitively valuable knowledge”
• Tacit Knowledge
– “knowledge that an individual has but that is difficult to express
clearly in words, pictures, or formulate and therefore difficult to
transmit to others”
• Explicit Knowledge
– “ knowledge that is easy to communicate to others via words,
pictures, formulate, or other means”
• Knowledge Management
– “practices that organizations and their managers use for
identification, creation, acquisition, development, dispersion, and
exploitation of competitively valuable knowledge”
• Tacit Knowledge
– “knowledge that an individual has but that is difficult to express
clearly in words, pictures, or formulate and therefore difficult to
transmit to others”
• Explicit Knowledge
– “ knowledge that is easy to communicate to others via words,
pictures, formulate, or other means”
12. 10-12
Define the Corporate Mission,
Vision, and Values Statements
• Mission Statement
– “a broad statement that defines the organization’s purpose
and scope”
• Vision Statement
– “describes the company’s desired future position if it can
acquire the necessary competencies and successfully
implement its strategy”
• Values Statement
– “ clear and concise description of the fundamental values,
beliefs, and priorities of the organization’s members
• Mission Statement
– “a broad statement that defines the organization’s purpose
and scope”
• Vision Statement
– “describes the company’s desired future position if it can
acquire the necessary competencies and successfully
implement its strategy”
• Values Statement
– “ clear and concise description of the fundamental values,
beliefs, and priorities of the organization’s members
13. 10-13
Some Examples
Unilever
“Unilever’s mission is to add vitality to life. We meet the
everyday needs for nutrition, hygiene, and personal care
with brands that help people feel good, look good, and get
more out of life.”
http://www.Amazon.com/
“Our vision is to be the earth’s most consumer-centric
company; to build a place where people can come to find
and discover anything they might want to buy online.”
Unilever
“Unilever’s mission is to add vitality to life. We meet the
everyday needs for nutrition, hygiene, and personal care
with brands that help people feel good, look good, and get
more out of life.”
http://www.Amazon.com/
“Our vision is to be the earth’s most consumer-centric
company; to build a place where people can come to find
and discover anything they might want to buy online.”
14. 10-14
Set Corporate Objectives
• Objectives
– Direct the firm’s course of
action
– Maintain action within
the mission’s boundaries
– Ensure the mission’s
continuing existence
• To implement an effective
strategy quantifiable
objectives are important
• Objectives
– Direct the firm’s course of
action
– Maintain action within
the mission’s boundaries
– Ensure the mission’s
continuing existence
• To implement an effective
strategy quantifiable
objectives are important
• Intel’s Mission:
– “to delight our customers,
employees, and shareholders by
relentlessly delivering the
platform and technology
advancements that become
essential to the way we work
and line”
• Intel’s Objectives:
1. Extend leadership in silicone
and platform manufacturing
2. Deliver architectural for market-
driven platforms
3. Drive world-wide growth
• Intel’s Mission:
– “to delight our customers,
employees, and shareholders by
relentlessly delivering the
platform and technology
advancements that become
essential to the way we work
and line”
• Intel’s Objectives:
1. Extend leadership in silicone
and platform manufacturing
2. Deliver architectural for market-
driven platforms
3. Drive world-wide growth
15. 10-15
Quantify the ObjectivesQuantify the Objectives
• International operations
deals with quantitative
& qualitative factors
• Difficult to quantify
• “What, how much,
when?” defines
objectives
• “How?” formulates
strategies
• International operations
deals with quantitative
& qualitative factors
• Difficult to quantify
• “What, how much,
when?” defines
objectives
• “How?” formulates
strategies
Formulate the
Competitive Strategies
Formulate the
Competitive Strategies
• Competitive Strategies
– “action plans the enable
organizations to reach
their objectives”
• Based on:
– external environmental
forces
– Internal SWOT Analysis
– Cost reduction
– Local market adaptation
offers 4 strategic
alternatives
• Competitive Strategies
– “action plans the enable
organizations to reach
their objectives”
• Based on:
– external environmental
forces
– Internal SWOT Analysis
– Cost reduction
– Local market adaptation
offers 4 strategic
alternatives
17. 10-17
Home Replication
Strategy
Home Replication
Strategy
• Centralizes product development
functions in home country
• Developed products transferred
to foreign markets in order to
capture additional value
• The company must posses a
distinctive competence local
companies lack
• Headquarters maintains tight
control over marketing &
product strategy
• Subsidiaries leverage home
country capabilities
• Centralizes product development
functions in home country
• Developed products transferred
to foreign markets in order to
capture additional value
• The company must posses a
distinctive competence local
companies lack
• Headquarters maintains tight
control over marketing &
product strategy
• Subsidiaries leverage home
country capabilities
Multidomestic StrategyMultidomestic Strategy
• Used when there is strong
pressure for local market
adaptation
• Decentralized decision making
allows for quick change
• Leads to increased cost structure
• Excessive adaptation may take
away from product’s
distinctiveness
• Cost and complexity of
coordination can be high
• Used when there is strong
pressure for local market
adaptation
• Decentralized decision making
allows for quick change
• Leads to increased cost structure
• Excessive adaptation may take
away from product’s
distinctiveness
• Cost and complexity of
coordination can be high
18. 10-18
Global StrategyGlobal Strategy
• Used when company faces strong
pressure to reduce costs with limited
pressure for local market adaptation
• Strategy and decision making
centralized
• Company offers standardized
products and services
• Value chain activities are in only one
or a few geographic areas
• Subsidiaries send information to HQ;
HQ imposes centralized controls
• Limited ability to adjust to local
customer needs
• Higher transportation and tariff
costs for exporting product
• Risk in locating activities in
centralized location
• Used when company faces strong
pressure to reduce costs with limited
pressure for local market adaptation
• Strategy and decision making
centralized
• Company offers standardized
products and services
• Value chain activities are in only one
or a few geographic areas
• Subsidiaries send information to HQ;
HQ imposes centralized controls
• Limited ability to adjust to local
customer needs
• Higher transportation and tariff
costs for exporting product
• Risk in locating activities in
centralized location
Transnational StrategyTransnational Strategy
• Used when facing simultaneous
pressures for cost effectiveness and
local adaptation
• Assets and activities located where
most beneficial for the firm
• Subsidiaries contribute to developing
firm’s overall capabilities
– “Upstream” value chain
activities will be more
centralized
– “Downstream” activities
localized closer to customers
• Achieving optimal balance is
challenging
• Strategic decisions, structures, and
systems are complex
• Used when facing simultaneous
pressures for cost effectiveness and
local adaptation
• Assets and activities located where
most beneficial for the firm
• Subsidiaries contribute to developing
firm’s overall capabilities
– “Upstream” value chain
activities will be more
centralized
– “Downstream” activities
localized closer to customers
• Achieving optimal balance is
challenging
• Strategic decisions, structures, and
systems are complex
19. 10-19
Standardization and Planning
• Not all firms’ activities confront same mix of
globalization and localization pressures
• R&D and manufacturing are standardized and
coordinated world-wide
• Tension between
– idea that marketing strategies are best determined locally
and
– desire for some degree of marketing strategy and total
product standardization
• Not all firms’ activities confront same mix of
globalization and localization pressures
• R&D and manufacturing are standardized and
coordinated world-wide
• Tension between
– idea that marketing strategies are best determined locally
and
– desire for some degree of marketing strategy and total
product standardization
20. 10-20
ScenariosScenarios
• Scenarios
– “multiple, plausible
stories about the future”
• Assesses implications of various
economic conditions & operating
strategies
• “What if” scenarios let managers
challenge assumptions and
projected outcomes of different
strategies
• Assist with “decision making
under uncertainty” and rapidly
change changing international
conditions
• Scenarios
– “multiple, plausible
stories about the future”
• Assesses implications of various
economic conditions & operating
strategies
• “What if” scenarios let managers
challenge assumptions and
projected outcomes of different
strategies
• Assist with “decision making
under uncertainty” and rapidly
change changing international
conditions
Contingency PlansContingency Plans
• Contingency Plans
– “ plans for the best- or
worst-case scenarios or for
critical events that could
have a severe impact on
the firm”
• Based on “be prepared…crisis
will happen” view
• Ensures effective communication
and continuation of operations in
the event of crisis
• Contingency Plans
– “ plans for the best- or
worst-case scenarios or for
critical events that could
have a severe impact on
the firm”
• Based on “be prepared…crisis
will happen” view
• Ensures effective communication
and continuation of operations in
the event of crisis
21. 10-21
Strategic Plan Features and
Implementation Facilitators
Sales Forecasts &
Budgets
Sales Forecasts &
Budgets
• Sales Forecast
– “a prediction of future
sales performance”
• Budget
– “itemized projection of
revenues and expenses for
a future time period”
• Sales Forecast
– “a prediction of future
sales performance”
• Budget
– “itemized projection of
revenues and expenses for
a future time period”
Plan Implementation
Facilitators
Plan Implementation
Facilitators
• Policies
– “broad guidelines to assist
lower –level personnel
handling recurring issues
or problems”
• Procedures
– “specialized ways of
performing a particular
task or activity”
• Policies
– “broad guidelines to assist
lower –level personnel
handling recurring issues
or problems”
• Procedures
– “specialized ways of
performing a particular
task or activity”
22. 10-22
Performance Measures
• Used to assess if
strategy and its
implications are
proceeding
successfully or if
modifications are
needed
• Used to assess if
strategy and its
implications are
proceeding
successfully or if
modifications are
needed
• 3 Types to Measure:
1. Company’s success in
obtaining & applying
required resources
2. Effectiveness of personnel
within and across global
operations network
3. Company's progress in
achieving its mission, vision,
& objectives and if consistent
with company’s values
• 3 Types to Measure:
1. Company’s success in
obtaining & applying
required resources
2. Effectiveness of personnel
within and across global
operations network
3. Company's progress in
achieving its mission, vision,
& objectives and if consistent
with company’s values
23. 10-23
Kinds of Strategic Plans
Time HorizonTime Horizon
• Horizons:
– Short – 1-3 years
– Medium
– Long – 5 years
• Length of time horizon:
– is industry-specific
– may vary by age or firm
and its market stability
• All plans are subject to
annual review
• Horizons:
– Short – 1-3 years
– Medium
– Long – 5 years
• Length of time horizon:
– is industry-specific
– may vary by age or firm
and its market stability
• All plans are subject to
annual review
Level in the
Organization
Level in the
Organization
• Each organizational
level has its own plan
• Each level’s plan is more
specific than that of the
level above
• Functional areas within
each level have their
own specific plan
• Each organizational
level has its own plan
• Each level’s plan is more
specific than that of the
level above
• Functional areas within
each level have their
own specific plan
25. 10-25
Methods of Planning
Top-down PlanningTop-down Planning
• “planning process that begins at the highest level in
the organization and continues downward”
• “planning process that begins at the highest level in
the organization and continues downward”
Bottom-up PlanningBottom-up Planning
• “planning process that begins at the lowest level in
the organization and continues upward”
• “planning process that begins at the lowest level in
the organization and continues upward”
Iterative PlanningIterative Planning
• “ repetition of bottom-up or top-down planning
process until all differences are reconciled”
• “ repetition of bottom-up or top-down planning
process until all differences are reconciled”
26. 10-26
New Directions in Planning:
Strategic Management
Who does Strategic Planning?Who does Strategic Planning?
• Diverse planning teams from all levels across all related business units
working in open collaboration; other stakeholders influence planning
• Diverse planning teams from all levels across all related business units
working in open collaboration; other stakeholders influence planning
How Strategic Planning is DoneHow Strategic Planning is Done
• Ideas can surface anywhere/anytime; shorter, less structured planning
documents; planning includes tactics and strategies
• Ideas can surface anywhere/anytime; shorter, less structured planning
documents; planning includes tactics and strategies
Contents of the PlanContents of the Plan
• Focus is on issues, strategies, implementation using creative, forward-
looking ideas needed for competitive success in changing global
environments with long-term perspective on decisions and resources
• Focus is on issues, strategies, implementation using creative, forward-
looking ideas needed for competitive success in changing global
environments with long-term perspective on decisions and resources
27. 10-27
Summary of the International Planning Process
For Flexibility to Compete Globally and Domestically:
1. Top management must assume a more explicit strategic decision-
making role, dedicating a large amount of time to deciding how
things ought to be instead of listening to analyses of how they are.
2. The nature of planning must undergo a fundamental change from an
exercise in forecasting to an exercise in creativity.
3. Planning processes and tools that assume a future much like the
past must be replaced by a mind-set that is obsessed with being first
to recognize change and turn it into a competitive advantage.
4. The role of the planner must change from being a purveyor of
incrementalism to being a crusader for action and alter ego to line
management
5. Strategic planning must be restored to the core of line management
responsibilities.
Frederick W. Gluck, McKinsey & Company
For Flexibility to Compete Globally and Domestically:
1. Top management must assume a more explicit strategic decision-
making role, dedicating a large amount of time to deciding how
things ought to be instead of listening to analyses of how they are.
2. The nature of planning must undergo a fundamental change from an
exercise in forecasting to an exercise in creativity.
3. Planning processes and tools that assume a future much like the
past must be replaced by a mind-set that is obsessed with being first
to recognize change and turn it into a competitive advantage.
4. The role of the planner must change from being a purveyor of
incrementalism to being a crusader for action and alter ego to line
management
5. Strategic planning must be restored to the core of line management
responsibilities.
Frederick W. Gluck, McKinsey & Company
28. 10-28
GLOBAL gauntlet
• Google’s Values and
Strategy versus the
China Opportunity
• Google’s Values and
Strategy versus the
China Opportunity
Update:
• Google moved its servers out of mainland
China to Hong Kong and redirected its
Chinese users from google.cn to Hong
Kong site, http://google.com.hk/, which
does not censor search results.
• Because Google was not hosting its
search operations within mainland
China, the company was not forced to
acquiesce to China's censorship laws; it
was up to the Chinese government to
block access to material deemed
objectionable.
• Google renewed its license with the
Chinese government and would be
allowed to continue operating in China.
Google did not make any concessions
regarding censorship.
Update:
• Google moved its servers out of mainland
China to Hong Kong and redirected its
Chinese users from google.cn to Hong
Kong site, http://google.com.hk/, which
does not censor search results.
• Because Google was not hosting its
search operations within mainland
China, the company was not forced to
acquiesce to China's censorship laws; it
was up to the Chinese government to
block access to material deemed
objectionable.
• Google renewed its license with the
Chinese government and would be
allowed to continue operating in China.
Google did not make any concessions
regarding censorship.
• Discuss Google’s strategic
and tactical decisions in
dealing with China.
• How has this affected
Google’s corporate image?
• What would you have done?
• Discuss Google’s strategic
and tactical decisions in
dealing with China.
• How has this affected
Google’s corporate image?
• What would you have done?
