SEU_MGT672_Module09_PPT_Ch08.pptx

    International Management

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Chapter 8

    Strategy Formulation and Implementation

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Learning Objectives

    Discuss the meaning, needs, benefits, and approaches of the strategic planning process for today’s MNCs

    Understand the tension between pressures for global integration and national responsiveness and the four basic options for international strategies

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Learning Objectives (continued 1)

    Identify the basic steps in strategic planning, including environmental scanning, internal resource analysis of the MNC’s strengths and weaknesses, and goal formulation

    Describe how an MNC implements the strategic plan, such as how it chooses a site for overseas operations

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Learning Objectives (continued 2)

    Review the three major functions of marketing, production, and finance that are used in implementing a strategic plan

    Explain specialized strategies appropriate for emerging markets and international new ventures

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Pharmerging Markets

    Emerging markets hold tremendous growth potential for the pharmaceutical industry

    Reason for disproportionate sales growth

    Companies will have to increasingly depend on consumers in developing economies to continue to maintain growth

    Expanding into emerging markets is accompanied by difficult growing pains

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Indian Drug Markets

    Are uniquely positioned for manufacturing

    Offer attractive labor costs and skilled workforce

    Face issues related to protection of intellectual property, quality and safety, and pricing and profit margin

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Strategic Management

    Process of:

    Determining an organization’s basic mission and long-term objectives

    Implementing a plan of action for pursuing the mission and attaining the objectives

    Required to keep track of firms' increasingly diversified operations in a continuously changing international environment

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Strategic Planning

    Helps an MNC coordinate and monitor its far-flung operations and deal with:

    Political risk

    Competition

    Currency instability

    Evidence for effectiveness of planning is mixed

    Planning does not always result in higher profitability

    Specifics will dictate the success of the process

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Approaches to Formulating and Implementing Strategy

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    10

    Focusing on the economic imperative

    Addressing the political imperative

    Emphasizing the quality imperative

    Implementing an administrative coordination

    Economic Imperative

    Worldwide strategy based on:

    Cost leadership

    Differentiation

    Segmentation

    MNCs sell products for which a large portion of value is added in upstream activities of industry’s value chain

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    11

    Economic Imperative (continued)

    Much of a product’s value is created through research and development, manufacturing, and distribution

    Used when a product is regarded as a generic good and does not have to be sold based on name brand or support service

    Global sourcing – Useful in formulating and implementing strategy

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Political Imperative

    Strategy formulation and implementation utilizing strategies that are country-responsive and designed to protect local market niches

    MNCs sell products for which a large portion of value is added in downstream activities of value chain

    Success of product/service depends on marketing, sales, and service

    Country-centered/multi-domestic strategy is used

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Quality Imperative

    Takes two interdependent paths

    Change in attitudes and raising of expectations for service quality

    Implementation of management practices designed to make quality improvement an ongoing process

    Total quality management (TQM)

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Forms of TQM

    Cross-train personnel to do jobs of all members in work group

    Process reengineering designed to help identify and eliminate redundant tasks and wasteful effort

    Reward system designed to reinforce quality performance

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    TQM Summarized

    Quality – Operationalized by meeting or exceeding customer expectations

    Quality strategy – Formulated at top management level and diffused throughout the organization

    TQM techniques – Traditional inspection and statistical quality control and cutting-edge human resource management techniques

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Administrative Coordination

    MNC makes strategic decisions based on merits of the individual situation

    Does not use a predetermined economic or political strategy

    Used when rapid, flexible decision making is needed to close the sale

    Least common approach to formulation and implementation of strategy

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Global Integration versus National Responsiveness

    Global integration

    Production and distribution of products and services of a homogenous type and quality on a worldwide basis

    National responsiveness: Need to:

    Understand different consumer tastes in segmented regional markets

    Respond to different national standards and regulations imposed by autonomous governments and agencies

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    18

    Basic International Strategies

    International strategy: Mixed strategy combining low demand for integration and responsiveness

    Multi-domestic strategy: Differentiated strategy emphasizing local adaptation

    Global strategy: Integrated strategy based primarily on price competition

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Basic International Strategies (continued)

    Transnational strategy: Integrated strategy emphasizing both global integration and local responsiveness

    Appropriateness of each strategy depends on pressures for cost reduction and local responsiveness in each country served

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Steps in Formulating Strategy

    Scanning the external environment for opportunities and threats

    Conducting an internal resource analysis of company strengths and weaknesses

    Formulating goals in light of the external scanning and internal analysis

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Environmental Scanning

    Provides management with accurate forecasts of trends

    Related to external changes in geographic areas where the firm is doing business or considering setting up operations

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Environmental Scanning (continued)

    Changes:

    Relate to environmental factors that can affect the company

    Include the industry or market, technology, regulatory, economic, social, and political aspects

    Central to discovering if an MNC can survive in a particular region

    Effective only when it is done consistently

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Internal Resource Analysis

    Helps firms evaluate their current managerial, technical, material, and financial resources and capabilities

    To better assess their strengths and weaknesses

    Determines firms' ability to take advantage of international market opportunities

    Identifies key success factors (KSF) that will dictate how well a firm is likely to do

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    24

    Goal Setting

    Precedes the first two steps of environmental scanning and internal analysis

    More specific goals for strategic plan come from external scanning and internal analysis

    Areas for formulation of MNC goals

    Profitability, marketing, operations, finance, and human resources

    Profitability and marketing goals top the plans and tend to be more externally environmentally responsive

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Strategy Implementation

    Process of providing goods and services in accord with a plan of action

    Includes:

    Consideration of location for implementation

    Execution of entry and ownership strategies

    Implementation of functional strategies in marketing, production, and finance

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Considerations in Selecting a Country

    Advanced industrialized countries that offer large markets for goods and services

    Amount of government control and restrictions on foreign investment

    Specific benefits offered by host countries

    Low tax rates, rent-free land and buildings, low-interest or no-interest loans, subsidized energy and transportation rates, and good infrastructure

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Considerations for Choosing a Specific Locale

    Access to markets

    Proximity to competitors

    Availability of transportation and electric power

    Desirability of location for employees coming in from outside

    Nature of workforce

    Cost of doing business

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Frontier Markets

    Unique subset of emerging economies

    Less correlated to ups and downs of the global economy

    Offer potentially high rewards, but with high risk

    Business initiatives require careful strategic considerations

    Potential strategy – Joint-venture with a local company with cultural knowledge of the market

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Role of Marketing in Implementation

    Strategy implementation must be determined on a country-by-country basis

    May be dictated by the overall strategic plan, which is based on market analysis

    Marketing strategy involves four Ps

    Product

    Price

    Promotion

    Place

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Role of Production in Implementation

    Production traditionally has been handled through domestic operations when exporting goods to foreign markets

    Recent trends

    Consideration of worldwide production

    Global coordination of operations

    Farming the product out to low-cost sites

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Role of Production Finance in Implementation

    Transferring funds or borrowing funds in international money markets is less expensive than relying on local sources

    Issues

    Reevaluation of currencies

    Inherent risk of volatile monetary exchange rates

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Specialized Strategies

    Strategies for developing and emerging markets

    Strategies for international entrepreneurship and new ventures

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Strategies for Emerging Markets

    MNCs are increasingly focusing on emerging economies

    Foreign direct investment (FDI) flows into developing countries

    Emerging markets present exceptional risks due to political and economic volatility

    Corruption

    Failure to enforce contracts

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Strategies for Emerging Markets(continued)

    Red tape and bureaucratic costs

    General uncertainty in legal and political environment

    Types

    First-mover strategies

    Strategies for the base of the pyramid

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    First-Mover Strategies

    First-mover or early-entry positioning – Being the first or one of the first to enter a market

    Capturing learning effects important for increasing market share

    Achieving scale economies that accrue from opportunities for capturing that greater share

    Developing alliances with the most attractive local partner

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    First-Mover Strategies (continued)

    Privatization supports the competitive effects of first-mover positioning

    First movers who succeed in taking over newly privatized state-owned enterprises possess a significant advantage over later entrants

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Strategies for Base of Pyramid (BOP)

    Strategy targeting low-income customers in developing countries

    BOP forces companies to consider smaller-scale strategies

    Ideal for incubating new, leapfrog technologies that reduce environmental impacts and increase social benefit

    Business models can travel profitably to higher-income markets if successful

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Strategies for Base of Pyramid (BOP) (continued)

    Challenging to implement – Companies must:

    Offer affordable goods that are highly available in a community that is willing to accept the product

    Bring awareness of the product to the general populace

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    International Entrepreneurship

    Combination of innovative, proactive, and risk-seeking behavior

    Crosses national borders and is intended to create value in organizations

    Innovative firms tend to grow faster when they internationalize earlier

    Venture performance is improved by technological learning gained from international environments

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    40

    Born-Global Firms

    Firms that engage in significant international activity a short time after being established

    Successful born-global firms leverage a distinctive mix of orientations and strategies

    Global technological competence

    Unique-products development

    Quality focus

    Leveraging of foreign distributor competencies

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Be the Management Consultant

    Given that the country is actively seeking foreign investors and appears to be creating a pro-business atmosphere, what non-oil businesses do you think would be best suited for expanding into Saudi Arabia?

    If you were a foreign investor, what concerns would you have about the country? Would you make an investment in the country?

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss

    Of the four imperatives discussed in this chapter—economic, political, quality, and administration—which would be most important to IBM in its efforts to make inroads in the Pacific Rim market?

    Would this emphasis be the same as that in the United States, or would IBM be giving primary attention to one of the other imperatives? Explain

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss (continued 1)

    Define global integration as used in the context of strategic international management

    In what way might globalization be a problem for a successful national organization that is intent on going international?

    In your answer, provide an example of the problem

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss (continued 2)

    Some international management experts contend that globalization and national responsiveness are diametrically opposed forces, and that to accommodate one, a multinational must relax its efforts in the other

    In what way is this an accurate statement? In what way is it incomplete or inaccurate?

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss (continue 3)

    Consider that both a retail chain and a manufacturing company want to expand overseas

    What environmental factors would have the most impact on these companies?

    What ratio of environmental scanning to internal analysis should each employ?

    What key factors of success differentiate the two?

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss (continued 4)

    Anheuser-Busch is attempting to expand in India, where beer is not widely consumed and liquor dominates the market

    What areas should be targeted for strategic goals?

    What could be some marketing implications in the Indian market?

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss (continued 5)

    What particular conditions that MNCs face in emerging markets may require specialized strategies?

    What strategies might be most appropriate in response?

    How might a company identify opportunities at the “base of the pyramid” (i.e., low-income markets)?

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss (continued 6)

    What conditions have allowed some firms to be born global?

    What are some examples of born-global companies?

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

    Review and Discuss (continued 7)

    Mercedes changed its U.S. strategy by announcing that it is developing cars for the $30,000 to $45,000 price range (as well as its typical upper-end cars)

    What might have accounted for this change in strategy?

    In your answer, include a discussion of the implications from the standpoints of marketing, production, and finance

    © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

    Click o edit Master title style

                                                                                                                                      Order Now