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International Strategic Management (Strategic management/planning (process…
International Strategic Management
Strategy
Choice of how to operate and how to differentiate itself from competitors
Different types
Corporate: define domain of business in which the firm intends to operate
single business
related diversification
Conglomerates/unrelated diversification
Business level: how to compete in chosen markets
customer needs
Product differentiation
customer groups
Four options
cost leadership: complete on price
Walmart optimising costs through the value chain
Differentiation: compete on brand image for premiums
real or perceived added value
Innovation driven
Focus: compete on distinctive competency and services
special markets/niches
Rapid response to local market/competition/trends
Zara with rapid turnover of clothing designs
Multiple operations: low cost and differentiated products and services
especially important in niche markets
International level: seek new markets/resources.lower costs in other countries
4 basic components
Scope of operations: where to go
Resource deployment: how to allocate
Distinctive component: What to compete
Synergy: how to achieve
Strategic management/planning
process by which managers evaluate future prospects
Decisions for appropriate strategies to achieve long term objectives
Essential to keep up with global competition
Important for coordinating widely scattered operations (esp if MNC)
Strategic formulation process
Planning cycles
Identifies opportunities with global orientation
Planning modes
proactive and long term
Reactive
Strategic Planning Process
Defines/clarifies mission and objectives
assess environment for opportunities and threats
Asses internal strengths and weaknesses
consider alternative strategy using competitive analysis
Implement strategy through complementary structure, systems and operational processes
Set up control and evaluation systems to ensure success and feedback
Choose right partner
Complementary skills, products and markets
Strong communication
Sensitive IP
What is/isn't shared
How shared capital will be handled
Implementation process
location consideration
ownership/entry consideration
Role of functional areas
Evaluation of alliance
Long term vs short term
Incremental approach
Planning
Define missions and objectives
Function the firm performs in society
Environmental screening
Gathering info for forecasts
Geographic areas
Process for adaptation
Competitor analysis
Internal Analysis
determines current and potential strengths/weaknesses
Comparison to competitors
Key success factors
technical capability
Apple
Managerial expertise
Toyota
Distributions channels
Disney
Assess Strategic Analysis
Use competitive (SWOT) analysis
Decide on level of strategic approach
Decide on entry strategy
Approaches to world markets
Globalisation
Worldwide economies of scale
Problems
risky
difficult to manage
Loss of original identity and value
lack of local flexibility/responsiveness
Subject to regional pressures
Regionalism: local markets linked together within a region, allowing more local responsiveness and specialisation
Impetus
unique customer preferences
domestic subsidies
more product variation
Glocal
go global, act local
Global integrative strategies
Entry strategy in stages
Exporting and licensing (less risky)
Offshoring/outsourcing (sort of risky)
Mergers/acquisitions and fully owned subsidiaries (v risky)
Global integration level
cooperation between subsidiaries to achieve economies of scale
Vertical and horizontal integration
Born global
e-business for global expansion
Alliance based entry modes
Suitable when cultural distance is high
Firms to pool resources to pursue mutual goals
Categories
Join ventures
Equity strategic alliances
Non-equity strategic alliances
Motivations/benefits
Avoid import barriers/other regulations
Share costs and risks of R&D
Gain access to specific market z
Reduction of political risk
Strategic Choice
Critical evaluation of dis/advantages in relation to the firm's capabilities
Critical environment factors
Contribution that each choice makes on overall mission of the company
Cultural distance
Affects compromise and communication