Business Strategy and the Global Context (Impacts of the macro environment…
Business Strategy and the Global Context
Impacts of the macro environment
Exchange rate fluctuations
Effects on pricing decisons?
Should prices be amended to accommodate fluctuations?
To what extent does this affect PED?
What other factors influence PED?
How will this impact competitiveness?
Impact on sales demand/ proportion of goods imported?
How does this impact business strategy?
Market attractiveness. Should similar markets be entered?
Enter various overseas markets to overcome negative fluctuations = portfolio balance?
Fix prices? How will this impact demand/competitivness?
Differentiation? Impact on PED?
Availability of suppliers?
Ability to enter market?
Do wider changes in ethical responsibilities reflect changes in consumer demand?
Are ethical demands a driving factor?
Should business strategy reflect such change?
Political and legal
Extent of government control? How does this impact tax/monetary policy? Does this impact market viability?
Extent of market liberation?
Existence of quotas or trade tariffs? Impact on expansion/competitiveness/market attractiveness?
Policies on FDI? Impact on ability to expand?
Impacts of the micro environment
How does this impact operations?
What are product requirements?
Is there a match between capabilities and market requirements?
How does this reflect competitors strategy/structure?
The Diamond Model (Porter, 1990)
Porter's Five Forces (1980)
Cost vs. profit potential
How does this relate to exchange rates?
What are the costs of expanding into the market?
Are there cost advantages? I.e. outsourcing?
What are the ethical costs?
Growth/size of market
What are the impacts of the macro environment?
What factors may restrict growth?
Are there political restraints? Quotas?
Threat of substitution? Threat of new entrants?
What are the driving forces behind expansion? Is the market plausible?
Is there a need to adapt?
Appropriateness if glocalisation?
Ability to accommodate change and to respond to shifts in demand size and choice
Convergence vs. Divergence
Follow international 'best practice'
What is perceived as 'best practice'
Does this fit market needs? To what extent?
Follow parental/local culture
Does the parent culture reflect a global culture?
Is this appropriate for all markets?
Does this reflect organisational strategy?
Using global frameworks with local relevance?
Is this strategy compatible with organisational capabilities? What is the cost? How does this reflect the wider environment?
How business strategy is impacted by and can be used to influence the wider business environment
1. Understanding consumer needs
What do consumers want?
How does this reflect wider change in the global context?
What is to be expected in future?
Does this reflect predicted changes in the macro environment?
How can these changes be integrated into business strategy?
Expansion into new markets?
How do consumer needs differ per market?
What factors drives consumption?
What determines market PED?
Influence of branding?
How does this relate to changes in the macro environment?
Increasing disposable incomes?
2. Understanding the global context
3. Understanding organisational strategy, its strengths, weaknesses and market positioning
Macro Environment vs. micro environment. Does this reflect organisational capabilities?
Standardisation vs. Globalisation
Do capabilities match market requirements?
Is there room for innovation? How does innovation reflect wider change? Should it reflect wider change? Why? Why not?
Does the organisation hold the power to influence the wider market? How does reflect 'power imbalances'?
Drivers of expansion?
Saturated/low growth/small domestic market
Do capabilities match market needs?
Is the market viable?
Identifying threats and opportunities
The Diamond Model (Porter, 1990)
Changes in related industry structure
Changes in factor conditions
Changes in demand conditions
Does organisational strategy reflect such change?
Does the organisation hold a relative comparative advantage?
How should one expand?
This relates to organisational strategy
Reliability and information sharing?
How does this reflect supply chain structure?
Effects on global supply chain management
What is the effect on competitiveness?
Firm's competitiveness in relation to rivals?
Porter's Five Forces Model (1980)
Global vs. Local branding
To what extent should branding be local?
How does this reflect convergence vs. divergence?
Do consumers want to be perceived as global?
Do the benefits outweigh the challenges?
What are competitors doing? Why?
Does branding reflect organisational culture?
Do consumers identity themselves with the brand? Why? How can this be increased? How does this reflect market positioning?