International Strategy and Organization

Planning and Strategy Planning Strategy Identifying and selecting objectives and deciding how to achieve those objectives Set of planned actions that managers take to help a company meet its objectives

Strategy-Formulation Process

Identify Mission and Goals Mission statements must consider: Company activities Business objectives Stakeholders Stockholders Customers Residents Environment and much more…

Identify Core Competency Special ability of a company that competitors find extremely difficult or impossible to equal Coordination of multiple skills Lengthy period to develop Difficult to imitate

Value-Chain Analysis Divide company activities into primary and support activities and identify those that create value for customers Each activity is a source of either strength or weakness Insights gained are fed into the strategy formulation process

Value Chain Components

Primary Activities. Inbound Logistics. Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organisation. Operations. This is where goods are manufactured or assembled. Individual operations could include room service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a new car's engine. Outbound Logistics. The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer.

Marketing and Sales. In true customer orientated fashion, at this stage the organisation prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix. Service. This includes all areas of service such as installation, after-sales service, complaints handling, training and so on.

Support Activities. Procurement. This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. They will be responsible for outsourcing (components or operations that would normally be done in-house are done by other organisations), and ePurchasing (using IT and web-based technologies to achieve procurement aims).

Technology Development. Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments.

Human Resource Management (HRM). Employees are an expensive and vital resource. An organisation would manage recruitment and s election, training and development, and rewards and remuneration. The mission and objectives of the organisation would be driving force behind the HRM strategy. Firm Infrastructure. This activity includes and is driven by corporate or strategic planning. It includes the Management Information System (MIS), and other mechanisms for planning and control such as the accounting department.

Business Environment National differences are inherent in analyzing a company’s unique abilities Cultural differences Political processes Legal matters Economic systems Labor issues Consumer forces and much more…

Multinational/Multidomestic Strategy Adapting products and their marketing strategies in each national market to suit local preferences Respond quickly to buyer preferences Difficult to exploit economies of scale

Multi-Domestic Strategy Strategy and operating decisions are decentralized to strategic business units (SBU) in each country Products and services are tailored to local markets Business units in each country are independent of each other Assumes markets differ by country or regions Focus on competition in each market Prominent strategy among European firms due to broad variety of cultures and markets in Europe 41

products using the same Global Strategy Offering the same products using the same marketing strategy in all national markets Cost savings from standardization May overlook varying buyer preferences

Global Strategy Products are standardized across national markets Decisions regarding business-level strategies are centralized in the home office Strategic business units (SBU) are assumed to be interdependent Emphasizes economies of scale Often lacks responsiveness to local markets Requires resource sharing and coordination across borders (which also makes it difficult to manage) 48

Levels of Company Strategy

Growth Strategy Increase the scale (size of activities) or scope (kinds of activities) of operations Internally generated growth Mergers and acquisitions Joint ventures Strategic alliances

Retrenchment Strategy Reduce the scale or scope of a corporation’s businesses Conditions Actions Poor economic conditions Increased competition Lay off workers Close inefficient factories Sell unprofitable businesses

Guard against change and avoid growth or retrenchment Stability Strategy Guard against change and avoid growth or retrenchment No opportunities or threats Strengths fully exploited Weaknesses fully protected Stated objectives are met

Combination Strategy Mix of growth, retrenchment, and stability strategies across a corporation’s business units Invest in promising units Retrench for less exposure Stabilize other units

Business-Level Strategies

Low-Cost Strategy Exploit economies of scale to have the lowest cost structure of any competitor in an industry Mantra is cutting costs Quality remains important Scale is barrier for new entrants Perhaps low customer loyalty

Differentiation Strategy Design products to be perceived as unique by buyers throughout an industry Differentiators Brand image Product design Quality Effects Price premium Customer loyalty Portion of market only Higher production costs

Focus Strategy Focus on narrowly defined market segment by being the low-cost leader, differentiating, or both Many sub-segments today Need distinctive product Specific geography, ethnicity, etc.

Organizational Structure Centralized decision making Decentralized decision making Coordination is paramount Financial control and cost savings Local responsiveness is key Fast-changing environment

Arguments for Centralization easier to coordinate decisions consistent with organizational objectives means to push through major changes avoids duplication of activities

Arguments for Decentralization top management overburdened more motivation at lower levels more flexibility better decisions on the spot by people directly involved more accountability

International Division Structure

International Area Structure

Global Product Structure

Global Matrix Structure

from similar levels but Work Teams Self-managed team Employees from one department take on responsibilities of former supervisors Cross-functional team Group of employees from similar levels but different functional departments Global team Top managers from headquarters and subsidiaries solve company problems

Malaysia Airlines It is the mission of Malaysia Airlines System Berhad, as a corporation, to provide a transport service that ranks among the best in terms of safety, comfort and punctuality, distinguished and loved for its personal touch and warmth. We aim to set new world standards continually with our enhanced in-flight services, reliable ground support and excellent infrastructure and to respond to consumer demand for worldwide coverage.

TM Vision "Our vision is to be the Communications Company of choice - focused on delivering Exceptional Value to our customers and other stakeholders“ Mission To achieve our vision, we are determined to do the following: Be the recognised leader in all markets we serve. Be a customer-focused organisation that provides one-stop total solution. Build enduring relationships based on trust with our customers and partners. Generate shareholder value by seizing opportunities in Asia Pacific and other selected regional markets. Be the employer of choice that inspire performance excellence.