1. Strategic planning CHAPTER 9
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Copyright © John Wiley & Sons

2. Chapter 9 Learning Objectives
Outline the process of strategic planning in the context of the global marketplace
Examine both the external and internal factors that determine the conditions for development of strategy and resource allocation
Illustrate how best to utilize the environmental conditions within the competitive challenges and resources of the firm to develop effective programs
Suggest how to achieve a balance between local and regional/global priorities and concerns in the implementation of strategy
Chapter 9 Learning Objectives 2
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Czinkota: International Business, 8e

3. Globalization
Globalization reflects a business orientation based on the belief that the world is becoming more homogenous and that distinctions between national markets are not only fading, but may eventually disappear 3
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Czinkota: International Business, 8e

4. Evolution of Global Strategy
Core Business Strategy
Develop Core
Business Strategy
Internationalize
the Strategy
Country A
Country B
Country C
Country D
Country E
Globalize
the Strategy
Figure 9.1 4
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5. Globalization Drivers
Market Factors
World customers are similar across nations
Channels of distribution are becoming more global
Technology is making world markets more accessible
Avoiding cost inefficiencies
Avoiding duplication of effort
Size is a major asset
Government barriers have fallen dramatically
Accelerated flow of information across borders
Removal of barriers and rapid technology growth
Companies take action to match competitors’ moves
Companies look for less competitive markets
Market presence necessary to execute global strategies
Cost Factors
Environmental Factors
Competitive Factors 5
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Czinkota: International Business, 8e

6. Focus on Entrepreneurship: How Social Entrepreneurs Think Global
The concept of doing good while building a profitable business model has grown in popularity.
Social enterprises are born global for 3 reasons:
Social problems exist in developing countries.
Resources are mainly in the developed world.
Global for-profit social enterprises can be adapted to other situations. 6
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Czinkota: International Business, 8e

7. Mininationals and Born Globals
Mininationals are newer companies with sales between 200 million and 1 billion that are able to serve the world from a handful of manufacturing bases
Born globals are newly founded firms that, from inception, are established as an international business 7
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8. Global Strategy Formulation
Assessment and Adjustment of Core Strategy
Market/Competitive Analysis
Internal Analysis
Formulation of Global Strategy
Choice of Competitive Strategy
Choice of Target Countries/Segments
Development of Global Program
Implementation
Organizational Structure
Control
Figure 9.3 8
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9. Understanding and Adjusting the Core Strategy
Strategic Business Units (SBUs) – Groupings with product-market similarities:
Needs or wants
End-user customers
Good or services used to meet needs of specific customers
Requires the participation of executives from different functions
Market and Competitive Analysis
Opportunities
Threats
Internal analysis
Strengths
Weaknesses 9
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Czinkota: International Business, 8e

10. Abu Dhabi’s Energy City Plan
Abu Dhabi is proceeding with a plan known as Masdar, which involves the development of a clean energy city. Founded in 2006, the $22 billion venture aims to develop a city run on renewable energy sources like solar power to avoid producing the carbon emissions that cause global warming.
The global financial crisis has resulted in funding cuts and construction delays. After conducting a strategic review of the new funding obstacles, it is expected that a revised plan will not scale back significantly on the original plan.
Source: Bloomberg.com 10
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11. Choice of Competitive Strategy
In global markets, the manager has three general choices of strategies:
Source of Competitive Advantage
Low Cost
Differentiation
Cost
Leadership
Industry-wide
Differentiation
Competitive
Scope
Focus
Single Segment
Figure 9.4 11
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Czinkota: International Business, 8e

12. Country-Market Choice
Usual approach – First start with regions, then further split the analysis by country
Portfolio models typically look at internal strength and external attractiveness and find the best fit or gap not being served
Three factors for determining country selection:
Stand-alone attractiveness of a market
Global strategic importance
Possible synergies 12
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13. Bases for Global Market Segmentation
Bases for International Market Segmentation
Environmental Bases
Marketing Management Bases
Geographic Variables
Political Variables
Economic Variables
Cultural Variables
Product-Related Variables
Promotion-Related Variables
Price-Related Variables
Distribution-Related Variables
Figure 9.6 13
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Czinkota: International Business, 8e

14. Focus on Economy: Global Extremes
The severity of the global recession has brought about a change in some parts of the world. The GfK Roper Mood of the World® index combines three measures to calculate an overall score in terms of how consumers are feeling: distress, reaction, and concern.
The consumer confidence index indicates that certain areas of the world differ in terms of when consumers expect to return to their previous spending patterns. 14
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Czinkota: International Business, 8e

15. Global Program Development
Involves combining adaptation, aggregation, and arbitrage elements
Product Offering
Standardization of core product or technology, adapted to local preferences
Marketing Approach
Uniformity is sought in elements that are strategic in nature
Care is taken to localize necessary tactical elements
Glocalization – Networked global organization approach
Location of Value-Added Activities
Cost reductions by pooling production or other activities 15
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16. Competitive Moves
A company can be attacked by competitors in any market, included those that are most profitable and successful
Cross-subsidization – Use of resources accumulated in one part of the world to fight a competitive battle in another
Soft power – The ability to obtain what one wants through co-option and attraction 16
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17. Implementing Global Programs
Successful global companies can balance local, regional, and global concerns
Challenges
Market-related reasons
Insufficient research
Over-standardization
Internal reasons
Inflexibility in planning an implementation
“Not-invented-here” syndrome 17
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18. A New Global Strategy for Peugeot
Beginning with the sleek, new RCZ coupe in 2010, the French carmaker Peugeot is planning to launch 14 new models in an effort to boost its global repertoire as an auto maker. The company aims to return to the virtues that made Peugeot great in the 1980s – class-leading handling combined with pert styling.
Among the new models, Peugeot will unveil a saloon specially developed for the Chinese market and a light pickup in Brazil.
Source: The Economist -- 18
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19. Localizing Global Moves
Balancing what country managers do and what global product managers do
Management Processes
Transfer of information
Personnel interchange to facilitate philosophy, strategy, actions
Headquarters should coordinate and leverage resources
Centralized decision making authority
Develop a strategy jointly
Permit local managers to develop own programs within specified parameters and with approval
Motivate by participation and autonomy 19
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20. Organizational Structures
Various organizational structures have emerged to support the globalization effort:
Global or regional product managers and their support groups at headquarters
Matrix structure – Effective system for managing today’s global marketplace
Global account management – Builds relationships with important customers and allows for the development of internal systems and interaction 20
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21. Focus on Culture: Staffing Creatively
Companies are trying to reduce their reliance on the traditional expatriate to keep costs down and maintain effectiveness. Many expatriates are charged with finding their replacements as quickly as possible. However, promising local candidates become expatriates themselves when they are asked to work in the head office to gain experience. Some companies have successfully encouraged local executives to step up to important roles. 21
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22. Two Dimensions of Corporate Culture
Dimension One – The overall way a company holds its operations together making them a single entity
Dimension Two – Commitment to the global marketplace 22
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23. Local Company in a Global Environment
The global marketplace presents significant challenges and opportunities for local firms
Strategies depend on both external and internal realities
Liberalization may mean hardship for some companies as a result of economic integration or WTO membership 23
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Czinkota: International Business, 8e

24. Competitive Strategies for Local Companies
Dodger
A local company that sells out to a global player or becomes part of an alliance
A local company that has assets that give it a competitive advantage only in its home market
A local company whose assets are transferable, allowing it to compete head-on with established global players worldwide
Defender
Contender
Extender 24
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