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OVERVIEW
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Strategic Management
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3. 4. 5.
Strategic Management
Strategic management
Determining the firms basic mission and long-term objectives, and developing and implementing an appropriate plan of action
Where are we going? How are we going to get there?
Strategic management growing in importance because of the need to coordinate and integrate diverse operations
Administrative Coordination
Political Imperative
Quality Imperative
Economic Imperative
Strategy based on cost leadership, differentiation, and segmentation Product mix
Value added in the upstream activities of the industrys value chain generic good (not name brand or support service dependent)
Political Imperative
Strategy country- responsive and designed to protect local market niches Success of the product or service depends heavily on marketing, sales or service
Customer or client-focused
Quality Imperative
Administrative Coordination
Decision making based on the merits of the individual situation rather than a predetermined economic or political strategy
Coordination of global supply chains Localized marketing of products and services
Least common approach given the pressures on MNCs to coordinate strategy both regionally and globally
Global Integration
Products and services homogeneous in terms of type and quality Customers have common taste preferences
National Responsiveness
Segmented regional markets Need to respond to differing national standards and regulations Adaptation of tools and techniques to manage local workforces
Global integration
High
Global strategy
Transnational strategy
Low
International strategy
Multi-domestic strategy
Choosing an Option
The right strategy is tailored to particular country and industry characteristics Reasons to choose each strategy
Global: low-cost strategy, commodification Multi-domestic: products and services differentiated by market International: core competencies set the MNC apart from local competitors Transnational:
Require management of contradictory pressures for cost reductions and differentiation Successful firms engage in glocalization, localizing their activities while maintaining a global focus
IMPLEMENTATION
Adapted from Figure 82: Basic Elements of Strategic Planning for International Management
Environmental Scanning
Provide management with accurate
forecasts of trends that relate to external changes in geographic areas where the firm is currently doing business or considering setting up operations These changes relate to the economy, competition, political stability, technology, and demographic consumer data
international market opportunities Match external opportunities (environmental scan) with internal capabilities (internal resource analysis)
Key question: Do we have the people and
resources that can help us to develop and sustain the necessary KFSs, or can we acquire them?
two steps However, more specific goals come out of external scanning and internal analysis
Typically serve as an umbrella for
subsidiaries and international operations Profitability and marketing goals almost always dominate Once set, the MNC will develop specific operational goals and controls for the subsidiary or affiliate level
Implementation
Functional areas
Marketing: usually country specific Production: domestic to foreign, foreign to domestic, or foreign to foreign, dispersed or coordinated Finance: local sources, centralized control, international markets, or barter trade
SPECIALIZED STRATEGIES
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First-Mover Strategies
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3.
First-Mover Strategies
Born-Global Firms
Engage in significant international activity a short time after being established Successful firms leverage a distinctive mix of orientations and strategies
Global technological competence Unique-products development Quality focus Leveraging of foreign distributor competences
Managers need to anticipate the future evolution of the firm and global markets