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Learning Objectives
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Learning Objectives
Describe the methods of and new directions in
strategic planning
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International Strategy
The way firms make choices about acquiring and using scarce resources in order to achieve their international objectives Involves decisions that deal with all the various functions, products and regional unit activities of a company
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International Strategy
The goal is to achieve and maintain a unique and valuable position both within a nation and globally: competitive advantage
Competitive advantage is the ability of a company to have higher rates of profits than its competitors
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Competitive Advantage
To create a sustainable competitive advantage, a company tries to develop skills that
Create value for customers Are rare Are difficult to imitate or substitute for Are organized in a way that the company can fully exploit
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Situational analysis
Forecast Value Chain Analysis Who are the target customers? What value do we deliver? How will customer value be created?
Figure 13.2
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Build knowledge database and transfer best practices Protect knowledge from competitors
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These broad statements communicate to the corporations stakeholders what the company is and where it is going and the values that will guide the behavior of the organizations members
Mission statement A broad statement that defines the organizations purpose and scope
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Generally, participants in the strategic planning process will formulate alternative competitive strategies along with action plans that seem plausible
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Cost and Adaptation Pressures and Their Implications for International Strategies
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Used when companies typically centralize product development functions in their home country
Then transferred to foreign markets in order to capture additional value Microsoft, McDonalds
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Multidomestic Strategy
Used when there is strong pressure for adaptation to local market
Decision making decentralized to allow for quick change Increases cost structure Too much adaptation may take away from product Cost and complexity of coordination can be substantial Schneider Electric
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Global Strategy
Used when a company faces strong pressure to reduce costs and limited pressure to adapt products for local markets
Strategy and decision making centralized Company offers standardized products and services Value chain activities in only one or a few areas Results in limited ability to adjust to meet customer needs and higher transportation costs Intel, Boeing
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Transnational Strategy
Used when a company confronts pressures for both cost effectiveness and local adaptation
Company locations based on where most beneficial for each activity Upstream value chain activities will be more centralized Downstream activities will be more decentralized Achieving an optimal balance is challenging Strategic decisions, structures and systems will be complex
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Scenarios
Multiple, plausible stories about the future
Often the what if questions reveal weaknesses in present strategies Types of subjects for scenarios include large and sudden changes in sales (up or down) sudden increases in price of raw materials sudden tax increases a change in the political party in power
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Types of Plans
Contingency Plans
Plans for the best-or-worst-case scenarios or for critical events that could have a severe impact on the firm
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Provides management with an estimate of the revenue to be received and the units to be sold
Budget
During planning, budgets coordinate the functions within the firm and provide management with a detailed statement of future operating results 13-26
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Procedures
Prescribe how certain activities will be carried out Ensure uniform action on the part of all corporate members
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Performance Measures
Assess if the strategy and its implementation are proceeding successfully and what modifications may be needed
Measures of the companys success Financial, technological, and human resources Measures of the effectiveness Measures of the companys progress
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Functional area
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Methods of Planning
Top-down planning
Begins at the highest level in the organization and continues downward definition of the business mission statement company objectives financial assumptions content of the plan special issues
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Methods of Planning
Bottom-Up Planning
Begins at the lowest level in the organization and continues upward
Iterative Planning
Repetition of the bottom-up or top-down planning process until all differences are reconciled
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Bring in customers and suppliers who have firsthand experience with the firms markets
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Competitor Analysis
Competitor Analysis
Process in which principal competitors are identified and their objectives, strengths, weaknesses, and product lines are assessed
Industrial Espionage
Act of spying on a competitors to learn secrets about strategy and operations
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Sources of Information
Within the Firm Sales representatives Librarians Technical and R&D people Published Material Technical journals Databases Internet Industry reports Public documents Suppliers/Customers Competitors Employees Direct Observation or Analysis of Physical Evidence Technical people Reverse engineering
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Benchmarking
A technique for measuring a firms performance against the performance of others
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Benchmarking
Four types
Internal: comparing one operation in the firm with another Competitive: comparing the firms operation with a direct competitor Functional: comparing similar functions of firms in your industry Generic: comparing operations in totally unrelated industries
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