Strategic Planning

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Chapter 12

• Strategic Planning

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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.

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Strategic Planning

• Globalization
• The Strategic Planning Process

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Globalization

• Globalization reflects a business orientation
  based on the belief that the world is becoming
  more homogeneous and that distinctions between
  national markets are not only fading but, for
  some products, will eventually disappear.

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Globalization Drivers

• Both internal and external factors will create
  favorable conditions for development of strategy
  and resource allocation on a global basis.
• These factors can be divided into
• Market Factors
• Cost Factors
• Environmental Factors
• Competitive Factors

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Market Factors

• The world customer gains new meaning.
• Developed infrastructures lead to attractive
  markets for other products.
• Similarities in demand conditions facilitates
  product design.
• Channels of distribution are becoming more
  global.
• Technology changes the landscape of markets.

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Cost Factors

• Two powerful cost-related globalization drivers.
• Cost inefficiencies
• Duplication of effort

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Environmental Factors

• Removal of physical, fiscal, and technical
  barriers to further facilitate globalization of
  markets.
• Rapid technological evolution contributes to
  globalization efforts.
• Smaller bureaucracies of mininationals
  facilitates new product development and allows
  for opportunities to seize new markets.

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Competitive Factors

• Companies may have to be the first to do
  something new, or to preempt competitors moves.
• Market presence may be necessary.

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The Strategic Planning Process

• Formal strategic planning contributes to

Non-financial Objectives
Financial Performance
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The Strategic Planning Process Involves

• Adjusting the core strategy.
• Formulating global marketing strategy.
• Developing global programs.
• Implementing global programs.

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Core Strategy

• Assessing and Adjusting

Forces determining business success are common
to different countries.
Companies must assess their own readiness
for necessary moves
Necessary Participants Executives from
marketing, production, finance, logistics and
procurement.
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Formulating Global Strategy

• The choices

Cost Leadership
Differentiation
Focus
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Country-Market Choice

• Three factors should determine country selection
• The stand-alone attractiveness of a market.
• Global strategic importance.
• Possible synergies

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Segmentation

• The recognition that groups within markets differ
  sufficiently to warrant individual approaches.
• Allows global companies to take advantage of the
  benefits of standardization.
• Involves looking at markets on a global or
  regional basis.

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Developing Global Programs

• Decisions involved in developing a global
  program.
• The degree of standardization in the
• product offering.
• The marketing program beyond the
• product variable.
• Location and extent of value-adding
• activities.
• Competitive moves to be made.

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Product Offering

• Product standardization may result in significant
  cost savings.

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Marketing Approach

• Uniformity is sought especially in elements that
  are strategic in nature, whereas care is taken to
  localize necessary tactical elements.

Glocalization
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Location of Value-Added Activities

• Cost Reduction

Pool Production
Exploit Factor Costs
Concentrate Activities
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Competitive Moves

• Global companies may have to respond to
  competitive moves a variety of markets.
• Cross-subsidization may offer competitive
  advantage.

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Implementing Global Programs

• Successful companies strive to balance local and
  global concerns.
• Too much local production may reduce
• import positioning.
• Too little planning involvement by the
• country organization may lead to NIH.

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Avoiding TheNot-Invented-Here Syndrome

• Ensure that local managers participate in the
  development of strategies and programs.
• Encourage local managers to generate ideas.
• Maintain local and global product portfolios.
• Allow local managers to control budget.

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Localizing Global Moves

• The role of headquarters staff should be one of
  coordination, and leveraging the resources of the
  corporation.
• Globalization calls for the centralization of
  decision-making authority beyond that of the
  multidomestic approach.
• Executing global account management programs
  builds relationships with customers and allows
  for development of internal systems and
  interaction.
• Decision-making in global companies supports the
  goal of treating the world as a single market.