International bussiness the challenge of global competition 11e chapter 13

chapter thirteen International Competitive Strategy McGraw-Hill/Irwin International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc All rights reserved Learning Objectives  Explain international strategy and competencies and international competitive advantage  Describe the steps in the global strategic planning process  Explain the purpose of mission statements, objectives, goals, and strategies 13-3 Learning Objectives  Describe the methods of and new directions in strategic planning  Explain home replication, multidomestic, regional, global, and transnational strategies and when to use them  Describe the sources of competitive information  Understand the importance of industrial espionage 13-4 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 13-5 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 13-6 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 13-7 Global Strategic Planning • Provides a means for top management to – Identify opportunities and threats – Formulate strategies to handle them – Stipulate how to finance and manage the strategies’ implementation • Provides consistency of action • Provides a thorough, systematic foundation for making decisions 13-8 Global Strategic Planning Process The process of strategic planning provides a formal structure in which managers • Analyze the company’s external environments • Analyze the company’s internal environment • Quantify goals • Define the company’s business and mission • Set corporate objectives • Formulate strategies • Make tactical plans 13-9 Global Planning Process 13-10 Plan Implementation Facilitators • Policies and Procedures • Policies – Broad guidelines to assist lower-level managers in handling recurring problems – Permit discretionary action and interpretation – The object is to economize managerial time and promote consistency among the various operating units 13-27 Plan Implementation Facilitators • Procedures – Prescribe how certain activities will be carried out – Ensure uniform action on the part of all corporate members – Facilitate comparison among operational units 13-28 Performance Measures • Assess if the strategy and its implementation are proceeding successfully and what modifications may be needed – Measures of the company’s success • Financial, technological, and human resources – Measures of the effectiveness – Measures of the company’s progress 13-29 Kinds of Strategic Plans • Time Horizon – Strategic plans may be classified as short, medium, or long term • Level in the Organization – Each organizational level will have its level of plan • Functional area 13-30 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 13-31 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 13-32 New Directions in Planning • Who Does the Planning? – Many firms have introduced innovation to the planning process • Bring in customers and suppliers who have firsthand experience with the firm’s markets 13-33 New Directions in Planning • How Planning is Done – Many firms have moved toward less structured formats and much shorter documents • Contents of the Plan – Top managers much more concerned with issues, strategies, and implementation 13-34 Summary Changes in the International Planning Process • Top management must assume more explicit strategic decision-making role, decide how things ought to be, not listen to analyses of how they are • The nature of planning must change from forecasting to creativity • Planning processes and tools that assume a future much like the past must be replaced by a mind-set obsessed with recognizing change and using it to build competitive advantage 13-35 Summary of Changes in International Planning Process • The planner must change from purveyor of incrementalism to crusader for action • Strategic planning must be restored to core of line management responsibilities 13-36 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 13-37 Competitor Intelligence Systems • Procedure for gathering, analyzing, and disseminating information about competitors • Benefits include ability to: – – – – Improve bidding success Identify competitor’s key customers Identify plant or other facility expansion plans Improve understanding of competitors’ products and processes 13-38 Sources of Information • Within the Firm – Sales representatives – Librarians – Technical and R&D people • Suppliers/Customers • Published Material – Technical journals – Databases – Internet – Industry reports – Public documents • Direct Observation or Analysis of Physical Evidence – Technical people – Reverse engineering • Competitors’ Employees 13-39 Benchmarking • A technique for measuring a firm’s performance against the performance of others 13-40 Benchmarking • Four types – Internal: comparing one operation in the firm with another – Competitive: comparing the firm’s operation with a direct competitor – Functional: comparing similar functions of firms in your industry – Generic: comparing operations in totally unrelated industries 13-41 ... strategies and when to use them  Describe the sources of competitive information  Understand the importance of industrial espionage 13- 4 International Strategy • The way firms make choices... beliefs, and priorities of the organization’s members 13- 15 Set Corporate Objectives • Objectives – Direct the firm’s course of action – Maintain it within the boundaries of the mission – Ensure... needed – Measures of the company’s success • Financial, technological, and human resources – Measures of the effectiveness – Measures of the company’s progress 13- 29 Kinds of Strategic Plans