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