International Strategic Management Griffin & Pustay 11-1 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall International Business, 6th Edition chapter 11 Chapter Objectives • Characterize the challenges of international strategic management • Assess the basic strategic alternatives available to firms • Distinguish and analyze the components of international strategy 11-2 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Chapter Objectives (continued) • Describe the international strategic management process • Identify and characterize the levels of international strategies 11-3 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall International Strategic Management International strategic management is a comprehensive and ongoing management planning process aimed at formulating and implementing strategies that enable a firm to compete effectively internationally 11-4 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Strategic Planning The process of developing a particular international strategy is often referred to as strategic planning 11-5 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Fundamental Questions • What products and/or services does the firm intend to sell? • Where and how will it make those products or services? • Where and how will it sell them? • Where and how will it acquire the necessary resources? • How does it expect to outperform its competitors? 11-6 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Factors Affecting International Strategic Management 11-7 • Language • Financing • Culture • Market research • Politics • Advertising • Economy • Money • Governmental interference • Transportation/ communication • Labor • Control • Labor relations • Contracts Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Sources of Competitive Advantage Global efficiencies Multinational flexibility Worldwide learning 11-8 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Global Efficiencies Location efficiencies Economies of scale 11-9 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Economies of scope Location Efficiencies Mercedes-Benz has achieved economies of scale by focusing production of its M-class at its assembly plant in Vance, Alabama 11-10 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 11.2 Steps in International Strategy Formulation Develop a Mission Statement Perform a SWOT analysis Set Strategic Goals Develop Tactical Goals and Plans Develop a Control Framework 11-19 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Mission Statements • Clarifies the organization’s purpose, values, direction • Communicates firm’s strategic direction • Specifies firm’s target customers and markets, principal products, geographical domain, core technologies, concerns for survival, plans for growth and profitability, basic philosophy, and desired public image 11-20 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Mission Statements (continued) • Wells Fargo – Satisfy all our customers’ financial needs, help them succeed financially, be known as one of America’s great companies and the number-one financial services provider in each of our markets • Carpenter Technology – Major, profitable, and growing international producer and distributor of specialty alloys, materials, and components 11-21 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall SWOT Analysis • Strengths • Weaknesses • Opportunities • Threats 11-22 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Environmental Scanning An Environmental Scan is a systematic collection of data about all elements of the firm's external and internal environments, including markets, regulatory issues, competitors' actions, production costs, and labor productivity 11-23 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 11.3 The Value Chain 11-24 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Strategic Goals Strategic goals are the major objectives the firm wants to accomplish through pursuing a particular course of action 11-25 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Tactical Goals and Plans • Middle management issues • Details of implementation 11-26 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall • Examples – Hiring – Compensation – Career paths – Distribution and logistics Control Framework A Control Framework is the set of managerial and organizational processes that keep the firm moving toward its strategic goals 11-27 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 11.4 Levels of International Strategy 11-28 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Corporate Strategy • Single-Business Strategy • Related Diversification • Unrelated Diversification 11-29 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Advantages of Related Diversification • Less dependence on single product • Greater economies of scale • Entry into additional markets more efficient and effective 11-30 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Business Strategy Differentiation Overall Cost Leadership Focus 11-31 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Functional Strategies Financial 11-32 Human resources Marketing R&D Operations Copyright 2010 Pearson Education, Inc publishing as Prentice Hall All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Printed in the United States of America Copyright © 2010 Pearson Education, Inc publishing as Prentice Hall ... analyze the components of international strategy 11- 2 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Chapter Objectives (continued) • Describe the international strategic management... and characterize the levels of international strategies 11- 3 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall International Strategic Management International strategic management... firm moving toward its strategic goals 11- 27 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 11. 4 Levels of International Strategy 11- 28 Copyright 2010 Pearson Education,