Chapter 6 Strategic Planning

© 2010 South-Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 6

Strategic Planning

Principles of

International Marketing

9th Edition

© 2010 South/Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Marketing

• Globalization reflects a business orientation which believes that:– The world is becoming more homogeneous and– Distinctions between national markets are not only

fading but would eventually disappear.


Exhibit 6.1: Global Marketing Evolution


Global Marketing

• Globalization drivers– Market factors – Include purchasing power, developed

infrastructures, technology, globalization of distribution channels, and cross-border retail alliances.

– Cost factors – Involve avoiding cost inefficiencies and duplicated efforts. Drugs & CT

– Environmental factors – Include reduced governmental barriers and rapid technological evolution; born globals are taking advantage of today’s more open trading regions and newer technologies (internet & social net work).

– Competitive factors – Include rapid product innovation, introduction, distribution.


The Strategic Planning Process

• Formal strategic planning contributes to both financial performance as well as non financial objectives such as: – Raising the efficacy of new product launches.– Reducing the operation cost.– Improving product quality.– Market share performance.



• Three broad dimensions to be kept in mind while undertaking formal strategic planning:– The potential benefits for the company in the short

and long term. – The costs in terms of management time and process

realignment.– The presence of the necessary management

resource to undertake the endeavor.


Exhibit 6.4 - Global Strategy Formulation


International Planning Process

• Insert Exhibit 11.1



• Understanding and adjusting the core strategy– Begins with a clear definition of the business for which

the strategy is to be developed.– The strategic business unit (SBU) represents groups

organized around product market similarities based on:• Needs or wants to be met,• End user customers to be targeted,• Products or services used to meet needs of specific

customers.– Requires the participation of executives from different

functions.– Ericsson& Sony: new features/ miniaturizing



• Market and competitive analysis– Help balance risks, resource requirements, competitive

economies of scale, and profitability to gain stronger long-term positions.

– Help understand the structure of the global industry and identify the forces that drive competition and determine profitability .Automobile company

• Internal analysis– Examine the readiness and capability of the firm to

undertake strategic moves with its current resources.



• Formulating a global marketing strategy– Choice of competitive strategy– Country-market choice– Segmentation


Exhibit 6.5 - Competitive Strategies



• Country-market choice– A market expansion policy will determine the allocation

of resources among various markets; basic alternatives being concentration and diversification.

– Factors that determine country market selection:• The stand-alone attractiveness of the market. China in

consumer product /size• Global strategic importance of the market. Finland in ship

building /technology• Possible synergies offered by the market. Expand in

market /similar


• A focus strategy is defined by its emphasize on single industry segment within the orientation towards either low cost or differentiation ,any one of these strategies can be pursued on global or regional basis

• Achieving a cost leadership ,marketer offer identical products or services at lower costs than a rivals

• Differentiation strategy either focus in industry wide or single takes advantage of the perceived uniqueness in elements such as design or after sales services


Exhibit 6.7 - Factors Affecting the Choice between Concentration and Diversification Strategies



• Segmentation – This approach looks at markets on a global or regional

basis, thereby ignoring the political boundaries that otherwise define markets in many cases.

– Allows global marketers to take advantage of the benefits of standardization while addressing the unique needs and expectations of a specific target group.


Exhibit 6.8 - Bases for Global Market Segmentation

EnvironmentalVariables

MarketingManagement

Variables

GeographicVariables

PoliticalVariables

EconomicVariables

CulturalVariables

PromotionVariables

ProductVariables

PriceVariables

DistributionVariables

Bases for InternationalMarket Segmentation


• Global marketing program development - Four decision areas that may best utilize the conditions set by globalization drivers, within the framework of competitive challenges of the firm, when dealing with global development: – The degree of standardization in the product offering.– Marketing approach - Uniformity is sought in elements that

are strategic in nature, while taking care to localize necessary tactical elements; this approach is called glocalization. coca

– Location and extent of value-adding activities. One repair center Sony

– Competitive moves - Cross-subsidization may be the competitive advantage needed for the long term. Fuji &Kodak



The Strategic Planning ProcessImplementing Global Marketing

• Challenges of global marketing– Insufficient research and the tendency to over-

standardize.– Inflexibility in planning and implementation.– Local resistance in the form of not-invented-here

syndrome (NIH), which occurs when country organizations are not part of the planning process, or if adoption is forced on them by headquarters.



• How to avoid the NIH syndrome– Ensure that local managers participate in the

development of global brand marketing strategies.– Encourage local managers to develop ideas for

regional or global use.– Maintain a product portfolio that includes local as well

as regional and global brands.– Allow local managers control over their marketing

budgets so that they can respond to local customer needs and counter global competition.



• Localizing global marketing : Includes three serious actions :– Management processes

• Globalization enhances the flow of information, leading to idea exchange and strengthening of organizational values.

• Encourage personnel interchange to gain experience abroad.

• Coordinate and leverage resources of the corporation.• Permit local managers to develop their own programs

within specified parameters and subject to approval. • Minimize the influence of the NIH syndrome by using

motivational policies.



• Localizing global marketing– Organization structures

• Establish global or regional product managers and their support groups at headquarters.

• The matrix structure is considered more effective in today’s global marketplace.

• Execute global account management programs to build relationships with important customers and allow development of internal systems and interaction.



• Localizing global marketing– Corporate culture

• Affects and is affected by the manner in which a company holds its operations together and makes them a single entity, and commitment to the global market place.

• The management development system has to be transparent; non-national executives should have an equal chance for the fast track to top management.

• Implement compensation and mobility policies to avail the best talent regardless of job location.


The Local Company in the Global Environment

• The degree and strength of globalization in an industry will determine the pressure that the local marketer will be under.(internally & externally)

• Internally is the extent to which the company’s assets are transferable will determine the opportunity dimension.

• Multiple strategies are available to local marketers when global markets and marketers challenge them.


Competitive Strategies for Local Companies

• Dodger: A local company which sells off its assets to a global player or becomes part of an alliance on account of a pressure to globalize in the industry. Czech Skoda/ Volkswagen

• Defender A local company that has assets that give it a competitive advantage only in its home market. Carrefour

• Contender: A local company which upgrades its capabilities to compete the established global players worldwide. Embracer/ Bombardier Aerospace aircraft

• Extender: A local company that possesses assets which allow them to exploit their success at home as a platform for expansion elsewhere. Jollibee foods /McDonalds


Exhibit 6.10 - Competitive Strategies for Local Companies


The Local Company in the Global Environment

• The following six-part strategy for success has been proposed:– Create customized products and services.– Develop approaches that overcome key obstacles.– Utilize the latest technology for advantage.– Scale up operations locally, regionally, and globally.– Exploit low-cost labor.– Invest in talent to sustain their growth and expansion.

Chapter 6 Strategic Planning

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