Chapter 6 Strategic Planning

1. 0 Chapter 6 Strategic Planning Chapter 7 Marketing Organization, Implementation, and Control

2. Group 1 Sergio Montero Olga Shostak Tyler Hackett Frank Buell

3. Global Marketing • Globalization reflects a business orientation which believes that: • The world is becoming more homogenous • Distinctions between national markets are on the road to disappear • As a result firms should: • Globalize international strategy • Factors: market – cost – environmental - competitive

4. Global marketing evolution

5. Global Marketing • Globalization drivers – internal and external factors • Market factors – • World customer change • Similar education – income – leisure time – lifestyles – aspirations • Channels of distribution • Cost factors – • Avoiding cost inefficiencies • Avoid duplication of efforts • Economies of scale and scope • Synergy

6. Global Marketing (Cont.) • Globalization Drivers • Environmental • Government barriers declining • Relaxed immigration control in Europe • Rapid technological evolution – removal of physical, fiscal and technical barriers • Competitive • First mover • Preempt competitors moves • Protect home market position – attack main competitor’s home market position

7. The Global Landscape by Industry and Market

8. 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 • Cost reduction efforts • Improving product quality • Improving market share performance

9. The Strategic Planning Process • Three broad dimensions to be kept in mind while undertaking formal strategic planning: • The potential benefits for the company in the short versus the long-term • The costs in terms of management time and process realignment • The presence of the necessary management resources to undertake the endeavor

10. Global Strategy Formulation

11. The Strategic Planning Process • Understanding and adjusting the core strategy • 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 • Product or service used to meet the needs of specific customers • Requires the participation of executives from different functions, especially Marketing, Finance, Production, Distribution and Procurement

12. The Strategic Planning Process • Market and competitive analysis • Help balance risks, resource requirements, competitive economies of scale, and profitability to gain stronger long-term positions. • Understand the structure of the global industry to identify competition and profitability drivers. • Internal analysis • Rigorous assessment of organizational commitment to global or regional expansion • Product’s readiness to face competitive environment

13. Formulating Global Marketing Strategy Step 1. The choice of competitive strategy to be employed. Step 2. The choice of country markets to be entered or penetrated further • 3 choices of strategies: • Cost Leadership; • Differentiation; • Focus.

14. Formulating Global Marketing Strategy (continue) Competitive Strategy choice

15. Formulating Global Marketing Strategy (continue) Country-Market choice Analysis of regions and then by country include two measures: • Internal Strength using: Market share, product fit, contribution margin, market presence. 2. External Attractiveness using: Market size, market growth rate, competitors, government regulations, country’s stability.

16. Formulating Global Marketing Strategy (continue) • 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 a market; • Global strategic importance; • Possible synergies.

17. Segmentation Approach This approach allows global marketers to take advantage of the benefits of standardization while addressing the unique needs and expectations of a specific target group.

18. Global Marketing Program Development Marketing-related decisions will have to be made in four areas: • 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.

19. Implementing Global Marketing • Challenges of Global Marketing: • Insufficient research; • Tendency to overstandardize; • Inflexibility in planning and implementation (NIH not-invented-here syndrome).

20. The best approach against the emergence of the NIH syndrome: • Ensure that local managers participate in the development of global marketing strategies and programs; • Encourage local managers to generate ideas for possible 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.

21. Implementing Global Marketing (continue) Localizing Global Marketing Actions in implementing the global strategy: 1. Management Processes: • Globalization enhances the flow of information, leading to idea exchange and strengthening of organizational values. • Coordinate and leverage resources of the corporation. • Uses motivational policies that minimize the influence of the NIH syndrome.

22. Localizing Global Marketing (continue) 2. Organization Structure: The matrix structure is considered more effective in today’s global marketplace. 3. Corporate Culture: The management development system has to be transparent; allowing non-national executives have an equal chance for the fast track to top management.

23. 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. • The extent to which the company’s assets are transferable will determine the opportunity dimensions. • Multiple strategies are available to local marketers when global markets and marketers challenge them.

24. Competitive Strategies for Local Companies The key is to innovate, rather than imitate, and exploit the inherent competitive advantages over global players

25. 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 local operations to the regional or global level. • Exploit low-cost labor. • Invest in talent to support growth and expansion.

26. Chapter 6 – Questions • How globalization drivers affect the international marketing strategy of a company? • What are Porters’ generic strategies? How are they related to a company’s competitive strategy, globally?

27. Marketing Organization, Implementation, and Control Chapter 7

28. Organizational Structure • The basic functions of an organization are to provide: • A route and locus of decision making and coordination • A system for reporting and communications

29. Organizational Structure (cont.) • Organizational Designs • Little or no formal organization • International Division • Global Organizations

30. Little or no Formal Organization • Domestic operations assume responsibility • Case by case basis, resident expert or agent • Export Department • Separate entity • Licensing • Joint venture or direct foreign investment • International division

31. International Division • Centralized International Activities • Operations separate • Manufacturing and other related functions remain domestic

32. Global Organization Structure • Product Structure • Area Structure • Functional Structure • Customer Structure • Mixed/Hybrid Structure

34. Implementation Locus of decision making • Decentralization –when a firm grants its subsidiaries a high degree of autonomy; controls are relatively loose and simple • Centralization -when a firm maintains tight controls and strategic decision making is concentrated at headquarters • Coordinated decentralization –overall corporate strategy is provided from headquarters (centralized decision making) but subsidiaries are free to implement it within the range established in consultation between headquarters and the subsidiaries

35. Levels of Coordination

36. Implementation Factors Affecting Structure and Decision Making • Degree of involvement in international operations. • The business(es) in the firm is engaged (ie. products marketed. • Size and importance of the markets. • The human resource capability of the firm

37. Implementation The networked global organization Glocalization-building in organizational flexibility to allow for local/regional adjustments in global strategic planning and implementation; uniformity is sought in strategic elements such as positioning of a product; care is taken to localize tactical elements, such as distribution

38. Implementation The networked global organization Companies that have adopted this approach have incorporated the following three dimensions into their organizations: • The development and communication of a clear corporate vision • The effective management of human resource tools to broaden individual perspectives and identification with corporate goals • The integration of individual thinking and activities into the broad corporate agenda

39. Implementation The networked global organization Key points • This avoids the problems of duplication of effort, inefficiency, and resistance to ideas developed elsewhere • Requires subsidiary upgrade from implementation and adaption to contribution and partnership • Three forms can emerge • Charismatic • Focused • Virtual

40. Implementation Promote internal cooperation • Moving ideas through teaching • Use international teams or councils to share best practices • Intranets integrate a company’s information assets into a single and accessible system using Internet- technologies

41. Levels of Coordination

42. Levels of Coordination • Strategic leader-is played by a highly competent national subsidiary located in a critical market • Contributor-is a country organization with a distinctive competence • Black hole-is a situation that the international marketer has to work its way out of • Implementer-should provide input in the development of a regional or global strategy

43. Control • Controls focus on actions to verify and correct actions that differ from established plans • Within an organization, control serves as an integrating mechanism • Controls are designed to: • Reduce uncertainty • Increase predictability • Ensure behaviors originated throughout the organization are compatible with organizational goals despite physical, psychic, and temporal distances

44. Comparison of Bureaucratic and Cultural Control Mechanisms

45. Control Bureaucratic/formalized control The elements are an international budget and planning system, the functional reporting system, and policy manuals used to direct functional performance. • Budgets are short term guidelines in such areas as investment, cash, and personnel • Plansrefer to formalized long-range programs with more than a one year horizon

46. Control Bureaucratic/formalized control The budget system is used for four main purposes. • Allocation of funds among subsidiaries • Planning and coordination of global production capacity and supplies • Evaluation of subsidiary performance • Communication and information exchange among subsidiaries, product organizations, and corporate headquarters.

47. Control Cultural control • Require an extensive socialization process, and informal, personal interaction is central to the process. • Influence Examples: • Nokia’s “Cultural and Spiritual Training” • Philip’s “Organization Cohesion Training” • Unilever’s “Indoctrination”

48. Control Exercising control • The degree of control imposed will vary by subsidiary characteristics, including its location. • Factors to be kept in mind while designing a control system: • One must only use relevant data • One must consider the cost of establishing , maintaining, and weigh the costs against the benefits to be gained • The impact of the environment

49. Marketing Organization, Implementation and Control (Chapter 7) • What are basic organizational structures we observe in the world? • Why the matrix organization is so much appreciated?