1.6 Globalization Strategy Flashcards
Steps to formulating a strategy
Know your market
Know your competition
Know yourself
Know your playing field
Know your tools
Formulating a strategy - 1. Know your market
Marketing understanding
Knowing where there is demand for your product, not in saturated markets
Understanding how others might affect your market growth chances
Being international means that demands might fluctuate, risky
Formulating a strategy - 2. Know your competition
Competitive analysis
Compare yourself to your competitors, where are you?
Use the 5 forces model to see your placement in the market
Competitive rivalry, threat to new entrants…
Porter’s 5 forces
Threat of new entrants
Threat of substitutes
Competitive rivalry
Bargaining power of customers
Bargaining power of suppliers
Formulating a strategy - 3. Know yourself
Creative, entrepreneurial insight into a company, its industry, and environment
New innovative things you can do to increase competitiveness?
Use SWOT analysis
Formulating a strategy - 4. Know your playing field
Major environment trends
What are your main stakeholders?
Where are you on the playing field?
What regulations determine your playing field? (Ex. Environmental regulations)
Use PESTLE analysis
PESTLE
Political
Economical
Social
Technological
Legal
Environmental
Formulating a strategy - 5. Know your tools
Systematic, comprehensive approaches to developing strategies
Scenario analysis prepare a company for possible futures, contingencies of different outcomes the can happen in the long term
Use a scenario analysis
Scenario analysis
Prepares a company for possible futures, contingencies that can happen in the long-term
Input-output diagram for scenarios
Input: uncertainty about how the future business environment of a firm will develop, but a need to take informed decisions now
Tool: scenario analysis
Output: 4 defined scenarios for possible futures, actions/investments to take now that are stress tested for all futures, indicators to monitor that inform what real future is developing
2 dimensions of scenario analysis
Supply (ex. CO2 emission reduction)
Your demand (other countries rising in markets could harm your demand)
4 possible future outcomes
Sunshine: high supply, high demand
Fog: low supply, high demand
Thunderstorm: high supply, low demand
Hurricane: low supply, low demand
Sunshine scenario
(High supply, high demand)
Best case
Factories can keep producing, competitors failed to rise but if they do you can compete
CEO advises to prepare for investments, secure access to funding, work on supplier loyalty, expand export sales network
Fog scenario
(Low supply, high demand)
Demands remain high as global competitors failed at their plans, but regulations cause lower supply
If outsider competitors can increase supply they can gain market share
CEO advises to look at possibility of outsourcing/offshoring
Thunderstorm scenario
(High supply, low demand)
Demand decreased as competitors gain advantage, but you can still supply so you can keep up to speed and come back with other strategies
CEO advises to merge or connect with other companies to create alliance, use marketing to attract new customers and increase demand
