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BUSI 338 > Chapter 7: Strategic Planning > Flashcards

Chapter 7: Strategic Planning Flashcards

1
Q

Even the biggest companies in the biggest home markets cannot survive on domestic sales alone if they are in…

A
  • Global industries such as:
    banking, cars, consumer electronics, entertainment, home appliances, mobile devices, pharmaceuticals, publishing, or travel services.
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2
Q

How does formal strategic planning contribute to a company?

A

Both financial performance and nonfinancial objectives

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3
Q

Formal strategic planning contributes to both financial performance and nonfinancial objectives such as:

A
  • Raising the efficacy of new-product launches
  • Enhancing cost reduction efforts
  • Improving market share performance
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4
Q

What does formal strategic planning contribute to?

A

Financial performance and nonfinancial objectives

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5
Q

Global strategy formulation

A
  1. Assessment and adjustment of core strategy: Market/competitive analysis, Internal analysis
  2. Formulation of global strategy: Choice of competitive strategy, choice of target countries and segments
  3. Development of global program
  4. Implementation: Organizational structure, control
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6
Q

Understanding and adjusting the core strategy…

A
  • Begins with a clear definition of the business for which the strategy is to be developed
  • Requires the participation of executives from different functions (e.g., marketing, production, finance, distribution, and procurement)
  • Geographic representation should be from the major markets or regions
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7
Q

Market and competitive analysis

A

Need to understand that the underlying forces that determine business success are common to the different countries that the firm compete in.

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8
Q

Planning process that focus simultaneously across a broad range of markets provides global marketers with tools to:

A
  • Help balance risks
  • Competitive economies of scale
  • Profitability to gain stronger long-term positions
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9
Q

Organizational resources have to be used as a…

A

reality check

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10
Q

Internal Analysis

A
  • Assessment of organizational commitment to global or regional expansion
  • Assessment of the product’s readiness to face the competitive environment
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11
Q

Formulating a global marketing strategy

A
  • Choice of competitive strategy
  • Country-market choice and segmentation
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12
Q

Choice of competitive strategies

A

(Picture on slide 9)
1. Source of competitive advantage
- Low cost
- Differentiation
2. Competitive scope
- Industry-wide
- Single-segment

  • Left top square (low cost, industry-wide): Cost leadership
  • Right top square (differentiation, industry-wide): Differentiation
  • Left bottom square (Low cost, single segment): Focus
  • Right bottom square (differentiation, single segment): Focus
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13
Q

Portfolio models involve two measures:

A
  • Internal strength (e.g., relative market share, product fit, contribution margin, and market presence)
  • External attractiveness (e.g., market size, market growth rate, number and type of competitors, government regulations, and economic and political stability)
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14
Q

What does market expansion policy determine?

A

The allocation of resources among various markets.

  • concentration or diversification
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15
Q

Bases for international market segmentation

A

Chart on slide 11
1. Environmental Bases
- Geographic variables
- Political variables
- Economic variables
- Cultural variables
2. Marketing management bases
- Product-related variables
- Promotion-related variables
- Price-related variables
- Distribution-related variables

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16
Q

Marketing related decisions will have to be made in four areas:

A
  • Degree of standardization in product offering
  • Marketing approach
  • Location and extent of value-adding activities
  • Competitive moves
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17
Q

Degree of standardization in product offering

A

Globalization is not the same as standardization

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18
Q

Marketing approach

A
  • Local touch is critical in the execution of the marketing program
  • Glocalization
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19
Q

Glocalization

A

Uniformity is sought in elements that are strategic in nature and care is taken to localize necessary tactical elements

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20
Q

Location and extent of value-adding activities

A

E.g., global marketers have established R&D centers next to key product facilities

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21
Q

Competitive moves

A
  • Firms do not respond to competitive modes only in the market where it is attacked
  • Cross-subsidization
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22
Q

Cross-subsidization

A

Use of resources accumulated in one part of the world to fight a competitive battle in another

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23
Q

Challenges of global marketing

A
  • Insufficient research and tendency to overstandardize
  • Globalization by design requires a balance between sensitivity to local needs and deployment of technologies and concepts globally
  • Not-invented-here syndrome (NIH): Leads to decline of global program when: Country organizations are not part of the planning process
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24
Q

Localizing global marketing

A
  • Management processes
  • Organization structure
  • Corporate culture
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25
Q

Management process

A
  • Encourage personnel interchange to gain experience abroad
  • Permit local managers to develop their own programs within specified parameters
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26
Q

NIH syndrome can be avoided by:

A
  • Ensuring that local managers participate in the development of global brand marketing strategies
  • Encouraging local managers to develop ideas for regional or global use
  • Allowing local managers control their marketing budgets and respond to local customer needs and counter global competition
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27
Q

Organization structures

A
  • Establish global or regional product managers and their support groups at headquarters
  • Execute global account management programs: Build relationships with important customers
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28
Q

Corporate culture

A
  • A global identity that favors no specific country (especially the “home country”)
  • The management features several nationalities
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29
Q

Who first coined the phrase “global marketing”?

A

Theodore Levitt

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30
Q

Global leverage means balancing three interests:

A

Global, regional, and local

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31
Q

Both external and internal factors will create the favorable conditions for development of strategy and resource allocation on a global basis. These factors can be divided into:

A

Market, cost, environmental, and competitive factors

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32
Q

Market factors

A

consumers have similar educational backgrounds, income levels, lifestyles, use of leisure time, and aspirations.

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33
Q

What do cross-border retail alliances do?

A

They expand the presence of retailers to new markets quite rapidly.

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34
Q

Cost factors: What are two of the most powerful globalization drivers?

A
  • Avoiding cost inefficiencies
  • Duplication of effort
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35
Q

What are mini-nationals and what is another name for them?

A

They can also be called “born globals” and they are newer companies with sales between $200 million and $1 billion.

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36
Q

What is the difference between mini-nationals and multinational corporations?

A

The are able to serve the world from a handful of bases, compared with having to build a presence in every country as the established multinational corporations once had to do.

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37
Q

What is the lesson from mini-nationals?

A

1) keep focused and concentrate on being number one or two in a niche
2) stay leanmby having a small headquarters to save on costs and to accelerate decision making
3) take ideas from wherever they can be found and solutions to wherever they are needed
4) take advantage, regardless of nationality, of employees’ ideas and experience to globalize thinking
5) solve customers’ problems by involving them rather than pushing standardized solutions on them.

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38
Q

What must be done to remain competitive?

A

To remain competitive, the marketer may have to be the first to do something or to be able to match or preempt competitors’ moves.

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39
Q

What are global markets doing to stay competitive?

A

many global marketers are looking for new markets and zeroing in on the best product categories for growth.

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40
Q

What is the benefit of formal strategic planning on financial performance and nonfinancial objectives?

A

These benefits include raising the efficacy of new-product launches, enhancing cost reduction efforts, and improving product quality and market share performance.
Internally, these efforts increase cohesion and improve on understanding different units’ points of view.

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41
Q

The strategic planning process will have to keep three broad dimensions in mind:

A

1) the potential benefits for the company in the short versus the long term
2) the costs in terms of management time and process realignment
3) the presence of the necessary management resources to undertake the endeavor.

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42
Q

Hard power

A

refers to the use of scale, financial might, or the use of a low-cost position to win market access and share.

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43
Q

Soft power

A

refers to the capability of attracting and influencing all stakeholders, whether through energetic brands, heroic missions, distinctive talent development, or an inspirational corporate culture.

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44
Q

What is SBU

A

Strategic business unit

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45
Q

What is the Strategic business unit?

A

The unit around which decisions are based.

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46
Q

What does SBU represent and what is this based on?

A

SBUs represent groupings organized around market similarities based on:
1) needs or wants to be met
2) end user customers to be targeted
3) the product or service used to meet the needs of specific customers.

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47
Q

What is the starting point for global strategic planning?

A

to understand that the underlying forces that determine business success are common to the different countries that the firm competes in.

48
Q

What do global marketers get from a planning process that focuses simultaneously across a broad range of markets?

A

Planning processes that focus simultaneously across a broad range of markets provide global marketers with tools to help balance risks, resource requirements, competitive economies of scale, and profitability to gain stronger long-term positions.
On the demand side this requires an understanding of the common features of customer requirements and choice factors.
In terms of competition, the key is to understand the structure of the global industry in order to identify the forces that will drive competition and determine profitability.

49
Q

Internal analysis

A

Organizational resources have to be used as a reality check for any strategic choice because they determine a company’s capacity for establishing and sustaining competitive advantage within global markets.

50
Q

Why may human resources present a challenge for market expansion?

A

A survey of multinational corporations revealed that good marketing managers, skilled technicians, and production managers were especially difficult to find.
This difficulty is further compounded when the search is for people with cross-cultural experience to run future regional operations.

51
Q

Steps in formulating a global marketing strategy

A
  1. Choice of competitive strategy
  2. Choice of country markets to be entered or penetrated further
  3. Segmentation
52
Q

In dealing with global markets, the marketing manager has three choices of competitive strategy:

A

1) cost leadership
2) differentiation
3) focus.

53
Q

What is a focus strategy?

A

A focus strategy is defined by its emphasis on a single industry segment, within which the orientation may be toward either low-cost or differentiation.

54
Q

What is cost leadership?

A

In pursuing cost leadership, the global marketer offers an identical product or service at a lower cost than the competition. This often means investment in scale economies and strict control of costs, such as overhead, research and development, and logistics.

55
Q

What is differentiation?

A

Whether it is industry-wide or focused on a single segment, takes advantage of the marketer’s real or perceived uniqueness in elements such as design or after-sales service.

56
Q

What is one common denominator of consumers around the world?

A

Their quest for value for their money.

57
Q

Critical choice in country-market choice

A

Critical choices relate to the allocation of a company’s resources among different countries and segments

58
Q

What is the usual approach in country-market choice?

A

The usual approach is first to start with regions and further split the analysis by country.
Many marketers use multiple levels of regional groupings to follow the organizational structure of the company, for instance, splitting Europe into northern, central, and southern regions that display similarities in demographic and behavioral traits.

59
Q

What are the two measures that portfolio models typically involve?

A

Internal strength and external attractiveness

60
Q

What are indicators of internal strength?

A

relative market share, product fit, contribution margin, and market presence

61
Q

How has country attractiveness been measured?

A

Country attractiveness has been measured using market size, market growth rate, number and type of competitors, and governmental regulation, as well as economic and political stability

62
Q

What will determine the allocation of resources among various markets?

A

A market expansion policy

63
Q

What is diversification?

A

Is characterized by growth in a relatively large number of markets.

64
Q

When would a firm choose a concentration strategy?

A

Facing high, stable growth rates only in certain markets, the firm will likely opt for a concentration strategy, which is often the case for innovative products early in their life cycle.

65
Q

What is a concentration strategy?

A

Focuses on a small number of markets

66
Q

When would a firm choose diversification?

A

If demand is strong worldwide, as the case may be for consumer goods, diversification may be attractive.

67
Q

When do concentration and diversification happen?

A

If markets respond to marketing efforts at increasing rates, concentration will occur; however, when the cost of market share points in any one market becomes too high, marketers tend to begin looking for diversification opportunities

68
Q

What is also a factor in expansion strategy?

A

The uniqueness of the product offering with respect to competition.

69
Q

What is effective use of segmentation?

A

The recognition that groups within markets differ sufficiently enough to warrant individual marketing mixes

70
Q

What does effective use of segmentation allow global marketers?

A

Allows marketers to take advantage of the benefits of standardization (such as economies of scale and consistency in positioning) while addressing the unique needs and expectations of a specific target group.

71
Q

Two distinct segments have been identified as ready for panregional approach:

A

Trendsetter and businesspeople

72
Q

What are trendsetters?

A

Are wealthier and better educated than average and tend to value independence, refuse consumer stereotypes, and appreciate exclusive products.

73
Q

What are businesspeople?

A

Are well-to-do, regularly travel abroad, and have a taste for luxury goods.

74
Q

What has been proposed about markets that reflect a high degree of homogeneity with respect to marketing mix?

A

They could be grouped into segments and thereby targeted with a largely standardized marketing strategy.

75
Q

What do product-related bases include?

A

Product-related bases include the degree to which products are culturally based, which stage of the life cycle they occupy, consumption patterns, and attitudes toward product attributes (such as country of origin), as well as consumption infrastructure (e.g., telephone lines for mobile).

76
Q

Marketing-related decisions will have to be made in four areas:

A

1) the degree of standardization in the product offering
2) the marketing program beyond the product variable
3) the location and extent of value-adding activities
4) competitive moves to be made.

77
Q

Product offering

A

Globalization is not the same as standardization except in the case of the core product or the technology used to produce the product. The need to localize varies by product. Product standardization may result in significant cost savings upstream.

78
Q

Marketing approach (glocalization)

A

Nowhere is the need for the local touch as critical as in the execution of the marketing program. Uniformity is sought, especially in elements that are strategic in nature (e.g., positioning), whereas care is taken to localize necessary tactical elements (e.g., distribution). This approach has been called glocalization

79
Q

Location of value-adding activities

A

Globalization strives to reduce costs by pooling production or other activities or exploiting factor costs or capabilities within a system. Rather than duplicating activities in multiple, or even all, country organizations, a firm concentrates its activities.
Many global marketers have established R&D centers next to key production facilities so that concurrent engineering can take place every day on the factory floor. To enhance the global exchange of ideas, the centers have joint projects and are in real-time contact with each other.
The quest for cost savings and improved transportation and transfer methods has allowed some marketers to concentrate customer service activities rather than having them present in all country markets.
To show commitment to a given market, both economically and politically, centers may be established in these markets.

80
Q

Competitive moves

A

A company with a regional or global presence will not have to respond to competitive moves only in the market where it is being attacked. A competitor may be attacked in its profit sanctuary to drain its resources, or its position in its home market may be challenged.
Cross-subsidization may be the competitive advantage needed for the long term. One major market lost may mean losses in others, resulting in a domino effect.
Given their multiple bases of operation, global marketers may defend against a competitive attack in one country by countering in another country or, if the competitors operate in multiple businesses, countering in a different product category altogether.

81
Q

Cross-subsidization

A

the use of resources accumulated in one part of the world to fight a competitive battle in another

82
Q

Challenges of global marketing

A

Pitfalls that handicap global marketing programs and contribute to their suboptimal performance include market-related concerns, such as insufficient research and a tendency to overstandardize, as well as internal problems, such as inflexibility in planning and implementation.
If a product is to be launched on a broader scale without formal research as to regional or local differences, the result may be failure.
Without local commitment, no global program will survive.

83
Q

Globalization by design requires a balance between…

A

sensitivity to local needs and deployment of technologies and concepts globally.

84
Q

What is NIH and what might it cause?

A

Non-invented-here syndrome.

May lead to the demise of the global program or, worse still, to an overall decline in morale.

85
Q

What is the best approach against the NIH syndrome?

A

Utilizing various motivational policies, such as:
1) ensuring that local managers participate in the development of marketing strategies and programs for global brands
2) encouraging local managers to generate ideas for possible regional or global use
3) maintaining a product portfolio that includes local as well as regional and global brands
4) allowing local managers control over their marketing budgets so that they can respond to local customer needs and counter global competition (rather than depleting budgets by forcing them to participate only in uniform campaigns).

86
Q

Corporate culture affects and is affected by two dimensions:

A

the overall way in which the company holds its operations together and makes them a single entity, and the commitment to the global marketplace.

87
Q

What is an example of a manifestation of global commitment?

A

A global identity that favors no specific country (especially the “home country” of the company).

88
Q

What is a defender?

A

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

Ideally, this asset is something that an entering global marketer cannot easily replicate, for instance, channel penetration or a product line that has a strong local-customer franchise.

89
Q

Competitive strategies for local companies:

A
  • Dodger
  • Contender
  • Defender
  • Extender
90
Q

Dodger

A

Sells out to a global player or becomes part of an alliance

91
Q

Contender

A

Upgrades capabilities to match globals in niches

92
Q

Defender

A

Leverages local assets in segments where globals are weak

93
Q

Extender

A

Expands into markets similar to home base.
Are able to exploit their success at home as a platform for expansion elsewhere.

94
Q

A six-part strategy for success over global players has been proposed:

A
  1. First, given that local companies have an inherent familiarity with their own marketplace, they should create customized products and services.
  2. Second, the local marketer can develop approaches that overcome key obstacles.
  3. Third, local companies can utilize the latest technologies for advantage.
  4. Fourth, local companies scale up swiftly, not only locally but also regionally and even globally.
  5. Fifth, local companies can often exploit low-cost labor.
  6. Finally, local companies need to invest in talent to sustain their growth and expansion.
95
Q

How do you define a business?

A

With a mission statement

96
Q

How do you properly implement a good international marketing plan?

A

You first develop a good marketing plan, and then you need all the different executives from different functions (marketing, production, finance, distribution, and procurement) in order to implement the marketing plan.

97
Q

What does it mean that we need the participation of regional marketers in the strategic planning process?

A

This means that we need the participation of the regional managers to participate in our strategic marketing process.

98
Q

What is NIH

A

Not invented here

99
Q

When do you develop an NIH problem?

A

If you don’t invite the participation of regional managers then you have the problem of NIH.

100
Q

How can you have economies of scale?

A

By managing to reduce your product costs.

101
Q

How do we satisfy consumers’ needs and wants?

A

Through benefits, through offerings.

102
Q

Value proposition

A

A set or combination of benefits

103
Q

What are offerings?

A

Product or services

104
Q

What do you have to do to formulate your global strategy?

A

You have to know all your three Cs

105
Q

What competitive strategy does Walmart use?

A

Cost leadership

106
Q

Which competitive strategies provide higher value to consumers?

A

Differentiation or cost leadership provides consumers with higher value.

107
Q

Why and when would you use a focus strategy?

A

When you select a small market segment. You have to have a focus strategy if you are only targeting students at TWU because you can only target those students.

108
Q

What is the 4 criteria model?

A
  • Demographic (age, gender, income, education level, household, etc.)
  • Geographic (country, provinces, states, city, neighborhood)
  • Psychographic (values, lifestyle, personality traits, etc.)
  • Behavioral (knowledge, attitudes, intentions, etc.)
109
Q

What is program strategy?

A

Four Ps strategy

110
Q

Glocalization

A

A combination of globalization and localization

111
Q

Value chain model

A

Has five primary activities and four supporting activities

112
Q

What are the five primary activities of the value chain model?

A
  • inbound logistics
  • manufacturing
  • outbound logistics
  • sales and marketing
  • after-sales
113
Q

What are the four supporting activities of the value chain model?

A
  • firm structure
  • HRM
  • R&D
  • procurement
114
Q

What is one example of cross-subsidization?

A

You have a strong competitive advantage in China but not in India, but you can use your successful resources in China in India to help you develop.

115
Q

What should you do before implementing the international marketing strategy?

A

You should do surveys and focus groups.

BUSI 338 (12 decks)

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