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.
2
Q
How does formal strategic planning contribute to a company?
A
Both financial performance and nonfinancial objectives
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
4
Q
What does formal strategic planning contribute to?
A
Financial performance and nonfinancial objectives
5
Q
Global strategy formulation
A
- Assessment and adjustment of core strategy: Market/competitive analysis, Internal analysis
- Formulation of global strategy: Choice of competitive strategy, choice of target countries and segments
- Development of global program
- Implementation: Organizational structure, control
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
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.
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
9
Q
Organizational resources have to be used as a…
A
reality check
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
11
Q
Formulating a global marketing strategy
A
- Choice of competitive strategy
- Country-market choice and segmentation
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
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)
14
Q
What does market expansion policy determine?
A
The allocation of resources among various markets.
- concentration or diversification
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
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
17
Q
Degree of standardization in product offering
A
Globalization is not the same as standardization
18
Q
Marketing approach
A
- Local touch is critical in the execution of the marketing program
- Glocalization
19
Q
Glocalization
A
Uniformity is sought in elements that are strategic in nature and care is taken to localize necessary tactical elements
20
Q
Location and extent of value-adding activities
A
E.g., global marketers have established R&D centers next to key product facilities
21
Q
Competitive moves
A
- Firms do not respond to competitive modes only in the market where it is attacked
- Cross-subsidization
22
Q
Cross-subsidization
A
Use of resources accumulated in one part of the world to fight a competitive battle in another
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
24
Q
Localizing global marketing
A
- Management processes
- Organization structure
- Corporate culture
25
Management process
- Encourage personnel interchange to gain experience abroad
- Permit local managers to develop their own programs within specified parameters
26
NIH syndrome can be avoided by:
- 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
27
Organization structures
- Establish global or regional product managers and their support groups at headquarters
- Execute global account management programs: Build relationships with important customers
28
Corporate culture
- A global identity that favors no specific country (especially the “home country”)
- The management features several nationalities
29
Who first coined the phrase "global marketing"?
Theodore Levitt
30
Global leverage means balancing three interests:
Global, regional, and local
31
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:
Market, cost, environmental, and competitive factors
32
Market factors
consumers have similar educational backgrounds, income levels, lifestyles, use of leisure time, and aspirations.
33
What do cross-border retail alliances do?
They expand the presence of retailers to new markets quite rapidly.
34
Cost factors: What are two of the most powerful globalization drivers?
- Avoiding cost inefficiencies
- Duplication of effort
35
What are mini-nationals and what is another name for them?
They can also be called "born globals" and they are newer companies with sales between $200 million and $1 billion.
36
What is the difference between mini-nationals and multinational corporations?
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.
37
What is the lesson from mini-nationals?
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.
38
What must be done to remain competitive?
To remain competitive, the marketer may have to be the first to do something or to be able to match or preempt competitors’ moves.
39
What are global markets doing to stay competitive?
many global marketers are looking for new markets and zeroing in on the best product categories for growth.
40
What is the benefit of formal strategic planning on financial performance and nonfinancial objectives?
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.
41
The strategic planning process will have to keep three broad dimensions in mind:
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.
42
Hard power
refers to the use of scale, financial might, or the use of a low-cost position to win market access and share.
43
Soft power
refers to the capability of attracting and influencing all stakeholders, whether through energetic brands, heroic missions, distinctive talent development, or an inspirational corporate culture.
44
What is SBU
Strategic business unit
45
What is the Strategic business unit?
The unit around which decisions are based.
46
What does SBU represent and what is this based on?
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.
47
What is the starting point for global strategic planning?
to understand that the underlying forces that determine business success are common to the different countries that the firm competes in.
48
What do global marketers get from a planning process that focuses simultaneously across a broad range of markets?
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
Internal analysis
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
Why may human resources present a challenge for market expansion?
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
Steps in formulating a global marketing strategy
1. Choice of competitive strategy
2. Choice of country markets to be entered or penetrated further
3. Segmentation
52
In dealing with global markets, the marketing manager has three choices of competitive strategy:
1) cost leadership
2) differentiation
3) focus.
53
What is a focus strategy?
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
What is cost leadership?
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
What is differentiation?
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
What is one common denominator of consumers around the world?
Their quest for value for their money.
57
Critical choice in country-market choice
Critical choices relate to the allocation of a company’s resources among different countries and segments
58
What is the usual approach in country-market choice?
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
What are the two measures that portfolio models typically involve?
Internal strength and external attractiveness
60
What are indicators of internal strength?
relative market share, product fit, contribution margin, and market presence
61
How has country attractiveness been measured?
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
What will determine the allocation of resources among various markets?
A market expansion policy
63
What is diversification?
Is characterized by growth in a relatively large number of markets.
64
When would a firm choose a concentration strategy?
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
What is a concentration strategy?
Focuses on a small number of markets
66
When would a firm choose diversification?
If demand is strong worldwide, as the case may be for consumer goods, diversification may be attractive.
67
When do concentration and diversification happen?
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
What is also a factor in expansion strategy?
The uniqueness of the product offering with respect to competition.
69
What is effective use of segmentation?
The recognition that groups within markets differ sufficiently enough to warrant individual marketing mixes
70
What does effective use of segmentation allow global marketers?
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
Two distinct segments have been identified as ready for panregional approach:
Trendsetter and businesspeople
72
What are trendsetters?
Are wealthier and better educated than average and tend to value independence, refuse consumer stereotypes, and appreciate exclusive products.
73
What are businesspeople?
Are well-to-do, regularly travel abroad, and have a taste for luxury goods.
74
What has been proposed about markets that reflect a high degree of homogeneity with respect to marketing mix?
They could be grouped into segments and thereby targeted with a largely standardized marketing strategy.
75
What do product-related bases include?
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
Marketing-related decisions will have to be made in four areas:
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
Product offering
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
Marketing approach (glocalization)
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
Location of value-adding activities
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
Competitive moves
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
Cross-subsidization
the use of resources accumulated in one part of the world to fight a competitive battle in another
82
Challenges of global marketing
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
Globalization by design requires a balance between...
sensitivity to local needs and deployment of technologies and concepts globally.
84
What is NIH and what might it cause?
Non-invented-here syndrome.
May lead to the demise of the global program or, worse still, to an overall decline in morale.
85
What is the best approach against the NIH syndrome?
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
Corporate culture affects and is affected by two dimensions:
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
What is an example of a manifestation of global commitment?
A global identity that favors no specific country (especially the "home country" of the company).
88
What is a defender?
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
Competitive strategies for local companies:
- Dodger
- Contender
- Defender
- Extender
90
Dodger
Sells out to a global player or becomes part of an alliance
91
Contender
Upgrades capabilities to match globals in niches
92
Defender
Leverages local assets in segments where globals are weak
93
Extender
Expands into markets similar to home base.
Are able to exploit their success at home as a platform for expansion elsewhere.
94
A six-part strategy for success over global players has been proposed:
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
How do you define a business?
With a mission statement
96
How do you properly implement a good international marketing plan?
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
What does it mean that we need the participation of regional marketers in the strategic planning process?
This means that we need the participation of the regional managers to participate in our strategic marketing process.
98
What is NIH
Not invented here
99
When do you develop an NIH problem?
If you don't invite the participation of regional managers then you have the problem of NIH.
100
How can you have economies of scale?
By managing to reduce your product costs.
101
How do we satisfy consumers' needs and wants?
Through benefits, through offerings.
102
Value proposition
A set or combination of benefits
103
What are offerings?
Product or services
104
What do you have to do to formulate your global strategy?
You have to know all your three Cs
105
What competitive strategy does Walmart use?
Cost leadership
106
Which competitive strategies provide higher value to consumers?
Differentiation or cost leadership provides consumers with higher value.
107
Why and when would you use a focus strategy?
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
What is the 4 criteria model?
- 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
What is program strategy?
Four Ps strategy
110
Glocalization
A combination of globalization and localization
111
Value chain model
Has five primary activities and four supporting activities
112
What are the five primary activities of the value chain model?
- inbound logistics
- manufacturing
- outbound logistics
- sales and marketing
- after-sales
113
What are the four supporting activities of the value chain model?
- firm structure
- HRM
- R&D
- procurement
114
What is one example of cross-subsidization?
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
What should you do before implementing the international marketing strategy?
You should do surveys and focus groups.
