Topic-2 Strategic Planning and Cultures PDF

Lecture Notes of Strategic Planning and Decision Making: Topic 2
Strategic Planning and Cultures
EM-503
Strategic Planning
& Decision Making
Resource Person
Dr. Muhammad Wasif, PMP
Assistant Professor
Deputy Director, Quality Enhancement Cell,
NED University of Engineering and Technology.
Topic # 2
Strategic Planning
and Cultures
Resource Person
Dr. Muhammad Wasif, PMP
Assistant Professor
Department of Industrial and Manufacturing Engineering,
NED University of Engineering and Technology.
(c) Dr. M. Wasif, PMP 1
Globalization
 Globalization is a process of
doing business worldwide
 Decisions are made based on
global profitability of the firm
rather than just domestic
considerations
 Global strategy seeks to meet the
needs of customers worldwide
3
Topic 1 ‐ Overvier of Strategic Management © Dr. Muhammad Wasif, PMP
Globalization
 Locating production in countries
 with the lowest labor costs or
 abundant natural resources,
 locating research and complex engineering centers where
skilled scientists and engineers can be found, and
 locating marketing activities close to the markets to be
served
 Competitors are global rather than domestic
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Globalization
5
Strategy Formulation
 Organizations that conduct business operations across
national borders are called international firms or
multinational corporations.
 Social, cultural, demographic, environmental, political,
governmental, legal, technological, and competitive
opportunities and threats that face a multinational
corporation are almost limitless, and the number and
complexity of these factors increase dramatically with the
number of products produced and the number of
geographic areas served
6
Advantages of Globalization
 New customers for their products.
 Foreign operations absorb excess capacity, reduce unit
costs,
 Foreign operations allow low‐cost production close to
raw materials or cheap labor.
 Competitors in foreign markets may may be less intense
than in domestic markets.
 Foreign operations may result in reduced tariffs, lower
taxes, and favorable political Environment
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Advantages of Globalization
 Joint ventures can enable firms to learn the technology,
culture, and business practices
 Economies of scale can be achieved from operation in
global
 A firm’s power and prestige in domestic markets
enhances if the firm competes globally.
 Enhanced prestige can translate into improved
negotiating power among creditors, suppliers,
distributors, and other important groups.
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Disadvantages of Globalization
 Foreign operations could be seized by nationalistic
factions.
 Firms confront different and often little‐understood
social, cultural, demographic, environmental, political,
governmental, legal, technological, economic, and
competitive forces when doing business internationally.
These forces can make communication difficult in the
firm.
 Weaknesses of competitors in foreign lands are often
overestimated, and strengths are often underestimated..
9
Disadvantages of Globalization
 Language, culture, and value systems differ among
countries, which can create barriers to communication
and problems managing people.
 Gaining an understanding of regional organizations
such as the European Economic Community, the Latin
American Free Trade Area etc.
 Dealing with two or more monetary systems can
complicate international business operations.
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Tax Rates
11
Cultural Pitfalls
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American Business Norms Vs. Global

 Americans place an exceptionally high priority on time,
viewing time as an asset.
 Personal touching and distance norms differ around the
world. Americans generally stand about three feet from
each other when carrying on business conversations.
 Family roles and relationships vary in different countries
 Business and daily life in some societies are governed by
religious factors
 Time spent with the family and the quality of
relationships are more important in some cultures
13
American Business Norms Vs. Global

 Many cultures around the world value modesty, team
spirit, collectivity, and patience much more than
competitiveness and individualism, which are so
important in the United States
 Punctuality is a valued personal trait when conducting
business in the United States,
 Eating habits also differ dramatically across cultures
 To prevent social blunders when meeting with managers
from other lands, one must learn and respect the rules of
etiquette of others
 Americans often do business with individuals they do
not know, unlike businesspersons in many other cultures
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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West Vs. East
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Lewis Model
38
Lewis Model
39
Business Climate across Countries
40
41
42
Business Climate : Pakistan

 Starting a business Pakistan made starting a business easier by replacing
the need to obtain a digital signature for company incorporation with a
less costly personal identification number. This change applies to both
Karachi and Lahore.
 Registering property Pakistan (Karachi) improved the transparency of
the land registration process by making the fee schedule and list of
documents to submit for property registration available online.
 Protecting minority investors Pakistan increased minority investor
protections by making it easier to sue directors in case of prejudicial
transactions with interested parties. This reform applies to both Karachi
and Lahore.
 Trading across borders Pakistan made importing and exporting easier by
developing a new container terminal and enhancing its customs platform
for electronic document submission. These changes apply to both
Karachi and Lahore. 43

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Lecture Notes of Strategic Planning and Decision Making: Topic 2

 Competitors are global rather than domestic

American Business Norms Vs. Global

American Business Norms Vs. Global

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

West Vs. East

Business Climate across Countries

Business Climate across Countries

Business Climate across Countries

Business Climate : Pakistan

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