International Competitive Strategy: Ball, Geringer & Mcnett and Minor (13 Edition)

International Competitive
Strategy
Ball, Geringer & McNett and Minor
(13th Edition)
Lesson Plan
1. What is strategy?
2. What is International strategy?
3. What are the significance of strategy?
4. What is Global Strategic Planning?
5. Global Strategic Planning Process
6. Strategic plan features and implementation
facilitators.
7. Value activities and value chain of a firm
WHAT IS INTERNATIONAL
STRATEGY
Let’s See some examples of
some companies
Strategy is to
Be the What is be always the
low cost first mover
provider Strategy?
Strategy
is to be Integrate a set
Compete
global of regional
customer
s acquisitions
None of these are strategies…

Rather these statements can be
considered as
• Tactics
• Goals
• Objectives
Dr. Chowdhury Saima Ferdous 4
What is Strategy?
 A co’s strategy is its action plan for outperforming its
competitors and achieving superior profitability.
 It represents a managerial commitment to an integrated
array of considered choices about how to compete.
 These include choices about:
 How to attract and please customers
 How to compete against rivals
 How to position the co in the market place
 How best to respond to changing economic and market
conditions
 How to capitalize on attractive opportunities to grow the
business
 How to achieve the co’s performance targets

What is International Strategy
• It is concerned with the way firms make
fundamental choices about developing and
deploying scarce resource internationally.
• It involves decisions that deal with all the

various functions and activities of a
company
• To be effective, international strategies

need to be consistent among the various
functions, products and regional units…and
international competitive environment
What is International Strategy contd…
• The goal of International strategy:
– Achieve and maintain a unique and

valuable competitive position both
within a nation and globally
– That means earning a position which

is termed as achieving Competitive
Advantage
• The goal of International strategy:

Ability of a company to earn
– Achieve and maintain a unique and a
profit rate which is higher
valuable competitive position both
than the average profit rate
within a nation and globally
and to be able to sustain this
advantage
– That means for couple
earning of years
a position which is
termed as achieving Competitive
Advantage
• International – The level of

performance
strategy must which are different
attain: from competitors
– allow them to
– The level of charge premium
performance price
which are
different from – Or to manage
competitors – performance to
allow them to achieve efficiency
charge premium – allow them to
price charge lower cost
• To create competitive advantage that is

sustainable, international companies should try
to develop skills and competencies that
i. Create value for customers - a value for which

customers are willing to pay
ii. Are rare
iii. Are difficult to imitate or substituted
iv. Are organized in a way that allows the co to fully

exploit and capture the value from competitive
potential of these valuable, are and difficult-to-
imitate competencies
• Some major International strategic

decisions are:
– Which nation to enter?
– Which technology to invest in?
– Which products and services to develop

and offer to customers?
ALL THAT NEEDS INTEGRATED PLANNING

Significance of SM

Significance of SM
 Detection of existing problems and

risks.
 The opportunity to take the best
alternative.
 Improves relationship between
managers and subordinates.
 Better job allocation
 Resistance to change is reduced.

WHAT IS GLOBAL STRATEGIC
PLANNING?
What is Global Strategic Planning
• Strategic planning is the process by

which an org determines
– where it in going in future,
– how it will get there,
– how it will assess whether and to what

extent it has achieved its goal.
What is Global Strategic Planning contd….
• Global Strategic planning is necessary because
– Company needs to adjust with the dynamic global

environment
– It provides a means for top mgt to identify

opportunities and threats
– Adjust with internal strength and weaknesses
– It ensures that decision makers have common

understanding about the SWOT and co goals
– To encourage strategic innovations

STRATEGY AS A QUEST FOR
VALUE
THE FIRM
Strategic as a quest for and
• goals value
values
•resources and capabilities
• As we have seen before
•structure & management
strategy analysis systems
comprises four •industry environment
components:
i. The firm’s goals and values
ii. It’s resources and
capabilities
Strategy
iii. Its structure & management
systems
iv. It’s industry environment
• This chapter thus discusses THE INDUSTRY ENV
firm’s goals and values in •Competitors
detail •Customers
•Suppliers
Strategic as a quest for value contd….
• While every firm has a distinct

purpose, the common goal for all
firms is creating value.
• It is the desire and the need of an
entrepreneur to create value – that
makes the difference
• Value can be created in two ways:
– Production – by physically transforming
products
– Commerce – by repositioning them in
Strategic as a quest for value
contd……..
• Value Added - means the difference

between the value of a firm’s output
and the cost of its material input.
– It is equal to the sum of all the income
paid to the suppliers of factors of
production
Value Added = Sales revenue from output - Cost
of materials inputs
=
Wage/Salaries+Interest+Rent+Royal
ties/License fees
contd……..
 Value for Whom? Shareholder or Stakeholder?
• Value added by firms is

distributed among
shareholders & other
stakeholders
• Shareholder view Vs
Stakeholder perspective
• Responsibilities to
shareholder – traditional
& fiduciary
• Responsibilities to
stakeholder – ethical
contd……..
 Value for Whom? Shareholder or Stakeholder? Cond..
• Strategy formulation is difficult for firms

approaching stakeholder view
• No Clear definition of stakeholder
• Combining multiple interest of
stakeholder is difficult
• Strategic decision making delayed.
• “Multiple objective is no objective”
contd……..
 Value for Whom? Shareholder or Stakeholder? Cond..
• Solution can be:

• Primary goal of STRATEGY is to maximize the values of
the firm to maximize profit over the long-term.
• It is possible because
• Competition > stakeholder’ prefer survival
• The market for corporate control > Merger
acquisition.
• Convergence of Stakeholders’ interest –
(profitability over the long term requires loyalty
from employees, trusting relationship with suppliers
& customers, support from govt – hence
convergence of interest is obvious)
contd……..
 What is Profit?
• What profit means? How does it relate to Value
Creation?
• PROFIT – is the surplus of revenues over costs
available for distribution to the owners of the firm
• If profit maximization is to be a realistic goal, firm
must know what profit means and how to measure it.
• Mgrs need to guide
• If they are supposed to attain total profit or rate of
profit? Over what period? with what kind of risk
adjustment? What profit would mean anyway? –
accounting profit? Cash flow or economic profit?
GLOBAL STRATEGIC PLANNING
PROCESS
Global Strategic Planning process contd….
• Co’s chief executive officer is responsible for

leading the global strategic planning process
1. Analyze Co’s external environment
2. Analyze co’s internal environment
3. Define co’s business and mission
4. Set corporate objective
5. Quantify goals
6. Formulate Strategy
7. Make tactical Plans
Step 1: Analyze Domestic,

International and Foreign
Environment
• Manager must identify the forces of
these environments, and identify where
they are heading to
• One can use the PESTEL analysis model
• Identify the key variables that affects
and are affected by the environments
Step 2: Analyze Corporate

Controllable variables
– It is the analysis of the forces controlled
by the firm.
– The managers of each department will
submit reports on their units or provide
input to a planning staff that will prepare
a report for the strategy planning
committee
Step 2: Analyze Corporate

Controllable variables contd…..
– Value chain analysis
• Who are the company’s target
customers
• What value does the company want to
deliver to these customers
• How will this customer value be
created.
Step 3: Define Corporate

Mission, Vision and Value
Statement
• These statement communicate to the
co’s stakeholders:
– What is the company is
– Where it is going
– And the values that will guide the
behavior of the organizational members.
Step 2: Define Corporate Mission, Vision and Value Statement contd..
• Mission statement
– A broad statement that defines the organization's
purpose and scope
• Vision Statement
– A description of the co’s desired future position of what
it hopes to accomplish if it can acquire the necessary
competencies and successfully implement its
strategies.
• Value statement
– A clear and concise description of the fundamental
values, beliefs and priorities of the org’s member
What is Strategic Vision
• Strategic Vision –
– Management’s view and conclusion
about what the or’s long term direction
should be, the tech-product-customer
focus it intends to pursue and its future
business scope.
– It reflects mgt’s aspiration for the org
and its business providing a panoramic
view of “where we are going”
Differences Between Strategic Vision and Mission
Statement
Vision Mission
Chief concern: Chief Concern”

“Where we are going” “Who we are and what we do”
Covers future business scope Present business scope oriented

Developing Strategic Vision
• The Three elements of Strategic Vision
a) The mission statement

b) From Mission statement to Strategic Vision
c) Communicating the strategic vision
Profit is an objective and a result of what company does
hence the desire to make profit does not tell anything abo
theDeveloping Strategic
business arena Vision
in which profit are to be sought
• The
i. The mission is not to make a profit
Three elements of Strategic Vision
ii. Incorporating what, who and how into the mission statement
iii. A broad or narrow Business definition and Mission
iv. Mission statement for functional departments
Missions
a) The mission based on profit does not
statement
distinguish one type of co from other either
• The
a) TheWhat
mission statement
customer need, which customer group to be
satisfied And how the co is planning to create and
b) From Mission
deliver VALUE tostatement to Strategic
customers in satisfying Vision
their need

•To incorporate what who how, the mission statement must be
specific enough.
•Broad or narrow definitions are relative to a co’s business
• The
focus and intent

•Key functions and departments within a business can also
b) From Mission statement to Strategic
have Vision
•A mission highlights the boundaries, who, what
how and …a logical vantage point to look down to
what co should do now and
• The Threestrategic
•Logically elements of Strategic
vision Vision
should tell what co
should do fiver years from now
•A series of questions help managers to draw a
strategic vision for co

•A mission highlights the boundaries, who, what how and …a logical vantage point
to look down to what co should do now and
•Logically strategic vision should tell what co should do fiver years from now
•A series of questions help managers to draw a strategic vision for co
•Answer the following questions:

• What changes are occurring in the mkt?
a)new
• What The mission
or different statement
customer needs should we be moving to satisfy?
• What new or different buyer segment should we be concentrating on?
• What new geographic or pdt mkt should we be pursuing?
• What
c)should be co;’s business makeup
Communicating look like invision
the strategic five years?
• What kind of co should we be trying to become?
•Entrepreneurs need to be visionary
•Breaking down resistance to a new strategic vision
•Putting the Vision statement in Writing
•The real pay-offs of a well-conceived, well-worded

vision
Developing
•Breaking down resistanceStrategic Vision vision
to a new strategic
•Putting the Vision statement in Writing

•The real pay-offs of a well-conceived, well-worded
vision
c) offCommunicating
Real pay are: the strategic vision
i) It crystallizes senior executives own views about the firm’s long-term directions
ii) it Reduces the risk of rudderless decision making.
iii) It conveys org purposes in ways that motivates org members to go all out
iv) It provides a beacon that lower-level managers can use to form departmental
mission
v) It help org to prepare for future.
Step 4: Set Corporate

Objectives:
• Objectives direct the firm’s course of
action, maintain it within the
boundaries of the stated mission,
and ensure its continuing existence.
Step 5: Quantify the Objectives:

• Co must quantify the objectives to:
– Enhance a co’s ability to develop and
implement an effective strategy
– To ensure objectives have been attained
• Usually international strategic
planning involves a range of
quantitative and qualitative goals.
Step 6: Formulate Competitive

Strategy
• Competitive strategies – action plans to
enable org to reach their objectives.
• It is based on S addresses W, targets the
O and have plans to protect from the T.
• Managers usually develops strategic
alternatives too.
Step 6: Formulate Competitive Strategy contd….

• When developing strategic alternatives,
planners need to consider that –
companies competing in international
market confront two opposing forces:
– Reduction of costs and
– Adaptation to local markets – to modify their
pdts to meet the demands of the local
markets.
Step7: Formulate Competitive Strategy contd….

• When
Thisdeveloping
modificationstrategic
requiresalternatives,
– the co
planners need to
differentiate itsconsider
strategy that
and –
companies competing
product and servicesinwhich
international
market confront
involves two opposing
additional expensesforces:
– Reduction of costs and
– Adaptation to local markets – to modify their
pdts to meet the demands of the local
markets.

• As a consequence of these two opposing
pressure - co basically have five different
strategies to compete in international
market
1. Home replication
2. Multidomestic strategy
3. Regional Strategy
4. Global strategy
5. Transnational Strategy
Step6: Formulate Competitive Strategy

contd….
Global Transnation
Strateg al Strategy
y
Pressure
to
reduce
Home Multidomes
Cost
Replication ticStrategy
Strategy
Pressure for local

adaptation
• Centralize product development functions in
Global Strategic
their home Planning process contd….
country.
• After developing differentiated products in the
home market these innovations are then
transferred to foreign markets – in order to
• As a consequence
capture of these two opposing
additional value.
• pressure
Home country
- co needs to have
basically havedistinctive
five different
competency
strategies tothat local companies
compete in foreign
in international
markets lack.
market
• Home country tightly
1. Home replication controls the marketing and
2. Multidomestic strategyproduct strategy.
• The extent of local
3. Regional Strategy customization is limited.
4. Global strategy • Appropriate where the
pressure of local
5. Transnational Strategyresponsiveness is limited.
• Involves high operating cost
• Used when pressure for the local
Global Strategic is
responsiveness Planning
strong. process contd….
• Decision making tends to be more
decentralized.
• Subsidiaries are expected to develop and
• Asexploit
a consequence
local market ofopportunities.
these two opposing
pressure - co basically
• Customization have five different
allows co to charge premium
strategies
price, butto compete
increases instructure.
cost international
market
• Too much adaptation to local taste reduces the
1.distinctiveness
Home replicationof the product
4. Global strategy
• Focus on a given geographical area
• Global
MarketStrategic Planningnot
entry and selection: process
simply contd….
on a
country by country basis
• Network of interlinked international markets
• Economic integrations:
• As a consequence
• NAFTA dominatedof bythese
USA two opposing
pressure - co basically
• EU: collection have
of national five different
states
• strategies to compete
embracing regional in international
strategies requires flexibility
market
and creativity.
• A company must decide what
1. Home replication constitutes a region, choose
the most appropriate
2. Multidomestic strategystrategies, and mesh those
3. Regional Strategy strategies with the
organization's existing
4. Global strategy structures.
• It is neither truly global nor
truly local, finding ways of
Worldwide
International
regional
Internationalisation Retrenchment
International market
entry and
development
Restricted national
market scope
Phase 1 Phase 2 Phase 3 Phase 4

Restricted national International market International Worldwide
market scope entry and regional competitor
development
52
Figure 7.1. The phase model of international business development
• Used when a co faces strong pressure for
Global Strategic
reducing Planning
cost and processtocontd….
limited pressure adapt
products for local markets
• Strategy
Step7: and decision
Formulate making
Competitive – centralized
Strategy contd….at
headquarter
• As
• Coa consequence of these two
teds to offer standardized opposing
product
pressure
• Overseas- offices
co basically have five different
are expected to adopt the most
strategies to compete
efficient strategies in within
found international
the entire co
market
• Value chain activities are often located in only
1.one
Homeor areplication
few geographical location to achieve co
to achieve cost reduction
• Close coordination and integration of activities
3.are
Regional
needed.Strategy
•4.Limitation – cannot adapt to change quickly,
Global strategy
increased transportation and tariff cost

• •AsUsed
a consequence
when a co facesof these
strong two opposing
pressure for cost
pressure - co and
effectiveness basically have five and
local adaptation different
when
there is a to
strategies potential
competefor competitive advantage
in international
from responding to both of these to divergent
market
forces.
• 1.The
Home replication
location of co’s asset and capabilities –
2.where it is moststrategy
Multidomestic beneficial for each specific
activity – neither highly centralized as with
global strategy, nor widely dispersed as with
4.Multidomestic strategy.
Global strategy
Step 7: Set Tactical Plans:

• Strategic plans are broad – tactical
plans are required for detailing how
the objectives will be reached.
• It is also called the operational plan
• It is very specific, short term means
for achieving the goals.
STRATEGIC PLAN FEATURES AND
IMPLEMENTATION FACILITATORS
Strategic plan features and implementation facilitators
• Sales forecast and budget
• Plan implantation Facilitators
– Policies
– Procedures
• Performance Measures

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International Competitive

None of these are strategies…

Dr. Chowdhury Saima Ferdous 5

• It involves decisions that deal with all the

• To be effective, international strategies

• The goal of International strategy:

– Achieve and maintain a unique and

– That means earning a position which

• The goal of International strategy:

• International – The level of

• To create competitive advantage that is

i. Create value for customers - a value for which

ii. Are rare

iii. Are difficult to imitate or substituted

iv. Are organized in a way that allows the co to fully

• Some major International strategic

– Which technology to invest in?

– Which products and services to develop

ALL THAT NEEDS INTEGRATED PLANNING

Dr. Chowdhury Saima Ferdous 12

 Detection of existing problems and

Dr. Chowdhury Saima Ferdous 13

• Strategic planning is the process by

– how it will get there,

– how it will assess whether and to what

• Global Strategic planning is necessary because

– Company needs to adjust with the dynamic global

– It provides a means for top mgt to identify

– Adjust with internal strength and weaknesses

– It ensures that decision makers have common

– To encourage strategic innovations

• While every firm has a distinct

• Value Added - means the difference

• Value added by firms is

• Strategy formulation is difficult for firms

• Solution can be:

• Co’s chief executive officer is responsible for

Step 1: Analyze Domestic,

Step 2: Analyze Corporate

Step 2: Analyze Corporate

Step 3: Define Corporate

Chief concern: Chief Concern”

Covers future business scope Present business scope oriented

• The Three elements of Strategic Vision

a) The mission statement

c) Communicating the strategic vision

a) The mission statement

a) The mission statement

•Answer the following questions:

•The real pay-offs of a well-conceived, well-worded

•Putting the Vision statement in Writing

Step 4: Set Corporate

Step 5: Quantify the Objectives:

Step 6: Formulate Competitive

Step 6: Formulate Competitive Strategy contd….

Step7: Formulate Competitive Strategy contd….

Step 6: Formulate Competitive Strategy contd….

Step6: Formulate Competitive Strategy

Pressure for local

Phase 1 Phase 2 Phase 3 Phase 4

Step 6: Formulate Competitive Strategy contd….

Step 7: Set Tactical Plans:

• Sales forecast and budget