International Strategic Management

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International Strategic Management by Mind Map: International Strategic Management

1. Formulation

1.1. Formulation of strategy is needed because...

1.1.1. coordinating increasingly diversified operations

1.1.2. ensuring all parts of a company work towards same goal

1.1.3. grow the bottom line

1.2. 5 Ps of Strategy

1.2.1. Plan

1.2.2. Ploy

1.2.3. Pattern

1.2.4. Position

1.2.5. Perspective

1.3. Global Integration vs. National Responsiveness

1.3.1. Global High global integration; low national responsiveness Economies of Scale Standardized products

1.3.2. Multi-Domestic Low global integration; high national responsiveness No economies of scale Specalized products

1.3.3. International low global integration; low national responsiveness No economies of scale Standardized products

1.3.4. Transnational High global integration; high national responsiveness Economies of scale Specalized products Most difficult to achieve What most companies want

1.4. Steps for Formulating Strategy

1.4.1. Environment Scanning Forecasting opportunities/threats Political Social Market Technology

1.4.2. Internal Resource Analysis Understanding the company's strength's and weaknesses Managerial Technical Material Financial Key Success Factor What is necessary for a company to compete

1.4.3. Formulating Goals Based on findings from other two steps Goals are focused on improving...

2. Implementation

2.1. Reason for Implementation

2.1.1. Put strategies into motion

2.1.2. Improve the overall company

2.2. Need to have specific plans for...

2.2.1. Marketing

2.2.2. Finance

2.2.3. Production

2.3. Specialized Strategies

2.3.1. First Mover: Entering a market first Builds brand recognition Builds customer loyalty

2.3.2. Developing for the Bottom of the Pyramid Low income countries and consumers have a lot of collective purchasing power Products and sales are focused on these people 'at the bottom of the pyramid'

2.3.3. Born Global Companies become global soon after creation There is no 'home country' for the company Commonly built using the internet

3. Entry Strategy

3.1. Considerations when deciding means of entry

3.1.1. Risk level

3.1.2. Cost

3.1.3. Political Risk

3.1.4. Laws

3.2. Modes of Entry

3.2.1. Export-Import Exporting or importing of a company's goods Least risky Most companies start here

3.2.2. Licensing Giving an entity in another country the right to produce or sell your product License is commonly contained within a specific region

3.2.3. Franchising Giving an entity the right to operate an enterprise using company... Logo Product Line Trademark Method of Operation Have to uphold parent company's standards on all points

3.2.4. Alliances and Joint Ventures Any cooperative relationship between two companies Two or more partners own or control a business Benefits include... Shared technology Improved efficency Access to knowledge Reducing Political Risk Commonly used to enter developing markets

3.2.5. Mergers/Acquistions Purchase or combining of companies Most common form on entry Difficulties with combining company cultures or aligning goals/strategies

3.2.6. Wholly Owned Subsidary Owning the entirety of a new operation in a country Most risky Most expensive Provide most control and profits for the company - high risk; high reward

4. Organizational Structure

4.1. Should reflect the company's strategy

4.1.1. Has varying degrees of... formalization: the use of defined strucutre specialization: giving individuals specific, defined tasks centralization: how much power is concentrated at the top

4.2. Potential Organization Structures

4.2.1. International Division Single division for all international operations Pros Simple reporting system International operations are treated as importantly as domestic ones Cons Potential conflicts between domestic and international operations Can't react as effectively to singular markets

4.2.2. Global Product Division Each product line has a separate division (marketing, finance, leadership) Pros Emphasis on product Employees very knowledgeable about specific product Cons Duplication of staff across divisions May place too much focus on regional rather than global perspective

4.2.3. Global Functional Division Focus on function before product Usually for extraction companies e.g. oil companies

4.2.4. Mixed Organizational Structures Combinations of global product, area, or functional arrangements Matrix Structure Employees are divided by product and region Report to two supervisors: one for product, one for region Increased complexity can make it difficult to manage effectively Transnational Network Structure A series of smaller groups spread across the global that all interact in a web-like system All groups can interact and exchange relevant information Very complicated to coordinate all the seprate pieces

5. Political Risk

5.1. Likelihood that a Multinational Corporation (MNC) will be constrained by host government actions

5.2. Types of Risk

5.2.1. Transfer: limiting the transfer of capital, people, and other factors

5.2.2. Operational: direct constraint on management and performance of local operations

5.2.3. Ownership-Control: inhibit ownership or control of local operations

5.3. To evaluate political risk, companies conduct...

5.3.1. Macro Analysis Government decisions that impact the country as a whole Country's laws on bribery Country's laws on foreign ownership of companies

5.3.2. Micro Analysis Government decisions that impact a specific sector or foreign business Taxes on specific businesses Industry regulations Exportation: a government seizing businesses with little or no reinversement

5.4. Managing Political Risk

5.4.1. Companies aim to quantify political risk to compare potential markets using factors such as... Political Environment Economic Environment Domestic Economic Conditions External Economic Conditions

5.4.2. Integrative Techniques Attempting to make overseas operations become a natural part of the host country's infastructure This is achieved by methods such as... Discourages company from being treated negatively because it's become a part of the country Company wants to be perceived as less foreign Company builds relationship with host government

5.4.3. Protective Techniques Discourages the host government from interfering in operations by limiting government gain if they were to interfere This is achieved by methods such as... Most companies employ this strategy

5.4.4. Proactive Technique Attempting to affect government policy to be favorable to a company Done via... Method is proactive rather than reactive

6. Decision Making

6.1. Choosing a course of action among alternatives

6.1.1. Decision Making Considerations Centralization v. Decentralization Centralization Decentralization Culturally Driven Decision Making When decision making is particular to a cultural, be in by country or by company Attacking the Competition Strategy is to directly challenge the competition Gives company footholds in global markets while discrediting competition

6.1.2. Total Quality Management A form of decision making focusing on providing high quality products or services to customers Belief is that customers are looking for highest quality product and not just the cheapest This decision making process takes a number of forms such as... Empowerment: giving employees the power they need to develop ideas and implement them Kaisen: focusing on continually improving a product or service

7. Control

7.1. Looking at the choices made via decision making and deciding if they were effective

7.2. Contextualizes decisions and evaluates if they really achieved what the company hoped for

7.3. Has to be in agreement with the corporate structure and decision making process

7.4. Types of Control

7.4.1. Internal MNC focusing on what the company does best Decision making and strategy looks to leverage these strengths

7.4.2. External MNC focusing on what the consumer and market wants Decision making and strategy looks to offer a product that effectively tailors to these wants and needs

7.4.3. Indirect Using reports and other written forms of communication Gives numerical data on how the company is performing Financial statements Typically used monthly

7.4.4. Direct Face-to-face or personal meetings to monitor progress Top executives visiting oversees operations Meetings pulling in employees from all over the world Typically used annually or semi-annually

7.5. Performance Evaluation

7.5.1. Performance measures used as a means of control Financial Performance Quality Performance Personnel Performance