Welcome!
Strategy Formulation
Dr. Satyendra Singh
Professor, Marketing & International Business
University of Winnipeg, CANADA
sites.google.com/view/drsatsingh
Business strategy depends on the 3 pressures
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① Industry-specific
② Country-specific
③ Company-specific
① Industry-specific pressure (+)…
Universal customer needs
People see it, so want it 🡪 product or services
eg watches, jeans, pizza, cell phone, computers…
MNCs do not miss out opportunities
B2B (industrial) customers
If GM goes international, so do suppliers
Otherwise suppliers miss out the opportunity
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Industry-specific pressure (+)
Need to recover high investment in R&D
eg MACH3 razor, Boeing,…
Amortize development cost through rapid globalization
Need to breakeven
Economies of scale (30% domestic + 70% international)
However, in newspaper industry, local content and responsiveness is more important than economies of scale or production efficiency
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② Country-specific pressure (±)
FDI may be better (eg. low cost…) than trade eg universities in China
Trading block may be promising
Enter one country and expand within the block
Cultural differences eg taste KFC/Burger King in Jamaica
Nationalism, unstable govt., Internet (±) may prevent FDI
Cost of maintaining physical structure can be ↑ overseas
Anti-globalization activities
Website and fundraising capabilities
Powerful social networking 🡪 uprising
So MNCs beef up public relations 🡪 eg Coca-Cola in Africa
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BBC Nov 2015. In fact, It was Turkey's Halal Chicken but led to temporary closure
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③ Company-specific pressure (±)…
Managers/Union oppose to globalization 🡪 lose control
HO is overestimating the impact of globalization
GM, Philips, IBM, Nestle 🡪 all have country managers
Global managers in short supply
Cross-culturally competent managers
Region (security) or religion – do not feel safe
Personal reasons — do not wish to travel or away from families
Need to take vaccinations for Malaria, Yellow Fever, Hepatitis A/B…
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Company-specific pressure (±)
Distribution issues
Costs may outweigh benefits of globalization
↓ value-to-weight is not suitable globalization
eg Dairy, bread product – short shelf-lives
eg Seafood, flowers 🡪 packaging, refrigeration
Need Flexible Manufacturing System (FMS)
Low set up time, Multiple Line of Business (LOB) in single factory
JIT vs JIC: Customization should be efficient
Ability to integrate ie integration: Vertical versus Horizontal
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Vertical vs. Horizontal integration
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Mapping industry for strategy formulation�
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Globalization 🡪 Our goal is to move up; ie ↑ integration quadrant
Cement: globalization limited by low value-to-weight ratio
Globalization and Localization vary from industry to industry
Pressure and mapping of industry will dictate suitable strategy
Multidomestic strategy
Could still be beneficial eg ↑ market/region size, customization, responsiveness
Regional strategy
Maximize economies of scale at regional level
Homogenous market demand, trading blocks
Stepping stone to full blown global strategy
Local staffing, ↓ turnover, ↑ morale, regional decision-making
Global strategy
Efficient, standardization, locate activities in low cost countries
Reconfigure value-adding activities between countries
MNCs can move operations elsewhere
Tax break, infra structure support, ↑ incentive offered
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Questions?�s.singh@uwinnipeg.ca