Strategy Formulation and ImplementationSlide 2Strategic ManagementApproaches to Strategic PlanningSlide 5Slide 6Slide 7Total Quality ManagementSlide 9Slide 10Global Integration vs. National ResponsivenessSummary of Approaches to Strategic PlanningElements of Strategic Planning for International ManagementSlide 14Slide 15Slide 16Formulation of MNC GoalsSlide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24CasesChapter8Strategy Formulation and Implementation1. IDENTIFY the basic steps in strategic planning, including environmental scanning, internal resource analysis of the MNC’s strengths and weaknesses, and goal formulation.2. DESCRIBE how an MNC implements the strategic plan, such as how it chooses a site for overseas operations.3. REVIEW the three major functions of marketing, production, and finance that are used in implementing a strategic plan.The specific objectives of this chapter are:Chapter8Strategy Formulation and Implementation4. DESCRIBE how an MNC implements the strategic plan, such as how it chooses a site for overseas operations.5. REVIEW the three major functions of marketing, production, and finance that are used in implementing a strategic plan.6. EXPLAIN specialized strategies appropriate for emerging markets and international new ventures.The specific objectives of this chapter are:3Strategic ManagementStrategic managementProcess of determining an organization’s basic mission and long-term objectives, and then implementing a plan of action for pursuing this mission and attaining these objectivesHow to allocate finite resources to achieve long-term objectivesGrowing need for strategic managementIncreasingly diversified operations in a continuously changing international environment.More resources, more places to allocate themIncreased complexity4Approaches to Strategic PlanningEconomic ImperativeEconomic ImperativeQuality ImperativeQuality ImperativePolitical ImperativePolitical ImperativeAdministrative CoordinationAdministrative Coordination5Approaches to Strategic PlanningEconomic imperative focused MNCs employ a worldwide strategy based on cost leadership, differentiation, and segmentationThey often sell products for which a large portion of value is added in the upstream activities of the industry’s value chainResearch and developmentManufacturingDistributionStrategy also used when the product is regarded as a generic good and therefore does not have to be sold based on name brand or support serviceEconomic ImperativeEconomic Imperative6Approaches to Strategic PlanningMNCs using the political imperative approach to strategic planning are country- responsive; their approach is designed to protect local market nichesSuccess of the product or service depends heavily onMarketingSalesServiceThese MNCs often use a country-centered or multidomestic strategy.Political ImperativePolitical Imperative7Approaches to Strategic PlanningTwo paths of quality imperative Change in attitudes and a raising of expectation for service qualityImplementation of management practices designed to make quality improvement an ongoing process“Total quality management,” (TQM) Cross-training personnel to do the jobs of all members in their work groupProcess re-engineering designed to help identify and eliminate redundant tasks and wasteful effortReward systems designed to reinforce quality performanceQuality ImperativeQuality Imperative8Total Quality ManagementQuality is operationalized by meeting or exceeding customer expectationsThe quality strategy is formulated at the top management level and is diffused throughout the organizationDeliver quality products or services to internal and external customers.TQM techniques Traditional inspection (no!) and statistical quality controlCutting-edge human resource management techniques, such as self-managing teams and empowerment9Approaches to Strategic PlanningAdministrative coordination approach MNC makes strategic decisions based on merits of the individual situation rather than using a predetermined economic or political strategyLeast common approach to formulation and implementation of strategy because of the firm’s desire to coordinate its strategy both regionally and globallyAdministrative CoordinationAdministrative Coordination10Approaches to Strategic PlanningGlobalization Production and distribution of products and services of a homogeneous type and quality on a worldwide basisMany customers of MNCs have homogenized tastes, which helps spread international consumerismNational responsivenessUnderstand different consumer tastes in segmented regional marketsRespond to different national standards and regulations imposed by autonomous governments and agenciesAdapt tools and techniques for managing the local workforce11Global Integration vs. National ResponsivenessGlobal strategyGlobal strategyInternational strategyInternational strategyTransnational strategyTransnational strategyMulti-domestic strategyMulti-domestic strategyNational responsivenessLow HighGlobal integrationLowHighAdapted from Figure 8–1: Global Integration vs. National Responsiveness12Summary of Approaches to Strategic PlanningThe appropriateness of each strategy depends on pressures for cost reduction and local responsiveness in each country servedA global strategy is a low-cost strategy which attempts to benefit from scale economies in production, distribution, and marketingA transnational strategy should be pursued when there are high cost pressures and high demands for local responsivenessPressures for cost reduction and local responsiveness put contradictory demands on a company because localized product offerings increase costOrganizations that can find appropriate synergies in global corporate functions can leverage a transnational strategy effectively13Elements of Strategic Planning for International ManagementExternal Environmental Scanning for MNC Opportunities and ThreatsExternal Environmental Scanning for MNC Opportunities and ThreatsInternal Resource Analysis of MNC Strengths and WeaknessesInternal Resource Analysis of MNC Strengths and WeaknessesStrategic Planning GoalsStrategic Planning GoalsIMPLEMENTATIONIMPLEMENTATIONAdapted from Figure 8–2: Basic Elements of Strategic Planning for International Management14Elements of Strategic Planning for International