UNLV MGT 480 - Strategy Formulation and Implementation (25 pages)

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Strategy Formulation and Implementation



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Strategy Formulation and Implementation

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Lecture Notes


Pages:
25
School:
University of Nevada, Las Vegas
Course:
Mgt 480 - International Management
Unformatted text preview:

Chapter Strategy Formulation and Implementation The specific objectives of this chapter are 1 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 8 Chapter Strategy Formulation and Implementation The specific objectives of this chapter are 4 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 8 3 Strategic 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 complexity 4 Approaches to Strategic Planning Economic Economic Imperative Imperative Administrative Administrative Coordination Coordination Political Political Imperative Imperative Quality Quality Imperative Imperative 5 Approaches to Strategic Planning Economic imperative focused MNCs employ a worldwide strategy based on cost leadership differentiation and segmentation Economic Economic Imperative Imperative 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 service 6 Approaches to Strategic Planning MNCs using the political imperative Political Political Imperative Imperative approach to strategic planning are countryresponsive 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 7 Approaches to Strategic Planning Two paths of quality imperative Change in attitudes and a raising of expectation for service quality Quality Quality Imperative Imperative 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 performance 8 Total 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 empowerment 9 Approaches to Strategic Planning Administrative coordination approach MNC Administrative Administrative Coordination Coordination 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 globally 10 Approaches 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 workforce 11 Global Integration vs National Responsiveness Global integration National responsiveness Low High High Global Global strategy strategy Transnational Transnational strategy strategy Low International International strategy strategy Multi domestic Multi domestic strategy strategy Adapted from Figure 8 1 Global Integration vs National Responsiveness 12 Summary 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 effectively 13 Elements of Strategic Planning for International Management External External Environmental Environmental Scanning Scanningfor forMNC MNC Opportunities Opportunitiesand andThreats Threats Internal Internal Resource ResourceAnalysis Analysis of of MNC MNCStrengths Strengths and and Weaknesses Weaknesses Strategic Strategic Planning Planning Goals Goals IMPLEMENTATION IMPLEMENTATION Adapted from Figure 8 2 Basic Elements of Strategic Planning for International Management 14 Elements of Strategic Planning for International Management Environmental scanning External ExternalEnvironmental Environmental Scanning Scanningfor forMNC MNC Opportunities Opportunities and andThreats Threats Provide management with accurate forecasts of trends that relate to external changes in geographic areas where the firm is currently doing business or considering setting up operations These changes relate to the economy competition political stability technology and demographic consumer data ECLIPTER Econography Culture Legal Systems Income Profile Political Risk Tax Systems and Exchange


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