STRATEGY FORMULATION

AND
IMPLEMENTATION

CHAPTER 8
 Strategic Management

Strategic management is the 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. For most companies, regardless of how
decentralized, the top management team is
responsible for setting the strategy.
 The Growing Need for Strategic Management

One of the primary reasons that MNCs need strategic

management is to keep track of their increasingly diversified
operations in a continuously changing international
environment.
One is Ford Motor, which has reentered the market in
Thailand and has built a strong sales force to garner market
share. The firm’s strategic plan here is based on offering the
right combination of price and financing to a carefully
identified market segment.
General Electric provides another example that reflects the
challenge managers face in shedding unprofitable
businesses in order to generate capital for expansion into
higher growth product and/or geographic markets.
 Benefits of Strategic Planning

strategic planning helps an MNC to coordinate and

monitor its far-flung operations and deal with
political risk, competition, and currency instability.
planning intensity (the degree to which a firm carries
out strategic planning) is an important variable in
determining performance
Approaches to Formulating and Implementing Strategy

Four common approaches to formulating and

implementing strategy are
(1) focusing on the economic imperative,
(2) addressing the political imperative,
(3) emphasizing the quality imperative, and
(4) implementing an administrative coordination
strategy.
 Global and Regional Strategies
A fundamental tension in international strategic
management is the question of when to pursue global
or regional (or local) strategies. This is commonly
referred to as the globalization vs. national
responsiveness conflict.
Global integration is the production and distribution
of products and services of a homogeneous type and
quality on a worldwide basis.
National responsiveness is the need to understand
the different consumer tastes in segmented regional
markets and respond to different national standards
and regulations imposed by autonomous
governments and agencies.
 Global Integration vs. National Responsiveness Matrix

Figure 8–1 Global Integration vs. National

Responsiveness
 The Basic Steps in Formulating Strategy

In international management, strategic planning can

be broken into the following steps:
(1) scanning the external environment for
opportunities and threats;
(2) conducting an internal resource analysis of
company strengths and weaknesses; and
(3) formulating goals in light of the external
scanning and internal analysis.
Goal Setting for Strategy Formulation

Table 8–1
Areas for Formulation of MNC Goals
 Strategy Implementation

Strategy implementation provides goods and services

in accord with a plan of action. Quite often, this plan will
have an overall philosophy or series of guidelines that
direct the process
International management must consider three general
areas in strategy implementation.
First, the MNC must decide where to locate operations.
 Second, the MNC must carry out entry and ownership
strategies.
Finally, management must implement functional strategies
in areas such as marketing, production, and finance.
 Location Considerations for Implementation

The Country
Local Issues
Frontier Markets
 Combining Country and Firm-Specific Factors in
International Strategy

Figure 8–2 The CSA-FSA Matrix

The Role of the Functional Areas in Implementation

Marketing
Production
Finance
 Specialized Strategies

Strategies for Emerging Markets

 First-Mover Strategies
 Strategies for the “Base of the Pyramid”

Table 8–2 Contributions by Nongovernmental

Organizations to Business Models in Developing
Markets
 Entrepreneurial Strategy and New Ventures

International Entrepreneurship
International New Ventures and “Born-
Global” Firms