Lesson #11
Why Global Strategic Planning?
Importance of Strategic Planning
Drives financial performance
Supports non-financial objectives (e.g., brand equity, market presence, sustainability goals)
Key Strategic Alignments Needed:
Market–Product Fit: Match the right foreign markets with the company’s existing products or services.
Competence–Opportunity Fit: Leverage the firm’s core strengths (e.g., technology, brand, supply chain) to capture global market opportunities.
Global Strategy Planning: 4 Key Steps
Define the Business
Clarify core offering, customer segments, and competitors.
Example: A skincare brand deciding its positioning (luxury, clean beauty, therapeutic dermatology).
Formulate the Global Business Strategy
Choose competitive positioning (e.g., cost leadership, differentiation).
Example: IKEA uses cost leadership and simple design to appeal globally, especially in urban centers.
Develop the Global Marketing Strategy
Decide on adaptation vs. standardization for 4Ps (Product, Price, Place, Promotion).
Example: McDonald's localizes its menu in India (no beef) but standardizes branding globally.
Implement the Strategy
Select the right structure, staff, and controls for global rollout.
Example: Samsung establishes regional HQs for localized strategy execution.
Step 1: Define the Business
Purpose: Identify the actual business to align strategy with reality.
Strategic Business Unit (SBU):
Subgroups serving specific customer types or products.
Example: Different SBUs for government contracts vs. consumer retail.
Key Questions to Ask:
What market are we really in?
Example: Apple generates 25% of revenue from services like App Store, not just hardware.
Who are our customers?
(e.g., individual consumers, businesses, governments)
Who are our true competitors?
Example: Zoom competes with traditional telecoms like Bell and Rogers.
Step 2: Formulate the Global Strategy
Using Porter’s Framework:
Market Scope: Broad vs. Narrow (Niche)
Competitive Advantage: Cost vs. Differentiation
Porter’s Four Generic Strategies:
Cost Leadership: Broad market, low cost (e.g., Walmart)
Differentiation: Broad market, unique value (e.g., Apple)
Cost Focus: Narrow market, low cost (e.g., Ryanair)
Focused Differentiation: Niche market, unique value (e.g., Rolex)
Example: Tesla's transition from luxury EVs (focused differentiator) to broader market with Model 3 and Model Y.
The 7S for Competitive Advantage:
Strategy
Clearly define the company’s goals, objectives, and direction based on its market positioning.
Analyze market trends and competitive landscape to set specific, achievable goals.
Ensure the strategy aligns with customer needs and desires for sustained profitability and growth.
Structure
Design an organizational structure that supports the chosen strategy, determining whether to adopt a centralized or decentralized approach.
A centralized structure can promote uniformity and strong control, while a decentralized structure allows for local responsiveness and agility.
Align reporting lines and functions to facilitate effective communication and resource allocation.
Systems
Develop robust processes and systems that support the strategic objectives, whether focusing on cost leadership or differentiation.
Implement technologies that streamline operations, improve efficiency, and enhance customer experience.
Regularly evaluate systems to ensure they remain relevant to the changing market dynamics and organizational goals.
Shared Values
Foster a company culture that emphasizes core values like customer satisfaction, innovation, and integrity.
Values should drive behaviors and decision-making, ensuring that all employees are aligned with the company’s mission.
Promote a collaborative environment where employees feel valued and motivated to contribute to the company’s success.
Style
The leadership style should reflect the organization's commitment to its strategic focus, whether it is cost efficiency or unique value.
Leaders should model desired behaviors and create an environment that encourages innovation and accountability.
Adapt leadership approaches to fit the organizational context and help navigate changes effectively.
Staff
Invest in recruiting and retaining talent that aligns with the strategic focus of the organization.
Develop training programs to enhance employee skills and support career growth, ensuring staff can adapt to changing market conditions.
Foster diversity within the workplace to bring in different perspectives that can enhance problem-solving and innovation.
Skills
Focus on enhancing critical capabilities that can provide a competitive advantage within the chosen market segment.
Identify skill gaps and provide training programs to build essential competencies in areas like customer service, technology, and product development.
Encourage continuous learning and development to keep the workforce adaptive and competitive in a dynamic environment.
Key points
Vision: anticipate customer needs, even before they emerge.
Speed: react to competitors.
Surprise: develop surprise to extend advantage.
Tactics: change the rules of the game (tech, launch multi-front actions).
Capabilities: creating temporary advantages via disruption.
Organizational Structures for Global Expansion
Functional: Efficient, simple (e.g., separate marketing, finance).
Geographic Division: Tailored by region, but duplicates effort.
Product Division: Focus by product line, may lack coordination.
Customer Division: Aligned with buyer segments (e.g., B2B vs. B2C).
Matrix: Combines two dimensions (e.g., product × geography).
🛠 Keegan’s Five Strategic Approaches
Product – Communication Extension: Same product, same messaging globally.
Product Extension – Comm. Adaptation: Same product, tailored communication.
Product Adaptation – Comm. Extension: Adapt product, keep messaging.
Dual Adaptation: Adapt both product and communication.
Product Invention: Develop entirely new offerings for global markets.
📊 Keegan’s Global Strategy Matrix
Product – Comm. Extension:
Red Bull uses the same product and ads globally.
Gillette uses the same razors globally.
Product Extension – Comm. Adaptation:
Gillette uses same razors but different ads (e.g., US).
Product Adaptation – Comm. Extension:
Coca-Cola slightly adjusts the formula, keeps the core 'happiness' brand.
Dual Adaptation:
McDonald’s India—vegetarian menu + local slogans.
Product Invention:
Unilever developed single-use shampoo sachets for low-income Asian markets.
🧭 Global Strategic Planning Process
This process involves balancing:
Internal company strengths
External attractiveness (e.g., market growth rates and level of competition)
Note: A "funnel" framework is used for selecting foreign markets. This approach leads the firm to focus on countries that are similar, which presents a risk for the firm. To mitigate this, the firm may opt to pursue a deliberate country diversification strategy instead.
🧠 What is a Global Mindset?
Managers with a global mindset integrate multiple cultures in strategic thinking. They don’t just translate — they transform marketing to fit both local and global realities.
"A global mindset requires openness, non-judgment, and a willingness to challenge assumptions. Managers must think beyond borders and integrate global-local insights. It is essential for leading in dynamic global markets but is mentally demanding. A global mindset allows nuanced decisions across diverse contexts."
🧑💼 Staffing for Global Assignments
Cultural fit is crucial: the inability to adjust is a top reason for failure. Key selection criteria include:
Technical ability
Cultural adaptability
Family support
Host country regulations
Success depends on proper preparation, support, and assignment length. Language & soft skills are often overlooked but essential.
🌐 Global Account Management (GAM)
GAM coordinates services for multinational customers through one team, offering several benefits:
Consistency
Better insight
Higher sales
Streamlined service
However, it also presents challenges such as:
Turf wars with local teams
High setup costs
Dual reporting
GAM needs a strong internal champion and alignment with strategic clients.
🧮 Control Mechanisms for Global Strategy
Prevent | Feedforward: prevent problems through planning and clear roles. |
Adjust | Concurrent: adjust during implementation (real-time feedback). |
Evaluate | Feedback: evaluate performance post-implementation. |
Guide | Behavioral Controls: guide actions via training and culture. |
Output | Output Controls: use KPIs, budgets, performance targets. |
Step 3: Develop the Global Marketing Program
Degree of Standardization: Decide on key standardization vs. adaptation.
Value Chain Configuration: Where to locate activities (e.g., R&D, manufacturing).
Integration views: Compete globally, coordinate actions across markets
Strategies for Local Firms in Global Markets
Local Firm Challenges:
Facing larger capital and marketing budgets, strong brands, and R&D from global companies.
Strategic Options:
Niche Specialization: Focus on specific segments with local insights.
Example: Local organic brands targeting health-conscious consumers.
Agility & Speed: Leverage quicker decision-making.
Example: Local fashion retailers adopting trends faster than multinationals.
Cultural Proximity: Deep understanding of local values.
Example: Snacks promoting traditional flavors.
Collaborate or Form Alliances: Partnering for strength.
Example: Bookstores with indie publishers for exclusive content.
Competitive Strategies for Local Companies
Dodger: Local firms that sell or join alliances to survive
(e.g., Škoda with Volkswagen).
Defender: Leverages local strengths to compete in areas where globals are weak.
Example: Local chocolate brands offering tailored products.
Contender: Upgrade capabilities to compete directly with globals
(e.g., Bombardier in aviation).
Extender: Expand into similar foreign markets for growth
(e.g., Jollibee).
Emerging Market Multinational Enterprises (EMMNEs)
Definition: Companies from emerging markets investing abroad, controlling foreign assets.
Examples: Tata Motors, Lenovo.
Challenges: Weak institutional frameworks, political instability, and high inflation rates.
These firms originate from countries with:
Suboptimal government policies and weak regulatory environments
Macroeconomic challenges (e.g., high inflation rates)
Weak institutional frameworks
Weak judicial systems and corruption
Political instability
Infrastructure deficits
💡 Frugal Innovation and Market Adaptation
EMMNEs understand the needs of customers in developing markets, and:
They adapt products to meet local demands — often through 'frugal innovation.'
Frugal engineering focuses on faster, cheaper product development.
eg. Tata Nano: A low-cost car aimed at motorcycle users in India (though price alone is not always the winning factor—features and image also matter).
💪 Adaptability and Strategic Advantages of EMMNEs
EMMNEs thrive in unstable environments with corruption, weak infrastructure, and shifting policies.
Some benefit from strong state support.
Their experience makes them highly adaptable in foreign markets
Step 4: Implement the Global Marketing Program
Head Office vs. Local Teams:
Control vs. local adaptation
example (Coca-Cola's flavor adjustments).
Company Organization: Use Global Account Managers for international clients (e.g., IBM).
Global Commitment and Culture: Create a culture that supports global goals (e.g., Unilever's sustainability commitment).
Summary Highlights
Understand the global strategy process.
Compare Porter vs. 7S for competitive advantage.
Distinguish between standardization and adaptation strategies.
Know organizational forms and GAM implications.
Recognize the importance of a global mindset and control systems.