978-1259317224 Chapter 9 Part 1

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This

Module 9: International Competitive Strategy

Use this Instructor Guide to incorporate the unique content of this product and facilitate your

Face-to-Face, Online, and Hybrid classes. This guide has been designed to be interactive and

links have been created within each title in the Table of Contents to guide you to each section.

You can also link back to the main page by clicking at the button at the bottom of each page.

Here is the Table of Contents highlighting what you’ll be able to find to support you in teaching

this module:

YOUR CONTENT

Summary

Learning Objectives

Key Terms & Key Terms with Definitions

Content Outline

CONNECT TOOLS FOR CLASS REPARATION

SmartBook

What is SmartBook?

How Does SmartBook Help You/Students?

How to assign SmartBook to ensure students come to class prepared?

ENGAGEMENT & APPLICAT ION (FACE TO FACE & ONLINE & HYBRID)

BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS

IB IN PRACTICE

GLOBAL DEBATE

GET THAT JOB! FROM BACKPACK TO BRIEFCASE

Critical Thinking Questions

Global Edge Research Task

MiniCase

Bonus Activities

Video Suggestions

Team Exercises

Supplemental Lecture

Tools & Tricks

Controversial Issues

Teaching Suggestions

CONNECT TOOLS FOR ASSESSEM ENT OF L EARN ING

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

Interactive Applications

Assigning Interactives

Time-Saving Hints:

Connect Content Matrix

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

YOUR CONTENT

SUMMARY

This module provides an overview of strategic considerations that international companies

must take into account when competing within an international business environment. In the

global marketplace, a company must be able to quickly identify and exploit opportunities

wherever they may occur. To do this effectively, managers must fully understand why, how,

and where they intend to do business, now and over time. Managers need to have a clear

understanding of their company’s mission and vision and an understanding of how they plan to

compete with other companies. In order to meet these challenges, managers need to

understand their company’s strengths and weaknesses along with those of their competitors.

They must also be able to identify opportunities and threats. Strategic planning provides

valuable tools for helping managers address these global challenges.

International strategy is concerned with the way firms make fundamental choices about

developing and deploying scarce resources internationally. International strategy involves

decisions that deal with all of the various functions and activities of a company, not merely a

single area such as marketing or production. To be effective, a company’s international strategy

needs to be consistent among the various functions, products, and regional units of the

company as well as with the demands of the international competitive environment. The goal

of international strategy is to achieve and maintain a unique and valuable competitive position,

both in a nation as well as globally, a position that has been termed “competitive advantage.”

This suggests that the international company either must perform different activities than its

competitors, or else perform the same activities but in different ways. In attempting to develop

competitive advantage, a company’s managers are forced to make choices regarding what to

do, and what not to do, now and over time. Different companies make different choices, and

these choices have implications for each company’s ability to meet the needs of customers and

to create a defensible competitive position internationally. Without adequate planning,

managers are more likely to make decisions that do not make good sense competitively, and

the company’s international competitiveness may be harmed. Many global and multinational

companies have instituted formal worldwide strategic planning to identify opportunities and

threats, formulate strategies to handle them, and stipulate the means to finance them. Global

strategic planning provides a formal structure in which managers analyze the firm’s external

environments, analyze the firm’s internal environments, define the company’s business and

mission, set objectives, quantify goals, and formulate strategies and tactics to achieve them.

Operating managers do the planning and with the assistance of their planning staff.

LEARNING OBJECTIVES

LO 9-1 Explain international strategy, competencies, and international competitive

advantage.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

LO 9-2 Describe the global strategic planning process and its components.

LO 9-3 Describe the features of a strategic plan.

LO 9-4 Discuss the time horizon, organizational level, and different methods of strategic

planning.

LO 9-5 Outline new directions in strategic planning.

KEY TERMS AND DEFINITIONS

Bottom-up planning (p. 249)

Planning process that begins at the lowest level in the

organization and continues upward.

Budget (p. 246)

An itemized projection of revenues and expenses for a future

time period.

Competitive advantage(p. 234)

The ability of a company to achieve and maintain a unique and

valuable competitive position both within and nation and

globally, generating higher rates of profit than its competitors.

Competitive strategies (p. 240)

Action plans to enable organizations to reach their objectives.

Contingency plans (p. 245)

Plans for the best- or worst-case scenarios or for critical events

that could have a severe impact on the firm.

Explicit knowledge (p. 237)

Knowledge that is easy to communicate to others via words,

pictures, formulas, or other means.

International strategy (p. 233)

A plan that guides the way firms make choices about developing

and deploying scarce resources to achieve their international

objectives.

Iterative planning (p. 249)

Repetition of the bottom-up or top-down planning process until

all differences have been reconciled.

Knowledge management (p.

237)

The practices that organizations and their managers use for

identifying, creating, acquiring, developing, dispersing, and

exploiting competitively valuable knowledge.

Mission statement (p. 238)

A broad statement that defines the organization’s purpose and

scope.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

Policies (p. 246)

Broad guidelines issued by upper management to assist lower-

level managers in handling recurring issues or problems.

Procedures (p. 247)

Guides that specify ways of carrying out a particular task or

activity.

Sales forecast (p. 246)

A prediction of future sales performance.

Scenarios (p. 244)

Multiple, plausible stories about the future.

Strategic planning (p. 234)

The process by which an organization determines where it is

going in the future, how it will get there, and how it will assess

whether and to what extent it has achieved its goals.

Tacit knowledge (p. 237)

Knowledge that an individual has but that is difficult to express

clearly in words, pictures, or formulas and is therefore difficult

to transmit to others.

Top-down planning (p. 249)

Planning process that begins at the highest level in the

organization and continues downward.

Value chain (p. 236)

A set of interlinked activities that add value to the final product

or service.

Value chain analysis (p. 236)

An assessment conducted on the chain of interlinked activities

of an organization or set of interconnected organizations,

intended to determine where and to what extent value is added

to the final product or service.

Values statement (p. 238)

A clear, concise description of the fundamental values, beliefs,

and priorities expected of the organization’s members,

reflecting how they are to behave with each other and with the

company’s customers, suppliers, and other members of the

global community.

Vision statement (p. 238)

A description of the company’s desired future position if it can

acquire the necessary competencies and successfully

implement its strategy.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

CONTENT OUTLINE

The following section provides the flow of information using the LEARNING OBJECTIVES as a

guide, KEY TERMS learners will need to take away from the course and a notation of when to

use POWERPOINT SLIDES with LECTURE NOTES to drive home teaching points.

LO 9-1

Explain international strategy, competencies, and

international competitive advantage

• Introduction

• What is international strategy, and why is it

necessary?

• Why plan globally?

Key Terms:

• International strategy

• Competitive advantage

• Strategic planning

Lecture Outline and Notes:

I. What is international strategy, and why is it necessary?

A. International strategy is concerned with the way firms make choices about developing and

deploying scarce resources internationally. Strategy must be consistent among the

company’s various functions, products, and regional units (internal consistency) and with

the demands of the international competitive environment (external consistency).

B. The goal of international strategy is to achieve competitive advantage. Competitive

advantage is the ability of a company to achieve and maintain a unique and valuable

competitive position both within a nation and globally, generating higher rates of profit

3. are difficult to imitate or substitute for,

4. allow the firm to be organized to fully exploit the competitive potential of these

competencies.

D. The challenge for international companies is that resources are always scarce, there are

many alternatives for using these scarce resources (for example, which nations to enter?),

and these alternatives are not equally attractive. Managers make choices regarding what

to do, and what not to do, now and over time. Different companies make different choices

with implications for each company’s ability to meet customer’s needs and create a

defensible competitive

II. Why plan globally?

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This

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the future, how it will get there, and how it will assess whether and to what extent it has

achieved its goals.

E. Formal global strategic planning provides managers a way to identify opportunities and

threats, formulate strategies to handle them, and stipulate how to finance their

implementation. Plans provide for consistency of action among the managers.

F. Strategic plans help ensure decision makers have a common under– standing of the

business, the strategy, the assumptions behind the strategy, the external business

environment pressures, and their own direction.

G. Strategic plans promote consistency of action among the firm’s managers worldwide and

encourage them to consider the ramifications of their actions in the firm’s other

geographic and functional areas.

H. Strategic planning is also intended to increase the likelihood of strategic innovations,

promoting the development, capture, and application of the new ideas needed to succeed

in a challenging competitive environment.

I. Strategic planning continues to be among the most commonly used management tool

among global executives, and it is the tool with one of the highest reported levels of

satisfaction.

LO 9-2

Describe the global strategic planning process and its

components

• The process of global strategic planning

o Step 1: analyze domestic, international, and

foreign environments

values statements

o Step 4: set corporate objectives

▪ Multidomestic strategy

▪ Global strategy

Key Terms:

• value chain

• value chain analysis

• knowledge

management

• mission statement

• vision statement

• values statement

• contingency plans

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International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

▪ Using scenarios in strategy formulation

▪ Contingency planning as part of strategy formulation

o Step 7: prepare tactical plans

Lecture Outline and Notes:

I. The Process of Global Strategic Planning (Figure 9.1)

The process provides a formal structure for (1) analyzing a firm’s external environments, (2)

analyzing a firm’s internal environments, (3) defining a company’s business and mission (4)

setting corporate objectives, (5) quantifying goals, (6) formulating strategies and (7) making

tactical plans.

Step 1: Analyze domestic, international, and foreign environments

1. Managers must know what the present force values are and where they

appear to be going, and to develop and implement appropriate responses to

any changes in key environmental forces

5. Environmental, social, and business trends are more critical to strategy than in the

past 5 years. However, few companies react to them

Step 2: Analyze corporate controllable variables

1. Includes a situational analysis and a forecast. Various functional areas will

provide input to the planning staff, who will prepare a report for the strategy

planning committee. The committee wants to know where the company is

heading, what are its strengths and weaknesses, etc.

6. Management often conducts a value chain analysis, which considers three key

questions:

a. Who are the company’s target customers?

b. What value does the company want to deliver to these customers?

c. How will this customer value be created?

7. Value chain analysis focuses on the third question. The goal is to enable

management to determine the set of activities that will comprise the company’s

value chain, including which activities the company will do itself and which will be

outsourced.

8. Management must consider where to locate various value chain activities and to

examine linkages among the activities in the value chain. Linkages must be

examined across activities within the company and manage relationships with

external entities (suppliers, distributors, or customers) within and across nations.

9. The desired outcome is identification and establishment of a superior set of well–

integrated value chain activities and linkages. This system will permit the

company to effectively and efficiently develop, produce, market, and sell the

company’s products and services to the target customers and create the basis for

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

global competitive advantage.

10. A simplified value chain is given in Figure 9.2

Knowledge as a controllable corporate resource

1. In a highly competitive, rapidly changing, knowledge-intensive economy,

companies achieve competitive advantages through leveraging organizational

knowledge across national boundaries.

11. Companies face ongoing challenges of creating mechanisms that will

systematically and routinely identify opportunities for developing and transferring

knowledge throughout international operations, and for ensuring that subsidiaries

are willing and able to both share what they know and to absorb knowledge from

management.

12. Since much valuable knowledge is tacit (known well by the individual but difficult

to express verbally or document), systems are needed to convert tacit knowledge

Step 3: Define the corporate mission, vision, and values statements

1. These broad statements communicate to the firm’s stakeholders what the

d. Vision Statement describes the desired future position, what it hopes to

accomplish if it can acquire needed competencies and successfully

implement its strategy.

e. Values Statement is clear, concise description of the fundamental

values, beliefs, and priorities of the organization’s members.

quantifiable or directional goals

J. Step 6: Formulate the competitive strategies

1. Managers will formulate alternative competitive strategies and corresponding

action plans that seem plausible, taking into consideration the directions of

external forces and the firm’s strengths, weaknesses, opportunities, and

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module 9

threats

13. Companies competing internationally confront two opposing forces: (1) reduction

of costs and (2) adaptation to local markets.

a. To be competitive, firms must do what they can to lower costs per

unit so customers will not perceive their products or services as

being too expensive. This results in pressure for some of the

company’s facilities to be located in places where costs are low, as

well as developing products that are highly standardized.

f. Managers must respond to local pressures to modify products to meet

local market demands where they do business. This pressures the

a. As suggested in Figure 9-3, the strategy that would be most

appropriate for the company, overall and for various activities in the

value chain, depends on the amount of pressure the company faces

to adapt to local markets and achieve cost reductions.

g. Home Replication strategy centralizes product development strategy in

the home country, and after differentiated products are developed in

i. Multidomestic Strategy is used when there is strong pressure to adapt

products or services for local markets. Decision making is decentralized

to allow the company to modify its products and to respond to changes

in local competition and demand. By tailoring products for specific

markets, companies may charge higher prices. Local adaptation

regional markets can be high.