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CHAPTER 7
STRATEGIC PLANNING
Chapter Outline
A. Global Marketing
B. Globalization Drivers
1. Market Factors
5. The Outcome
C. The Strategic Planning Process
1. Understanding and Adjusting the Core Strategy
This chapter outlines the process of strategic planning in the context of the global marketplace.
Both the external and internal factors that determine the conditions for development of strategy
Suggestions for Teaching
The business press, almost on a weekly basis, reports on how companies have (attempted to)
globalize (d) their marketing efforts. Good sources for such articles are in Fortune, Business
Week, and Advertising Age. Business International reports on such efforts in more technical
detail. These articles can be used to kick off the discussion on to highlight why these industries /
companies are doing what they are as well as to speculate on the challenges they may be facing.
Chapter Summary
A. Global Marketing
Globalization reflects a business orientation based on the belief that the world is
becoming more homogeneous and that distinctions between national markets are not only
fading but, for some products, will eventually disappear. As a result, companies need to
B. Globalization Drivers
Both external and internal factors will create the favorable conditions for development of
strategy and resource allocation on a global basis. These factors can be divided into
market, cost, environmental, and competitive factors.
1. Market factors
Two reasons for similarities in the demands of consumers in the triad markets
2. Cost factors
Avoiding cost inefficiencies and duplication of effort are two of the most
powerful globalization drivers. A single–country approach may not be large
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3. Environmental factors
Government barriers have fallen dramatically in the last years to further facilitate
the globalization of markets and the activities of marketers within them. At the
same time, rapid technological evolution is contributing to the process.
A new group of global players is taking advantage of today’s more open trading
regions and newer technologies. Mini–nationals or “born globals” (newer
4. Competitive factors
To remain competitive, the marketer may have to be the first to do something or
5. The Outcome
The four globalization drivers have affected countries and industrial sectors
C. The Strategic Planning Process
Exhibit 7.4 summarizes the strategic planning process as a sequence of steps.
For globally committed marketers, formal strategic planning contributes to both financial
performance and nonfinancial objectives. The planning process will have to keep three
broad dimensions in mind:
1. Understanding and Adjusting the Core Strategy
The strategic business unit (SBU) is usually the unit around which strategic
planning decisions are based. In practice, SBUs represent groupings organized
around market similarities based on:
• needs or wants to be met
2. Formulating Global Marketing Strategy
The first step in the formulation of global strategy is the choice of competitive
strategy to be employed, followed by the choice of country markets to be entered
or penetrated further.
Exhibit 7.5 shows the three choices that the marketing manager has when dealing
differentiation.
• The usual approach to making country-market choices is first to start
with regions and further split the analysis by country. Various portfolio
models that have been proposed as tools for this analysis typically
involve two measures—internal strength and external attractiveness. As
and diversification, which is characterized by growth in a relatively large
number of markets. The various factors that affect the expansion strategy
include uniqueness of the product, the degree to which marketing-mix
elements can be standardized, savings through economies of scale, and
objectives of the company.
when used in a combination rather than on a stand-alone basis. Markets
that reflect a high degree of homogeneity with respect to marketing mix
variables could be grouped into segments and thereby targeted with a
largely standardized marketing strategy. On the pricing side, dimensions
such as customers’ price sensitivity may lead the marketer to go after
3. Developing the Global Marketing Program
Marketing-related decisions need to be made in four areas:
• The degree of standardization in the product offering: Globalization is
not the same as standardization except in the case of the core product or
the technology used to produce the product. The need to localize varies
4. Implementing Global Marketing
Successful global marketers of the future will be those who can achieve a balance
between local and regional or global concerns.
• Pitfalls that handicap global marketing programs and contribute to their
suboptimal performance include market-related concerns, such as
culture. Globalization requires transfer of information not only between
headquarters and country organizations but also among the country
organizations themselves. By facilitating the flow of information, ideas
are exchanged and organizational values strengthened. Personnel
interchange helps in this flow of information while the role of
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development of internal systems and interaction.
• Corporate culture affects and is affected by two dimensions: the overall
way in which the company holds its operations together and makes them
D. The Local Company in the Global Environment
The global marketplace presents significant challenges but also opportunities for local
firms. Strategies available to the local company depend on both external and internal
realities. The degree and strength of globalization in an industry will determine the
similar to home base.
Multiple strategies are available to local marketers when global markets and marketers
challenge them. A six-part strategy for success that has been proposed includes the
following:
• Given that local companies have an inherent familiarity with their own
marketplace, they should create customized products and services.
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Key Terms
Triad: 30 Organization for Economic Cooperation and Development (OECD) countries from
North America, Western Europe, and Asia; Japan and Australia included. They are treated by
marketers as a single market with similar consumption habits.
Concentration: Focusing on a small number of markets; a typical option for firms facing high,
stable growth rates only in certain markets.
Diversification: Expanding in a large number of markets; a typical option for firms if demand for
their products is strong worldwide.
Glocalization: The approach whereby uniformity is sought, especially in elements that are
strategic in nature (e.g., positioning), whereas care is taken to localize necessary tactical elements
(e.g., distribution).
global players worldwide.
Extender: A local company that is able to exploit its success at home as a platform for expansion
elsewhere.
Questions for Discussion
1. What is the danger in oversimplifying the globalization approach? Would you agree with the
statement that “if something is working in a big way in one market, you better assume it will
work in all markets”?
Ex-CEO of Apple Computer, Inc., Michael Spindler has reportedly stated that “The U.S. is a
place, not an attitude.” This means that the transfer of an idea, product, or process may not be
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2. In addition to teenagers as a global segment, are there possibly other such groups with
similar traits and behaviors that have emerged worldwide?
The greatest challenge for the global marketer is the choice of an appropriate base for the
segmentation effort. The possible bases for segmentation are summarized in Exhibit 7.7. Apart
3. The concept dubbed “reverse innovation” encompasses any innovation that is adopted first
in the developing world and then migrates into mature markets. Why?
Student answers may vary.
Traditionally, companies developed new products for markets in developed countries.
4. Carrefour has adapted many aspects of its product offerings and processes to fit the different
consumer demands in various countries. Why?
Carrefour has adapted many aspects of its product offerings and processes to fit the different
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5. What is the key to a successful global assignment? Why do some assignments fail?
In the multi-domestic approach, country organizations had very little need to exchange ideas.
Globalization, however, requires transfer of information between not only headquarters and
country organizations but also between the country organizations themselves. Part of the
6. What are the basic reasons why country operations would not embrace a new regional or
global plan (i.e., why the not-invented-here syndrome might emerge)?
Globalization by design requires a balance between sensitivity to local needs and deployment of
technologies and concepts globally. This means that neither headquarters nor independent
Internet Exercises
1. Whirlpool’s goal is “a Whirlpool product in every home, everywhere.” Using its
Web site, (http://www.whirlpoolcorp.com/about/strategy.aspx), describe what needs to take
place for this vision to become reality.
Whirlpool has taken a step in the right direction in order to achieve its goal by instituting a
strong value-based system with its employees. Its corporate culture values all beliefs,
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2. Innovators solve problems in two key ways: by acquiring or developing technologies and by
altering business models or capabilities. In India, IT-based software and service providers
used off-the-shelf hardware from the West but devised new ways of organizing work. Tata
Motors focused on technology as well as capabilities when it set out to create the world’s
cheapest car www.tatamotors.com/products-services/passenger.php?ref=worldwide).
Examine the advantages of both of these methods.