12. Determining the level of integration and responsiveness
12.1
Integration-responsiveness framework
high
Global
strategy
Level of
global
integration
Transnational
strategy
Multinational
strategy
low
low
high
Level of
local
responsiveness
(adapted from Bartlett/Ghoshal/Beamish, 2008)
© 2012 R. Grünig/D. Morschett
12. Determining the level of integration and responsiveness
12.2
Process for determining the level of integration and
responsiveness
1. Analyzing the industry forces
2. Determining the managerial
preferences
3. Determining level of global integration and local responsiveness
© 2012 R. Grünig/D. Morschett
13. Defining the strategic businesses
13.1
Business, business unit and business field
Business
Market offer
which can be distinguished
from other market offers and
contributes critically to the
success of the company.
Business unit
Business field
Business
which shares a market with
other businesses and/or
which shares important
resources with other
businesses
Business
which does not significantly
share its market with other
businesses and
which does not share
important resources with other
businesses
© 2012 R. Grünig/D. Morschett
13. Defining the strategic businesses
13.2
Business units as parts of business fields
A
A1
B
A2
A3
B1
B2
B3
B4
C
C1
C2
D
= Business fields
= Business units
= Strong interdependencies
= Weak interdependencies
© 2012 R. Grünig/D. Morschett
13. Defining the strategic businesses
13.3
Process for defining the strategic businesses
1. Defining the strategic business units
2. Defining the strategic business fields
© 2012 R. Grünig/D. Morschett
13. Defining the strategic businesses
13.4
Business structure of Ricola
Switzerland Germany
France
US
…
Hard herb drops
Soft herb drops
Instant tea
Teabags
Chewing gum
= Business unit
= Business field
(adapted from Thahabi, 2010)
© 2012 R. Grünig/D. Morschett
13. Defining the strategic businesses
13.5
Patterns of strategic businesses where countries are the
competitive arenas
R
C
I
S
Business units based on
countries and industry segments
R1
C11
R2
C12
C11
C12
= Region
= Country
= Industry
= Industry segment
= Business unit
= Business field
S11
I1
S12
S22
I2
S22
Business fields based on
regions and industries
R1
C11
C12
Business fields based on
regions
R2
C11
R1
C12
C11
S11
I1
S12
I1
S12
C11
C11
C12
I1
S12
R2
C11
R1
C12
C11
C12
R2
C11
C12
S11
I1
S22
I2
S22
C12
No business fields
S11
S22
I2
S22
R1
R2
S11
S22
I2
C12
Business fields based on
industries
S12
S22
I2
S22
S22
© 2012 R. Grünig/D. Morschett
13. Defining the strategic businesses
13.6
Patterns of strategic businesses where the world market is
the competitive arena
R
C
I
S
Business units based on
industry segments
R1
C11
C12
R2
C11
C12
= Region
= Country
= Industry
= Industry segment
= Business unit
= Business field
S11
I1
S12
S22
I2
S22
Business fields based on
industries
R1
C11
C12
No business fields
R2
C11
R1
C12
C11
S11
I1
S12
C11
C12
S11
I1
S22
I2
C12
R2
S12
S22
I2
S22
S22
© 2012 R. Grünig/D. Morschett
14. Defining the strategic objectives
14.1
Dimensions of the strategic objectives in an international
company
Industry
markets
Categories
of objectives
Value chain
level
Country
markets
Industry
segments
© 2012 R. Grünig/D. Morschett
14. Defining the strategic objectives
14.2
Possible strategic objectives
Company
objectives
Cash flow and free
cash flow
ROS, ROI and ROE
Growth
Ability to innovate
Reputation with
stakeholders
Strategic business
objectives
Market positioning
Competitive
advantages
Unit sales
Revenue
Market share
Contribution margin
Objectives for
operation units
Quality
Output
Costs
Capacity
Sourcing
objectives
Quality
Quantities
Costs
© 2012 R. Grünig/D. Morschett
14. Defining the strategic objectives
14.3
Process of defining strategic objectives
1. Identifying businesses and operation units which need strategic
objectives
2. Defining the categories of objectives
= usual
sequence
of steps
= most
important
possible
loops
3. Fixing the values of the objectives
4. Checking for consistency
5. Producing a list of objectives
© 2012 R. Grünig/D. Morschett
14. Defining the strategic objectives
14.4
Businesses of FFA
Austria
Germany
China
Indonesia
Product group A1
Product group A2
Product group B
Product group C
= Existing business unit
= Planned business unit
= Business field
© 2012 R. Grünig/D. Morschett
14. Defining the strategic objectives
14.5
Contribution margin and cash flow definition for FFA
./.
=
./.
./.
=
./.
./.
=
./.
=
./.
=
Revenue
Cost of raw materials and components
Contribution margin 1
Direct production cost
Sales cost
Contribution margin 2
Fixed cost of the factory/factories *
Overhead cost of the business field *
Contribution margin 3
Overhead cost of the company *
Cash flow
Investments
Free cash flow
* = without amortisations and depreciations
© 2012 R. Grünig/D. Morschett
14. Defining the strategic objectives
14.6
Strategic objectives of FFA
Business objectives
Businesses
Years
A1 Austria
A2 Austria
A2 China
A2 Indonesia
A Total
B Austria
B Germany
B Total
C Austria
C Indonesia
C Total
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
20xx
…
…
20xx
20xx
20xx
20xx
20xx
…
…
20xx
20xx
20xx
20xx
20xx
+1
+2
+3
+4
+1
+2
+3
+4
+1
+2
+3
+4
+1
+2
+3
+4
+1
+2
+3
+4
+1
+2
+3
+4
+1
+2
+3
+4
Factory objectives
Turnover
6
6
6
6
6
10
10
10
10
10
15
16
17
18
19
0
0
2
2.5
3
31
32
35
36.5
38
…
…
20.5
21
21.5
22
22.5
…
…
8.5
9
11.5
12.5
13.5
Contribution
margin
2
3
3
3
3
3
3
3
3
3
3
3.8
4
4.3
4.5
4.8
0
0
0.4
0.6
0.8
9.8
10
10.7
11.1
11.6
…
…
6.8
7
7.2
7.4
7.6
…
…
2.8
3
3.3
3.8
4.5
Contribution
margin
3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5.2
5.4
5.9
6.3
6.8
—
—
2.5
2.5
2.6
2.6
2.7
—
—
1.9
2.1
2.3
2.8
3.5
Factories
Products
Years
Output
Direct
cost
per unit
A1 Austria
A11
A12
A21
A22
B1
B2
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
C1
C2
…
…
…
…
…
…
A2 China
B Czech
Republic
C Austria
Sourcing objectives
Raw materials
Products
and
components
A11
A111
A112
A12
A121
A122
A21
A211
A212
A22
A221
A222
B1
B11
B12
B2
B21
B22
C1
C11
C12
C2
C21
C22
Company objectives
Years
Turnover
20xx
60
62
20xx + 1
20xx + 2
68
20xx + 3
71
20xx + 4
74
Fixed
cost
…
…
…
…
Years
Quantities
Cost per unit
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
Contribution
margin 3
9.6
10
10.8
11.7
13
Cash
Flow
3.6
4
4.6
5.5
6.8
Free cash
flow
2.6
0.8
3.4
4.3
5.6
Figures in millions
of EUR
— = not possible to
calculate at this level
… = not displayed to
shorten the figure
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.1
Interdependencies between marketing in different countries
Foreign country A
Foreign country B
Company
Competitors
Company
Government
Competitors
Customers
Government
Customers
Home country
Company
Competitors
Government
Customers
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.2
Standardization, differentiation and types of
international marketing
Ethnocentric
marketing
Internationally
standardized
marketing
Locally
adapted
marketing
Global
marketing
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.3
Availability of selected car models of Volkswagen in
different countries
Model
Gol
Golf
Golf GTI
Touran
Fox
Scirocco
Sharan
Polo
Vento
Eos
Jetta
Voyage
Passat / CC
Routan
Tiguan
Touareg
New Beetle
Phaeton
Country
Germany
USA
India
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Brazil
Japan
x
x
x
x
x
x
x
x
x
x
x
x
x
x
(x)
x
x
x
x
x
x
x
x
x
x
x
x
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.4
The brand structure of Anheuer-Busch InBev
Brand type
Brands
Global brands
Budweiser, Stella Artois, Beck’s
Multi-country
brands
Hoegaarden, Leffe
Examples of
local
brands
USA: Michelob, Bud Light
Argentina: Quilmes
Belgium: Jupiler
Brazil: Skol, Antarctica
China: Sedrin, Harbin
Germany: Diebels, Franziskaner
Russia: Bagbier
UK: Bass, Whitbread
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.5
Process for determining the product and brand portfolio
1. Analyzing the market needs in the foreign market
2. Determining which product/brands from the existing portfolio fit the
demand in the foreign market
3. Analyzing the benefits and costs of modification of products/
brands from the existing product portfolio for the foreign market
4. Analyzing the benefits and costs of developing specific
products/brands for the foreign market
5. Determining which products/brands from the foreign market are
suitable for introduction in the home market
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.6
Product and brand portfolio in the foreign market and the
home country during the process
Home
country
Foreign
market
Step 1
Step 2
Step 3
Step 4
Step 5
= Home country product
= Modified home country product
= Host country product
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.7
Basic methods of market segmentation in international
marketing
Segmentation methods
Integral segmentation:
Identifying cross-country
customer segments
International segmentation:
Identifying country clusters
A
B
A-F = Countries
C
D
E
F
A
B
C
D
E
F
= Segments
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.8
Culture-boundedness of different product categories
Culture-free
Cultural
dependency
Culturebound
Computer (hardware)
"High tech"
Cameras
Heavy machinery
Machine tools
Consumer Electronics
Software
Durable domestic goods (e.g.appliances)
Wine and spirits
Soft drinks
Tobacco, cigarettes
Paperware
Cosmetics
Beer
Detergents
Publications/media
Food
Confectionary
Clothing
High
Standardization
potential
Low
(Müller/Gelbrich, 2004)
© 2012 R. Grünig/D. Morschett
15. Determining the level of standardization and differentiation of market offers
15.9
Process for determining the level of standardization and
differentiation of market offers
1a. Analyzing all present and
intended markets of the company
1b. Considering the level of integration
and responsiveness
2. Deciding between the options of full standardization or willingness to adapt to local
markets
If standardization
If differentiation
If differentiation
= usual
sequence
of steps
= most
important
possible
loops
If standardization
3a. Identifying country clusters
3b. Identifying cross-country segments
and deciding upon segment specific
offers
4a. Determining the product and brand
portfolio for each country group
4b. Determining product brand portfolio
5a.Determining the marketing
mix for each country group
5b.Determining the marketing
mix
6. Planning the implementation
© 2012 R. Grünig/D. Morschett
16. Configuring the value creation process and determining the operation modes
16.1
Basic types of production configurations
International splitting
of production No international splitting
process
International splitting
Number of
production
location
Parallel production
Decentralization
A1 A2 A3
B1
B2
C1 C2
H1 H2 H3
Cross-border production II
B3
C3
A
B
A1 A2
C
C1
A
B2
B3
C3
H2
H
H
A
H = Home countries
A, B + C = Host countries
A
B
H1 H2 H3
= production steps
= sales
C
Cross-border production I
World market factory
Concentration
B
C
H
B2
B
C1
C
H3
H
= one production location
= different production locations
1, 2 + 3 = Production steps
(adapted from Knüppel, 1997; Kutschker/Schmid, 2011; Morschett/Schramm-Klein/Zentes, 2010)
© 2012 R. Grünig/D. Morschett
16. Configuring the value creation process and determining the operation modes
16.2
Configuration of PrecIn GmbH
Mexico
China
= Production plant
= Wholly-owned sales unit
= Sales joint venture or partially
owned sales unit
= Independent distributor
= Flow of finished products
= Flow of components
© 2012 R. Grünig/D. Morschett
16. Configuring the value creation process and determining the operation modes
16.3
Process for developing an operations strategy
1. Determining the product and country markets included in the
operation strategy
2. Analyzing the current value creation process and operation modes
= usual
sequence
of steps
= most
important
possible
loops
3. Forecasting the future demands for the products in the different
markets
4. Determining the future configuration of the value creation process
5. Determining the future
operation modes
6. Estimating the cost of transformation from the current to the target
situation
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.1
Process of strategic planning in an international company
= usual
sequence
of steps
= most
important
possible
loops
0. Preparing the strategy planning project
rg
1. Carrying out strategic analyses
2. Revising or producing
the mission statement
3. Developing the
corporate strategy
4. Developing the
business strategies
5. Developing the
functional strategies
6. Determining the implementation programs
7. Final assessment of strategies and implementation
8. Formulating and approving the strategic documents
(adapted from Grünig/Kühn, 2011)
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.2
Fields of analysis for FFA
Countries
Global
environment
Industry
markets
A
B
Austria
e
Germany
e
Czech Rep.
e
China
e
e
Indonesia
p
p
World
e
e
= main analysis field
e = existing market or resources
Company
e
C
e
Sales
e
e
p
e
Production
e
e
e
e
e
e
Comp. in
general
e
p
e
= additional analysis field
p = potential market or resources
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.3
Table of contents of a mission statement
1. Corporate identity / raison d'être of the company
2. Overriding objectives and values
3. Areas of activity
4. Relation to specific stakeholder groups
5. If any: Principles governing specific tasks
(adapted from Grünig/Kühn, 2011)
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.4
Table of contents of a corporate strategy
1. Level of integration and responsiveness
2. Strategic businesses
3. Strategic objectives
4. If needed: Level of standardization and differentiation of market offers
5. If needed: Configuration of the value creation process and operation
modes
6. Required business strategies and functional strategies
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.5
Business field patterns in international companies and their
drivers
Competitive Country markets as
World market as
arena competitive
competitive arena
Level of
arenas
integration and
responsiveness
Multinational
 Business fields according
strategy
to regions and industries
 Business fields according
to regions
Transnational
strategy
 Business fields according
to industries
 No business fields
Global
strategy
 Business fields according  Business fields according
to industries
to industries
 No business fields
 No business fields
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.6
Businesses of FFA
Austria
Germany
China
Indonesia
Product group A1
Product group A2
Product group B
Product group C
= Existing business unit
= Planned business unit
= Business field
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.7
Target Boston Consulting Group portfolio for FFA
Real
market
growth
10%
A2
Indonesia
= current turnover
= target turnover in four years
C
Indonesia
8%
6%
A2
China
4%
C
Austria
2%
0%
B
Germany
A2
Austria
B
Austria
A1
Austria
-2%
0.25
0.5
1
2
4
Relative
market
share
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.8
Table of contents of a business field strategy
1. Strategic objectives
2. Generic business strategy
3. If needed: Standardization and differentiation of the market offers
4. Competitive advantages of the market offers
5. Strategy of business unit A
6. Strategy of business unit B
7. Competitive advantages of resources and processes
8. If needed: Operations strategy
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.9
Generic business strategies
Competitive
advantage
Lower
Product and
price
image advantages
Whole
market
1. Broad scope
price strategy
2. Broad scope
differentiation
strategy
3. Niche focus
price strategy
4. Niche focus
differentiation
strategy
Scope
of market
Niche
market
(adapted from Porter, 1980)
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.10
Competitive advantages of the pocket knives of Victorinox
•
Top quality products
•
Multifunctional products
•
Broad range of traditional and innovative pocket knives
•
Uniform product design
•
Swiss cross emphasizing Swissness
•
Well-known brand
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.11
Strategic programs of FFA
Corporate level
Business field A
Business field B
Business field C
Building up a sales
subsidiary in Indonesia*
Introduction of product
group A2 in Indonesia
Replacing the sales
representative in
Germany by a sales
subsidiary
Introduction of product
group C in Indonesia
Introduction of a holding
structure
Entering central and
western China with
product group A2
Marketing campaign
in Germany
Building up logistics for
Indonesia*
Building up logistics for
Indonesia*
Implementing
rationalizations in the
Czech factory
Building up logistics for
central and western
China
be coordinated
* = Must
with each other
Shifting production
steps for product group
A1 from Austria to
China
© 2012 R. Grünig/D. Morschett
17. The process of strategic planning in an international company
17.12
Strategic documents of FFA
Mission
statement
Corporate
strategy
Business field
strategy A
Business field
strategy B
Business field
strategy C
Implementation programs
Implementation programs
Operations
strategy A
Implementation programs
Implementation
programs
© 2012 R. Grünig/D. Morschett
http://www.springer.com/978-3-642-24724-8