Group 1 Seth Schulz, Daniel Lujan, Jacob Martin

1. Group 1Seth Schulz, Daniel Lujan, Jacob Martin Chapter 8 Strategic Management in Action

2. The International Environment8.1 • Important aspects of International Environment • Legal-Political Environment • Economic Environment • Cultural Environment

3. Legal-Political Environment • Legal-Political environment in the U.S. is stable • Slow changes, legal and political procedures are well established, laws governing actions of individuals and institutions are fairly stable • Other Countries are different • Deutsche Bank’s assessment of global political risk categorizes countries into different stability categories such as maximum, high, moderate, low, and failed states

4. Legal-Political Environment cont… • Maximum stability • U.S., Spain, Japan, Germany, Australia • Low stability • Bosnia, Nigeria, North Korea • Failed state • Haiti, Sudan, Somalia • Countries will low stability levels face greater uncertainty and strategic threats

5. Economic Environment • Important factors • Currency exchange rates • Timing of conversion is crucial • Inflation rates • How fast are prices for products and services rising • Tax Policies • Some countries more restrictive than others

6. Cultural Environment • National culture – values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important • Global Oil Company • Employee productivity in Mexico plants • Once strategic managers are familiar with the opportunities and threats found in the international environment, they can begin to look at strategies for doing business internationally

7. Cultural Environment cont… • Two frameworks for assessing a company’s culture • Geert Hofstede – Five dimensions • Indivdualism vs.. Collectivism – degree to which people in a country want to act as individuals or as members of groups • Power distance – measure of the extent to which a society accepts that power in institutions and organizations is distributed unequally

8. Cultural Environment cont… • Uncertainty avoidance – degree to which people tolerate risk and prefer structured over unstructured situations • Achievement vs. Nurturing – degree to which a country values assertiveness and competitiveness versus relationships and concern for others • Long term vs. Short term orientation – measure of a country’s orientation toward life and work • Global Leadership and Organizational Behavior Effectiveness (GLOBE) • Ongoing investigation of cross-cultural leadership behaviors and focuses more on the managerial and leadership implications of cultural differences

9. Cultural Environment cont… • Nine dimensions • Assertiveness, future orientation, gender differentiation, uncertainty avoidance, power distance, individualism/collectivism, in-group collectivism, performance orientation, and humane orientation

10. International Strategic Decisions 8.2 • Multicountry Approach – an organization’s strategies vary according to the countries in which it does business. • Based on developing a differentiation advantage • Products are tailored to fit customer tastes and preferences • Marketing and distribution are adapted to local customs and cultures • Competitive actions are chosen to fit the unique circumstances of the market

11. International Strategic Decisions • Global Approach – strategies are basically the same in all countries in which the organization does business • Designed to help develop a low cost advantage • More emphasis on globally integrating operations rather than on local market responsiveness • Products have minor variations but emphasizes coordination between functions and business units and more sharing of capabilities, competencies, and technologies across the functions and units

12. International Strategy Alternatives • When a company decides to expand into other countries, it has several alternatives to use • Exporting – organization makes producs in its home country and transports those products to other countries • Importing – selling products at home that are made in another country

13. International Strategy Alternatives cont… • Licensing – an arrangement in which a foreign license buys the rights to manufacture and market a company’s product in that country for a negotiated fee • Franchising – company sells franchisees in other countries limited rights to use its brand name in return for a lump sum payment and a share of the franchisee’s profits • Direct Investment – organization actually owns assets in another country

14. International Strategy Alternatives cont… • Born global firm – an organization which chooses to go international from founding

15. Small Business - Independent business having less than 500 employees. Entrepreneurial Venture- -pursue opportunities, are characterized by innovational practice and growth and profitability as their main goal

16. Why are they important. • Job Creation • Small business provide up to 80% of all jobs • Number of New Start ups • Due to the evolving markets • Innovation • Creating, changing experimenting, transforming and revolutionizing

17. Planning (Value??) • Lies more in doing (the process itself) than formalizing a plan.

18. External analysis • Importance of information, • exploit new idea and competitive advantages • Changes in the market (customer needs, demographics • Opportunities

19. Internal analysis • Assessing the strengths and weaknesses • Know your resources, capabilities, and core competency.

20. The Boiled Frog Phenomenon • Picture you tube

21. Strategy choices • Extent and range of possible strategy varies • Focus strategy • Avoid head to head competition • Decision will come down to resources, capabilities and core competency.

22. Strategy Evaluation • Goal Attained • Performance trends in comparison to competitors

23. Similar issues faced (SM & LG) • Human resources • Getting the right people and keeping the right people • Innovation and Flexibility • An advantage for Small and Entrepreneurial ventures

24. Creative Destruction • Process in which existing products, processes, ideas, and businesses are replaced with better ones, • Defined by Economist Joseph Schumpeter.

25. 8.4 SM Practices & Issues for Not-for-Profit and Public Sector Organizations Not-for-Profit Organization • Def: Organization whose purpose is to provide some service or good with no intention of earning a profit in order to meet the requirements of US tax code section 501(c)(3) as a tax exempt organization. • Still earn revenue, must cover costs

26. NFP Revenues Revenue comes from a number of sources • Taxes • Dues • Grants • Permits, user fees, and charges • Product (good or service) sales • Donations of time or money

27. NFP Revenues • If revenues exceed costs… • Use extra to improve goods or services • Reduce price for those goods or services • Put aside for years where revenues do not meet expenses

28. Public Sector Organizations • Def: an NFP that’s created, funded, and regulated by the public sector or government • They provide public services that a society needs to exist and operate, such as • police protection, • paved roads, • recreational facilities, • care for needy and disabled…. • All to enhance and support life

29. Other Types of NFP’s • Educational • Public schools, colleges… • Charitable • United way, American Cancer Society… • Religious • Churches, synangogues… • Social Service • American Red Cross, Habitat for Humanity… • Cultural/Recreational • Professional membership • Cause Related • Foundations

30. Why are NFP’s Important • They provide many of society’s essential needs that can’t be, or shouldn’t be provided by For-Profit organizations • Can provide funds to researchers (American Cancer Society) • Encourages, facilitates, and protects the development and continued existence of for-profit orgs

31. SM Processes in NFP’s • Need competitive advantage because they compete for resources and customers • Researchers have found positive link between SM and NFP’s

32. External & Internal Environmental Analysis • External Analysis- provides an assessment of the positive and negative trends that might affect the NFP’s strategic decisions. • Internal Analysis- provides assessment of the organizations resources and capabilities and its strengths and weaknesses • Internal Audits popular tool for assessing capabilities • SWOT analysis used to assess various strategy options and choices

33. Strategy Choices Functional Level • Must have strategies that allow it to do what it is set up to do • Functional Strategies are the ways an org might choose to get resources and capabilities to deliver their goods/services • Difference between Functional Strategy NFP and FP • NFP’s don’t have wide variety of alternatives from which to choose because of scarce and limited resources or because of external constraints

34. Competition between NFP’s Compete to • Keep costs low • Be different • Focusing on a specific niche Must develop and exploit a sustainable competitive advantage to ensure continued existence

35. Strategy Evaluation • Most difficult process for NFPs that accurately assesses success • No measuring stick (ex. Profits) • No clearly stated performance standard • More focus on what resources come into the organization, than how resources are used • Still must evaluate to see if the plan was effective

36. Specific Strategic Issues • Many people within NFPs do not understand or even believe managers are needed • Not a business for profit, so why run it like one? • Closely intertwined with politics • Public sectors “owned” by public = many different demands

37. Cause Related Marketing • Business pairs up with a NFP for a social cause that fits well with their products • Ex: Relay for Life and all its sponsors • Benefits NFP by getting greater exposure • Mainly to enhance the image of supporting company

38. Unique Strategies • NFP Marketing Alliances • Strategic partnership between NFP and one or more corporate partners in which the corporate partner agrees to do marketing actions that will benefit both the NFP and the corporate partner • Transaction based Promotion • Corporate partner donates set amount of food, money, or supplies in proportion to sales (TOM’s shoes)

39. Joint issue Promotion • Alliance where partners agree to tackle a social problem through actions such as advertising and distributing products • Licensing • NFP receives fee or percentage of revenues who use license entity

40. In the End • Yes, NFP organizations need SM to get ahead • NFPs important because they provide many essential societal needs • Marketing alliances are great way for NFPs to cope with uncertain revenue sources