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MindMap Gallery 03. Strategic choice-functional strategy international business strategy
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03. Strategic choice-functional strategy international business strategy
Note: Comprehensive, content refined, 03. Strategic Choice - Functional Strategy, International Business Strategy, International Strategy: Products are generally produced domestically and exported to other countries (high operating costs, poor adaptability).
Edited at 2023-09-03 23:05:54
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03. Strategic choice-functional strategy international business strategy
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
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- Outline
third chapter Strategic Choice- Functional strategy International business strategy
functional strategy
marketing strategy
1. Determine target market (STP)
Gradually
market segmentation Segmenting
consumer market segmentation
Geography, demography, psychology, behavior, etc.
Industrial market segmentation
User industry categories, user scale, etc.
Target market selection Targeting
Undifferentiated marketing, differentiated marketing, concentrated marketing
Market positioning (own role) Positioning
Seize or fill, coexist and confront, replace competitors
2. Design marketing mix (4Ps mix)
Product strategy (Product)
Product development, product portfolio, branding and trademarks
Promotion strategy
Advertising promotion, business promotion, public relations and personal selling
Distribution strategy (Place)
direct distribution
Directly from manufacturer to consumer without going through middlemen
indirect distribution
Exclusive distribution, intensive distribution
Price strategy (price)
basic pricing method
Cost-oriented, demand-oriented, competition-oriented
Product differential pricing (factors to consider)
Psychological pricing, product portfolio pricing, discounts and allowances, geographical price differences
new product pricing method
penetration pricing, skimming pricing, satisfaction pricing
research and development strategy
R&D type
product research
New products development;
process research
Establish effective processes to [save money and time], thereby increasing productivity and achieving cost leadership or differentiation
Source of motivation for R&D
demand pull
technology push
R&D positioning
1. Become a company that introduces new technology products to the market;
2. Be an innovative imitator of successful products;
3. Become a low-cost producer of successful products
4. Become an imitator of low-cost producers of successful products
Production operations strategy
Competitive Focus of Production Operations Strategy
1. Delivery time
2. quality
3. cost
4. manufacturing flexibility
Balanced Scorecard - Internal Business Processes
Capacity planning
Procurement strategy
single source strategy
Suppliers establish relatively solid relationships and generate economies of scale
Multiple source strategy
Competition among suppliers increases the bargaining power of enterprises
Balanced supply strategy
A combination of the above two
HR strategy
financial strategy
life cycle financial metrics
financial strategy options
Sales growth rate > sustainable growth rate requires external financing → cash shortage
international business strategy
Motives for international business operations of enterprises
seek market
Sales soared, orders increased, and new areas were opened up
seeking efficiency
Seeking labor cost reductions Path: from resource-rich developing countries
seek resources
Natural resources and raw material supply
Seek ready assets
Management experience, brand, advanced technology Path: From developed countries
The main methods of international business (Market segmentation logic is complete)
1. Export trade
2. external equity investment
foreign securities investment
no control
Foreign Direct Investment
sole proprietorship
May cost a lot of money, experience and resources
joint venture
High coordination costs among multiple joint venture parties
3. non-equity arrangements
Contract farming, contract manufacturing, franchising, licensing, service outsourcing
international business strategy
Strategy types and characteristics
details
international strategy
definition
Products are generally produced domestically and exported to other countries (high operating costs and poor adaptability)
Decision-making power
Sometimes it is produced in other countries. R&D and production are decided by the headquarters and there is no local decision-making power.
Multi-country localization strategy
definition
Products are produced locally and sold locally (good adaptability, high cost)
Decision-making power
Local decision-making power
globalization strategy
definition
The products produced and sold in different countries are the same, but the different links of product production are configured in different countries (poor adaptability and low experience cost)
Decision-making power
The production headquarters makes unified decisions and is highly centralized.
transnational strategy
definition
A combination of multi-country localization strategies and globalization strategies
feature
Good adaptability
Low operating costs
Resource-to-order production: demand is different and difficult to predict Steps: Order→Purchase→Production
Production operations strategy
position
third chapter Strategic Choice- overall strategy
Main types of overall strategies
development strategy
definition
Emphasis on making full use of opportunities in the external environment and fully exploring the superior resources within the enterprise in order to develop the enterprise in a higher-level direction based on the existing basis.
integrated strategy
definition
Integration strategy means that for products or businesses with [advantages and growth potential], the company extends the depth and breadth of the business along the [vertical or horizontal direction of the business chain], expands the scale of operations, and achieves corporate growth.
Classification
vertical integration
Features
advantage
Enterprises adopting a vertical integration strategy can help save transaction costs in purchasing or selling with upstream and downstream enterprises in the market, control scarce resources, ensure the quality of key inputs, or obtain new customers.
shortcoming
Will increase the company's internal management costs
Main risks
risks associated with unfamiliarity with new business areas;
Vertical integration, especially backward integration, generally involves [larger investment amounts and strong asset specificity], which increases the exit costs of enterprises in this industry.
Classification
forward integration strategy
Purpose
Obtain [ownership] of distributors or sellers or increase [control] over them
advantage
By controlling the sales process and channels, it is helpful for enterprises to control and master the market, enhance sensitivity to changes in consumer demand, and improve the market adaptability and competitiveness of enterprise products.
Applicable conditions
Double height and great ability
The profit margin in the sales process is relatively [high]
The company's existing sellers have high sales costs or poor reliability and are unable to meet the company's sales needs;
The enterprise [has] the funds, human resources, etc. required for forward integration;
The growth potential of the industry in which the enterprise is located is [large];
backward integration strategy
Purpose
Gain ownership or increase control over suppliers
advantage
It is helpful for enterprises to effectively control the cost, quality and supply reliability of key raw materials and other inputs, and ensure the steady progress of enterprise production and operation activities.
Applicable conditions
Double height and difference, great ability, less stable
The profit margin in the supply chain is relatively [high]
The company's existing suppliers have high supply costs or poor reliability and are unable to meet the company's needs for raw materials, parts, etc.;
The enterprise [has] the funds, human resources, etc. required for backward integration;
The growth potential of the industry in which the enterprise is located is [large];
The number of suppliers [is small] and the demand-side competitors are many;
[Stability] of enterprise product prices is very critical to enterprises. Backward integration is conducive to controlling raw material costs, thereby ensuring the stability of product prices.
horizontal integration
definition
Refers to the strategy of enterprises to expand towards the same stage of the industrial value chain (i.e. acquisition, merger or joint competing enterprises)
Purpose
The main purpose is to achieve [economies of scale] to gain competitive advantage
Applicable conditions
Disputing regulations does not mean possessing great power
The industry in which the enterprise is located [competition] is relatively fierce;
The [economy of scale] of the industry in which the enterprise is located is relatively significant;
The horizontal integration of enterprises complies with [anti-monopoly laws and regulations] and can obtain a certain monopoly position in local areas;
The enterprise [has] the funds, human resources, etc. required for horizontal integration
The growth of the industry in which the enterprise is located [has great potential];
intensive strategy
definition
It refers to the strategy of an enterprise to fully utilize the potential of [existing products or services] and strengthen the [competitive position] of existing products or services.
product-market strategy mix (Ansoff matrix)
specific strategies
market penetration
Content and objectives
Emphasis on the development of a single product, trying to gain greater [market share] through stronger marketing methods, and the goal is to increase the [frequency of use] of the product through various methods
methods to achieve goals
Expand insurance
Expand market share
Develop niche markets
maintain market share
Applicable situations
The needle thread is low and low from the ground
When the overall [market is growing], companies that want to increase market share can achieve their goals faster
If a company decides to limit [interests] to existing products or market areas and does not allow sales to decline even if the overall market declines, then the company must adopt a market penetration strategy
If other companies [leave the market] due to various reasons, it is easier to succeed using a market penetration strategy
If a company has a strong market position and can use its experience and capabilities to gain a strong and unique competitive advantage, it is easier to implement market penetration.
The market penetration strategy is also more suitable when the risk of the market penetration strategy is lower, senior management involvement is higher, and less investment is required.
Market Development
Content and approach
The main way to penetrate existing products into new markets is to open up other regional markets and market segments.
Market development strategy reasons
Difficult to combine
Companies find that the nature of the processes used to produce existing products makes it difficult to switch to producing entirely new products, so they look to develop other markets.
Market development is often combined with product improvement.
The existing market or market segment has been [saturated], and companies can only look for new markets.
Applicable conditions
The heart beats the golden ball
Access to [new, reliable, economical and high-quality sales channels];
The enterprise has [excess production capacity];
The existence of untapped or undersaturated markets;
The enterprise is very successful in [existing business fields];
The enterprise has the [funding and human resources] needed to expand operations;
The company's [main business] belongs to a rapidly [globalizing industry]
product development
Content and features
In the original market, new products are developed through technological improvement and development; it can extend the product life cycle and improve product differentiation.
Product Development Strategy Reasons
Xin'an, Liaoning
Make full use of the company’s understanding of the [market];
·Maintain [leading position] relative to competitors;
Seek [new opportunities] from the shortcomings of the existing product portfolio;
Enable enterprises to continue to maintain a solid position in the existing market
Applicable conditions
Full of skills and good looks
The company's products have high [market credibility and customer satisfaction];
The industry in which the enterprise is located is a [high-speed developing high-tech industry] suitable for innovation;
③The industry in which the enterprise is located is in the [rapid growth stage];
④The enterprise has strong [research and development capabilities];
⑤Major competitors offer products of higher quality at similar prices
Diversification
Content and type
content
Refers to an enterprise entering an area that is different from its existing products and markets.
type
Related diversification strategies (Concentric Diversity)
Refers to the strategy of an enterprise to enter related industries or markets based on its existing business or market (Integration Advantage 1 1>2)
unrelated diversification strategy (Centrifugal Diversification)
Refers to a company's strategy of entering an area that is unrelated to its current business and market (the current market is unattractive)
Diversification strategy reasons
Project profit
In existing products or markets [continuing operations cannot achieve the goal]
The business retains funds due to previous successful operations in [existing products or markets] in excess of the funds required for financial expansion in existing products or markets
A diversification strategy means [higher profits] compared to expansion within existing products or markets.
Advantages of diversification strategy
Two branches profit and win honors
[Risk diversification] When existing products and markets fail, new products or new markets may provide protection for the company.
When enterprises cannot grow in the original industry, they find [new growth points].
[Taking advantage of underutilized] resources.
Use【Surplus Funds】
Can more easily obtain financing from capital markets.
Using the company's image and reputation in a certain industry or [a certain market] to enter another industry or market, and obtain funds or other financial benefits in another industry, such as accumulated tax losses.
Diversification strategy risks
The original city's advance and retreat, internal rectification
[Risk from the original business industry].
[Market overall] overall risk.
【Industrial Entry】Risk.
[Industry Exit] Risk.
Internal Operations [Integration Risk]
stabilization strategy
meaning
Also known as the maintenance strategy, it means that within the [business environment and internal conditions], the operating conditions that the company expects to achieve during the strategic period are basically maintained within the scope (referring to the business without adjustments) and levels (referring to various economic indicators) of the strategic starting point. (unchanged)] strategy
Applicable situations
It is suitable for enterprises whose environment in the strategic period [forecast will not change much] and the enterprise has been quite successful in the early stage.
risk
Change to civilization
Once an enterprise [the external environment undergoes major changes], the balance among the enterprise's strategic goals, external environment, and enterprise strength will be lost, and the enterprise will be in trouble.
The stabilization strategy can also easily cause enterprises to "weaken their risk awareness" and even form a corporate culture of fearing and avoiding risks, reducing their "sensitivity and adaptability" to risks.
contraction strategy
definition
Also known as retreat strategy, it refers to the strategy of enterprises to reduce [original business scope and scale]
Reasons for adopting shrinkage strategy
active cause
①The need for strategic reorganization of large enterprises
②Short-term behavior of small businesses
passive cause
External causes
Due to a variety of factors, such as changes in the overall economic situation, industry cycles, etc.
The enterprise (or a certain business of the enterprise) loses [competitive advantage]
Due to the internal operating mechanism of the enterprise, poor decision-making, poor management and other reasons, the enterprise is in trouble and has to take defensive measures.
contraction strategy
Retrenchment and focus strategies (focus on short-term benefits)
Mechanism change
Adjust the corporate leadership team; re-formulate new policies and management control systems, etc.
Finance and Financial Strategy
Strictly control cash flow; debt restructuring; debt-for-equity swaps, etc.
cost cutting strategy
Reduce labor costs, material costs, administrative expenses and assets (internal abandonment or lease, sale and leaseback), etc.; reduce the size of divisions and functional departments
Shift to strategy ([business direction] or change in business strategy)
Reposition or adapt existing products and services
Adjust marketing strategy
Abandonment strategy (involving changes in enterprise (or subsidiary) [property rights])
Special sale and purchase packages (buy new packages)
Franchise
【Split】for shares/split
[Asset swap] and strategic trade
Management and leveraged buyouts
sell out
Subcontract
Difficulties with a contraction strategy
Judgment of enterprise or business conditions
Timing: when to contract
exit barriers
I will make money by withdrawing from my heart
Degree of specificity of fixed assets
exit cost
internal strategic connections
emotional disorder
Government and social constraints (the government opposes or discourages)
Main approaches to development strategy
External development (M&A strategy)
definition
Refers to the strategy for enterprises to seek development through [obtaining external business resources]
Types of mergers and acquisitions
Classified by the industry in which both parties to the merger and acquisition are located (class integration)
horizontal merger
Refers to the acquiring party and the acquired party being in the same industry
vertical merger
Refers to mergers and acquisitions between enterprises that are closely related to their business objects but are at different stages of production and marketing. [Forward M&A and Backward M&A]
Diversified M&A
Refers to mergers and acquisitions between companies in different industries and not closely related in business operations.
Classification according to the attitude of the acquired party
Friendly mergers and acquisitions
Refers to a type of merger and acquisition in which the acquiring party and the acquired party determine the terms of the merger and acquisition through [friendly negotiation] and realize the transfer of property rights when both parties basically agree on the opinions.
hostile takeover
Also called a hostile merger, it usually refers to a type of merger and acquisition in which the acquiring party takes coercive measures to acquire the other party's enterprise regardless of the wishes of the acquired party after friendly negotiations are rejected.
Classified by the identity of the acquirer
Industrial capital mergers and acquisitions
Generally carried out by non-financial companies. The purpose is to obtain [industrial profit]
Financial capital mergers and acquisitions
Generally, acquisitions are carried out by investment banks or non-bank financial institutions (such as financial investment companies, private equity funds, venture capital funds, etc.). The purpose is to obtain [investment profits]
Classification by source of acquisition funds
LBO
During the acquisition, if the acquirer's main source of funds is external liabilities (generally 60%), it will be completed with the support of bank loans or financial market borrowings.
non-leveraged buyout
The acquirer’s main source of funds is its own funds
Motives for mergers and acquisitions
Avoid [entry barriers], enter quickly, [strive for market opportunities and avoid various risks]
Gain synergy
Operation, financial capital, technology, product and market aspects
Overcome corporate [negative externalities], reduce [competition], and enhance control over the market
Reasons for failed mergers and acquisitions
Not complete high risk
poor decision making
Enterprise integration cannot be carried out well after mergers and acquisitions.
Pay [exorbitant M&A fees].
Cross-border mergers and acquisitions face [political risks]
Internal development (greenfield strategy)
definition
Refers to the strategy of an enterprise using [its own internal resources] to seek development
Motives for companies to adopt internal development
I want to add new articles without losing my grace.
The process of developing new products enables companies to gain the deepest understanding of the market and products;
There is no suitable [merger and acquisition target];
Cost of internal development [slower growth rate]
This may be the only reasonable way to achieve true [technological innovation];
Maintain a unified [management style and corporate culture;]
Provide career development opportunities for managers to avoid [stagnation]
Mergers and acquisitions often create hidden or unpredictable [losses], whereas internal developments are less likely to create this;
[Lower risk]. In a merger and acquisition, the acquirer may also have to bear the consequences of the acquired party's previous decisions;
It can be carried out in a planned manner, it is easy to obtain [financial support] from the enterprise, and the cost can be spread over time;
Disadvantages of Internal Development
Hair extension cream
Compared with existing companies in the M&A market, there are [increased competitors] in the market, which may intensify competition within a certain market;
Companies [cannot have access] to other companies’ knowledge and systems, which may be even more risky;
[lack of economies of scale or experience curve] effects from the start;
When the market is developing very fast, internal [development appears too slow];
Entering new markets can involve very [high barriers]
Conditions for application of internal development strategies
No restraint
The industry is in an "unbalanced situation" and structural barriers have not yet been fully established.
The enterprise has the ability to [overcome structural and behavioral obstacles], or the cost to the enterprise of overcoming the obstacles is less than the profit after the enterprise enters.
[Behavioral barriers are easily restricted] by existing companies in the industry.
Strategic Alliance
definition
Refers to a [cooperative relationship] established between two or more business entities in order to [achieve a certain strategic purpose]
Basic characteristics of enterprise strategic alliances
Usually open to each other
[Equality] in mutual exchanges
[Long-term nature of the cooperative relationship]
[Complementarity] of overall interests
Openness of organizational form
Reasons for the formation of enterprise strategic alliances
Improve skills and make new kites
[Reduce coordination costs]
——No integration required (as opposed to mergers and acquisitions
Promote [technological innovation]
—— Share investment
Realize [resource complementarity]
Open up [new markets].
—— Product increase and market expansion
Avoid【Business Risk】
——Information communication
Avoid or reduce [competition].
——Coopetition and avoid excessive competition
Main types of corporate strategic alliances
Equity participation
Joint venture
Mutual shareholding investment
contractual bond
Functional Protocol (Production Acting)
[Technical Exchange] Agreement
——Alliance members exchange technical information with each other and enhance their competitiveness through "knowledge" learning
Cooperation [Research and Development] Agreement
——Share existing scientific research results, jointly use scientific research facilities and production capabilities, and jointly develop new products
[Production and Marketing] Agreement
——Jointly produce and sell a certain product
【Industrial Coordination】Agreement
——Establish an industrial alliance system with comprehensive collaboration and division of labor, which is often seen in high-tech industries.