In Chapters 8 and 9, we reviewed several types of global expansion strategies a company can undertake when entering new markets. For this assignment, you will read a case study about Starbucks’ expansion into the Indian market (p. 413 in the textbook) and then respond to, and make decisions, based on the following questions:
- What inspired Starbucks to venture in to India?
- What were some of the company’s early concerns and other obstacles?
- How would you describe Starbucks’ approach to entering India?
- how Starbucks was influenced by cultural differences to adapt its offerings for the Indian market?
- Why did Starbucks want to enter India through a joint venture? Specifically,
- what benefits did Starbucks and the Tara Group both gain by partnering with one another?
- What synergies were present?
- What conflicts occurred and how were they resolved?
- Now, assume the role of the Director of Starbucks’ Indian strategic planning team.
- You have been tasked to explore the benefits and challenges of expansion into foreign countries through joint-venture partnerships.
- Describe the opportunities, benefits, and concerns that Starbucks might face by doing so.
- Summarize the cultural environment, choose an entry strategy from the text, and describe how you would implement this entry strategy. Make sure you are very detailed in your explanation.
should meet the following requirements:
- Be 6 pages in length, which does not include the title page, abstract, or required reference page, which is never a part of the content minimum requirements.
- Use APA (7th ed) style guidelines.
- Support your submission with course material concepts, principles, and theories from the textbook and at least 10 scholarly, peer-reviewed journal articles.
- Please include in the answer Appendix ( Graph or table …)
Writing rules
· Use a standard format for responses to all questions (i.e., an introduction, middle paragraphs, headline (and conclusion).
· Make sure to include all the key points within conclusion section, which is discussed in the assignment. Your way of conclusion should be logical, flows from the body of the paper, and reviews the major points.
· I would like to see more depth for the question
· Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.
· Plagiarism All work must be free of any form of plagiarism.
· Written answers into your own words. Do not simply cut and paste your answers from the Internet and do not copy your answers from the textbook
Zainab Critical Thinking -MGT-672
Question and writing rules
Module 09: Critical Thinking Assignment
In Chapters 8 and 9, we reviewed several types of global expansion strategies a company can undertake when entering new markets. For this assignment, you will read a case study about Starbucks’ expansion into the Indian market (p. 413 in the textbook) and then respond to, and make decisions, based on the following questions:
1. What inspired Starbucks to venture in to India?
2. What were some of the company’s early concerns and other obstacles?
3. How would you describe Starbucks’ approach to entering India?
4. how Starbucks was influenced by cultural differences to adapt its offerings for the Indian market?
5. Why did Starbucks want to enter India through a joint venture? Specifically,
6. what benefits did Starbucks and the Tara Group both gain by partnering with one another?
7. What synergies were present?
8. What conflicts occurred and how were they resolved?
9. Now, assume the role of the Director of Starbucks’ Indian strategic planning team.
10. You have been tasked to explore the benefits and challenges of expansion into foreign countries through joint-venture partnerships.
11. Describe the opportunities, benefits, and concerns that Starbucks might face by doing so.
12. Summarize the cultural environment, choose an entry strategy from the text, and describe how you would implement this entry strategy. Make sure you are very detailed in your explanation.
Required:
Chapters 8 & 9 in International Management: Culture, Strategy, and Behavior
Chapter 8 PowerPoint slides Chapter 9 PowerPoint Slides – Alternative Formats in International Management: Culture, Strategy, and Behavior
“In-Depth Integrative Case Study 3.1: How Starbucks Convinced Indians to Embrace Coffee” (p. 413) in International Management: Culture, Strategy, and Behavior
Ahsan, M., & van Wyk, J. (2018). Going past entry mode: Examining foreign operation mode changes at the strategic business unit level. Journal of Managerial Issues, 30(1), 28.
Recommended:
Al-Tit, A., Omri, A., & Euchi, J. (2019). Critical success factors of small and medium-sized enterprises in Saudi Arabia: Insights from sustainability perspective. Administrative Sciences, 9(2), 32.
Jiang, F., Ananthram, S., & Li, J. (2018). Global mindset and entry mode decisions: Moderating roles of managers’ decision-making style and managerial experience. Management International Review, 58(3), 413-447.
Essay should meet the following requirements:
· Be 6 pages in length, which does not include the title page, abstract, or required reference page, which is never a part of the content minimum requirements.
· Use APA (7th ed) style guidelines.
· Support your submission with course material concepts, principles, and theories from the textbook and at least 10 scholarly, peer-reviewed journal articles.
· Please include in the answer Appendix ( Graph or table …)
Writing rules
· Use a standard essay format for responses to all questions (i.e., an introduction, middle paragraphs, headline (and conclusion).
· Make sure to include all the key points within conclusion section, which is discussed in the assignment. Your way of conclusion should be logical, flows from the body of the paper, and reviews the major points.
· I would like to see more depth for the question
· Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.
· Plagiarism All work must be free of any form of plagiarism.
· Written answers into your own words. Do not simply cut and paste your answers from the Internet and do not copy your answers from the textbook
,
International Management
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Chapter 8
Strategy Formulation and Implementation
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Learning Objectives
Discuss the meaning, needs, benefits, and approaches of the strategic planning process for today’s MNCs
Understand the tension between pressures for global integration and national responsiveness and the four basic options for international strategies
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Learning Objectives (continued 1)
Identify the basic steps in strategic planning, including environmental scanning, internal resource analysis of the MNC’s strengths and weaknesses, and goal formulation
Describe how an MNC implements the strategic plan, such as how it chooses a site for overseas operations
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Learning Objectives (continued 2)
Review the three major functions of marketing, production, and finance that are used in implementing a strategic plan
Explain specialized strategies appropriate for emerging markets and international new ventures
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Pharmerging Markets
Emerging markets hold tremendous growth potential for the pharmaceutical industry
Reason for disproportionate sales growth
Companies will have to increasingly depend on consumers in developing economies to continue to maintain growth
Expanding into emerging markets is accompanied by difficult growing pains
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Indian Drug Markets
Are uniquely positioned for manufacturing
Offer attractive labor costs and skilled workforce
Face issues related to protection of intellectual property, quality and safety, and pricing and profit margin
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Strategic Management
Process of:
Determining an organization’s basic mission and long-term objectives
Implementing a plan of action for pursuing the mission and attaining the objectives
Required to keep track of firms’ increasingly diversified operations in a continuously changing international environment
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Strategic Planning
Helps an MNC coordinate and monitor its far-flung operations and deal with:
Political risk
Competition
Currency instability
Evidence for effectiveness of planning is mixed
Planning does not always result in higher profitability
Specifics will dictate the success of the process
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Approaches to Formulating and Implementing Strategy
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10
Focusing on the economic imperative
Addressing the political imperative
Emphasizing the quality imperative
Implementing an administrative coordination
Economic Imperative
Worldwide strategy based on:
Cost leadership
Differentiation
Segmentation
MNCs sell products for which a large portion of value is added in upstream activities of industry’s value chain
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11
Economic Imperative (continued)
Much of a product’s value is created through research and development, manufacturing, and distribution
Used when a product is regarded as a generic good and does not have to be sold based on name brand or support service
Global sourcing – Useful in formulating and implementing strategy
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Political Imperative
Strategy formulation and implementation utilizing strategies that are country-responsive and designed to protect local market niches
MNCs sell products for which a large portion of value is added in downstream activities of value chain
Success of product/service depends on marketing, sales, and service
Country-centered/multi-domestic strategy is used
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Quality Imperative
Takes two interdependent paths
Change in attitudes and raising of expectations for service quality
Implementation of management practices designed to make quality improvement an ongoing process
Total quality management (TQM)
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Forms of TQM
Cross-train personnel to do jobs of all members in work group
Process reengineering designed to help identify and eliminate redundant tasks and wasteful effort
Reward system designed to reinforce quality performance
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TQM Summarized
Quality – Operationalized by meeting or exceeding customer expectations
Quality strategy – Formulated at top management level and diffused throughout the organization
TQM techniques – Traditional inspection and statistical quality control and cutting-edge human resource management techniques
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Administrative Coordination
MNC makes strategic decisions based on merits of the individual situation
Does not use a predetermined economic or political strategy
Used when rapid, flexible decision making is needed to close the sale
Least common approach to formulation and implementation of strategy
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Global Integration versus National Responsiveness
Global integration
Production and distribution of products and services of a homogenous type and quality on a worldwide basis
National responsiveness: Need to:
Understand different consumer tastes in segmented regional markets
Respond to different national standards and regulations imposed by autonomous governments and agencies
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18
Basic International Strategies
International strategy: Mixed strategy combining low demand for integration and responsiveness
Multi-domestic strategy: Differentiated strategy emphasizing local adaptation
Global strategy: Integrated strategy based primarily on price competition
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Basic International Strategies (continued)
Transnational strategy: Integrated strategy emphasizing both global integration and local responsiveness
Appropriateness of each strategy depends on pressures for cost reduction and local responsiveness in each country served
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Steps in Formulating Strategy
Scanning the external environment for opportunities and threats
Conducting an internal resource analysis of company strengths and weaknesses
Formulating goals in light of the external scanning and internal analysis
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Environmental Scanning
Provides management with accurate forecasts of trends
Related to external changes in geographic areas where the firm is doing business or considering setting up operations
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Environmental Scanning (continued)
Changes:
Relate to environmental factors that can affect the company
Include the industry or market, technology, regulatory, economic, social, and political aspects
Central to discovering if an MNC can survive in a particular region
Effective only when it is done consistently
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Internal Resource Analysis
Helps firms evaluate their current managerial, technical, material, and financial resources and capabilities
To better assess their strengths and weaknesses
Determines firms’ ability to take advantage of international market opportunities
Identifies key success factors (KSF) that will dictate how well a firm is likely to do
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24
Goal Setting
Precedes the first two steps of environmental scanning and internal analysis
More specific goals for strategic plan come from external scanning and internal analysis
Areas for formulation of MNC goals
Profitability, marketing, operations, finance, and human resources
Profitability and marketing goals top the plans and tend to be more externally environmentally responsive
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Strategy Implementation
Process of providing goods and services in accord with a plan of action
Includes:
Consideration of location for implementation
Execution of entry and ownership strategies
Implementation of functional strategies in marketing, production, and finance
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Considerations in Selecting a Country
Advanced industrialized countries that offer large markets for goods and services
Amount of government control and restrictions on foreign investment
Specific benefits offered by host countries
Low tax rates, rent-free land and buildings, low-interest or no-interest loans, subsidized energy and transportation rates, and good infrastructure
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Considerations for Choosing a Specific Locale
Access to markets
Proximity to competitors
Availability of transportation and electric power
Desirability of location for employees coming in from outside
Nature of workforce
Cost of doing business
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Frontier Markets
Unique subset of emerging economies
Less correlated to ups and downs of the global economy
Offer potentially high rewards, but with high risk
Business initiatives require careful strategic considerations
Potential strategy – Joint-venture with a local company with cultural knowledge of the market
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Role of Marketing in Implementation
Strategy implementation must be determined on a country-by-country basis
May be dictated by the overall strategic plan, which is based on market analysis
Marketing strategy involves four Ps
Product
Price
Promotion
Place
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Role of Production in Implementation
Production traditionally has been handled through domestic operations when exporting goods to foreign markets
Recent trends
Consideration of worldwide production
Global coordination of operations
Farming the product out to low-cost sites
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Role of Production Finance in Implementation
Transferring funds or borrowing funds in international money markets is less expensive than relying on local sources
Issues
Reevaluation of currencies
Inherent risk of volatile monetary exchange rates
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Specialized Strategies
Strategies for developing and emerging markets
Strategies for international entrepreneurship and new ventures
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Strategies for Emerging Markets
MNCs are increasingly focusing on emerging economies
Foreign direct investment (FDI) flows into developing countries
Emerging markets present exceptional risks due to political and economic volatility
Corruption
Failure to enforce contracts
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Strategies for Emerging Markets (continued)
Red tape and bureaucratic costs
General uncertainty in legal and political environment
Types
First-mover strategies
Strategies for the base of the pyramid
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First-Mover Strategies
First-mover or early-entry positioning – Being the first or one of the first to enter a market
Capturing learning effects important for increasing market share
Achieving scale economies that accrue from opportunities for capturing that greater share
Developing alliances with the most attractive local partner
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First-Mover Strategies (continued)
Privatization supports the competitive effects of first-mover positioning
First movers who succeed in taking over newly privatized state-owned enterprises possess a significant advantage over later entrants
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Strategies for Base of Pyramid (BOP)
Strategy targeting low-income customers in developing countries
BOP forces companies to consider smaller-scale strategies
Ideal for incubating new, leapfrog technologies that reduce environmental impacts and increase social benefit
Business models can travel profitably to higher-income markets if successful
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Strategies for Base of Pyramid (BOP) (continued)
Challenging to implement – Companies must:
Offer affordable goods that are highly available in a community that is willing to accept the product
Bring awareness of the product to the general populace
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International Entrepreneurship
Combination of innovative, proactive, and risk-seeking behavior
Crosses national borders and is intended to create value in organizations
Innovative firms tend to grow faster when they internationalize earlier
Venture performance is improved by technological learning gained from international environments
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40
Born-Global Firms
Firms that engage in significant international activity a short time after being establi
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