Global Strategic Market Management (GSM) Malin Brännback Fall/Spring 2004/2005

Course Outline W. 50-51; Dec 7 and Dec.13, Introduction. What is strategy, strategic management, and global market management and what is culture, Culture Questions W. 50-51 Hand-out of assignment on Dec.13 to be prepared for January 11 Hand-out of assignment to prepared for January 18

Course Outline W. 2; January 11 Global Brands – Brand New W. 3-7; Jan. 18-Feb. 15, Strategy Workshop Different Schools, Perspectives, and Tools Articles to be read for each workshop + summaries by you Large assignment to be handed in W.9 Friday March 4 at 15.00 NO EXAM!

Strategy, strategic management

Competence-Based Competition Economic Behavioral Organisational 1940s-50s 1960s 1970s 1980s 1990s General Mgmt (Harvard) Penrose: Theory of the growth of the Firm Game Theory Industrial Org. Economics Industry Structures Strategic Groups Value Chain Analysis Re-engi- neering Resource-based view Core competence Evolutionary Theory Dynamic capabilities Cognitive models Leadership Strategic HRM Business Policy Competence-Based Competition

Strateginen sekamelska. (Prof. Juha Näsi, JYU, 1992, p Strateginen sekamelska.. (Prof. Juha Näsi, JYU, 1992, p. 2, “Liikejohto ja johtajuus, esseitä asioiden ja ihmisten johtamisesta”) “Yksi sankari tulee ja kirjoittaa, että liikeidea on se suuri salaisuus, seuratkaa siis minua! Toinen saapuu paikalle ja yliviivaa liikeideakeskustelun ja väittää, että “mission” ja “creed” ne vasta avainsanoja ovatkin. Ilmestyy kolmas kurssittaja, joka nauraa ja kertoo, että pojat puhuvat puutaheinää: se jokin on johtajan aivoissa ja se jokin on visio eikä mikään “tuuri”. Kunnes lopulta lavalle änkeää viimeisin saarnamies. Hän arvelee, että visiomies on periaatteessa oikeassa, mutta käytännössä väärässä: avain on kyllä aivoissa, mutta ei sen nimi mikään visio ole, vaan agenda se on ja sillä siisti!”

Onko strategia siis kielipeliä? Puhuvatko veijarit samoista asioista eri nimillä vai tietenkin hieman eri asioista samoilla nimillä?? Valitettavasti epäselvyydet eläävät paljon syvemmällä Peruskäsite eli strategia ja käsitteen luonnetta ja olomuotoa - strategian idea - koskevat käsitykset voivat olla peräti erilaisia. Seuraavaksi yksi lääke, jossa on kaksi osaa.

Soitamme siis strategian vellikelloa ja paikalle saapuu 4 ritaria.. 1. Edustaa suurta kansianvälistynyttä monialayhtymää, napauttaa paksua mappia ja toteaa, että siinäpä se - strategia. Mapissa on 457 sivua, se on siisti, täsmällinen ja vakuuttava. Mietimme hetken ja tajuamme, että tämä strategiaidea on eräänlainen tiivistetty kaiku joka toistaa perinteisen amerikkalaisen strategiakäsitteen: “Yrityksen strategia on määritelty kokonaisuus, joka esittelee yrityksen toiminta-ajatuksen, päämäärät ja tavoitteet, paljastaa yrityksen toimintaperiaatteet ja suuntaviivat edellisten saavutta- miseksi, hahmottaa välttämättömän organisaation sekä nimeää yrityksen eri intressenteilleen tuottaman tuloksen” Strategia tarkoittaa siis suunnitelmaa

Den andra ’riddaren’ 2. Tulee toinen ja tokaisee: “Meille koko asia on hyvin yksinkertainen. Me myymme X-maasta tuotuja kodinkoneita Pirkanmaalla. Kuulumme vapaehtoiseen Y-markkinointiketjuun. Tuotteemme ovat pikkuisen yli keskitason laadultaan ja hinta taas pikkuisen alle. Siinä kaikki.” liikeidean käsite, tuote-markkina-ajattelu ja yksinker- taisuuden ylistys Strategia on yhtä kuin reviiri

Den tredje 3. Kolmas on menestynyt yrittäjä, erittäin kokenut teolli- suusneuvos, joka on valtakuntansa omin käsin rakentanut, kunnioitettu ja pelättykin. Hän haluaa neuvoa: “Ei meillä koskaan mitään strategiaa ole ollut, eikä tulla tarvitsemaankaan…Kaikki mitä on tehty, on mietitty tämän tukan alla..On meinaan ollut riittävän kapea tuotesektori.. Ja se osattu viimeisen päälle..Rautainen työnjohto ja luottoyhteydet avainammattimiehiini..Pari hyvää myyntitykkiä, aina ja hyvät suhteet viranomaisiin….” Hänen strategia on ollut jonkinlainen visio, näkemys tai käsitys Strategia on ohjaava maailmankuva

Och den fjärde 4. “No strategia on siis sellainen kokonaishahmo yrityksen toiminnasta, siinä on niinku ajatusta, tilannetta ja toimintaa.. Se siis niinku muuttuu tilanteen mukaan…Voitais ajatella, että se on niinku kanoottimies joella…koskia ja suvantoja… tyyntä ja vuolasta…suoraa ja mutkittelua…ohjaaminen riippuu siitä, mitä on välittömästi edessä ja mitä näkyy sitten vähän kauempana…siis ihan seuraavan mutkaan asti…” Strategia on toimintamallina päätösten jatkuvassa virrassa. Härmäläisittäin soveltaen Mintzbergiläisiä ajatuksia

Lets add and divide with four Strategy is a plan Strategy is area Strategy is guiding worldview Strategy is action model in the con- stant flow of decisions Strategy is Strategy is the plot of the firm’s action(s), the string that pulls together the events

Yrityksen toiminnan juoni, sen tapahtuman punainen lanka Strategy is drama, every business is a stage

Strateginen johtaminen vastaavasti pyrkimystä tuon toiminnan juonen ja punaisen langan käsissäpitämiseen. Monisovitteinen määritelmä: se sopii päätöksentekijän strategiaan, kun mietitään mitä halutaan ja mitä pitää tehdä yrityksen tulevaisuudessa ja sopiihan se myös historijoitsijan strategiaan, kun selvitetään jälkikäteen, mitä todella on tapahtunut.

Näsin strateginen kolmio Tiede miten ja miksi yleisesti ottaen on? Science/Theory Käytäntö miten juuri nyt ja tässä on ja/tai pitäisi olla? Practice Strategointi Oppi mitenkä strategiat yleisesti pitäisi rakentaa ja valita? Knowledge, wisdom, understanding

Strategy, tactics, and operations Strategy; 5 yrs + Tactics; 1-3 yrs Operations; NOW

Mission, Objectives, Strategies, and Tactics/Policies Mission: Top management’s view of what the organisation seeks to do and become over the long term Objectives: Specific performance targets in each of the areas covered by a firm’s mission Strategies: Means through which firms accomplish mission and objectives Tactics/Policies: Actions that firms undertake to implement their strategies

Vision, mission, strategy What are the assessments about the future? For the industry, the com- pany, competitors? Which discontinuities lie ahead? Mission With respect to the visions, what is the mission of our company within the next 5-10 years? Strategy Is about the direction of organisations, most often, business firms. It includes: selection of goals, choice of products, choice of scope and diversity, positioning decisions, design of org. structure and work, etc. Choices with critical influence on success and failure.

Vision Visions from a particular industry are linked with “global visions”. An industry does not exist in a kind of social vacuum What are global visions and how will they affect the industry?

Mission Mission statement is a statement of the company’s strategic intent in the future, fitted with the visions of the industry and the business Mission statement forms the basis of strategy, which is a more detailed declaration of the mission and the visions

What is culture? “se on sitä kun lauletaan ja soitetaan” [next door kid] “no teatteri kyllä on sitä, tai oli anakin ennen Oulua” [man in the street] “culture is science and art” “Icehockey is culture” [voice in the audience] “Rauman giäl on…”[supporter of Lukko] “handcarved boats..”[crafts teacher] “I believe that cultures begin with leaders who impose their own values and assumptions on a group”[Schein]

Deciphering the concept of culture A climate and practices that organisations develop around their handling of people “right kind of culture” or a “culture of quality” - certain values there are better or worse cultures, stronger or weaker (Kotter)

Shared or held in common Observed behavioural regularities when people interact: the language, the customs, the rituals Group norms: implicit standards and values that evolve Espoused values: the articulated, publicly announced principles and values - product quality, price leadership

Shared or held in common Embedded skills: special competencies Habits of thinking, mental models, linguistic paradigms: the shared cognitive frames guiding perception, thought and language used Shared meaning: the emergent understandings “Root metaphors” or integrating symbols

Deciphering culture Why not just: norms, values, beliefs, behaviour patterns, rituals and traditions, etc. Culture has two more dimensions: structural stability patterning Accumulated shared learning History of shared experience

Culture defined “A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.”

Levels of culture Visible structures and processes Strategies, goals, Artefact Strategies, goals, philosophies Espoused Values Unconscious, taken-for granted beliefs, thoughts feelings, perceptions Basic Underlying Assumptions

The levels Artefacts: all we see, hear, and feel, e.g. architecture, language, technology, products, artistic creations, style, emotional displays, manners, etc The problem is that symbols are ambiguous One’s interpretation will be projections of ones own feelings and reactions

The levels Espoused values: require joint action (social validation) enabling observation of outcome Requires a shared basis for determining what is factual and real Cognitive transformation; shared value or belief; shared assumption Espoused values can predict what people will say, it requires prior learning to predict what they will do

The levels Basic assumptions: something becomes treated as reality; theories-in-use Thriving for cognitive stability psychological defence mechanism

Understanding global competition

National competitive advantage Competitive analysis need to focus on a national level The forces influencing an industry should be examined Competitive positions within an industry are important strategic groups The competitive advantage of individual companies have to be taken into account

Determinants of national advantage Firm strategy, structure, and rivalry Factor conditions Demand Related and supporting industries

Porter’s diamond Factor conditions Demand conditions Human resources Physical resources Knowledge resources Capital resources Infrastructure resources Demand conditions Composition of home demand net disposable income The size and growth of home demand How does a nation’s home demand pull the nation’s products into foreign markets

Related and supporting industries & Firm strategy, structure and rivalry Sub-contractors Differences in management styles, organizational skills Capital markets and attitudes toward investments are important

Influences on the development of related and supporting industries A group of domestic rivals encourages the formation of more specialized suppliers as well as related industries Firm strategy, structure, and rivalry Factor conditions Demand Related and supporting industries Specialized factor pools are transferable to related and supporting industries Large or growing home demand stimulates the growth and deepening of supplier industries

Influence on domestic rivalry Factor abundance or specialized factor- creating mechanisms spawn new entrants world-class users enter supplying indutries Firm strategy, structure, and rivalry Factor conditions Demand Related and supporting industries Early product penetration feeds entry New entrants emerge from related and supporting industries

The complete system Chance Firm strategy, structure, and rivalry Factor conditions Demand Related and supporting industries Gov’t

Questions for w. 50-51 Analyse and compare the following organizations website London School of Business and Åbo Akademi University Nokia and Ericsson Raisio Group and Unilever UPM and Stora-Enso What is their vision of their business What is their mission statement? What is their strategy?? Corporate values? –Espoused values

Questions for W. 50-51 How would you apply Porter’s diamond for the Finnish forest industry Finnish mobile telephone market? How would you apply Porter’s diamond for Estonia India Brazil

How would you go about assessing a global market?

Global information needs Economic and competitive environment Technological environment Political environment Regulatory environment Legal environment Social and cultural environment

Key points The execution of global marketing research may differ substantially from the process of domestic research Global market researchers are faced with broader competition, different variables to be considered, and lack of infrastructure Marketers need to learn about various aspects of foreign market environments Underdeveloped communication infrastructure can hinder the information collection process

More key points The global marekt researcher must analyse many national markets, each of which has unique characteristic. However, it is important that data have the same meaning or interpretation the same level of accuracy precision of measurement, and reliability The need of data compatibility in global marketing research gives rise to a number of issues dealing with problem definition data analysis

What kinds of secondary data sources would you use?

Secondary data sources Can be used with minimal effort and cost However, pay attention to how old that data is! Major sources are governments, international organizations, trade associations, directories, and electronic databases Criteria for using secondary data sources are accuracy, availability, timeliness, costs, and comparability

How would you go about primary research in global marketing?

State-of-the-art Identify the research problem Develop a research plan Identify the market opportunity Develop a research plan What do you have to consider? Information worth in €,$, or ¥ What will we gain with this data? What’s the cost of not getting this data IT IS NECESSARY TO DO A COST-BENEFIT ANALYSIS!!

State-of-the-art Collecting data Sampling Analysis Findings survey or interviews or what Sampling Analysis demand pattern analysis income elasticity measurement market estimation by analogy cluster analysis Findings

Terminology MARKET POTENTIAL MARKET AVAILABLE MARKET TARGET MARKET The set of all actual and potential buyers of a product POTENTIAL MARKET The set of consumers who profess a sufficient level of interest in the market offer AVAILABLE MARKET The set of consumers who have interest, income, and access to a particular market offer TARGET MARKET The part of the available market the company decides to pursue MARKET DEMAND The total volume of a product that would be purchased by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program

Segmentation, targeting, and positioning

Assessing the US: Geographic Variables Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Region City or metro size Under 4,999; 5,000-19,999; 20,000-49,999 . . . 1,000,000-3,999,999; 4,000,000 and over Density Urban, rural, suburban Climate Northern, southern

Psychographic segmentation Based on attitudes, values, and lifestyle activities, interests, and opinions Porche: Top Guns, 27% - driven and ambitious, care about power and control, expect to be noticed Elitists, 24% - old money; a car – even an expensive one – not an extension of ones personality Proud patrons, 23% - ownership counts – a trophy, reward for working hard Bon vivants, Cosmopolitan jet setter, thrill seekers Fantasists, 9% - car represents an escape, don’t care about impressing others – even a feeling of guilt

Young&Rubicam’s cross-cultural consumer characterization Attitudes Work Lifestyle Purchase Behaviour ------------------------------------------------------------------------------------------- Resigned Poor Unhappy Labour Shut-in Staple Distrustful Unskilled Television Price Struggling Poor Unhappy Labour Sports Price Dissatisfied Craftsmen Television Discount stores Mainstreamers Happy Craftsmen Family Habit Belong Teaching Gardening Brand Loyal Aspirers Unhappy Sales Trendy sports Conspicuous consumption Ambitious White collar Fashion magazine Credit Succeeder Happy Managerial Travel Luxury Industrious Professional Dining out Quality Transitionals Rebellious Student Arts/crafts Impulse Liberal Health field Special interest Unique products magazines Reformers Inner growth Professional Reading Ecology Improve world Entrepreneur Cultural events Home-made/grown

Global Targeting

Criteria for targeting Basically the same as for a single country current size of the segment anticipated growth potential competition compatibility and feasibility

Key points for global targeting After defining potential global target groups it needs to decide which group to target remember the recipe for failure is to try and please everyone Which is then the most suitable marketing strategy?

New products and services in global marketing

Key questions to ask How big is the market for this product at various prices? What are the likely competitive moves in response to our activity with this product+ Can we market the product through existing structures? If not what changes and what costs will be required to make the changes?

Key questions to ask Given estimates of potential demand for this product at specified prices with estimated levels of competition, can we source the product at a cost that will yield an adequate profit? Does this product fir our strategic development plan? Is the product consistent with our overall goals? Is the product consitent with our available resources? Is the product consistent with our management structures? Does the product have adequate global potential?

Key points New products and services can be: New to the consumer and new to the company (product innovation) New to the consumer but not to the company (product line extention) Not new to the consumer but new to the company (new product duplication)

To test a product or service under actual market conditions before proceeding with full-scale introduction is, in global markets, even more important than in local or national markets