Guide to creating and executing a global strategy

Since 2003, Forbes has published the Global 2000, a list that ranks the largest public companies worldwide by the following four metrics: sales, profits, assets and market value.  Studying this ranking  and its associated company profiles, like which corporation is No. 1 this year, who’s new to the list, or which companies have dropped off, are a great way to start designing a successful multinational corporation.   

The top 100 companies cover a wide range of sectors, including oil and gas, technology, banking and finance, automotive, telecommunications, pharmaceuticals, mining and food and beverage.  The 2,000 companies in on the 2022 list come from 58 countries, but nearly three-fourths are based in  just 10 countries . The U.S. and China remain the countries with the most listed companies, followed by Japan, South Korea, Canada and the United Kingdom. 

All of these 2,000 companies  global businesses with facilities, suppliers, employees and other assets in at least one country other than their home country. Large multinational companies (MNC) have several advantages over other companies, most of which come with just being big. Labor concerns, supply issues and regulatory problems are all easier to deal with if a company has bases in more than one country.

Affordable and reliable communication technology may be the most important factor that makes it easier for companies to operate in other countries is Consider Walmart with its 5,100 stores and 550,000 staffers in 23 countries outside the U.S. Walmart also sources its products from more than 100 different countries. 

Face-to-face communication is as important for sensitive discussions or avoiding cultural faux pas in a multinational corporation as it is in a small local business. Ensuring employees and customers understand a corporation’s global strategy and their roles in its execution takes an extremely fine-tuned level of focus and understanding from the top down.

Short story about the long history of global business

Global business refers to international trade, whereas a global business is a company doing business across the world. The exchange of goods over great distances goes back a very long time. 

Anthropologists have identified long-distance trading in Europe in the Stone Age. Maritime trade, or business across the seas, dates back before Greek civilization. These would not be defined as “global” trade, but they had the same goals – to reach beyond homelands and across the world to find new markets and resources. 

The British East India Company, established in 1600, and the Dutch East India Company, begun in 1602, were the two earliest global companies. As government-chartered organizations, they were part-business, part-government. Their goals were two-fold; to accumulate capital, often by using natural resources and labor in the new locations, and establish colonial empires. 

At the end of the 19th century, another type of global business emerged, and the multinational corporation (MNC) was born.  

The first MNCs in the modern world were also searching for natural resources, locations where production was directly linked to the land. Many of today’s mining and agricultural companies date back more than 100 years and still rank among the world’s largest global companies. 

In fact, Exxon Mobil Corp., No. 15 on Forbes 2000,  was founded by John D. Rockefeller in 1882. 

International strategies: Multiple structure options 

International business organizations face choices regarding resource allocation, the balance of authority between the central office and business units and the degree to which products and services are customized to accommodate the tastes and preferences of local markets. 

Every country is different, and so are the cultures, expectations and needs of the people who live there. What might work in one country could be a huge failure in another. Yet some companies are so large and their products and services so pervasive that they can succeed even if they make very few, if any, adjustments in a new country.   

Usually, an MNC is a very large company possessing subsidiaries in several countries, and its organization, production and sales strategies are conceived on a global scale. M any companies choose entirely different methods and structures for their international expansion. Multinational corporations choose from these three basic strategies: 

  • International strategy : This is u sually the first type of international expansion for a business, focusing on imports and exports and maintaining a head office or offices in their home country. This is a common model for companies selling food or wine, or other products with regional appeal. An example of this strategy is Moet & Chandon, which sells champagne around the world, growing every grape in France.
  •   Multi-domestic strategy :    Rather than using one global brand, multidomestic strategy creates many smaller, country-specific brands tailored to local tastes, its customers and local environment.  The Swiss-owned candy company Nestle owns more than 2,000 companies including Gerber, Purina, Perrier, Lean Cuisine and Toll House. Nestle sells in over 186 countries, where each carries a selection of brands designed to match the local market.
  • Global strategy : A firm using this strategy may make some  minor modifications to products and services in various markets. Still, the objective is to gain economies of scale by offering the same products or services in each market. Microsoft, for example, offers the same software programs around the world but adjusts the programs to match local languages. KFC, Coke and Apple sell the same products with consistent branding in overseas markets.
  • Transnational strategy:  When employing a transnational strategy, the goal is to combine elements of global and multi-domestic strategies, to balance the goal of efficiency and adjusting to meet the needs of local markets. Firms using a transnational approach make some concessions for local tastes. For example, you can buy wine in addition to fast food at McDonald’s in France. 

Developing an international business strategy

It’s time to expand your business. You’ve already got some feelers in international waters but aren’t entirely sure how to set things up.  Global markets offer opportunities for new markets, expanded brand recognition or potential partnerships.

Before a company gets too far into a new market, it is important to step back and answer some questions that will help determine what type of business strategy makes the most sense at this stage. Here are  eight steps  articulated by Global Expansion, an international employment firm:

  • Research your market Seek out multiple sources of information, trying to make local contacts. And don’t neglect researching the local regulatory environment.   
  • Decide on what you’re bringing to the market Be clear about what you are selling and how your products fit into the local market.  
  • Set your goals Set specific goals about market share, sales numbers, cost-efficiency and customer growth. Develop sales goals for multiple years.  
  • Make a note of any competition Research local competition to further understand potential markets.  
  • Develop the finer points of your strategy Think hard about who you’ll hire, how your business can navigate financial regulations and what an overseas market means for marketing.  
  • Evaluate your infrastructure Audit your current business capabilities. Examine the team needed to carry out expansion.  
  • Create a system for distribution Explore your options for franchising, licensing and regulatory requirements.  
  • Consider a partner or consultant Explore putting a management team together on the ground to help expand your operation.

Executing your international business strategy

Recognize that your global business strategy will be a living document. Initial plans and goals that take shape through focused due diligence are subject to change once you set up shop across international boundaries. Remember to be flexible. 

As you move into new markets, keep these goals and visions in mind:

  • Partner with someone who understands the laws and regulations in your new market.
  • Explore pros and cons internally and make sure you have stakeholder buy-in.
  • Get to know your international customers; learn how you have a competitive advantage.
  • Become familiar and comfortable with the new culture.
  • Prepare a solid global marketing plan to support international growth and strategic goals.

Learning customs, culture, values 

“International” is a term that is so broad and unspecific that it can be near meaningless in establishing a growth strategy.

Business strategist Lowell Aplebaum recommends that entrepreneurs take a specific approach to creating a global strategy. It’s important to take the time to break down the regions, countries or communities that are in closest alignment to the offered service or product. Aplebaum, CEO of Vista Cova, suggests taking the time to determine how you will be able to fill a unique need in the new locale. “From there, a global growth strategy can be stepped and piloted with intent,” Aplebaum says.  

When expanding into international markets, it is important for entrepreneurs to understand the cultural differences in those markets and adapt their business plans accordingly. A business that is successful in the United States, for instance, might not be successful in Nairobi because the cultural norms in those countries are very different.

Cross-cultural environments require business leaders to understand diverse cultural, political and business customs.  Perhaps the most important thing to keep in mind while your business moves into new markets is culture, what we at  Thunderbird call a Global Mindset . 

Whether you’re an international executive or a student, developing a Global Mindset will help you thrive in global enterprises and beyond. At Thunderbird, leadership development is a fundamental aspect of our curriculum, and we help students and executives become better leaders. Here are a few of our programs geared toward future and current leaders: 

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International Business Strategy

Due to increasing globalisation the past decades, even smaller companies have been able to cross national borders and do business abroad. Consequently, many terms have been given to companies operating in multiple countries: multinationals, global businesses, transnational companies, international firms et cetera. The aim of this article is to clearly define these different terms and see how they differ from each other, because they do differ! An often used framework to distinguish multiple forms of internationally operating businesses is the Bartlett & Ghoshal Matrix (1989). Bartlett and Ghoshal clustered these businesses based on two criteria: global integration and local responsiveness . Businesses that are highly globally integrated have the objective to reduce costs as much as possible by creating economies of scale through a more standarized product offering worldwide. Business that are highly locally responsive have as extra objective to adapt products and services to specific local needs. It seems that these strategic options are mutually exclusive, but there are companies trying to be both globally integrated and locally responsive as can be seen in some examples below. Together these two factors generate four types of strategies that internationally operating businesses can pursue: Multidomestic , Global , Transnational and International  strategies.

Figure 1: Bartlett and Ghoshal’s Typology of Multinational Companies: Global, Transnational, International and Multidomestic Strategy

Multidomestic: Low Integration and High Responsiveness

Companies with a multidomestic strategy have as aim to meet the needs and requirements of the local markets worldwide by customizing and tailoring their products and services extensively. In addition, they have little pressure for global integration. Consequently, multidomestic firms often have a very decentralized and loosely coupled structure where subsidiaries worldwide are operating relatively autonomously and independent from the headquarter. A great example of a multidomestic company is Nestlé. Nestlé uses a unique marketing and sales approach for each of the markets in which it operates. Furthermore, it adapts its products to local tastes by offering different products in different markets.

global strategic planning process international business

Global: High Integration and Low Responsiveness

Global companies are the opposite of multidomestic companies. They offer a standarized product worldwide and have the goal to maximize efficiencies in order to recude costs as much as possible. Global companies are highly centralized and subsidiaries are often very dependent on the HQ. Their main role is to implement the parent company’s decisions and to act as pipelines of products and strategies. This model is also known as the hub-and-spoke model. Pharmaceutical companies such as Pfizer can be considered global companies.

Pfizer | Medische Informatie | Netherlands

Transnational: High Integration and High Responsiveness

The transnational company has characteristics of both the global and multidomestic firm. Its aim is to maximize local responsiveness but also to gain benefits from global integration. Even though this seems impossible, it is actually perfectly doable when taking the whole value chain into considerations. Transnational companies often try to create economies of scale more upstream in the value chain and be more flexible and locally adaptive in downstream activities such as marketing and sales. In terms of organizational design, a transnational company is characterised by an integrated and interdependent network of subsidiaries all over the world. These subsidiaries have strategic roles and act as centres of excellence. Due to efficient knowledge and expertise exchange between subsidiaries, the company in general is able to meet both strategic objectives. A great example of a transnational company is Unilever.

Unilever logo

International: Low Integration and Low Responsiveness

Bartlett and Ghoshal originally didn’t include this type in their typologies. Other authors on the other hand have attributed the name to the lower left corner of the matrix. An international company therefore has little need for local adaption and global integration. The majority of the value chain activities will be maintained at the headquarter. This strategy is also often referred to as an exporting strategy. Products are produced in the company’s home country and send to customers all over the world. Subsidiaries, if any, are functioning in this case more like local channels through which the products are being sold to the end-consumer. Large wine producers from countries such as France and Italy are great examples of international companies.

Figure 2: Organizational structures of the Bartlett and Ghoshal’s MNC Typology: Global, Transnational, International and Multidomestic Strategy

Table 1: Characteristics of MNC Types (Multidomestic, Global, Transnational) – Bartlett and Ghoshal

MNE Archetypes of Administrative Heritage

Bartlett and Ghoshal are not the only academics who have been trying to classify internationally operating companies. Verbeke (2013) has looked at a large number of multinational enterprises (MNE’s) and their administrative heritage, and distinguished four archetypes of MNE’s: Centralized Exporter, International Projector, International Coordinator and the Multi-centred MNE. Each will be elaborated on below.

Centralized Exporter

The centralized exporter is a home-country managed firm that trades and sells products internationally. In this case, most production facilities are located in the home country and foreign subsidiaries, if any, are functioning largely as facilitators for efficient home country production. Products are standarized and only minor customer-oriented activities are done abroad. The centralized exporter is very close to an international or global company in Bartlett and Ghoshal’s typology.

International Projector

The second archetype is the international projector. These kind of companies build upon a tradition of transferring its proprietary knowledge, which was developed in the home country, to foreign subsidiaries across the globe. These subsidiaries are essentially clones of the home operations, since the business model and its success recipe are simply copied and pasted abroad. The automotive company Ford is known for this strategy in its early days in the 1900s. Disneyland is another great example of a successful business model that has been copied all over the world.

International Coordinator

The international coordinator does not only rely on knowledge and resources from its home country as could be seen in the two archetypes above. Instead the international coordinator manages international operations both upstream and downstream the value chain through a tightly-controlled but still flexible logistics function. They tap into location advantages from multiple countries in order to form an efficient vertical value chain across borders. It is therefore perfectly possible that the raw materials are bought and manufactured in multiple countries and that the product is being assembled elsewhere where labor is cheapest. A good example of an international coordinator is Apple. The components of Apple’s flagship product, the iPhone, are bought from multiple suppliers all over the world and are finally assembled in China. Design and marketing on the other hand are still largely done in California where Apple is headquartered.

Apple logo

Multicentred MNE

Finally, the multicentred MNE consist of a set of entrepreneurial subsidiaries abroad. Local responsiveness is the foundation of this company’s strategy. The only thing that holds these firms together are the shared financial governance and the identity and interests of the founding fathers and owners of the company. Ultimately the multicentred MNE should be viewed as a portfolio of largely autonomous and independent businesses. Bartlett and Ghoshal’s multidomestic strategy is most closely associated with this archetype. Philips is known for using this approach in the early years of its existance.

Philips logo

Figure 3: MNE Archetypes of Administrative Heritage (Verbeke, 2013): Centralized Exporter, International Projector, International Coordinator and Multi-centred MNE

International Business In Sum

Taken this all together, there are many ways in which companies can do business abroad. When a firm has economic operations located in at least two countries, they are often referred to as multinational enterprises or companies (MNE’s or MNC’s). But the way in which they do business abroad determines whether we can call it an international, global or transnational company for instance. By being aware of these different types of multinationals, you will be better able to structure your own strategic options when going global. In case you want to know more about foreign market entry options, you might want to read more about the  OLI paradigm .

Further Reading:

  • Bartlett, C.A. & Ghoshal, S. (1989). Managing Across Borders. The Transnational Solution. Boston: Harvard Business School Press.
  • Harzing, A.W. (2000). An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational Companies. Journal of International Business Studies.
  • Verbeke, A. (2013). International Business Strategy. Cambridge University Press.

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4 thoughts on “ International Business Strategy ”

GOOD ENOUGH FOR YOUNG BUSINESS MEN AS ME

Well done and informative. This helped me understand the terms better. Thanks.

Amazing article, brought clarity to all sub types, along with examples. Thank you for this.

The content was very informative and understandable. The examples used made it practical. Nice piece!

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What Is Global Strategic Planning?

Global strategic planning is the processes of examining a multinational organization’s internal and external environments to develop its strategic plan. By looking at the internal environment, the business is able to leverage its strengths and overcome its weaknesses. In evaluating its external environment, the business examines the political, environmental, social and technological events that can offer it opportunities or become potential threats. Multinational organizations that do not go through the global strategic planning processes are more likely to face unexpected challenges and be unprepared to compete with competitors in new international markets .

One major aspect of the global strategic planning process is conducting an internal audit to find out the business’s strengths and weaknesses. While this may seem unnecessary, a business may find that it does not have the structure or technology to support its efforts of competing in the international marketplace. It may have to create additional departments, hire more human resources , or invest in new technologies. By having an outside organization analyze its current business processes, the business can gain a fresh perspective of its situation. This internal audit includes looking at a company's human capital , technology, structure, communication methods and policies.

Multinational organizations that do not use global strategic planning processes may be unprepared to compete with competitors.

External audits are another major aspect of the global strategic planning process and are especially crucial for competing in international markets. Multinational businesses may find that new markets include political, environmental, social and technological challenges that it has not faced before. For instance, political instability can result in loss from currency value, environmental policies can require changing a product design, social norms may cause locals to reject the product, and technological support may not be readily available within the country. Any of these situations can result in business failure if a proper strategic plan is not in place.

It is important for a business to research international markets before entering them.

Avoiding the global strategic planning process can be disastrous for multinational organizations, since they will most likely be unprepared to handle any obstacles or challenges that will arise. It is important for a business to research international markets before entering them, so that it can compete effectively against local competitors and be aware of the social customs and regulations. For example, locals may not purchase from an international company, because they believe it has taken jobs away from their neighbors and will be taking money out of the country. A company can prepare for this reaction in advance by hiring locals and releasing marketing campaigns about how it will be investing a portion of its profits into the local community.

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Multinational organizations that do not use global strategic planning processes may be unprepared to compete with competitors.

How to Develop an International Business Strategy

International expansion is the next step for many businesses looking to grow and are in the position to do so. Global markets offer new opportunities for increased customer retention, new distribution channels and improved worldwide brand recognition. 

However, it’s difficult to know where to begin with this exciting and important decision. To help you develop an international business strategy, explore our recommended steps below.

Research Your Market

Decide on what you’re bringing to the market, set your goals, make a note of any competition, develop the finer points of your strategy, evaluate your infrastructure, create a system for distribution.

  • Consider a Partner or Consultant

Your organization should already have some idea of the location it would like to expand into. This has possibly come from discovering market potential related to the location or you've found a market need you can capitalize on. 

If not, consider several markets. There are many options for market research available to you. For example, the International Trade Administration has developed a resource known as the Country Commercial Guides . This is a valuable resource for analyzing market opportunities and conditions around the world. 

Seek out multiple sources of information, but also realize remote research is never enough. If you can, attend trade shows in those target markets for research purposes. This also allows you to make local contacts and get to grips with the local culture a little better. This kind of bespoke understanding will allow your organization to further develop its product offering within that market.

Finally, don’t neglect to research the local regulatory environment. It's crucial and will ensure a greater chance of continued success later in your expansion process.

Decide on what your business is selling and determine what makes your company worth buying from. Does your product or service stand out? Is your business model easily distinguishable from similar ventures?

Determine which of your products or services fit well within the new market. If you only have one product, this is a very simple step. But if you have many, you need to decide which ones fit the market's needs. Also, do those products fit the culture as well? Having this knowledge beforehand will help your chances of success.

Now your organization has decided on a product or service and you’ve researched your market, you can use these to begin setting your goals. What do you want to achieve? How many products do you want to sell over a specific period? Your goals must be incredibly specific as they'll be the framework to chart your growth by. For example, you could aim for:

  • A specific market share.
  • Sales numbers.
  • Greater profitability.
  • Improved cost-efficiency.
  • Customer retention and growth.

Develop sales goals for year one, year two and so on. Also, consider the time it takes to get to market and the time to meet your first few goals. You also need to calculate when you’ll hopefully see a return on your investment.

Local competitions can make or break your expansion process. Without thorough research, you’ll fly blind through unfamiliar territory. Competition lets you see what works within a market and then improve upon it. 

Researching competition is also one of the best ways of understanding a market because the business models and offerings of healthy competition help to define a market or industry.

Consider any marketing campaigns that will be run side-by-side. Similarly, also plan for the following:

  • Whether you'll hire overseas or expatriating current employees.
  • Establishing either a physical presence or another type of expansion option, such as an in-country partnership (ICP) or a merger or acquisition.
  • Any financial regulations that apply to the market in question.
  • How you'll manage your employees overseas.

Think about your branding as well. Will your organization want to keep it consistent or change it to fit within specific markets that may have distinct cultural differences?

A key part of developing an international business strategy is to audit your business capabilities at this moment in time. First of all, determine how financially viable an expansion is for you right now. 

If you’re pursuing an international expansion strategy in-house, create a team ready and willing to carry the strategy through to fruition. This group needs the skills and collaborative experience to support the process fully. On top of this, determine your failsafe plans. If something goes wrong, do you have an exit strategy or a way of mitigating financial risk?

Finally, when evaluating infrastructure, analyze how effective your business technology is and whether it will hinder your expansion process. Many issues could cause this, such as limited real-time data, lack of visibility or siloed software systems unable to talk to one another.

The absence of an innovative digital structure can slow an expansion process down or stop it altogether. 

How will your business distribute its products or services within the new market? This could come under the remit of franchising or licensing arrangements, but those aren’t the only methods. You could also sell through in-country distributors or simply through an e-commerce website. 

You could even sell your intellectual property (IP) rights to another business. Each of these comes with its own regulatory guidelines, so you’ll need to further research what will apply as each method comes with advantages and disadvantages.

Consider A Partner or Consultant

When pursuing international expansion, it’s always wise to consider working with a global expansion consultancy or a Global Professional Employer Organization (PEO). These experts help to ease the stress of global expansion, ensuring compliance and enhancing your regulatory knowledge of a market or locale. 

Not only that, but they can also help you to make the most of global talent acquisition and manage your HR processes, freeing up your team for more business-critical tasks. For example, here at Global Expansion, we can get your business set up in no less than 140 countries around the world within days.

They’ll take care of all your HR-related tasks involved in your business strategy, ranging from finding and screening the most talented employees to managing payroll in one centralized platform.

We realize global expansion is an important thing to get right and this blog only covers one aspect of the process. If you’re looking for a more in-depth look at expansion, read on to discover what our latest helpful guide can offer.

Discover More Expansion Considerations

Our latest guide is a fantastic starting resource for businesses of all types. Inside, you’ll find the various methods of growth, the differences between national and international expansion as well as how to mitigate risk within bringing your business into a new environment.

Plus, there's much more that will guarantee you a good foundation of knowledge for beginning your expansion process. Not only compliantly but also successfully.

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Chapter 7: Competing in International Markets

Types of International Strategies

Learning Objectives

  • Understand what a multidomestic strategy involves and be able to offer an example.
  • Understand what a global strategy involves and be able to offer an example.
  • Understand what a transnational strategy involves and be able to offer an example.

A firm that has operations in more than one country is known as a multinational corporation (MNC) . The largest MNCs are major players within the international arena. Walmart’s annual worldwide sales, for example, are larger than the dollar value of the entire economies of Austria, Norway, and Saudi Arabia. Although Walmart tends to be viewed as an American retailer, the firm earns more than one-quarter of its revenues outside the United States. Walmart owns significant numbers of stores, as of mid-2014, in Mexico (2,207),  Brazil (556), Japan (437), the United Kingdom (577), Canada (390), Chile (386), Argentina (105), and China (400). Walmart also participates in joint ventures in China (328 stores) and India (5). Even more modestly sized MNCs are still very powerful. If Kia were a country, its current sales level of approximately $42 billion (in 2012) would place it in the top 75 among the more than 180 nations in the world (Wal-Mart Stores Inc., 2014).

Multinationals such as Kia and Walmart have chosen an international strategy to guide their efforts across various countries. There are three main international strategies available: (1) multidomestic, (2) global, and (3) transnational ( Figure 7.23 “International Strategy” ). Each strategy involves a different approach to trying to build efficiency across nations while remaining responsive to variations in customer preferences and market conditions.

Multidomestic Strategy

A firm using a multidomestic strategy  sacrifices efficiency in favor of emphasizing responsiveness to local requirements within each of its markets. Rather than trying to force all of its American-made shows on viewers around the globe, MTV customizes the programming that is shown on its channels within dozens of countries, including New Zealand, Portugal, Pakistan, and India.

Similarly, food company H. J. Heinz adapts its products to match local preferences. Because some Indians will not eat garlic and onion, for example, Heinz offers them a version of its signature ketchup that does not include these two ingredients.

Global Strategy

A firm using a global strategy   sacrifices responsiveness to local requirements within each of its markets in favor of emphasizing efficiency. This strategy is the complete opposite of a multidomestic strategy. Some minor modifications to products and services may be made in various markets, but a global strategy stresses the need to gain economies of scale by offering essentially the same products or services in each market.

Microsoft, for example, offers the same software programs around the world but adjusts the programs to match local languages. Similarly, consumer goods maker Procter & Gamble attempts to gain efficiency by creating global brands whenever possible. Global strategies also can be very effective for firms whose product or service is largely hidden from the customer’s view, such as silicon chip maker Intel. For such firms, variance in local preferences is not very important.

Transnational Strategy

A firm using a transnational strategy  seeks a middle ground between a multidomestic strategy and a global strategy. Such a firm tries to balance the desire for efficiency with the need to adjust to local preferences within various countries. For example, large fast-food chains such as McDonald’s and KFC rely on the same brand names and the same core menu items around the world. These firms make some concessions to local tastes too. In France, for example, wine can be purchased at McDonald’s. This approach makes sense for McDonald’s because wine is a central element of French diets.

Key Takeaways

  • Multinational corporations choose from among three basic international strategies: (1) multidomestic, (2) global, and (3) transnational. These strategies vary in their emphasis on achieving efficiency around the world and responding to local needs.
  • Which of the three international strategies is Kia using? Is this the best strategy for Kia to be using?
  • Identify examples of companies using each of the three international strategies other than those described above. Which company do you think is best positioned to compete in international markets?

Standard & Poor’s Ratings Services. (2014).   Stock report on Walmart .  Retrieved from http://www.standardandpoors.com/ratings/en/us?rpqSearch=NO&pageNav=No&searchText=Walmart%20stores%20Inc.&searchField=Entity

Wal-Mart Stores Inc.  (2014).  Our Locations.   Retrieved from http://corporate.walmart.com/our-story/our-business/locations/

Image description

Figure 7.23 International Strategy

“What’ for dinner?” is a question Of interest to folks Of nations. The answer depends, in some part, on the international strategy of the corporations that provide foods, drinks, and condiments worldwide. Firms choose between the potential trade-offs between efficiency in production/distribution and responsiveness to local market preferences. Below we provide examples of how a firm’s decision may provide some answers to how you might fill your belly.

Return to Figure 7.23

Media Attributions

  • Figure 7.23: Attribution information for all included images is in the chapter conclusion.
  • Curry-Beanz © Gordon Joly is licensed under a CC BY-SA (Attribution ShareAlike) license

A firm that has operations in more than one country.

To sacrifice efficiency in favor of responsiveness to varying preferences across countries.

To sacrifice responsiveness to local preferences in favor of efficiency.

Involves balancing the desire for efficiency with the need to varying preferences across countries.

Mastering Strategic Management - 1st Canadian Edition by Janice Edwards is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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The Art of Going Global pp 131–153 Cite as

Strategic Decisions in International Business

  • Olga E. Annushkina 3 &
  • Alberto Regazzo 4  
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Reasoning about internationalization strategy starts with defining the key business units of your firm—as we have seen in other chapters of this book, many internationalization decisions are specific to industries, and even to types of products and services. Decisions about internationalization strategy concern both the corporate level and the level of the business unit. Three “classical” internationalization strategy models selected for this chapter—the OLI paradigm of Professor J. Dunning, the AAA framework of Professor P. Ghemawat and the adaptation/global coordination decisions approach of Professors C. Bartlett and S. Ghoshal—deal with decisions taken at both levels. Internationalization decisions are taken in conditions of uncertainty. Therefore, we recommend organizing the process of defining internationalization strategy around real strategic options (investments that create opportunities to respond to future contingent events) and using effectuation principles (that is, decisions are made only if we can afford to be wrong), and even some elements of military planning, such as alternative courses of action and the crystal ball technique. We also suggest that you reflect, drawing on the ideas of Professors H. Mintzberg and J. Waters, on whether your firm’s strategy in global markets is deliberately chosen or created ad hoc as a reaction to external events; likewise, whether your strategy positioning on the continuum of planned, entrepreneurial, umbrella, process, consensus, imposed, ideological and unconnected strategies is an intentional one. Awareness of your personal cognitive biases is the final piece in the puzzle, as we discuss overconfidence, false positives and false negatives in the evaluation of a project; the availability, anchoring and representativeness biases; the gambler’s fallacy, focalism and impact bias; the planning fallacy, framing, confirmation and blind-spot biases; and the endowment effect.

  • Internationalization
  • Globalization
  • Firm growth
  • Multinational corporations
  • Business strategy

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Annushkina, O.E., Regazzo, A. (2020). Strategic Decisions in International Business. In: The Art of Going Global. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-21044-1_7

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Building a Global Strategy for Your Business

Want to expand your business internationally? A global strategy means building market dominance without sacrificing what makes your brand unique. See how successful companies focus on standardization to build market share and brand awareness worldwide.

Yext

No matter where in the world you live, you’ve probably experienced or heard of some of the top global brands like Apple or Amazon. Whether you’re interacting with these companies in Canada or Cambodia, your experience is more similar than it is different in terms of products, website, mobile app, and look and feel.

That’s because these companies employ a global strategy as their model for international expansion — one that prioritizes standardization across different markets.

For many companies, a global strategy is the endgame. It means you’ve “made it” because you don’t have to worry about the whims of specific market pressures or competition — you’ve grown to the point where that doesn’t matter. Here’s what a global strategy looks like in practice.

What is a global strategy?

With a global strategy, the world is your market .

Rather than approaching each country as its own market with different tastes and preferences, companies employing globalization standardize as many elements as possible, including colors, messaging, and operational models. As a result, the top global brands are instantly recognized in any country.

Take Apple, for example. They’re one of the most successful examples of a global strategy. Think about the iPhone — you may be reading this on one right now! The keyboard may be slightly different to accommodate a different language (depending on accents and alphabetical characters), but otherwise, the layout, functionality, colors, and buttons are the same no matter where you purchase in the world.

Choosing a global business strategy gives you several advantages:

  • A global, standardized brand that is immediately recognizable
  • Economies of scale deliver a more efficient process and operations
  • One product line with minimal changes makes it easier to streamline operations and scale faster
  • Competitive advantage across a global market

However, there are some trade-offs companies make by pursuing such high global integration:

  • Gambling on the brand equity and international appeal
  • Requires global footprint and recognition to be successful
  • Competing with local brands that already have established market share
  • Consumers demand transparency in supply chain and global operations
  • Localization and translation (don’t worry, we can help with that! )

Of all the strategic models available, a global strategy has the highest global integration and the lowest local responsiveness. This means the focus is operating with the most standardization possible and optimizing supply chain management, so there’s one brand, one suite of products, and one message from a central headquarters. There may be local offices or manufacturing sites in foreign markets, but everything rolls up to a corporate hierarchy in the domestic market that determines everything down to the size and shape of the smallest button.

International Strategy: Global Integration & Local Responsiveness Graph

But a global strategy isn’t the only answer to international expansion . In fact, it’s not the best model for everyone at every stage of growth. Most brands employing a global strategy standardize their business slowly over time after moving through one or more of these business models below:

  • International strategy : Usually the first type of international expansion a business undergoes, this strategy focuses on imports and exports, keeping most of their operations in their home country. Think about luxury goods like wine, caviar, or cheese as an example of this kind of business strategy — where the region of origin is a significant part of the product’s appeal in the first place.
  • Multi-domestic strategy : Multi-domestic businesses take a local-first approach for every decision and use entirely different sales, marketing, and product strategies based on the specific companies they’re operating in, creating country-specific brands in a portfolio. Many food and wellness brands like Johnson & Johnson, Frito-Lay, and Nestle use this strategy.
  • Transnational strategy : Transnational businesses coordinate local subsidiaries in international markets with one central or head office in their local market. This model is the most similar to a global strategy in that there is one overarching brand and decision-making body for strategic management but it takes a local-first approach with specific marketing, localization, and product campaigns. Companies like McDonald’s and Coca-Cola are experts at this strategy.

5 global strategy examples from top companies

A successful global strategy model focuses all of its energy on global integration, delivering one overarching brand that looks, feels, and operates cohesively regardless of the market. While not every global company is the same, many of the most successful sell products and services that have universal appeal or are easily customizable to individual users, rather than the market, like software.

Take five of the most successful multinational companies (MNC) in the world:

One of the largest companies in the world, Amazon operates in 58 countries and reaches more than a billion people online every day. The leading e-commerce company in every country except China (where Alibaba is #1), you can see Amazon’s ever-present “smile” on trucks and packages — and enjoy same-day shipping — pretty much everywhere.

Spotify uses a hyper-personalized approach to individual users based on their music preferences and tastes rather than across markets. While some music may not be available in every country due to licensing and legal issues, you can generally browse over 1,000 different genres from more than 1.2 million artists around the globe.

It’s a small world, after all . Whether you’re visiting parks in Shanghai or California, you’ll be able to experience the same magic. Disney’s team works to make sure it’s as globally inclusive as possible for movies, merchandise, and television shows, with only minor changes if needed based on audience feedback (say, for the title of a film).

IKEA uses subtle tweaks based on the target market, like specific measurements, adjusting for plug types or electricity needs, and dimensions. But overall, IKEA furniture is the same Swedish engineering for small spaces that require customers to put it together themselves — and you’ll still be able to browse their large blue-and-white warehouses in every country they operate.

Since releasing the original Mac in 1984, Apple rose to dominance for its sleek lines, clean interface, and easy-to-use software. Globally, Apple’s technology is the same (with a few minor changes) wherever you go. Considered one of the biggest global brands today, Apple operates in over 175 countries worldwide with more than 100,000 employees.

Why you still need localization, even with a global strategy

Even though a global strategy is the least concerned with local responsiveness, that doesn’t leave you off the hook for localization. Even some of the most successful international brands still use localization and translation services.

While they may not change their product specifications, invest in market-specific imagery, or operate with local company managers or offices, global brands still provide information in multiple languages. Continuing with the Apple example, here’s a quick snapshot of their homepage, advertising the iPhone 12:

Apple iPhone 12 US homepage version

You can see from these screenshots from Apple’s home page in the United States (top) and Spain (bottom) that prices look a little different across the markets, but the message and imagery are the same.

There may be subtle differences that a global brand uses per market based on legal requirements or payment processes. Still, overall, even with Apple’s flagship product, the iPhone, their website looks and feels the same, just in a different language. You can also see that with their product pages:

Apple iMac United States product page

Everywhere you purchase, the colors, specifications, and information is the same. While Apple does offer different plug styles to accommodate electrical needs worldwide, an iMac is an iMac no matter where you go — including the product messaging.

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While localization and translation may seem like the most daunting aspects of a global strategy, they don’t have to be. Smartling offers a world-class translation software solution and top-notch language services.

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8.1 Global Strategic Choices

Learning objectives.

  • Learn about the rationale and motivations for international expansion.
  • Understand the importance of international due diligence.
  • Recognize the role of regional differences, consumer preferences, and industry dynamics.

The Why , Where , and How of International Expansion

The allure of global markets can be mesmerizing. Companies that operate in highly competitive or nearly saturated markets at home, for instance, are drawn to look overseas for expansion. But overseas expansion is not a decision to be made lightly, and managers must ask themselves whether the expansion will create real value for shareholders. Companies can easily underestimate the costs of entering new markets if they are not familiar with the new regions and the business practices common within the new regions. For some companies, a misstep in a foreign market can put their entire operations in jeopardy, as happened to French retailer Carrefour after their failed entry into Chile, which you’ll see later in this section. In this section, as summarized in the following figure, you will learn about the rationale for international expansion and then how to analyze and evaluate markets for international expansion.

image

Rationale for International Expansion

Companies embark on an expansion strategy for one or more of the following reasons:

  • To improve the cost-effectiveness of their operations
  • To expand into new markets for new customers
  • To follow global customers

For example, US chemical firm DuPont, Brazilian aerospace conglomerate Embraer, and Finnish mobile-phone maker Nokia are all investing in China to gain new customers. Schneider Logistics, in contrast, initially entered a new market, Germany, not to get new customers but to retain existing customers who needed a third-party logistics firm in Germany. Thus, Schneider followed its customers to Germany. Other companies, like microprocessor maker Intel, are building manufacturing facilities in China to take advantage of the less costly and increasingly sophisticated production capabilities. For example, Intel built a semiconductor manufacturing plant in Dalian, China, for $2.5 billion, whereas a similar state-of-the-art microprocessor plant in the United States can cost $5 billion. [1] Intel has also built plants in Chengdu and Shanghai, China, and in other Asian countries (Vietnam and Malaysia) to take advantage of lower costs.

Planning for International Expansion

As companies look for growth in new areas of the world, they typically prioritize which countries to enter. Because many markets look appealing due to their market size or low-cost production, it is important for firms to prioritize which countries to enter first and to evaluate each country’s relative merits. For example, some markets may be smaller in size, but their strategic complexity is lower, which may make them easier to enter and easier from an operations point of view. Sometimes there are even substantial regional differences within a given country, so careful investigation, research, and planning are important to do before entry.

International Market Due Diligence

International market due diligence involves analyzing foreign markets for their potential size, accessibility, cost of operations, and buyer needs and practices to aid the company in deciding whether to invest in entering that market. Market due diligence relies on using not just published research on the markets but also interviews with potential customers and industry experts. A systematic analysis needs to be done, using tools like PESTEL and CAGE, which will be described in Section 8.2 “PESTEL, Globalization, and Importing” and Section 8.4 “CAGE Analysis” , respectively. In this section, we begin with an overview.

Evaluating whether to enter a new market is like peeling an onion—there are many layers. For example, when evaluating whether to enter China, the advantage most people see immediately is its large market size. Further analysis shows that the majority of people in that market can’t afford US products, however. But even deeper analysis shows that while many Chinese are poor, the number of people who can afford consumer products is increasing (Kleiner, 2010).

Regional Differences

The next part of due diligence is to understand the regional differences within the country and to not view the country as a monolith. For example, although companies are dazzled by China’s large market size, deeper analysis shows that 70 percent of the population lives in rural areas. This presents distribution challenges given China’s vast distances. In addition, consumers in different regions speak different dialects and have different tastes in food. Finally, the purchasing power of consumers varies in the different cities. City dwellers in Shanghai and Tianjin can afford higher prices than villagers in a western province.

Let’s look at a specific example. To achieve the dual goals of reducing operations costs and being closer to a new market of customers, for instance, numerous high-tech companies identify Malaysia as an attractive country to enter. Malaysia is a relatively inexpensive country and the population’s English skills are good, which makes it attractive both for finding local labor and for selling products. But even in a small country like Malaysia, there are regional differences. Companies may be tempted to set up operations in the capital city, Kuala Lumpur, but doing a thorough due diligence reveals that the costs in Kuala Lumpur are rising rapidly. If current trends continue, Kuala Lumpur will be as expensive as London in five years. Therefore, firms seeking primarily a lower-cost advantage would do better to locate to another city in Malaysia, such as Penang, which has many of the same advantages as Kuala Lumpur but does not have its rising costs (Chamania, Mehta, & Sehgal, 2010).

Understanding Local Consumers

Entering a market means understanding the local consumers and what they look for when making a purchase decision. In some markets, price is an important issue. In other markets, such as Japan, consumers pay more attention to details—such as the quality of products and the design and presentation of the product or retail surroundings—than they do to price. The Japanese demand for perfect products means that firms entering Japan might have to spend a lot on quality management. Moreover, real-estate costs are high in Japan, as are freight costs such as fuel and highway charges. In addition, space is limited at retail stores and stockyards, which means that stores can’t hold much inventory, making replenishment of products a challenge. Therefore, when entering a new market, it’s vital for firms to perform full, detailed market research in order to understand the market conditions and take measures to account for them.

How to Learn the Needs of a New Foreign Market

The best way for a company to learn the needs of a new foreign market is to deploy people to immerse themselves in that market. Larger companies, like Intel, employ ethnographers and sociologists to spend months in emerging markets, living in local communities and seeking to understand the latent, unarticulated needs of local consumers. For example, Dr. Genevieve Bell, one of Intel’s anthropologists, traveled extensively across China, observing people in their homes to find out how they use technology and what they want from it. Intel then used her insights to shape its pricing strategies and its partnership plans for the Chinese consumer market (Radjou, 2009).

Differentiation and Capability

When entering a new market, companies also need to think critically about how their products and services will be different from what competitors are already offering in the market so that the new offering provides customers value. Companies trying to penetrate a new market must be sure to have some proof that they can deliver to the new market; this proof could be evidence that they have spoken with potential customers and are connected to the market. [2] Related to firm capability, another factor for firms to consider when evaluting which country to enter is that of “corporate fit.” Corporate fit is the degree to which the company’s existing practices, resources and capabilties fit the new market. For example, a company accustomed to operating within a detailed, unbiased legal environment would not find a good corporate fit in China because of the current vagaries of Chinese contract law (Wingard, 2011). Whereas a low corporate fit doesn’t preclude expanding into that country, it does signal that additional resources or caution may be necessary. Two typical dimensions of corporate fit are human resources practices and the firm’s risk tolerance.

Did You Know?

Over the years 2005–09, the number of Global 500 companies headquartered in BRIC countries (Brazil, Russia, India, and China) increased significantly. China grew from 8 headquarters to 43, India doubled from 5 to 10, Brazil rose from 5 to 9, and Russia went from 4 to 6. The United States still leads with 181 company headquarters, but it’s down from 219 in 2005 (Meister & Willyerd, 2009).

Industry Dynamics

In some cases, the decision to enter a new market will depend on the specific circumstances of the industry in which the company operates. For example, companies that help build infrastructure need to enter countries where the government or large companies have a lot of capital, because infrastructure projects are so expensive. The president of Spanish infrastructure company Fomento de Construcciones y Contratas said, “We focus on those countries where there is more money and there is a gap in the infrastructure,” such as China, Singapore, the United States, and Algeria. [3]

Political stability, legal security, and the “rule of law”—the presence of and adherence to laws related to business contracts, for example—are important considerations prior to market entry regardless of which industry a company is in. Fomento de Construcciones y Contratas learned this the hard way and ended up leaving some countries it had entered. The company’s president, Baldomero Falcones, explained, “When you decide whether or not to invest, one factor to take into account is the rule of law. Our ethical code was considered hard to understand in some countries, so we decided to leave during the early stages of the investment.” [4]

Ethics in Action

Companies based in China are entering Australia and Africa, primarily to gain access to raw materials. Trade between China and Africa grew an average of 30 percent in the decade up to 2010, reaching $115 billion that year (Redfern, 2011). Chinese companies operate in Zambia (mining coal), the Democratic Republic of the Congo (mining cobalt), and Angola (drilling for oil). To get countries to agree to the deals, China had to agree to build new infrastructure, such as roads, railways, hospitals, and schools. Some economists, such as Dambisa Moyo, who wrote Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa , believe that the way to help developing countries like those in Africa is not through aid but through trade. Moyo argues that long-term charity is degrading. She advocates business investments and setting up enterprises that employ local workers. Ecobank CEO Arnold Ekpe (whose bank employs 11,000 people in twenty-six African states) says the Chinese look at Africa differently than the West does: “[The Chinese] are not setting out to do good,” he says. “They are setting out to do business. It’s actually much less demeaning” (Perry, 2009). Deborah Brautigam, associate professor at the American University’s International Development Program, agrees. In her book, The Dragon’s Gift: The Real Story of China in Africa , she says, “The Chinese understand something very fundamental about state building: new states need to build buildings and dignity, not simply strive to end poverty” (Bloomfield, 2010).

Steps and Missteps in International Expansion

Let’s look at an example of the steps—as well as the missteps—in international expansion. American retailers entered the Chilean market in the mid- to late 1990s. They chose Chile as the market to enter because of the country’s strong economy, the advanced level of the Chilean retail sector, and the free trade agreements signed by Chile. From that standpoint, their due diligence was accurate, but it didn’t go far enough, as we’ll see.

Retailer JCPenney entered Chile in 1995, opening two stores. French retailer Carrefour also entered Chile, in 1998. Neither company entered through an alliance with a local retailer. Both companies were forced to close their Chilean operations due to the losses they were incurring. Analysis by the Aldolfo Ibáñez University in Chile explained the reasons behind the failures: the managers of these companies were not able to connect with the local market, nor did they understand the variables that affected their businesses in Chile. [5] Specifically, the Chilean retailing market was advanced, but it was also very competitive. The new entrants (JCPenney and Carrefour) didn’t realize that the existing major local retailers had their own banks and offered banking services at their retail stores, which was a major reason for their profitability. The outsiders assumed that profitability in this sector was based solely on retail sales. They missed the importance of the bank ties. Another typical mistake that companies make is to assume that a new market has no competition just because the company’s traditional competitors aren’t in that market.

Now let’s continue with the example and watch native Chilean retailers enter a market new to them: Peru.

Figure 8.1 Map of Peru

8-1-0n

Nathan Hughes Hamilton – Map of Peru, undated – CC BY 2.0.

The Chilean retailers were successful in their own markets but wanted to expand beyond their borders in order to get new customers in new markets. The Chilean retailers chose to enter Peru, which had the same language.

Figure 8.2 Machu Picchu

8-1-1n

Dennis Jarvis – Peru-237 – Machu Picchu – CC BY-SA 2.0.

The Peruvian retailing market was not advanced, and it did not offer credit to customers. The Chileans entered the market through partnership with local Peruvian firms, and they introduced the concept of credit cards, which was an innovation in the poorly developed Peruvian market. Entering through a domestic partner helped the Chileans because it eliminated hostility and made the investment process easier. Offering the innovation of credit cards made the Chilean retailers distinctive and offered an advantage over the local offerings. [6]

Key Takeaways

  • Companies embark on an expansion strategy for one or more of the following reasons: (1) to improve the cost-effectiveness of their operations, (2) to expand into new markets for new customers, and (3) to follow global customers.
  • Planning for international expansion involves doing a thorough due diligence on the potential markets into which the country is considering expanding. This includes understanding the regional differences within markets, the needs of local customers, and the firm’s own capabilities in relation to the dynamics of the industry.
  • Common mistakes that firms make when entering a new market include not doing thorough research prior to entry, not understanding the competition, and not offering a truly targeted value proposition for buyers in the new market.

(AACSB: Reflective Thinking, Analytical Skills)

  • What are some of the common motivators for companies embarking on international expansion?
  • Why is international market due diligence important?
  • What are some ways in which a company can learn about the needs of local buyers in a new international market?
  • Discuss the meaning of “corporate fit” in relation to international market expansion.
  • Name two common mistakes firms make when expanding internationally

Bloomfield, S., “China in Africa: Give and Take,” Emerging Markets , May 27, 2010, accessed February 14, 2011, http://www.emergingmarkets.org/Article/2580082/CHINA-IN-AFRICA-Give-and-take.html .

Chamania, A., Heral Mehta, and Vikas Sehgal, “Five Factors for Finding the Right Site,” Strategy and Business , November 23, 2010, accessed May 17, 2011, http://www.strategy-business.com/article/10403?gko=e029a .

Kleiner, A., “Getting China Right,” Strategy and Business , March 22, 2010, accessed January 23, 2011, http://www.strategy-business.com/article/00026?pg=al .

Meister, J. and Karie Willyerd, The 2020 Workplace (New York: HarperBusiness, 2010), 22, citing “FT500 2009,” Financial Times , accessed November 27, 2009, http://www.ft.com/reports/ft500-2009 .

Perry, A., “Africa, Business Destination,” Time , March 12, 2009, accessed February 14, 2011, http://www.time.com/time/specials/packages/article/0,28804,1884779_1884782_1884769,00.html#ixzz1DwbdOXvs .

Radjou, N., “R&D 2.0: Fewer Engineers, More Anthropologists,” Harvard Business Review (blog), June 10, 2009, accessed January 2, 2011, http://blogs.hbr.org/radjou/2009/06/rd-20-fewer-engineers-more-ant.html .

Redfern, P., “Africa: Trade between China and Continent at U.S.$115 Billion a Year,” Daily Nation , February 11, 2011, accessed February 14, 2011, http://allafrica.com/stories/201102140779.html .

Wingard, C., “Ensuring Value Creation through International Expansion,” L.E.K. Consulting Executive Insights 5, no. 3, accessed January 15, 2011, http://www.lek.com/sites/default/files/Volume_V_Issue_3.pdf .

  • “2011 Global R&D Funding Forecast,” R&D Magazine , December 2010, accessed January 2, 2011, http://www.rdmag.com/tags/publications/global-r-and-d-funding-forecast . ↵
  • “How We Do It: Strategic Tests from Four Senior Executives,” McKinsey Quarterly , January 2011, accessed January 22, 2011, https://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2712&srid=27 . ↵
  • “Practical Advice for Companies Betting on a Strategy of Globalization,” Knowledge@Wharton , January 12, 2011, accessed February 5, 2011, http://knowledge.wharton.upenn.edu/article.cfm?articleid=2541 . ↵
  • “The Globalization of Chilean Retailing,” Knowledge@Wharton , December 12, 2007, accessed January 5, 2011, http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=1450&language=english . ↵
  • "The Globalization of Chilean Retailing,” Knowledge@Wharton , December 12, 2007, accessed January 5, 2011, http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=1450&language=english . ↵

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A Guide to Preparing an International Business Plan

By: FITT Team

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An international business plan acts as a framework that identifies goals and objectives, specific target markets and clients, resources required and strategies to be developed in pursuit of international business opportunities. The plan allows for the monitoring of progress via metrics against which success and failure can be measured. A comprehensive international business plan will be comprised of a number of integrated strategies related to business functions, including communications, sales and marketing, finance and production.

What Is an International Business Plan?

An international business plan is a valuable management tool that describes who a business is, what it plans to achieve and how it plans to overcome risks and provide anticipated returns. It can be used for a wide variety of purposes, such as to:

  • Set goals and objectives for the organization’s performance.
  • Provide a basis for evaluating and controlling the organization’s performance.
  • Communicate an organization’s message to managers and staff, outside directors, suppliers, lenders and potential investors.
  • Help the planner identify the cash needs of the business.
  • Provide benchmarks against which to compare the progress and performance of the business over time.

A comprehensive and detailed plan forces the planner to look at an organization’s operations and re-evaluate the assumptions on which the business was founded. In doing so, strengths and weaknesses can be identified.

Although highly dependent on the individual business case, on average it takes a three-year commitment to establish a successful presence in a foreign market. This process may require tremendous human, technical and financial resources during the developmental period.

International Market Entry Strategies Couse Banner

The Planning Process

An international business plan is subject to repeated adjustment and revision to keep it current with the changing circumstances of the organization. The plan is a feedback mechanism through which new information is continually incorporated into the organization’s operations. Planning always precedes action. Therefore, planning must be thought of as a continuous cycle. The analytical tools presented here are not intended to be used just once. If they are to be useful, they should be used repeatedly as part of a process of improvement and incremental adjustment.

Plan Preparation Guidelines

These 7 guidelines will help in preparing a comprehensive international business plan:

  • Clearly define the objectives for producing the plan : Who is going to read the plan, and what will they need to do? These objectives can help you decide how much emphasis to put on various sections.
  • Allocate sufficient time and resources to thoroughly research the plan : A plan is only as good as the research that went into producing it.
  • Show drafts of the plan to others : It can be very useful to obtain feedback from others, both inside and outside the business.
  • Create an original plan that is done specifically for each business case : A common mistake entrepreneurs make is to borrow heavily from a sample plan and simply change the names and some of the numbers. There are two big problems with this approach. First , the emphasis placed on various sections of the plan must reflect what is important to the particular business in question. Second , a good plan should flow like a story, with the sections working together to demonstrate why the business will succeed. Plans that borrow too heavily from other plans tend to be disjointed, with some sections contradicting others and various key issues left unaddressed.
  • Outline the key points in each section before the writing starts : These points must then be reviewed to ensure the sections are consistent with each other, there is little duplication and all key issues have been addressed.
  • Ensure financial projections are believable : For many readers, the financial section is the most important part of the plan because it identifies the financing needs and shows the profit potential of the business. In addition, a good financial plan will give the reader confidence that the author really understands the business.
  • Consider writing the executive summary as the last step in the process: It is usually easier to provide a concise overview after the detailed content has been created.
If you’re having trouble getting started with your business plan, try writing like it’s a series of tweets—one for every section of your business plan. To get your point across, 140 characters is all you need.

Forcing yourself to boil each section of your business plan down to one main point is an exercise in decision making and strategy all in itself. When you’re done, you’ll have everything you need to take your next step, whether that’s practicing your pitch to potential investors or a business partner, or sitting down to expand each tweet into a full section of a more traditional business plan.

Core Content

The international business plan is the culmination of all of the work done to determine the appropriate venture for the organization’s growth. As part of the feasibility process, the organization will have determined its own internal readiness, conducted comprehensive target market research and carefully analyzed any relevant risks.

Feasibility of International Trade Couse Banner

At this point, the organization can take all of this information and analysis and formally document the plan for moving forward. There are many different models and examples of how to put together a formal business plan, rather than one correct way.

The right format will depend on the organization, the venture being pursued and who will be accessing the business plan and for what purpose. However, there are some basic guidelines to follow.

One of the reasons business plans are developed is to convince investors and/or bankers to invest in the venture.

Increasingly, they are looking for a business plan to include two sections: one relating to online strategy (in terms of e-marketing, social media and ROI) and the second relating to corporate social responsibility (including quality, health, safety and environment policies).

The inclusion of these topics gives more credibility to the company by demonstrating its commitment to the community and to employees’ well-being.

Table 3.1 nternational Business Plan Content

Telling a Story 

One trend in business planning is to use a narrative structure in the document, rather than traditional technical writing techniques. Storytelling techniques are increasingly being used throughout the business world to create personal and organizational brands, deliver marketing messages and develop persuasive plans.

Stories make presentations better. Stories make ideas stick. Stories help us persuade. Savvy leaders tell stories to inspire us, motivate us. That’s why so many politicians tell stories in their speeches. They realize that “what you say” is often moot compared to “how you say it.

Instead of using bulleted points and cold, technical language, organizations employ a “beginning, middle and end” narrative style. This engages the audience by establishing the context, describing the conflict or obstacles and arriving at a successful resolution.

The Executive Summary

Usually the last step of preparing the international business plan is to develop the executive summary, a short overview of what the plan proposes to accomplish. For some purposes, a one-page business plan can also be useful.

There is not a great deal of difference between an executive summary and a one-page business plan. The most significant distinction is the one-page plan must completely fit on one page in a readable font, while an executive summary may spread over two or three pages.

One-Page Business Plan

There is a trend towards the one-page business plan, especially if the plan is to be presented to potential partners for their consideration. Audiences for the one-page plan will be looking for a “quick hit”: a clear and concise description of what the opportunity is and how it is being pursued.

For example, a one-page business plan might include the following topics, as described in Noah Parson’s article “How to Write a One-Page Business Plan” on the website Bplans :

  • Customer problem/opportunity
  • Your solution/approach
  • Business model (how you make money)
  • Target market (who is the customer and how many are there)
  • Competitive advantage
  • Management team
  • Financial summary
  • Funding required

The one-page plan (or the executive summary, if used in place of the one-page plan) may provide the first impression the audience has of the business. This is the most important document generated out of the business planning process, and significant effort and care should be taken in its creation.

There are many websites the provide blank samples of one-page business plans, including Bplans , the GoForth Institute and Startup.com.

A Note on Strategic Plans

A strategic plan covers many of the same points as a business plan. However, a strategic plan sets out the detailed action plan to be followed to achieve the objectives of the international business plan.

It must outline specific activities, their due dates and who is responsible for each activity. It is a project plan with a critical path. A strategic plan ensures any venture is carried out in a coordinated, informed and systematic way.

A key consideration in action planning is how quickly to enter the market, which is driven by the chosen market entry strategy. If market entry is done too quickly, the potential for costly mistakes increases. However, if it is completed too slowly, opportunities may be missed and competitors will have more time to react.

The Planning Cycle

Attaching the word “cycle” to planning implies that it happens more than once. International business plans need to be reviewed periodically because new information that has an impact on both planning and operations is continually coming in.

All plans, including international business plans and strategic plans, need to be reviewed every time there is a major event impacting the business, such as civil unrest, a currency fluctuation or the presence of a new competitor.

About the author

global strategic planning process international business

Author: FITT Team

The Forum for International Trade Training (FITT) is the standards, certification and training body dedicated to providing international business training, resources and professional certification to individuals and businesses. Created by business for business, FITT’s international business training solutions are the standard of excellence for global trade professionals around the world. View all posts by FITT Team

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Three Key Global Strategy Challenges Companies Face

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The future of multinational corporations hinges on their ability to address three main forces affecting globalisation today: geopolitical tensions, sustainability and digital transformation. It is no surprise that these challenges are also high on the agenda at the World Economic Forum Annual Meeting in Davos this year.

Until recently, multinationals have adapted their global strategies in response to changing consumer preferences, competitive landscapes and economic conditions. As I outline in the Fifth Edition of Global Strategic Management , all companies currently operating across different countries now need to put geopolitical issues, sustainability and digitalisation at the heart of their strategies for how to compete globally.

The Covid-19 pandemic and Russia’s invasion of Ukraine have further accelerated these pressures, forcing multinationals to re-examine their global strategies.

Geopolitics issues impact more industries than ever

Recent geopolitical issues, translated into commercial wars, are affecting the globalisation process. The constraints put on Huawei’s development of its 5G network, the ban on export to Iran enacted by the United States and the economic and financial sanctions imposed on Russia are but three examples.

While geopolitical problems are certainly not a new phenomenon, they have become increasingly prevalent and pertinent for many different industries.

Governments, in the interest of national sovereignty, are intervening more than before. As a result, firms are changing tactics and considering “friendshoring” or “ally shoring” – relocating supply chains to trusted countries with shared values.

One company that has taken great strides to diversify geopolitical risk is Taiwan Semiconductor Manufacturing Company (TSMC). As the world's largest contract chipmaker, it manufactures chips for tech giants including Apple and Alibaba. In response to China-Taiwan tensions and the US-China trade conflict, TSMC began building factories in the US and Japan . It recently outlined a US$40 billion plan to expand the US production hub it is building in Arizona, and is in advanced talks with suppliers about setting up its first European plant in Germany, according to media reports .

By taking geopolitical concerns into account, TSMC recognised the need to be present in several key regions to mitigate political risks and increase supply chain resilience. Indeed, when it comes to developing and implementing a global strategy, geopolitical tensions can be as important as cost considerations and customer demand.

But it is not only sensitive industries such as chipmaking that are subject to geopolitical tensions. In the wine industry, for instance, research shows recent trade disputes between the US and the European Union, as well as China and Australia threatened to reduce wine trade by nearly US$340 million annually. Another clear example is how the Ukraine war’s impact on energy prices is being felt by companies across several different industries.

Global enterprises need to move away from having one single strategy for the world to more regional strategies that are better equipped to deal with the local impact of political tensions. That is not to say that multinationals require individual strategies for each country they operate in, but rather that different ecosystems may be required for some regions that simply cannot be replicated in others.

Sustainability considerations need to drive strategy

Multinationals have taken different approaches to addressing pressing sustainability issues. While some simply comply with regulations and standards in each country, others recognise the need to completely integrate sustainability into their overall strategy. Forward-looking firms demonstrate a commitment to sustainability by aiming to set the highest standards everywhere, even if governments and regulatory bodies aren’t pressuring them to do so.

Energy giant Enel, for example, made sustainability a pillar of growth and aligned its strategic plans with the UN Sustainable Development Goals (SDGs). As outlined in the book and my case study , Enel’s aim was to create long-term sustainable value for all its stakeholders by adhering to the SDGs in its investment decisions.

The multinational used open innovation to incorporate novel products and ideas from outside its own business units. “ Innovability teams ” – which blend innovation with sustainability – were integrated into each business line. The company then began pulling external innovation into the firm with a crowdsourcing platform where thousands of “solvers” were able to contribute solutions to important challenges.

Multinationals have a huge advantage when it comes to identifying and scaling sustainable solutions. A well-established idea in multinational management is that some foreign subsidiaries become “centres of excellence” with leverageable capabilities and expertise. By pinpointing subsidiaries that could become centres of excellence for sustainable solutions – such as European countries – multinationals can develop local, sophisticated solutions and scale them.

Multinationals have the potential to move the needle on sustainability through their operations and their influence on the wider business community. By learning what works and what doesn't work in different parts of the world, these firms can come up with tailored and deployable global solutions for global problems.

Digital transformation has disrupted traditional business models

On the technological front, the world has fully entered a digital era that permeates nearly all segments of human activities: health, industrial production, entertainment, communication, research, development and more. Digital technologies have revolutionised consumer behaviours, impacted core business models and blurred borders between industries and sectors.

Digital technologies have brought major structural change to how business is done and how global companies operate. The Covid-19 pandemic further accelerated digital transformation, forcing multinationals to quickly move their operations online and implement digital strategies.

For instance, FC Barcelona built on its digital presence through its Barça Innovation Hub to help generate revenues when Covid-19 struck. The club launched the Hub in 2017 with the aim to attract companies, research institutions and entrepreneurs to develop innovative technologies to increase the visibility and impact of the Barça brand and create new revenue streams. Key domains of the Hub include healthcare and well-being, sport performance, big data and fan engagement, smart facilities and social impact.

My recent case study details how FC Barcelona accelerated its content-sharing strategies and training platform during the pandemic in a push to become even more digitally affluent. For example, the club launched a freemium TV streaming service, film studio, digital magazine and entered a strategic partnership with Spotify.

A truly digital global enterprise has a competitive edge thanks to the data it collects. Multinationals can use data to better understand their customers, identify trends, pinpoint gaps in the market and evaluate the potential for new products or services. 

Digitalisation has also paved the way for “born global” companies – such as Airbnb, Netflix, Spotify and Uber – that become multinational very soon after their creation. In order to stay competitive, traditional global firms are feeling the pressure to adapt and innovate.

In the current uncertain environment, I hope my book can help business leaders understand and respond to the new pressures global companies face. In the last 15 years that I’ve spent teaching global strategic management, much of the conversation has been about executing global strategy. Now it has shifted to revising and redesigning those strategies. Firms looking to compete globally need to tear up the rulebook and go back to the drawing board.

About the author(s)

L. Felipe Monteiro

is a Senior Affiliate Professor of Strategy at INSEAD and the Academic Director of the Global Talent Competitiveness Index . He is the Programme Director for INSEAD’s partner programme with Fundação Dom Cabral, Advanced Management Program.

About the research

Global Strategic Management, 5th Edition was  published by Bloomsbury in November 2022 and is available on  Amazon .

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What is strategic planning? A 5-step guide

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Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. In this article, we'll guide you through the strategic planning process, including why it's important, the benefits and best practices, and five steps to get you from beginning to end.

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. The strategic planning process informs your organization’s decisions, growth, and goals.

Strategic planning helps you clearly define your company’s long-term objectives—and maps how your short-term goals and work will help you achieve them. This, in turn, gives you a clear sense of where your organization is going and allows you to ensure your teams are working on projects that make the most impact. Think of it this way—if your goals and objectives are your destination on a map, your strategic plan is your navigation system.

In this article, we walk you through the 5-step strategic planning process and show you how to get started developing your own strategic plan.

How to build an organizational strategy

Get our free ebook and learn how to bridge the gap between mission, strategic goals, and work at your organization.

What is strategic planning?

Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization’s mission and goals, conduct competitive assessments, and identify company goals and objectives. The product of the planning cycle is a strategic plan, which is shared throughout the company.

What is a strategic plan?

[inline illustration] Strategic plan elements (infographic)

A strategic plan is the end result of the strategic planning process. At its most basic, it’s a tool used to define your organization’s goals and what actions you’ll take to achieve them.

Typically, your strategic plan should include: 

Your company’s mission statement

Your organizational goals, including your long-term goals and short-term, yearly objectives

Any plan of action, tactics, or approaches you plan to take to meet those goals

What are the benefits of strategic planning?

Strategic planning can help with goal setting and decision-making by allowing you to map out how your company will move toward your organization’s vision and mission statements in the next three to five years. Let’s circle back to our map metaphor. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Build a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.

Align everyone around a shared purpose and ensure all departments and teams are working toward a common objective.

Proactively set objectives to help you get where you want to go and achieve desired outcomes.

Promote a long-term vision for your company rather than focusing primarily on short-term gains.

Ensure resources are allocated around the most high-impact priorities.

Define long-term goals and set shorter-term goals to support them.

Assess your current situation and identify any opportunities—or threats—allowing your organization to mitigate potential risks.

Create a proactive business culture that enables your organization to respond more swiftly to emerging market changes and opportunities.

What are the 5 steps in strategic planning?

The strategic planning process involves a structured methodology that guides the organization from vision to implementation. The strategic planning process starts with assembling a small, dedicated team of key strategic planners—typically five to 10 members—who will form the strategic planning, or management, committee. This team is responsible for gathering crucial information, guiding the development of the plan, and overseeing strategy execution.

Once you’ve established your management committee, you can get to work on the planning process. 

Step 1: Assess your current business strategy and business environment

Before you can define where you’re going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.

To do this, your management committee should collect a variety of information from additional stakeholders, like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future.

Customer insights to understand what your customers want from your company—like product improvements or additional services.

Employee feedback that needs to be addressed—whether about the product, business practices, or the day-to-day company culture.

Consider different types of strategic planning tools and analytical techniques to gather this information, such as:

A balanced scorecard to help you evaluate four major elements of a business: learning and growth, business processes, customer satisfaction, and financial performance.

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your company’s goals and objectives

To begin strategy development, take into account your current position, which is where you are now. Then, draw inspiration from your vision, mission, and current position to identify and define your goals—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” “What’s the ideal future state of this company?” This can help you figure out which path you need to take to get there.

During this phase of the planning process, take inspiration from important company documents, such as:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose.

Your vision statement, to clarify how your strategic plan fits into your long-term vision.

Your company values, to guide you towards what matters most towards your company.

Your competitive advantages, to understand what unique benefit you offer to the market.

Your long-term goals, to track where you want to be in five or 10 years.

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in.

Step 3: Develop your strategic plan and determine performance metrics

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Take your current business position and strategy into account, as well as your organization’s goals and objectives, and build out a strategic plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your plan should be created or revisited as the quarters and years go on.

As you build your strategic plan, you should define:

Company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable. These KPIs will help you track progress and ensure you’re moving in the right direction.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Implement and share your plan

Now it’s time to put your plan into action. Strategy implementation involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Make sure your team (especially senior leadership) has access to the strategic plan, so they can understand how their work contributes to company priorities and the overall strategy map. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management platform .  

A few tips to make sure your plan will be executed without a hitch: 

Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively. 

Define what “success” looks like by mapping your strategic plan to key performance indicators.

Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization, so that every team member's daily activities are aligned with the broader strategic objectives.

Utilize tools and software—like a work management platform—that can aid in implementing and tracking the progress of your plan.

Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.

Establish regular check-ins to monitor the progress of your strategic plan and make adjustments as needed. 

Step 5: Revise and restructure as needed

Once you’ve created and implemented your new strategic framework, the final step of the planning process is to monitor and manage your plan.

Remember, your strategic plan isn’t set in stone. You’ll need to revisit and update the plan if your company changes directions or makes new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan. Make sure to review your plan regularly—meaning quarterly and annually—to ensure it’s still aligned with your organization’s vision and goals.

Keep in mind that your plan won’t last forever, even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

Build a smarter strategic plan with a work management platform

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

A work management platform plays a pivotal role in this process. It acts as a central hub for your strategic plan, ensuring that every task and project is directly tied to your broader company goals. This alignment is crucial for visibility and coordination, allowing team members to see how their individual efforts contribute to the company’s success. 

By leveraging such a platform, you not only streamline workflow and enhance team productivity but also align every action with your strategic objectives—allowing teams to drive greater impact and helping your company move toward goals more effectively. 

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics that will help your company be successful.

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed.

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What is a strategic planning template?

A strategic planning template is a tool organizations can use to map out their strategic plan and track progress. Typically, a strategic planning template houses all the components needed to build out a strategic plan, including your company’s vision and mission statements, information from any competitive analyses or SWOT assessments, and relevant KPIs.

What’s the difference between a strategic plan vs. business plan?

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, you should create a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

What’s the difference between a strategic plan vs. mission and vision statements?

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

Simply put: 

A mission statement summarizes your company’s purpose.

A vision statement broadly explains how you’ll reach your company’s purpose.

A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

What’s the difference between a strategic plan vs. company objectives?

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

What’s the difference between a strategic plan vs. a business case?

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

What’s the difference between a strategic plan vs. a project plan?

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

What’s the difference between strategic management vs. strategic planning?

A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.

Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success. 

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Why Study Global Business? 5 Benefits to Consider

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  • 27 May 2021

You may have heard the age-old phrase, “It’s a small world.” In a time of advanced technology, the world not only feels small in terms of accessibility, but in terms of connectivity. It’s impossible to avoid being impacted by the decisions made by others around the globe—and no field showcases this dynamic better than business.

If you own a company or are a key employee, the actions and plans of business and political leaders worldwide impact your organization's trajectory, whether or not you operate internationally.

Because global business is such a multifaceted field that’s often studded with high-risk, high-reward opportunities , it can be intimidating to dive in. Here’s a look at what global business is, five ways studying it can help you as an organizational leader, and how to kick off your education.

What Is Global Business?

Global business , also called international business , is the production and sale of goods and services between countries. The term can also encompass the nuances, politics, and dynamics of doing business in a global economy.

There are three major categories international businesses can fall into:

  • They produce goods domestically and sell domestically and internationally
  • They produce goods in a different country but sell domestically
  • They produce goods in a different country and sell domestically and internationally

If your business produces and sells strictly domestically, you may choose to expand internationally for the positive short- and long-term impacts on financial performance, increased production capabilities, new markets, and opportunities to join global business networks. Some examples of successful international businesses include well-known companies such as Walmart and Starbucks.

Why Is Global Business Important?

Even if your organization doesn’t produce or sell products internationally, the importance of global business can’t be overstated. It can enable you to assess new business opportunities, make informed decisions, and adopt a holistic view of global competition from a strategic standpoint.

For instance, imagine you own a clothing company that sells embroidered T-shirts. Your products are made in the United States from locally sourced material, and you only sell domestically. How might global business impact your company?

  • Domestic competitors may produce or sell their products internationally and gain more traction. For instance, a rival company sources cotton from a farm abroad and charges less money for similarly embroidered T-shirts. It then develops a global audience and presence, perhaps where clothing trends differ from those of the US.
  • Internationally-based companies could become your competitors, too. For example, a clothing company based in the United Kingdom may expand into the US and win over your customers.
  • Laws in other countries regarding the taxation, production, and importation of goods may impact the market you operate in. Policy changes, even those made abroad, can have a ripple effect that impacts your domestic business.

Studying global business can enable you to navigate the challenging, ever-changing business world while capitalizing on opportunities for expansion and connection. Here are five benefits of studying global business to consider.

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Benefits of Studying Global Business

1. understand macroeconomics.

One benefit of studying global business is that you gain awareness of the dynamics of macroeconomics. You develop an understanding of economic metrics you can use to compare countries on a one-to-one basis and several other factors that impact a country’s economic health. These factors provide insights into how a country’s business economics impact its residents and other organizations.

Some metrics you can learn to use include:

  • Gross domestic product (GDP)
  • Unemployment rate
  • Inflation rate
  • Degree of income inequality
  • Currency exchange rate

“It seems obvious why companies with operations or customers spanning the globe would have to worry about global macroeconomics,” says Harvard Business School Professor Forest Reinhardt in the online course Global Business . “If exchange rates move or inflation changes at different rates in different countries, it’s going to affect the economic performance of those firms.”

Reinhardt also stresses that even domestically operated companies need to understand macroeconomics.

“What about companies that make a product domestically and sell it domestically?” he asks. “Are they exposed to the global economy? It seems natural to say ‘no,’ but that turns out not to be the case.”

Learning a common language with which to assess and compare different countries’ economic performances can provide a foundation for your international business education.

2. Gain an Appreciation for Different Cultures

Just as important as the “hard skills” of macroeconomics are the “soft skills”—such as emotional intelligence —required to tactfully and respectfully navigate an international business world. Diving into global business means exposing yourself to cultures that might greatly differ from your own. Learning about the customs, holidays, beliefs, social norms, and expectations of the cultures in countries where you’ll be working, selling, and employing people is invaluable when making connections.

Some examples of cultural differences in business include:

  • Personal space: While it might be standard in some cultures to greet with a handshake, understand that there are other ways business associates meet one another in other cultures that reflect different comfort levels around personal space.
  • Communicating objectives: While people of some cultures are comfortable with short and direct instructions or requests for fast decision-making, others might be accustomed to require more explanation before moving forward.
  • Etiquette: Small differences regarding how associates formally address one another, as well as specific gestures to avoid, reflect the importance of learning the nuances of different cultures.

Remember to keep an open mind and lead with curiosity, empathy, and respect. At the heart of every business deal is a relationship between people; set yourself up to forge meaningful relationships with professionals in other countries by expanding your cultural competency.

Related: 6 Tips for Managing Global & International Teams

3. Navigate the Opportunities and Challenges of International Politics in Business

Because political leaders and systems have the power to influence education, transportation, laws, and taxes, they can also alter the global business landscape.

Studying global business can prepare you for scenarios that occur as a result of political decisions. It can also give you a tool kit for thinking on your feet when the unexpected happens.

One such unexpected event was the coronavirus (COVID-19) pandemic , which swept the world starting in early 2020. The pandemic devastated communities with deaths and health complications and caused international tensions and economic and political unrest.

According to an article by EY , the incidence of political risk—defined as a political event that alters the expected value of a business investment or economic outcome—has increased dramatically in recent years, hitting its highest point since World War II between 2016 and 2018. The tensions resulting from COVID-19 are likely to send the incidence of political risk to a new high.

EY outlines five key business areas that can be impacted by geopolitical risk:

  • Cost of capital
  • Cross-border flows
  • Market entry and global footprint
  • Corporate responsibility

“While 51 percent of global executives say political risk is having a greater effect on their companies today than just two years ago, 50 percent are also very confident in their ability to effectively manage it,” the firm reported in 2019 .

In a time when political risk is predicted to reach an all-time high, having a background in global business can help you navigate these unexpected dynamics and gain the confidence to capitalize on opportunities for success.

Related: 5 Common Challenges of International Business You Should Consider

4. Learn from Others’ Triumphs and Mistakes

Another benefit of studying global business is learning about the triumphs and failures of international businesses that came before yours. Because global business can be equally rewarding and challenging, familiarizing yourself with other firms’ strategies can help inform your own strategic planning process .

Hearing real business leaders—maybe from your specific industry—tell the stories of their forays into the global economy can bring humanity to concepts and frameworks and allow you to put yourself in their shoes. Would you have made the same decisions they did? If so, what were the outcomes of those decisions, and how did they impact their business? What can you learn from their stories to be better prepared for your involvement in international business?

To ensure your global business education includes this benefit, look for a course offering that uses the case method or be prepared to research examples independently.

Related: The History of the Case Study at Harvard Business School

5. Craft Winning Business Strategies

A long-term benefit of studying international business is developing the ability to think on a global scale, and thus formulate strategies for your business with the big picture in mind.

When crafting winning strategies, it’s important to keep in mind all factors that could possibly impact your business’s trajectory toward its goals. In a global market, that list of factors must include the political and social relations between countries where your organization operates and your market’s global economic trends.

A global business education may also inform the strategic goals your firm pursues; for instance, expanding into another country where your product could fill an unmet need.

It’s important to remember that the international business landscape is always evolving. As such, so should your business strategy.

Global Business | Thrive in today's interconnected, global economy | Learn More

Demand for International Business Skills

Another important benefit of studying international business is the diversity and strength it brings to your professional skill set. As the world becomes more interconnected than ever before, employers are increasingly regarding international business as a desired skill for future hires.

Some of the top industries hiring people with international business skills are:

  • Manufacturing
  • Professional, scientific, and technical services
  • Educational services
  • Transportation and warehousing

Global business skills demand by industry

This trend is not only reflected across industries, but also across job postings. Some of the most common job titles that require international business skills are:

  • Global Trade Analyst
  • Conflict Analyst
  • Global Services Consultant
  • Tax Manager

Global business skills demand by job title

By seeking education in global business, you can diversify your future job opportunities while also ensuring that you’re a well-rounded professional.

Which HBS Online Business in Society Course is Right for You? | Download Your Free Flowchart

How to Start Studying Global Business

Starting your global business education doesn’t need to be difficult—in fact, it can be as simple as diversifying your daily news intake to include international publications. Keeping up on current events, international politics, and relationships between countries can enable you to envision how your business is impacted by and fits into the global sphere. Research the leading businesses in your organization’s market and adjacent markets. Where are they based? What do their supply chains look like? In which countries do they sell products?

Additionally, learning about other cultures can give you the knowledge and respect necessary for making global connections that serve you well professionally and personally.

If you’d like to take your education one step further, consider taking an online course like Global Business . Taught by HBS Professor Forest Reinhardt, the course equips learners with the knowledge to navigate the global business landscape’s challenges and opportunities. For the full global experience, make sure the course you select has a social component—a cornerstone of HBS Online courses—so you can learn from and share knowledge with business professionals around the world.

Are you interested in breaking into a global market? Sharpen your knowledge of the international business world with our four-week online course Global Business , and explore our other business in society courses. Not sure which is right for you? Download our free course flowchart .

This post was originally published on May 27, 2021. It was updated on August 5, 2022.

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Differences in Strategic Planning for Domestic & International Companies

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Strategic planning is the act of creating short- and long-term plans to take a company from where it is today to where its owners would like it to be. Strategic plans include growth strategies, human resource development strategies, marketing tactics and internal goal-setting. There are a number of differences in strategic planning for domestic and international companies, usually as a result of international businesses' larger scale and wider range of uncontrollable market variables. Understanding these differences can guide your strategic planning efforts as your small business grows to an international scale.

Growth Strategies

Growth strategies in strategic plans are likely to look much different between domestic and international businesses. Domestic companies' growth plans are more likely focused on creating new markets or increasing market share in domestic markets. Small domestic companies can only grow their geographic reach to the edge of their home country's borders, then they must focus on finding new business in areas they already serve. International companies' growth strategies, on the other hand, are more likely focused on penetrating new markets in previously untapped countries and regions of the world.

Strategic HR Management

International HR development strategies must consider foreign outsourcing, the organizational structure of management between countries, the ethnic makeup of regional management and creating international work teams. Domestic companies in certain regions, meanwhile, may find it challenging to recruit culturally diverse employees, for example, which can cause legal issues and put companies at a disadvantage.

Situational Analysis

Comprehensive strategic plans begin with a situational analysis -- a detailed look at current market conditions as well as a company's strengths and weaknesses. International businesses usually face multiple market conditions at once, adding depth to the equation. Consider a SWOT analysis (strengths, weaknesses, opportunities, threats) for example. Domestic companies only have to consider the strengths of single company, while international businesses have to analyze the strength of individual regional business units in addition to the company as a whole. The same goes for weaknesses. Domestic companies have to consider opportunities and threats in a single country. For international businesses, the same companies can be both domestic and foreign competitors, presenting additional risks.

Multinational Strategic Planning

Domestic businesses can make do with a single, overarching strategic plan to guide their efforts. International businesses have to make a choice between developing a single, comprehensive strategic plan, different strategic plans for different markets or a combination of both. Cultural considerations can render a strategic plan that is highly effective in one country, but virtually useless in another. International companies consider all of the variables mentioned above -- their unique growth goals, the makeup of their regional management team and their situational analyses -- when determining how broad or narrow to make their strategic plans.

  • Reference for Business: International Business
  • Startup Biz Hub: Domestic Business vs. International Business
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David Ingram has written for multiple publications since 2009, including "The Houston Chronicle" and online at Business.com. As a small-business owner, Ingram regularly confronts modern issues in management, marketing, finance and business law. He has earned a Bachelor of Arts in management from Walsh University.

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By  Fabrice Roghé ,  Sascha Kleebaur , and  Kai Sondermann

Key Takeaways

Once a revolutionary organization inside many companies, global business services (GBS) today stands at a crossroads. Created in the 1990s to centralize transactional tasks for finance, HR, and other internal units, many GBS functions have reached a strategic tipping point—requiring corporate leaders to make crucial decisions on the future of their GBS organizations.

A recent BCG study showed that only 41% of companies believe that GBS creates value. With that in mind, the leaders of these support functions must raise their game at a time when companies around the world face unprecedented challenges in how they operate. Marginal adjustments to GBS strategy are no longer sufficient.

As the limitations of traditional models become evident, GBS must transition from a purely operational role to a more strategic one. Although global business service organizations have been at the forefront of change in the past, they now need to reinvent themselves to build support and enabling functions that are more resilient, flexible, and scalable. They also need to expand their charters and provide more value-added activities such as collections and payments, customer management, and even sales functions.

The next generation of GBS functions are becoming more closely intertwined with corporate success—and the GBS model, as a key amplifier of change, is about to take center stage, creating value beyond its legacy contributions. GBS can lead the transformation of areas such as customer experience , operations , and worker training. This requires corporations to adopt a new mindset—and a new framework that we call “Beyond GBS.”

A Bold Vision for Global Business Services

Under the traditional GBS model, C-suite and GBS executives alike have focused largely on consolidating tasks, maximizing transactional processing efficiency, and minimizing costs by bundling resources and operating from low-cost locations around the world.

But the legacy model may have hit its limits: between 2009 and 2021, overhead costs—as measured by sales and general administration—grew 35% more than overall corporate margins, giving rise to what’s known as the “GBS value dilemma.”

This creates three imperatives for GBS organizations:

  • To further strengthen their ownership of end-to-end outcomes
  • To run GBS like a business in terms of performance, cost, and service levels
  • To attract more attention from the C-suite

The “Beyond GBS” model puts these imperatives into practice. It offers a bold vision, strategy, mandate, and governance structure that is aligned with the company’s strategic direction and initiatives and promoted by the group, business, and functional leadership. “Beyond GBS” organizations lead digitization initiatives, scale their best practices internally around the world using consistent structures and processes, and provide new value-added services adjacent to their core delivery.

Taking Support Functions to the Next Level

“Beyond GBS” is the highest of five levels in the support-function journey. At the first, or bottom, level are the roughly 15% of companies that either have no GBS function or have standalone centers siloed across multiple geographies. Companies at this level suffer the most: one company we’ve studied has 117,000 accounting cost centers for 72,000 employees, 150 reporting lines between shared services and the business units they support, and a $5 billion gap in cost optimization versus their peers.

The second level, representing 40% of companies, are those organizations still running multifunctional service factories. The third level and fourth levels, each representing another 20% of companies, consist of organizations with integrated global support functions.

The fifth, and highest, level consists of the roughly 5% of all companies who have gone beyond GBS. These companies have digitized transactional activities and developed effective platform deliveries and end-to-end solutions. They achieve all this while rebalancing workloads seamlessly between global worksites.

Reaching this top level remains a challenge for many companies. In our experience, GBS organizations achieve roughly 80% of the potential gains—the low-hanging fruit, in other words—if they depend on labor arbitrage, process efficiencies, and the first-time digitization of processes. Despite the complexity and high costs of most GBS initiatives, GBS teams tend to hit an early ceiling and incremental improvements tend to be small. This is particularly true for laggard GBS functions, which represent about two-thirds of all organizations.

The success of GBS organizations is mainly limited by weakly aligned top-management GBS priorities, a nonaligned target picture, and subsequently having a very rigid governance and ineffective steering of the GBS model. Leapfrogging from a less mature GBS model to an advanced one has only proven successful in isolated cases, given the lack of synchronized implementation across the organization. Thus, rather than focusing on incremental improvement of traditional practices—which add value for no more than 10% of companies—companies need to completely rethink and redesign the GBS function.

How to Get Started

Before implementing the best practices of the “Beyond GBS” model, corporate leaders must ensure that they have a firm foundation in place. That starts with an enhanced digital and data backbone with the latest technology solutions and continues with the following three building blocks:

  • An agile internal customer front line that brings GBS close to its customers and fosters rapid delivery of services and a responsive iteration of new offerings
  • A highly effective delivery platform that drives exceptional operations, focuses on value-adding activities, and attracts high-quality employees
  • A digital innovation center that delivers a steady stream of new capabilities and technologies, enabling constant improvement in the GBS unit’s interfaces and delivery platforms

Assured that a solid foundation is in place, organizations can then begin implementing the “Beyond GBS” model. There are five steps companies should take to unlock the most business value:

1. Forge internal “value partnerships.” This step repositions GBS teams from a siloed, transactional processing unit to a partner that can help other business units optimize their processes to create total company value through outcome- and impact-based solutions.

2. Boldly rescope your mandate. Leaders need to think beyond the transactional core mindset of the past to a bolder, broader, and even more radical vision of what GBS can provide. To be sure, transactional processing cannot be ignored. But by embracing AI and analytics, GBS can play a valuable role in ESG and compliance reporting and user experience design—all with a clear link to overall strategy and business outcomes. Once the foundation is secured, GBS leaders have an opportunity to sell the CEO and C-suite team on a broader charter.

3. Expand talent and capability access. To expand beyond extended-workbench thinking requires the creation of vibrant capability hubs and global capability teams that provide nonclassical GBS services, including R&D and other center-of-expertise activities. This shift allows these services to collocate to locations with the best mix of cost and talent. At the same time, attracting and retaining the best talent remain priorities and can be enhanced with upskilling and cross-skilling initiatives. This approach places greater emphasis on expertise and digital capabilities.

4. Rethink global ways of working. This critical step moves teams beyond the obligatory, if not forced, cross-functional and organizational alignment to a new model promoting institutionalized global ownership. This includes a globally organized mandate and the formation of distributed teams with global coverage. The goal is to maximize the contribution of global team members. GBS leaders can play a key role in fostering global functional ownership that enhances the contributions of these global teams.

5. Build in scale and resilience. The optimal setup for a “Beyond GBS” approach is a platform-based operating and technology model that provides agility, flexibility, and a healthy redundancy of globalized and localized services along a multicapability hub infrastructure that leverages external partners. The three key components of this model are a customer-centric interface, an agile (and digital) “center of competence,” and a global network of shared delivery platforms managed by the GBS team and vendors as needed. This setup ensures the company is globally resilient even as it scales—and enables the company to continuously rebalance workloads based on the geopolitical climate.

In the “Beyond GBS” model, vibrant service hubs are built around a globally consistent, modular approach that enables new “plug-and-play” services. This approach also allows for the collocation of noncore GBS functions at hubs to leverage GBS’s infrastructure costs and capabilities in the broader organizational ecosystem.

The main objective, of course, is to attract and retain the best talent while operating at the lowest costs. In addition, building out core process standards atop a digital and data backbone based on the latest tech solutions will create even more value. Leading these efforts are GBS’s global process owners, who will shape service operations globally and lead process optimization and digitization initiatives.

The evolution of the traditional GBS function into a more strategic business unit creates vast new opportunities for companies. By expanding beyond its historic back-office role, GBS teams can provide real value and drive impact rather than maintaining rigid structures and services. Solutions will become innovative and highly customized. And most important, “Beyond GBS” functions operate as business-like entities—actively managed by leading talent and measured against clear outcomes.

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Managing Director & Senior Partner

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Partner and Associate Director

Kai Sondermann

Partner and Associate Director, Organization Transformation

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Strategic Planning

3 reasons why CEOs need to rethink strategic planning in 2024

Rethinking strategic planning

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Strategic planning has forever been a core responsibility of the CEO. During the rising-tide economy of the 2010s, it was a relatively straightforward process. But when COVID-19 hit in 2020, every leader in the world’s strategic plan blew up overnight .

Now, in the aftermath of the pandemic , we live in a radically different economy, one marked by accelerated disruption and continued uncertainty. Changes happen suddenly and rapidly. Consequently, strategic planning has become more critical than ever, and the dynamic nature behind it means CEOs must put even more energy into their process than ever before.

Recent Vistage research revealed that 72% of CEOs utilize an internally developed approach for strategic planning . However, in our current economic landscape, solely relying on a self-built framework that has been generated over time or handed down generationally is no longer sufficient. Strategic planning processes need to flex to meet the ever-changing nature of today’s marketplace. So, for CEOs who continue to rely on their “tried and tested” approach to strategic planning, now is the time to pause and reconsider their process.

Strategic planning should ultimately seek to serve as a blueprint for success. This is more than a tactical operating plan laying out to-do’s. When done correctly, strategic planning provides clarity, creates alignment, and drives execution.

First and foremost, the successful strategic planning process results in clarity. It shines a light on an organization’s unique identity, including its overarching mission, vision, purpose and culture, as well as what ultimately differentiates it from its competitors. The planning process also seeks to uncover meaningful data and trendlines to back each decision. Every goal and KPI ladders back to this central identity. Nothing is sporadic or disjointed — everything is working in unison.

2. Alignment

After finding clarity, strategic planning plays a key role in orchestrating internal alignment. Transparency is key to ensuring every employee can not only dictate the objectives of their organization but also how their role is contributing to the greater purpose. All contributing individuals collectively move towards a shared purpose; instead of pushing against each other, everyone is pulling with each other. This unified approach then translates externally to the greater marketplace, including current and prospective customers, by creating a unified position for the company.

3. Execution

Perhaps most importantly, strategic planning drives outcomes. Armed with clarity and alignment, employees can execute in a way that is consistent with the organization’s values and vision. A strong strategic plan ensures everyone across an organization is marching in the same direction and generates accountability across every level, from intern to C-suite.

To reach these three important planning goals amid continued volatility, using the same standard template on a three-year basis simply falls short. In today’s world, strategic planning must be nimble. When the next growth cycle starts, leaders need to be able to accelerate on a dime. Similarly, they must be adaptable to emerging technology. And they are required to understand the unpredictable nature of the current macroeconomic landscape. Similarly, strategic plans must evolve in scope and scale over time. What works for a company of 20 employees does not work for a company of 100 people.

As another planning cycle comes into full swing for many companies, the time is now for CEOs to reassess and reevaluate their planning format. All too often, leaders get stuck in a mindset of what’s worked in the past. However, in the ongoing dynamic environment of accelerated change, leaders need to take their strategies to the next level. This requires finding and eliminating the gaps in their current processes and turning to trusted sources for external perspectives.

Without outside quality assurances, CEOs may rely on insular or outdated thinking. If COVID-19 has taught leaders anything, it’s that plans can be derailed without any notice — companies who focus on clarity, alignment and execution, while remaining flexible to the unknown, will come out on top.

This article first appeared in Inc .

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The Impact of Strategic Planning in International Business

The Impact of Strategic Planning in International Business

Strategic planning is a significnt tool in the strategic management of organizations and companies. This planning can be conducted annually by a company, and it is considered to be an important process where companies can organize their activities. Companies across the globe implementing this planning find themselves at a better position, in dealing with the dynamic market environment and having a competitive edge over their competitors.

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Introduction

The concept of strategy has had numerous underpinnings in different fields and industries across the world, but over decades it became essential when it is integrated into the major process of organizational activities, in both profit and not-for-profit oriented enterprises. Strategic planning can be depicted to be a longitudinal study, where institutions identify changes that affect their performance over time, and consequently incorporate strategic tools in their competitive and dynamic market environment. It is crucial for organizations undertaking international business to understand, the practice and nature of employing strategic planning and its effect in the global market arena, and the possible correlations between their performance and efforts in business output. More so, organizations need to understand issues in international business, which they cannot control and simultaneously have a potential impact, on their business transactions, success and survival.

Formal planning exerted by a company in the international scene can, have some positive aspects such as creating competitive advantages, positive control in regard to market forces, improve organizational performance and its overall effectiveness. Consequently, with the importance strategic planning generates, various international businesses and organizations have directed their attention towards the process of strategic planning, and the relationship in the firm’s efforts and the performance achieved, translating to a developed market economy for different countries across the globe.

The aim of this study is to analyze the impact of strategic planning in international business relations, and what it entails for organizations to remain competitive in the global environment characterized by globalization and constant changes.

The strategic planning process incorporates strategic management that seeks to align an organization’s activities with the immediate external environment. Strategic planning is central to the management techniques employed by an organization in dealing, with increased and constant changes in the market environment in aspects such as globalization, and hence firms stand to benefit through implementing strategic planning tools. Various studies conducted by different researchers have sought to examine, the correlation between planning and performance by a firm in business environment. The planning process refers to the inclusion of an organization’s mission statements, goals, internal resources and environmental information programs (Leung, 2005, p.358).

In addition, characteristics in the planning process such as system maturity, commitment, importance, time horizon and comprehensiveness are crucial in the overall planning framework by the organization. Culture also plays a significant role in an organization’s strategic planning process, because cultural values or organizational culture shapes the acceptable company processes like decision making and planning. Constantly, planning processes have been observed to reflect upon the dominant aspects of a culture. Strategic planning is part of an organizations business strategy, which will often involve other factors such as evaluation, analysis, corporate culture, future thinking and strategic intents.

As illustrated, corporate culture influences a company’s planning processes, as it influences decisions made by management and consequently determine, the ultimate performance of the firm in the international business environment. Corporate culture entails company ideals or beliefs, team work strategies, adaptability and flexibility, mission statements, change management, leadership and vision. Organizations must re-assess their corporate culture because it influences the, entire firm’s efforts towards the perceived performance in the competitive market environment. Culture influences individuals working in an organization through people interactions and relationships, like staff relations with clients or customers, stakeholder relationship, individual responses and attitudes towards work ethics, energy use, community involvement, absenteeism and consequently how the organization relates to its employees in regard to factors like professional development and training.

 All these factors influence an organization’s performance in the international environment, because when a company does not implement proper strategic plans it stands to lose, attributed to the risks encountered in the dynamic competitiveness in the international market, posed by different market players and aspects of globalization. It is essential for businesses or organizations’ to step back every so often, from daily running of business or  marketing programs to look at the bigger picture of the organization’s mission and overall accomplishment of defined goals, through effective strategic planning (Leung, 2005 p.362).

Strategizing will encompass a broad spectrum of issues such as the services or products a company offers, the markets served, internal and environmental variables, research, production, finance coupled with myriad other organizational elements, which are essential in establishing a competitive footprint in the international business environment. Strategic planning oversees a company’s immediate circumstances, and looks into the future processes of clarifying the missions and goals of the business in a strategic perspective, compared to tactical position which looks at the short term prospects, or operational planning that focuses on the detailing of the work done. Basically for the organization to be competitive, a thorough analysis will be essential in understanding the objectives and strategies to be employed by the company, through marketing expertise in implementing abstract corporate strategy, making key marketing decisions towards addressing market niches and direct marketing tactics, with the mindset of a sound strategic marketing plan.

As indicated, strategic planning involves analyzing future business performance, and simultaneously encompassing immediate external environment in the international, regional or local environment, in changes which affect the performance of the firm. A company will need to communicate its vision to all its staff members, to the goals and objectives set by the firm and the direction the company is taking. This will incorporate factors like market research in identifying consumer needs, developing relationships with customers, suppliers and stakeholders in the international environment (Leung, 2005 p.370).

Hence, when the direction is identified marked with strategic planning, the next steps would be to analyze the market position of the business or organization, and further introduce and develop strategic goals set coupled with evaluation of the strategies laid down, through constant analysis and evaluation of results and feedback of the performance, of the strategies implemented. Analysis of an organization’s strategic plans in the international market environment would incorporate, analyzing the business strategy through crucial factors which include core competencies, required inputs, identifying core business processes, coupled with SWOT, PEST and Five-Force analysis.

In this respect, the SWOT analysis will identify and evaluate existing organizational strengths, existing business weaknesses, the opportunities in which a business might expect with redefined objectives in the changing market environment, and further the threats which might impede the successful implementation of strategic plans, and future success of the organization. In addition, PEST analysis will evaluate the political factors such as international and national politics that affect development, and hence the overall performance of the business. Economic factors will identify main economic issues in the international or national scene affecting the organization, social factors evaluating developing social trends especially in consumer consumption and how it affects future planning processes, and technological changes brought about by globalization, where a business can use this tool in form a competitive advantage over competitors.

Required inputs in the strategic plan will encompass the resources which will be essential, in carrying out the company strategy and this will impact on land opportunities which are important for development, obtaining both skilled and unskilled labor, and capital which will drive the necessary strategic processes. Five-Forces on other hand influences and shapes the market and industry, the company operates in and this entails barriers to entry of competitors, rivalry between firms, buyer power, threat of substitutes, and supplier power. These factors and models ultimately influence business operations of an organization in the international environment, and should be given priority and the necessary attention coupled with evaluation, that is significant in monitoring the progress of the various strategic plans implemented by the organization.

Strategic planning ultimately affects how an organization conducts its business in local, national or international environment. Coupled with organizational culture or corporate values, strategic planning processes need to involve all the stakeholders who include suppliers, customers, shareholders and employees for the plans to take positive effect. The company’s vision and strategic plans must be communicated to all stakeholders, in order to adopt appropriate attitude, work ethics, business practices and functions compounded by encompassing analysis factors such as core competencies, SWOT or required inputs in implementing the company strategic plans.

                                                            Reference

Leung, K. & Gibson, C. B. (2005). Culture and international business: Recent advances and their implications for future research. Journal of International Business Studies. Volume 36, Issue, 4 pp.357-378.

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