A glocal strategy won’t work; unless you do! v2

A Glocal strategy won’t work; unless
you do!

Presented by
Daniel Feiman, MBA, CMC©

© 2010 Build It Backwards
1 IMC International SIG
June 25, 2010 All international rights reserved

Today’s program
A Glocal strategy won’t work; unless you do!

Discussion Points:
• How do you answer the question, “Why do you want to go
global?”
• C you use the same strategy globally that you use locally?
Can ?
• What is your Strategic Competitive Advantage?
• Have you completely identified & assessed the risks?
• Globally vs. internationally – what is the difference?
• What entry strategy will you use?
• How will you beat out “local” competition?
• If it costs 7 times more to find new clients than to keep
existing ones...

June 25, 2010 2 © 2010 Build It Backwards IMC International SIG
All international rights reserved

How do you answer the question, “Why do you
want to go g
g global?”
• Nothing better to do
• No choice
• Demand
• Curiosity
• Option
• Other
• ________________________________________________
________________________________________________
________________________________________________


The answer should be…
• The reason for being a global company is to leverage
capabilities worldwide so that a long term competitive
advantage is achieved that cannot be achieved otherwise
• Gain new customers
• Lower costs
• Leverage core competencies
• Diversify risk
• Move to an earlier point on the life cycle curve


Can you use the same strategy globally that you
use locally?
y
• In order to compete successfully, we must consider
– differences in culture
– market conditions and
– Demographics
– Examples
Nestles in Africa
Disney in France
KFC in China
• Cost issues
– currency exchange rates
– labor
– material
– taxes or not
• Business Issues
– Country risk
– Business Friendly
– Political Stability
– Access to customers


What is your Strategic Competitive Advantage?
What is Sustainable Competitive Advantage?
• Sustainable competitive advantage is the focal point of your
corporate strategy.
• It is an advantage that enables business to survive against its
competition over a long period of time.
• It allows you to maintenance and improvement of y
y p your company’s
p y
competitive position in the market.
• Examples include:
– Innovation
– Process
– Labor cost
– Worker productivity
p y
– Government regulations
– Distribution costs
– Business friendly government


Sources of Competitive Advantage
Strategic Objectives National Dif erences Scale Economies Scope Economies
Efficiencyy in Operations Exploit factor cost dif erences Scale in each activity Sharing investments and costs
Flexibility Market or policy-induced changes Balancing scale with strategic & operational risks Portfolio diversification
Innovation and Learning Societal dif erences in management and organization Experience - cost reduction and innovation Shared learning across activities
g p


Have you completely identified & assessed the
risks?
• Exchange rates
• Culture
• Lifestyle differences
• Demographics
• Income levels
• Diversify macroeconomic risks (business cycles not perfectly
correlated among countries)
g )
• Diversify operational risks (labor problems, earthquakes,
wars)


Globally vs. internationally – what is the
difference?
• A company is an international competitor when it competes in
a select few foreign markets.
• It is a global competitor when it h or i pursuing a market
i l b l tit h has is i k t
presence on most continents and in virtually all of the world’s
major countries


What entry strategy will you use?

Franchise

Multi-
License
Country

International
Strategy
Strategic
g
Global
Alliances

Domestic Export


How will you beat out “local” competition?
• Each country has a local market that is self-contained
y
• Competition in one country is independent of competition in
other country
• Rivals competing in one country differ from set of rivals
competing in another country
• Rivals vie for national market leadership
• C
Competitive conditions across countries are strongly li k d
titi diti ti t l linked
together
– Many of same rivals compete in many of the same country markets
– Rivals vie for worldwide leadership
– A true international market exists
• A firm’s competitive position in one country may affect its
position in other countries
• Competitive advantage (or disadvantage) is based on a
firm’s world-wide operations and overall g
p global standingg


• Customized competitive approach to fit each market
• Different product versions under different brand names,
customized to fit buyer tastes in each country
y y
– McDonalds
• Production plants in each country
– Producing products for that country
– Using local suppliers where possible
• Marketing and distribution to local customs and cultures
• Transfer competences where possible
• Autonomous local managers


If it costs 7 times more to find new clients than to keep
existing ones...
• Every study says…
• Frederick F. Reichheld, author of the widely read The Loyalty
Effect: The Hidden Force Behind Growth Profits and Lasting
Growth,
Value, showed that making loyalists out of just 5% more
customers would lead, on average, to an increase in profit
per customer of between 25% and 100%. Reichheld's
f % %
analysis showed that the cost of acquiring new customers
was five times the cost of servicing established ones.
g

Why do we feel we must go shopping rather than building
relationships?


A final word of warning
• Profitability in emerging country markets rarely comes quickly
or easily
• New entrants have to be very sensitive to local conditions be
conditions,
willing to invest in developing the market for their products
over the long term and be patient in earning a profit

15 © 2010 Build It Backwards IMC International SIG

Build It Backwards
We turn Roadblocks into Roadmaps by helping you plan,
achieve & sustain exceptional success with
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easu eab e esu s days. e start clearly
defining & quantifying your unique future. Then we guide
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( )

clearly marked, you can proceed with more clarity &
more profits.

Strategy – Finance - Process

Why not call us today to start your Success Roadmap(SM)
before your competition does!
y p


Contacting us:
Daniel S. Feiman, MBA, CMC®
Managing Director
Build It Backwards(TM)
Success by Ch i
S Not Chance(SM)
b Choice; N t Ch
Office: 310.540.6717 Cell: 818.522.2892

Consultants & trainers in:
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Fi Modeling Analysis
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