Case Studies 1

SUPPLY CHAIN MANAGEMENT WEEK 6-LECTURE 1

CHAPTER 11

DR. ISMAIL CIVELEK

CONDUCTING A GLOBAL STRATEGY ANALYSIS • Assembling the global team

• Defining the business

• Identifying key markets

• Identifying key competitors

• Checking the core strategy

• Checking country selection

• Diagnosing industry globalization potential

• Evaluating current and potential use of global strategy levers

• Evaluating organization capability

• Developing global programs

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ASSEMBLING THE GLOBAL TEAM

Since involvement across the organization is absolutely crucial, the team needs to be selected from the following:

• Head of the worldwide business, if there is one • Senior representatives from related businesses (that share facilities

or staff)

• Senior corporate executive • Heads of major regions/countries • Heads of key functions

The ideal number is 6-8, including one designated as the leader.

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DEFINING THE BUSINESS

Business definition is an important issue, because a global strategy analysis is often more effective by starting out with a piece of the business rather than with the entire business.

Classical definitions of a business focus on three dimensions:

• product (or service) function • technology employed • customer groups served • In the global context, the geographic dimension must be added to

the above three.

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IDENTIFYING KEY MARKETS • Given the constraints of time and other resources, the approach to

identifying key markets is to split it into two levels, first by region and then by country within each region.

• Important information about each country-market, such as market size, stage of product life cycle, etc. allows the team to compare countries and identify key markets.

• It is important to convert all currencies into the currency of the headquarters country at historical exchange rates.

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IDENTIFYING KEY COMPETITORS

While resource constraints preclude identifying all competitors, the following should be identified and examined:

• All global competitors • The largest competitor based in each lead country and major

region, even if they are not global

• Potential global competitors

The goal is to keep this list to 10 or fewer competitors.

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CHECKING THE CORE STRATEGY

The following elements should be understood:

• Business definition • Strategic thrust • Financial targets • Sources of competitive advantage • Strategy elements • Value-adding activities • Competitive strategy

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CHECKING COUNTRY SELECTION

Three sets of factors should determine country selection:

• Stand-alone attractiveness • Global strategic importance • Synergy

The global team should identify all countries or regions in which the business already participates or might do so.

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DIAGNOSING INDUSTRY GLOBALIZATION POTENTIAL • Diagnosing industry globalization potential is best done in two

stages:

• In stage 1, the global team can make preliminary assessments through group discussions at one of its meetings.

• In stage 2, the team should identify how industry globalization drivers give rise to opportunities to use global strategy levers.

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EVALUATING CURRENT AND POTENTIAL USE OF GLOBAL STRATEGY LEVERS

• Various analytical and display techniques can help diagnose the individual global strategy levers.

• A key aspect of a global approach to market participation is the extent to which the business’s revenues are in geographic balance with those of the market as a whole.

• The key analysis needed for product standardization decisions is the calculation of potential cost savings.

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EVALUATING ORGANIZATION CAPABILITY • It is essential to evaluate the organization’s capability for global

strategy and to diagnose the necessary changes.

• The global team should try to discover how other effective companies in the same industry or comparable industries organize and manage for global strategy.

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DEVELOPING GLOBAL PROGRAMS • To ensure the transition to implementation, finally the team should

specify plans for global programs in sufficient detail.

• The example summary of one such program detailed in the chapter helps reinforce the importance of this step to facilitate implementation.

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FURTHER STEPS • An assessment of how global an industry is today and is likely to

become in the future

• An understanding of how global a company’s approach is today, and how it compares to its peers and to the industry potential for further globalization

• An identification of the organizational factors that will facilitate or hinder a move toward globalization

• A broad action that encompasses both strategic and organizational change priorities.

• The guidelines suggested in this chapter help in getting the best of the above four outputs.

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