Developing Strategies for International Business

Transcription

1 Developing Strategies for International Business

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3 Developing Strategies for International Business The WRAP Process J. Angus Gillon and Lynne Pearson

4 J. Angus Gillon and Lynne Pearson 2004 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published 2004 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N. Y Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin s Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Gillon, J. Angus, 1941 Developing strategies for international business : the WRAP process / J. Angus Gillon and Lynne Pearson. p. cm. Includes bibliographical references and index. 1. Export marketing Management. 2. International business enterprises Management. 3. Strategic planning. I. Pearson, Lynne, 1965 II. Title. HF1416.G dc

5 Contents List of Figures Foreword and Acknowledgments viii x Chapter 1 International Business Rationale Awareness counts 1 International thinking negative and positives 3 The essential rationale 5 Exporting v. international business 7 Pulling it together: the international mindset 10 Chapter 2 Overview of the WRAP Process What is WRAP? 14 How does WRAP work? 16 Step 1: Internal assessment 18 Step 2: Development of external information 19 Step 3: Analysis and prioritization 19 Step 4: Determining Strategic options 20 Evaluation and reassessment 21 Strategy development 22 Implementation, monitoring and management 23 Chapter 3 International Business Cultures Cultural priorities 28 Key cultural characteristics of the marketplace 32 Language and communication 32 Regionalization 33 Religion and belief 34 Geography, infrastructure and climate 35 Legal and regulatory issues 36 Business ethics 39 Security and threat assessment 41 Chapter 4 Understanding International Customers Identifying the real customer base 46 Drivers in customer market sectors 47 Tracking customer movements 51 Tracking population shifts 54 v

6 vi Contents Chapter 5 Building a Foundation Internal assessment 58 Available resources 59 Market perceptions 59 Corporate culture 60 Management resources 62 Operational resources 63 Financial resources 64 Current products 65 Competitive environment 66 Corporate background 67 External information: establishing the search 68 Creating strategic objectives 68 Parameters and criteria 71 Chapter 6 Information Development The nature and value of information 80 Rationale behind information development 83 The information development process 84 The market model 86 Building the market model 88 Key comparators and contextual information 91 Key comparators 91 Contextual information 92 Data extrapolation 95 Chapter 7 Analysis and Strategic Prioritization Recognizing the corporate subtext 101 Gaining focus: the prioritization process 104 Strategy audit 111 Chapter 8 Routes to Market What is presence 115 Reaching the market 118 External barriers 119 Operational barriers 121 Supply chain 123 Routes to market: establishing presence 125 Indirect presence 125 Distributors and agents 128 Licensing 132 Piggy-backing 132

7 Contents vii Direct presence 133 Joint ventures and acquisition 134 Direct marketing 135 Franchising 135 Non-domestic supply: production and outsourcing 135 Chapter 9 Building a Strategy Strategic objectives 143 Resources and competencies 144 Priority targets 148 Business environment 151 Business opportunity 154 Developing options 155 Example of a developed strategy 158 What to do if it all goes wrong 161 Chapter 10 Strategy Implementation and Management Components of implementation 165 Action plan and time-scale 165 Implementation Budgets 168 Project management or facilitation 169 Managing the strategy 171 Conclusions 174 Bibliography 177 Index 178

8 List of Figures Figure 1.1 Seven Traits That Should Be Overcome Before Attempting International Business 4 Figure 1.2 Eight Potential Benefits of International Business 5 Figure 1.3 Comparative Economies Expressed as Gross Domestic Product, Figure 1.4 Ten Constraints on International Business 7 Figure 1.5 Brazil is Bigger Than Peru. Honest 9 Figure 1.6 Summary of Key Points 11 Figure 2.1 The Benefits of Learning, or How to Achieve Success Quicker and Better 13 Figure 2.2 The WRAP Stairway 15 Figure 2.3 A Typical Un-WRAPped Stairway 16 Figure 2.4 The WRAP Process 17 Figure 2.5 Laboratory IT Systems 24 Figure 3.1 The End 30 Figure 3.2 Walk This Way 31 Figure 3.3 Three Imperatives of Cultural Awareness 32 Figure 3.4 The Colors of Charity 35 Figure 3.5 Climate Change 36 Figure 3.6 Physical Threats 42 Figure 3.7 Examples of Economic Risk 43 Figure 4.1 Examples of Customer Drivers 48 Figure 4.2 Driving the Customer 49 Figure 4.3 Examples of Customer Movement 52 Figure 5.1 Confusing the Issue 65 Figure 5.2 US Defense Market 70 Figure 5.3 Potential Parameters 72 Figure 5.4 Losing the Opportunity 74 Figure 6.1 Nine Types of Information 81 Figure 6.2 The Saga of the Broken Window 88 Figure 6.3 Example of Quantitative Comparators 91 Figure 6.4 Some Populations in Western Europe 93 Figure 6.5 Ranking Contextual Factors Across Territories 94 Figure 6.6 International Police 96 Figure 7.1 Elements in the Prioritization Process 99 Figure 7.2 Healthcare in Columbia 100 viii

9 List of Figures ix Figure 7.3 Some Population Size in Western Europe 106 Figure 7.4 Selected GDP Per Capita, Figure 7.5 The Man from the West: A Reprise 109 Figure 7.6 Criteria Matches 110 Figure 7.7 Ten Recent Strategy-Killing Events 113 Figure 7.8 The South East Asia Bubble 114 Figure 8.1 The Supply Chain in Outline 124 Figure 8.2 The Italian Job 131 Figure 9.1 Chinese Walls 139 Figure 9.2 Facing up to International Business 146 Figure 9.3 Divergence in Strengths and Weaknesses 147 Figure 9.4 We Can t Do Business With Them Because 148 Figure 9.5 Reviewing Strategic Options 156 Figure 9.6 Forecast Platforms for Strategy Development 160 Figure 9.7 World Competitive Positioning Starting and Forecast 161 Figure 10.1 Outline Plan for Strategy Implementation 166 Figure 10.2 The Hacienda Built on Sand 168 Figure 10.3 Using the WRAP Process for Managing Strategy 173 Figure 10.4 Five Golden Rules of Global Strategy 176

10 Foreword and Acknowledgments The high tree of international trade has a long, strong and extremely convoluted root complex that has survived empires, despots, natural disasters, wars and seismic political and geological shifts over many millenia. While the tragic events of 9/11 in New York and Washington created a sharp intake of breath around the world and subsequent actions led to the turbulence that we see around us today, the globalization of business continues apace with new entrants competing with traditional firms and developing economies fast catching up with commercially maturing territories. In this world it is no longer viable to retreat into a protected valhalla of domestic trade; the world is not so much on our doorstep as in our faces, and we need to find better ways of perceiving and dealing with it. That means meeting and addressing new challenges in ways that not only offer benefit and value but also provide frameworks within which commercial needs can be adapted to a variable range of cultural and market demands. Risk exists in all ventures, and in the complex planet that we inhabit it requires to be managed through foresight, awareness and intelligent judgment. Successful strategies, after all, can only be as effective as the people who implement them as well as those who develop them in the first place. The contents of this book, and indeed the WRAP process itself, came together as a result of many years working with firms, and sometimes government bodies, to address the problems and opportunities that arise in doing business internationally. Creating order out of chaos may seem tough but creating real order out of perceived order presents a whole new challenge, and we responded to this need by linking information, rationale and judgment to the creative elements involved in developing successful strategies. Essentially the book reflects a pragmatic approach to the world of global business in which prejudices and misconceptions can be recognized as constraints that need to be replaced by awareness and knowledge, and that gaining these attributes can be achieved within a reasonable timeframe, at least by those who seek them. We also know that the WRAP process works because many organizations that have had exposure to the total process or its individual elements now operate much more successfully in their international environment. x

11 Foreword and Acknowledgments xi Our first set of acknowledgments must therefore go to all those directors, managers and officers who had the wit to learn, adapt, develop and apply the basic principles espoused, from whom we derived the confidence and dedication to continue the WRAP development. This book also contains many illuminating and sometimes cautionary tales and examples, each drawn from real situations and involving real people. Perfection in international strategy is rarely achieved and our focus is primarily concerned with the quality of the building blocks and the attributes of the other materials to be used in achieving appropriate objectives rather than the adoption of a grand architecture whose structural flaws become apparent as soon as the foundation stones are laid. At this developmental level, many mistakes are made and can be corrected or adjusted at the design stage. Our next set of acknowledgements therefore goes, along with our gratitude for helping us to enliven our readers experience, to those whose follies and misapplied good intentions gave us many heart-stopping moments but also confirmed the validity of a better-informed approach. The style and approach adopted in this book may be a consequence of combining American enthusiasm and Scottish guile. More likely, however, they derive from a shared dedication to building a strategic environment that can best enable companies to achieve their international aims, an enthusiasm for addressing the fresh challenges evident in the global marketplace, and a sense of humor which, although quirky, sustains us during the brain-banging sessions familiar to most strategists. Special thanks go to Jackie Kippenberger, our commissioning editor at Palgrave Macmillan, for allowing us this opportunity and then leaving us alone to get on with it, to Jane Tulloch for de-confusing our computers on many angst-ridden occasions, and to Angus s wife Helen, who not only put up with some of the wierdest sleeping/waking schedules known to mankind but continued to provide encouragement all the way through the chapters.