Special Topics:International Strategies and

Strategies for Entrepreneurial Ventures and Not-for-Profits

Strategic Management in Action[Chapter 8]

Kelsey CombestKatie FickenRyan Lacy

Learning Outcomes

Issues that arise as organizations go international

Important international strategic decisions

Strategic management process and issues that face entrepreneurial ventures and small businesses

Strategic management process and issues that face not-for-profit and public sector organizations

The International Environment

The Legal-Political Environment: Laws and regulations Political stability

The Economic Environment: Currency exchange rates Inflation rates Diverse tax policies

The Cultural Environment: National culture – the values and attitudes shared

by individuals from specific country that shape their behavior and their beliefs about what is important.

International Strategy Decisions

Multicountry Approach vs. Global Approach Multicountry approach: an organization’s

strategies vary according to the countries in which it does business▪ Create differentiation advantage▪ Products and marketing are tailored to fit consumer tastes and

preferences

Global approach: the strategies are basically the same in all countries in which the organization does business.▪ Low-cost advantage.▪ Emphasis on globally integrating operations▪ Products have minor variations▪ Emphasizes coordination between functions and business units

Apple, Inc.

Retail Locations

International Strategy Alternatives

1. Exporting: make products in the home country and transport them for sale to other countries

2. Importing: selling products that are made in another country in the home country

3. Licensing: a foreign licensee buys the right to manufacture and market a company’s product in that country for a fee

4. Franchising: a business sells franchisees in other countries limited rights to use its brand name in return for a lump-sum payment and share of profits

5. Direct Investment: an organization owns assets in another country

Born Global Firm

An organization that chooses to go international from founding.

Example: Logitech

Entrepreneurial Ventures and Small Businesses

Entrepreneurial Venture Small BusinessInnovative strategic practices Independently owned, operated,

and financed

Strategic goals are profitability and growth

Fewer than 500 employees

Seeks out new opportunities Doesn’t emphasize new or innovative practices

Willingness to take risks Little impact on industry

Why Are These Organizations Important?

Job Creation Statistics collected by the U.S. Small Business

Administration (SBA) show that small firms generate 60 to 80 percent of all net new jobs annually.

Number of New Start-Ups Continual changes in the external environment provide

a fertile climate for entrepreneurial ventures because these organizations often are better able to respond quickly to changing conditions than are larger, more bureaucratic, and less flexible organizations.

Many of the cost advantages that large organizations traditionally had because of their size have been eroded by technological advances.

Why Are These Organizations Important?

Innovation Entrepreneurial firms are an essential source of

new and unique ideas that might otherwise go untapped.

Entrepreneurial organizations generate 24 times more innovations per R&D dollar spent than do Fortune 500 organizations, and they account for over 95 percent of new and “radical” product development.

Small entrepreneurial firms produce 13 to 14 times more patents per employee than do large patenting firms.

Mission Statement

Situation Analysis

Strategy Formulation

Strategy Implementation

Strategy Evaluation

Strategic Management Process

Strategic Issues

Human Resource Management Issues Most valuable resources and competitive

advantages a small organization has is its employees.

Recruiting, motivating, and retaining employees is one of the biggest problems for small organizations.

Strategic decision makers should recognize how important human resources are and commit whatever time and resources are necessary to develop appropriate strategies for attracting and keeping good people.

Strategic Issues

Innovation and Flexibility Consideration Primary competitive advantage Strategic decision makers need to capitalize

on this flexibility advantage and to be aware of and open to environmental changes.

Have the potential to come up with real innovations.

Economist Joseph Shumpeter referred to this process in which existing products, processes, ideas, and businesses are replaced with better ones as creative destruction.

NFP’s

Not-for-profit organization (or non-profit) - is an organization whose purpose is to provide some service or good with no intention of earning a profit in order to meet the requirements of U.S. Tax code Section 501 (c)(3) as a tax-exempt organization. Does NOT mean ‘no revenue’

Sources of Revenue for NFP’s

Public Sector (government units, offices & departments, essential for society)

Professional Membership Associations

Health Service Cultural

Cause Related Foundations Educational Charitable Religious Social Service

Strategic Management for NFP’s

Similar to that of a normal business Must do internal and external

analysis for your company Still must know:

Strengths and weaknesses Core Competencies Distinctive Capablities

Strategic Management for NFP’s

Face similar constraints such as scarce or limited resources (yet resources are typically more scarce)

Want to keep costs low Should we grow? And if so, how? Must have clearly stated goods, and

evaluations of them

Specific Issues facing NFP’s

Still must have a specific vision and mission statement

Designing appropriate programs and services

Different types of stakeholders and pressure than a normal business

Unique Strategies used by NFP’s

Cause Related Marketing Existing business joins with a NFP that fits well

with their products Marketing Alliances

Strategic partnership between a NFP & one or more corporate partner

Partners agree to do marketing actions that will benefit both parties

Can also license names and logos to businesses Strategic Piggybacking

Developing a new activity to generate revenue

Takeaways

Opportunities and threats must be assessed in the international environment and then the most appropriate global approach can be chosen.

Entrepreneurial Ventures and Small Businesses are important because they contribute to job creation, the number of new start-ups, and innovation.

Both external and internal analyses are important in determining opportunities and threats and strengths and weaknesses. - “boiled frog”

Not-for-Profit Organizations are like normal businesses; having to strategize and differentiate

References

www.apple.com http://www.uq.edu.au/news/?article=

7023 http://ideas.repec.org/a/pal/jintbs/v3

5y2004i2p124-141.html