‘All Multinationals That Conduct Strategic Planning Go Through a Three-Step Process: Formulation, Implementation and Control’

Topics: Strategic management, Strategic planning, Michael Porter Pages: 11 (2298 words) Published: November 11, 2008
Introduction

This essay will discuss how Multinational enterprises (MNE) use strategic planning to achieve strategic goals. Its will also discuss and explain each stage of the strategic planning process which allows multinational to carry out a successful and useful plan.

The three main stages, which are formulation, implementation and control, will be discussed in detail on how it is used by multinationals.

‘All multinationals that conduct strategic planning go through a three-step process: formulation, implementation and control’ (Rugman & Collinson 2006:225). Discuss.

Every organisation that plans to expand and grow worldwide would need to carry out strategic planning to determine where they are going over the next year or more, how their going to get there and how will they know if they are there.

There are three steps that an organisation must consider and go through to carry out an effective strategic plan, these are:

Strategic formulation
Strategic implementation
Strategic control and evaluation

Strategy Formulation

For a multinational organisation, strategy formulation identifies environmental and internal strengths to establish its goals and the strategic plan that will lead to the achievement of those goals.

In strategy formulation managers develop, refine and agree on which markets to enter (or exit) and how best to compete in each. The diagram below shows us the stages managers go through to develop new strategic plans for their firms.

Steps in Strategy formulation

Strategic Formulation – Mission Statement

A mission statement defines an organisation by answering the following questions:

1.WHO are we?
2.WHAT do we do?
3.WHERE are we headed?

Mission statements may change depending on length and content. They might explain company philosophy, promote ethical policy, celebrate successes and most importantly discuss strategic goals. They project the corporate image to a range of people who have an interest in the company: these include the media, analysts, customers and suppliers, other people in the environment and company workers. MEAD, R 2005 ‘International management’

When addressing employees of multinational companies, mission statements aim to fill the following functions (discovered by Baetz and Bart (1996) in their analysis of Canadian statements):

Guide strategic planning
Define the scope of operations
Provide a common purpose
Guide leadership styles
Promote a sense of shared expectations among all levels of the organisation

Source: MEAD, R 2005 ‘International Management’ Pg 89

Strategic Formulation – Environmental scanning and SWOT analysis

The next step in developing a strategy is conducting a SWOT analysis. SWOT identifies the ‘’Strengths, Weaknesses, Opportunities, and Threats.’’ Multinationals often perform environemtal scans to help them conduct a SWOT analysis.

Environmental scan is a systematic collection of data about all elements of the multinational external and internal environments, including:

Markets
Regulatory issues
Competitors actions
Production costs
Labour productivity

GRIFFIN W. and PUSTAY W. 2003 ‘International Business: a managerial perspective’

Managers or members of the planning department at multinational companies scan the external environment to identify opportunities and threats that may occur within the environment. They aim to obtain information about economic, financial, political, legal, social and competitive changes in various markets the company serves or might want to serve.

For example, Boeing a multinational organisation, continuously monitors changes in political and economic forces that effect air travel. During the early 1990’s due to political shifts in China, competition increased within the Chinese air...

References: BOOKS
GRIFFIN, RICKY W. and PUSTAY, MICHEAL W. (2003) International Business: a managerial perspective. International edition, Texas: Prentice Hall
RUGMAN, ALAN M. and COLLINSON, S. (2006) International Business, 4th edition: London, Prentice Hall
MEAD, R. (2005) International Management: cross cultural dimensions, 3rd edition. UK: Blackwell Publishing
TAYEB, M. (2003) International Management: theories and practice, 1st edition. London: Prentice Hall
CZINKOTA, MICHEAL R. and RONKAINEN, IIKKA A. and MOFFETT, MICHEAL H. (1994) International Business: international edition. USA: Liz Widdicombe.
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