MARKET SELECTION AND FOREIGN ENTRY MODE


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MARKET SELECTION AND FOREIGN ENTRY MODE

Required Reading

Start out this module with this introductory video on foreign entry mode strategies that explains the main concepts from Professor Mark Wolters of the University of Illinois:

Wolters World. (2012, October 25). Global market entry strategies explained [Video file]. Retrieved from https://www.youtube.com/watch?v=GSyYo4ph3hM

The first step to entering a foreign market is to decide which country to enter. The following chapter will give you a solid overview of the process of selecting a potential country to enter:

de Kluyver, C. (2012). Chapter 5: Target markets and modes of entry.
In Fundamentals of global strategy. Saylor Foundation. Retrieved from https://saylordotorg.github.io/text_fundamentals-of-global-strategy/s07-
target-markets-and-modes-of-en.html

After you’ve chosen which country you want to enter, you then need to decide how to enter the country. The following two readings will give you an overview of several foreign entry-mode strategies and benefits and risks of each strategy:

Carpenter, M., & Dunung, S. (2012). Chapter 8.3: International expansion
entry modes. In Challenges and opportunities in international business.
Lardbucket Books. Retrieved from https://saylordotorg.github.io/text_international-
business/s12-03-international-expansion-entry-.html
Jeyarathmm, M. (2008). Chapter 12: Strategy in a global environment.
In Strategic management (pp. 165-169). Mumbai, India: Himalaya Publishing
House. [Ebrary. Note: You don’t have to read the whole chapter—just the
last five pages.]

Case Assignment

Junqian, X. (2014, October 3). Pret a Manger prepares for sandwich battle. China Daily. [ProQuest]

Sanchanta, M. (2004, March 30). Pret a Manger retreats from Japanese market. FT.Com. [ProQuest]

Assignment Overview

Pret a Manger (which means “ready to eat” in French) is a British fast food restaurant chain known for its very friendly staff and relatively healthy food. While the majority of its restaurants are in the U.K., it also has a heavy presence in the eastern United States. While the restaurant is successful in the U.K. and in American cities such as New York and Chicago, it has had only limited success in other countries so far. In 2002, it tried to expand to Japan in a joint venture with McDonald’s, but ultimately this venture failed and it withdrew from Japan by 2004. Now it is currently entering China with restaurants in Hong Kong and Shanghai. Clearly, Pret a Manager is intent on international expansion, but given its failure in Japan, it of course needs to carefully plan its expansion strategies.

Before writing your paper, make sure to carefully review the concepts of target markets and market selection from de Kluyver (2012) as well as the discussion of advantages and disadvantages of different foreign entry mode decisions in Carpenter and Dunung (2012) and Rajagopal (2009). Once you have finished reviewing the basic concepts of this module, do some research on Coupang. Below are a couple of articles to get you started, but news on Pret a Manger seems to change by the day so try to find some more recent articles in addition to reading these two articles:

Junqian, X. (2014, October 3). Pret a Manger prepares for sandwich battle. China Daily. [ProQuest]

Sanchanta, M. (2004, March 30). Pret a Manger retreats from Japanese market. FT.Com. [ProQuest]

Case Assignment

Suppose you have been hired by Pret a Manger to come up with an international strategic plan. Write a 4- to 5-page strategic plan for Pret a Manger that addresses the following issues:

  1. What country or countries should Pret a Manger enter next (beyond the five countries they already operate in)? Explain your reasoning for this selection based on criteria from the background materials including de Kluyver (2012) and articles on Pret a Manger.
  2. What mode of entry should Pret a Manger use to enter this country or countries that you chose? For example, should they use a joint venture, franchising, a greenfield strategy, etc.? Refer to the concepts from Carpenter and Dunung (2012) and Jeyarathmm (2008) in your answer, and cite some articles on Pret a Manger.

Assignment Expectations

  • Answer the assignment questions directly.
  • Stay focused on the precise assignment questions. Don’t go off on tangents or devote a lot of space to summarizing general background materials.
  • Make sure to use reliable and credible sources as your references. Articles published in established newspapers or business journals/magazines are preferred. If you find articles on the internet, make sure they are from credible sources.
  • Reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations.

MGT 499 CASE

 

STRATEGY IMPLEMENTATION AND MONITORING

Required Reading

Organizational Controls

To begin our discussion of implementation controls, please read Section 9.4 of the Mastering Strategic Management text. In this section, note specifically the reference to “organizational control systems.” Also, note the three general types of controls: Output controls, behavioral controls, and clan controls. Finally, be sure to review the section on organizational culture specifically. Culture, defined as “the way we do things around here,” is a key organizational control.

Functional Strategies, Annual Objectives, and Policies and Procedures

Following the choice of grand strategy (or strategies), the organization needs to execute its strategies. Execution requires that the grand strategy be:

  1. Operationalized: The strategy must be implemented, put into motion;
  2. Institutionalized: The strategy must be made clear to the people throughout the organization, i.e., “This is the direction in which we are now headed; this is the choice we have made”; and
  3. Controlled: The strategy must be monitored on an ongoing basis, and every functional area of the organization must play a role in its execution.

When implementing its grand strategy, the organization must concern itself with the following:

  1. Functional strategies;
  2. Annual objectives; and
  3. Policies and procedures that guide decision-making.

Functional strategies are short-term strategies established within each functional area within the organization (e.g. Accounting, Marketing, Human Resources, Operations, Customer Service). Let’s assume that the organization has selected to pursue a Concentration strategy. By definition, following a Concentration strategy requires that the organization focus its people, financial, and capital resources on a single product or service. An example of a Sales and Marketing functional strategy (one that is also aligned with a Concentration grand strategy) might be: “Product line X: Outperform Competitors A and B in Year 1 by 15% unit sales in Market Y.”

Annual objectives are the mechanisms by which functional strategies are translated into even more time-limited (annual) plans of action. An example of an annual objective that relates specifically to the Sales and Marketing function (again within a Concentration strategy) might be: “Provide sales training to 10 sales staff on Product Line X, resulting in an increase of 20% in annual revenue in Year 1.” Note how this objective is not only specific and measurable, but that it is time-limited (to one year) as well. Moreover, it is aligned well with a Concentration strategy, as it is intended to increase sales revenue of Product X by a certain percentage year over year.

Within each functional area, policies and procedures (and rules) guide day-to-day actions and decision-making. Policies and procedures allow for uniform and consistent handling of similar activities, and they guide people to desired organizational behaviors (some might consider this to be the basic “control” function of management). Many policies and procedures are formalized in writing. Others, however, may be unwritten and less formal.

Organizational Structure/ Organizational Design

The organizational structure is not only a form of strategic control, it must be aligned with the organization’s strategies. Be sure to read Section 9.1 “Executing Strategy through Organizational Design, in the Mastering Strategic Management text.

In addition to the formal organizational structure, committees – on a smaller scale – are structures that are frequently formed to keep strategies on-track. Committees are frequently formed by the Board of Directors; such committees monitor key strategic areas, for example, Budgets, Audits, Capital Expenditures, Finance, Employee Compensation, Special Projects, and Corporate Social Responsibility.

Organization Culture

Organizational culture plays a critical role in the execution of strategy. Culture was mentioned in Section 9.4 of the Mastering Strategic Management text.

For an excellent overview of organizational culture, please read Chapter 1 of Mats Alvesson’s book: Understanding organizational culture.

Alvesson, M. (2002). Understanding Organizational Culture. London: SAGE Publications Ltd. Retrieved from EBSCO eBook Collection.

Budgeting and Variance Analysis

Budgeting is a key means of implementation control. Actual expense to budgeted expense analysis (or variance analysis) is critical to keeping a strategy on-track.

For a very good overview of how budgets are used as control systems, please read Chapter 2: “Strategic Planning and Budgeting” of Shim and Siegel’s text:

Shim, J. K., & Siegel, J. G. (2009). Budgeting basics and beyond. Hoboken, N.J.: Wiley. Retrieved from EBSCO eBook Collection.

Next, read Chapter 8 in Shim and Seigel, as it relates to Variance Analysis:

Shim, J. K., & Siegel, J. G. (2009). Budgeting basics and beyond. Hoboken, N.J.: Wiley. Retrieved from EBSCO eBook Collection.

Performance Appraisal

It goes without saying that no strategy would exist without the people who are ultimately responsible for executing that strategy. Proper implementation and execution of strategic choices requires the best people. And the best people are selected by – and retained by – the organization through the performance appraisal process. Of course, this is a Human Resource Management (HRM) function. Performance appraisal is, therefore, used as a strategic control. Read a short summary of the performance appraisal process here:

Performance appraisal. (n.d.). Management study guide. Retrieved from http://www.managementstudyguide.com/performance-appraisal.htm

Institutionalizing the Strategy

Above, it was stated that strategy must be “institutionalized.” Institutionalization of the strategy requires not only that everyone within the organization is aware of the strategy, but also that everyone is on-board. Institutionalization process requires that the strategy is understood and that everyone knows his/ her role in execution process. Read Chapter 19 of Brian Tracy’s text: “Engage the Entire Company”:

Tracy, B. (2015). Business strategy (The Brian Tracy Success Library). New York: AMACOM. Retrieved from EBSCO eBook Collections.

Assignment Overview

In the Module 4 Case, we will investigate the control systems at the Coca-Cola Company.

Case Assignment

Visit the website of the Coca-Cola Company: http://www.coca-colacompany.com/, and go to the Investors page. Look around at this page (there is a lot of excellent information here), and search for information related to the organization’s structure and controls. Then, locate the company’s most recent Annual Reports and 10-K filings. After completing some research at Coke’s website, in the library, and on the internet, please address the following:

  1. Describe the organizational structure at the Coca-Cola Company (what form of structure does the company have?). Include any information you can find regarding the company’s Board of Directors and the company’s committees.
  2. Describe the organization’s culture. How well does the company’s Values statement align with its culture?
  3. Do some research at the Coca-Cola Company website and in the library (be sure to look at trade magazines and newspapers as well) and find as much information concerning the company’s control systems as you can (budgets, inventory control, annual objectives, functional strategies, policies and procedures, personnel evaluation systems, or other). Describe these controls, and discuss how they assist in keeping Coca-Cola’s strategies on-track.
  4. In the Module 3 Case, you identified a grand strategy (or grand strategies) that the company should follow. Do the company’s organizational structure, culture, and control systems align well with this strategy? Explain.

Assignment Expectations

Your Case Assignment should be a minimum of 5 pages in length.

You are required to use APA formatting and you are required to cite and reference your sources.  There should be a minimum of three (3) reputable sources cited and referenced in your paper (your sources must be different from the sources provided you in the Background materials).

Please make sure you review the assignment rubric prior to writing your assignment.

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