Question

Strategic planning and execution skills are essential to the success of any company. Strategy is the game plan for winning in the marketplace. Strategy decisions are driven by environmental and competitive changes that lead to opportunities or threats for the company. A business needs to know why it exists- it’s purpose or mission, and where it is going- it’s vision for the future, and its values- the behaviors, attitudes and beliefs that it must adhere to. how might a company go about deciding on which parts it would locate internationally? How do core competencies and innovation factor into the decision-making?

Answer 1

For a company to decide on which parts it should locate internationally, it is very important strategic decision for the company. The company to do so should analyze :

1. The entry barriers in those parts and whether it can enter those markets easily at reasonable costs.

2. Bargaining power of suppliers and customers in those parts. This is very important as the lower bargaining power the suppliers and customers will have, the more can be the potential profit delta the company can enjoy.

3. The stability of the economy and the political infrastructure in the part.

4. The no of competitors and the competitive strength against the competition. For e.g for a retail giant to set up a shop in USA against Walmart is very difficult. These factors should be analyzed.

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Core competencies factor into decision making for any enterprise. Core competency is the main product and strength of the enterprise and what it does best. The core competency also helps the enterprise walk into many other opportunities over time.
For e,g for accountants which started the Pricewaterhouse, their core strength was accounting and auditing. The firm built a massive service offering accounting and auditing services over time.Also over time the firm used its position in the industry and among its clients to get other kind of consultancy work including management consultancy and IT Consultancy assignments which might not be its core competency.

Also for most companies if not all, Innovation as well is very critical. Innovation can be in all processes - including production design, selling and marketing technique etc. Innovation differentiates the products of the company from its competitors. /

For e.g When Coke changed its bottle design, it was a new industry innocvation.

It worked very well we can today say in hindsight.
Also for some industries like food industries etc, innovation to better products is always the key.