Global Strategy, Ethics, and Multinational Business Planning

Strategic Business Planning and Market Adaptation

A strategic business plan defines the business, quantifies and explains the existing market, and addresses the business's current products, services, strategic propositions, routes to market, customers, case studies, sales and marketing plans, competitors, and potential strategic actions in the near and long-term future. For example, when Starbucks was planning to enter Japan, it might define its business as a coffee retailer and café, its target customer as younger twentysomethings, its products as coffee beverages and ground beans, and its services as preparing coffee and providing pastries and sandwiches. Its strategy might be to position itself between fast food and formal sit-down restaurants, with its route to market being the displacement of the traditional generic coffee market. Customers could be defined as individuals seeking a place to "hang out," with case studies drawn from former fast food establishments. Starbucks might also note that it marketed itself against fast food competitors through a more upscale sales and marketing campaign, while simultaneously employing the strategic act of franchising into urban and then suburban areas.

In Japan, however, where tea is more commonly consumed, noodles are more popular than pastries, and ground coffee is less popular than ready-made beverages purchased on the street — partly due to Japan's smaller homes — these factors would require significant plan adjustments. Starbucks would need to offer a greater selection of teas, allocate more kitchen space, and carry less of a stock of coffee beans. Additionally, the plan would need to focus more heavily on urban markets such as Tokyo, since franchised beverage establishments similar to cafés are not in as much demand in more rural areas.

These adaptations illustrate a key principle of international strategic planning: a framework that succeeds in one cultural and economic context cannot simply be transplanted into another. Effective planning requires a thorough analysis of local consumer behavior, infrastructure, and cultural preferences before committing to a market entry strategy.

Large firms are not the only ones capable of operating on a global scale. Even a small firm can achieve global reach, particularly in the age of the Internet. A small firm — especially one that specializes in a particular but rare product — can keep its brick-and-mortar costs low and its workforce limited, yet still ship to and advertise to customers all over the world via the web. Platforms such as eBay demonstrate this clearly, enabling individual sellers and small businesses to access a worldwide customer base without the overhead traditionally associated with international commerce. The relationship between organizational size and globalization, therefore, is not one of strict dependency; rather, globalization is increasingly accessible to firms of any size.

Organizational Size and Globalization

A mature market may seem to carry little risk because it offers a ready-made customer base. However, that market may already have saturated its demand. For instance, Walmart's saturation of the market in China could make it significantly more difficult for a competitor such as Target or Sears to gain a foothold in that economy. Through such pre-saturation, a state resembling perfect competition may already exist, meaning a new multinational might make a costly entry into the market only to find that it has little ability to generate greater profits than it could domestically, since luring international customers away from an established firm is both expensive and uncertain.