The Unique Nature of

Industrial Marketing
 Industrial Marketing
• Also called: Business-to-Business
(B2B) and Organizational Marketing.

• Definition: the creation and

management of mutually beneficial
relationships between organizational
suppliers and organizational
customers.

• Customer can be private firm, public

agency, or nonprofit organization.

2
 The Marketing Concept

• Creating value for customers

with goods and services that
address organizational needs
and objectives.

3
 Marketing Concept
• Three major components:
– All company activities should begin
with, and be based on, the
recognition of a fundamental customer
need.
– A customer orientation should be
integrated throughout the functional
areas of the firm: production,
engineering, finance, R&D.
– Customer satisfaction is viewed as
the means to long-term profitability
goals.
4
B2B Defined

• The management process responsible

for the facilitation of exchange
between producers of goods and
services and their organisational
customers.
• B2B marketing and purchasing is a
complex and risky business
involving a number of different
parties.
Flows within a B2B market
Differences between B2B and
consumer marketing (1 of 3)
Differences between B2B and
consumer marketing (2 of 3)
Differences between B2B and
consumer marketing (3 of 3)
B2B customers
• Commercial enterprises - profit making
organisations that produce and/or resell
goods and services for a profit. Can be
subdivided into users, original
equipment manufacturers (OEMs),
resellers.
• Government bodies.
• Institutions - largely non-profit making
organisations, e.g. universities,
churches, etc.
Characteristics of B2B markets
• Nature of demand - derived,
joint, inelastic.
• Structure of demand -
industrial and geographic
concentration.
• Buying process complexity.
• Buyer-seller relationships.
 Strategic Focus Grid

High

Follower Interact

Customer
Focus

Isolate Shaper

Low

Low Technology Focus High

12
 Market Orientation
• Acquire intelligence from the
external environment.
• Disseminate that intelligence
throughout the organization.
• Respond to the intelligence:
take action.
(Kohli and Jaworski 1990, Journal of
Marketing)

13
 Marketing Mission Statement

• State in terms of meeting

customer needs, not in terms of
products or technologies.

• Marketing Myopia (Levitt 1960

HBR)

14
 Marketing Activities
• Identify customer needs
• Research customer behavior
• Divide market into manageable
segments
• Develop new products/services
• Establish/negotiate prices
• Deliver, install, service products
• Ensure adequate and timely supply of
products at correct place
• Allocate resources across product
lines
• Communicate with customers
• Evaluate/control marketing programs
15
 Marketing Mix
• Limited number of variables under
Marketing’s control to create
position that is attractive to
the target market segment.
• Four Ps
– Product
– Price
– Promotion
– Place (Distribution)

16
 External Environment

• Characterized by:
– Degree of Stability
– Complexity
– Diversity
– Hostility

17
 External Environment
• Six Environments
– Technological
– Economic
– Social/Cultural (Customer)
– Political/Legal
– Natural/Climatic
– Competitive

18
 So what’s different
about B2B?
• Marketing Concept
• Marketing Mix
• Market Segmentation
• Product Life Cycle

• All apply in both B2C and B2B.

19
 So what’s different about B2B?
• The technical characteristics of
the product are important.
• These products directly affect the
operations and economic health of
the customer.
• The customer is an organization
rather than an individual
consumer, or family.

20
 Five Major Differences
Between B2B and B2C

• Products/Services being
marketed
• Nature of demand
• How the customer buys
• Communication process
• Economic/Financial factors

21
 Products/Services
• More complex
• Functional vs. Symbolic Attributes
• Large unit dollar value/Large
quantities
• Custom/Tailored
• Various Stages from raw material to
finished goods.
• Foundation, Entering, Facilitating
Goods

22
Raw Material Extraction

Material Processing

Manufacturing
Parts/Subassembly

Facilitators
Assembly

Distribution

Wholesale/Retail Trade

Final Consumers

23
Firms in Production Chain
 Nature of Demand
• Derived – needed to produce
other goods and services.
Precision steel tubes for
various products to be used in
automobiles.
• Joint/Shared – pump set needs
engine /motor

24
Influences on a B2B purchasing chain
 Sourcing strategies - advantages
and disadvantages (1 of 2)

Source: Adapted from Treleven (1987).

 Sourcing strategies - advantages
and disadvantages (2 of 2)

Source: Adapted from Hahn (1986) and Ramsey and Wilson (1990). Reprinted by permission of MCB University Press Ltd.
Models of organisational
buying decision making
 DEALERS /
DISTRIBUTORS

COMMERCIAL OEMs;
ENTERPRISE

End user

Public
GOVERNMENT sector

BUSINESS
projects
BUYERS

INSTITUTIONAL Public

private

COOPERATIVE Manufacturig
SOCIETIES units

Non
manufacturi
ng units
 What do they buy?

• Materials and parts – RM,

Manufactured materials, components –
gets into the product directly.
• Capital goods: plant and building,
infrastructural needs, machinery –
needed to produce other products and
services.
• Supplies and services: consumables,
delivery services, installation and
commissioning, servicing and repairs,

30
Decision problems in B2B purchasing
decision making process (1 of 2)
Decision problems in B2B purchasing
decision making process (2 of 2)
Roles in the buying process

• Purchasing - handle relationships with

suppliers.
• Production/operations - meeting targets for the
end product in both quantity and quality terms.
• Engineering - the specification and design.
• R&D.
• Finance - devolve budgets to appropriate
managers.
• Marketing - outputs of the production process.
 Unit production model of
buyer-seller contact in B2B markets

Source: Adapted from Johanson (1982), copyright 1982 © John Wiley & Sons Limited. Reporoduced with permission.
 Mass production model of
buyer-seller contact in B2B markets

Source: Adapted from Johanson (1982), copyright 1982 © John Wiley & Sons Limited. Reproduced with permission.
Buying centres - comparison between
consumer and B2B markets (1 of 2)
Buying centres - comparison between
consumer and B2B markets (2 of 2)
 INDUSTRIALBUYER BEHVIOR M ODEL

INFO.SOURCE

- Salesperson
- Exhibitions & trade shows
- Trade journals
- W OM Activ
- DIRECT M AIL 38
 7 R’s of MARKETING MIX.

• RESEARCH – WHAT DO THEY WANT?

• RATE – SPEED – MIND TO MARKET CYCLE.
• RESOURCES – 4 Ms.- THROUGH THE SCM.
• RETAILING – SHELF SPACE VS MIND SPACE.
• RELIABILITY – SOLUTION – PERFORMANCE –
SCM – AFTER SALES SERVICES
• REWARD – LOYALTY ENHANCING – BRAND
LOYALTY.
• RELATIONSHIP- WITHIN SCM – CRM - MENTAL
RECALL RATE.

39
 How Customer Buys

• Group Process
• Formal
• Lengthy
• Loyal
• Decisions based on risk and
opportunity

40
 Communication

• Personal selling more important

than mass paid advertising
• Support sales with other
promotional activities:
advertising in trade journals,
catalogs, trade shows, direct
mail, WWW.
• Message focused on technical,
factual, and descriptive content.
• Multiple audience members.

41
 Economic/Financial Factors

• Competition oligopolistic
• Power/Dependency relationships
• Reciprocity: Doing business
with companies that do business
with them.
• Economic variables: interest
rates, inflation, business
cycle

42
 Marketing Environment Audit
• Macro environment
• A. Demographic :What major demographic
developments and trends pose opportunities or
threats to this company?
• What actions has the company taken in response to
these developments and trends?
• B. Economic What major developments in income,
prices, savings, and credit will affect the
company? What actions has the company been taking
in response to these developments and trends?
• C. Environmental: What is the outlook for the
cost and availability of natural resources and
energy needed by the company?
• What concerns have been expressed about the
company's role in pollution and conservation, And
what steps has the company taken?
• D. Technological What major changes are
occurring in product and process technology? What
is the company's position in these
technologies? What major generic substitutes
might replace this product?
• E. Political What changes in laws and
regulations might affect marketing strategy and
tactics? What is happening in the areas of
pollution control, equal employment opportunity,
product safety, advertising, price control, and
so forth, that affects marketing strategy?
• F. Cultural What is the public's attitude
toward business and toward the company's
products? What changes in customer lifestyles and
values might affect the company?

44
• Task Environment
• A. Markets What is happening to market size,
growth, geographical distribution, and profits?
What are the major market segments?
• B. Customers What are the customers' needs and
buying processes? How do customers and
prospects rate the company and its
competitors on reputation, product quality,
service, sales force, and price? How do
different customer segments make their buying
decisions?
• C. Competitors Who are the major
competitors? What are their objectives,
strategies, strengths, weaknesses, sizes, and
market shares? What trends will affect
future competition and substitutes for the
company's products?
• D. Distribution and Dealers What are the main
trade channels for bringing products to customers?
What are the efficiency levels and growth
potentials of the different trade channels?
• E. Suppliers What is the outlook for the
availability of key resources used in production?
What trends are occurring among suppliers?
• F. Facilitators and Marketing Firms What is
the cost and availability outlook for
transportation services, warehousing facilities,
and financial resources? How effective are the
company's advertising agencies and marketing
research firms?
• G. Publics Which publics represent particular
opportunities or problems for the company? What
steps has the
• company taken to deal effectively with
each public?

46
Marketing audit : Measurement of performance

• A. Business Mission
• Is the business mission clearly stated
in market-oriented terms? Is it
feasible?
• B. Marketing Objectives and Goals
• Are the corporate and marketing
objectives stated in the form of clear
goals to guide marketing planning and
performance measurement?
• Are the marketing objectives
appropriate, given the company's
competitive position, resources, and
opportunities?
• C. Strategy
• Is management able to articulate a clear marketing
strategy for achieving its marketing objectives? Is
the strategy convincing? Is the strategy
appropriate to the stage of the product life cycle,
competitors' strategies, and the state of the
economy?
• Is the company using the best basis for market
segmentation? Does it have sound criteria for
rating the segments and choosing the best ones? Has
it developed accurate profiles of each target
segment?
• Has the company developed a sound positioning and
marketing mix for each target segment? Are
marketing resources allocated optimally to the
major elements of the marketing mix -- i.e.,
product quality, service, sales force, advertising,
promotion, and distribution?
• Are enough resources or too many resources budgeted
to accomplish the marketing objectives?
• Marketing-Organization Audit
• A. Formal Structure
• Does the marketing officer have adequate authority
over, and responsibility for, Structure company
activities that affect the customer's satisfaction?
• Are the marketing activities optimally structured
along functional, product, end- user, and territorial
lines?
• B. Functional Efficiency
• Are there good communication and working relations
between marketing and Efficiency sales?
• Is the product management system working effectively?
Are product managers able to plan profits or only
sales volume?
• Are there any groups in marketing that need more
training, motivation, supervision, or evaluation?
• C. Interface Efficiency
• Are there any problems between marketing and
manufacturing, R&D, purchasing, Efficiency finance,
accounting, and legal that need attention.
• Marketing-Systems Audit
• A. Marketing Information System
• Is the marketing intelligence system producing accurate, sufficient, and
timely information about marketplace developments with respect to
customers, prospects, distributors and dealers, competitors, suppliers,
and various publics?
• Are company decision makers asking for enough marketing research, and
are they using the results?
• Is the company employing the best methods for market and sales
forecasting?
• B. Marketing Planning System
• Is the marketing planning system well conceived and effective?
• Is sales forecasting and market potential measurement soundly carried
out?
• Are sales quotas set on a proper basis?
• C. Marketing Control System
• Are the control procedures adequate to ensure that the annual-plan
objectives are being achieved?
• Does management periodically analyze the profitability of products,
markets, territories, and channels of distribution?
• Are marketing costs periodically examined?
• D. New-Product Development System
• Is the company well organized to gather, generate, and screen new-
product ideas?
• Does the company do adequate concept research and business analysis
before investing in new ideas?
• Does the company carry out adequate product and market testing before
launching new products?
• Marketing-Productivity Audit
• A. Profitability Analysis
• What is the profitability of the company's
different products, markets, territories
and channels of distribution?
• Should the company enter, expand,
contract, or withdraw from any business
segments and what would be the short- and
long-run profit consequences?
• B. Cost Effectiveness Analysis
• Do any marketing activities seem to have
excessive costs? Can cost-reducing steps
be taken?
• Marketing-Function Audits
• A. Products
• What are the product-line objectives? Are
these objectives sound? Is the current
product line meeting the objectives?
• Should the product line be stretched or
contracted upward, downward, or both ways?
• Which products should be phased out? Which
products should be added?
• What is the buyers' knowledge and attitudes
toward the company's and competitors'
product quality, features, styling, brand
names, etc.? What areas of product strategy
need improvement?
• Price
• What are the pricing objectives, policies,
strategies, and procedures? To what extent are
prices set on cost, demand, and competitive
criteria?
• Do the customers see the company's prices as
being in line with the value of its offer?
• What does management know about the price
elasticity of demand experience curve effects,
and competitors' prices and pricing policies?
• To what extent are price policies compatible
with the needs of distributors and dealers,
suppliers, and government regulation?
• Distribution
• What are the distribution objectives and
strategies?
• Is there adequate market coverage and
service?
• How effective are the following channel
members distributors, dealers, manufacturers
representatives, brokers, agents, etc.?
• Should the company consider changing its
distribution channels?
• Advertising, Sales Promotion, and Publicity
• What are the organization's advertising
objectives? Are they sound?
• Is the right amount being spent on advertising?
How is the budget determined?
• Are the ad themes and copy effective? What do
customers and the public think and Publicity
about the advertising?
• Are the advertising media well chosen?
• Is the internal advertising staff adequate?
• Is the sales-promotion budget adequate? Is
there effective and sufficient use of sales-
promotion tools such as samples, coupons,
displays, sales contests?
• Is the publicity budget adequate? Is the public
relations staff competent and creative?
• Sales-force
• What are the organization's salesforce objectives?
• Is the salesforce large enough to accomplish the
company's objectives?
• Is the salesforce organized along the proper
principles of specialization (territory, market,
product)? Are there enough (or too many) sales
managers to guide the field sales representatives?
• Does the sales-compensation level and structure
provide adequate incentive and reward?
• Does the salesforce show high morale, ability, and
effort?
• Are the procedures adequate for setting quotas and
evaluating performances?
• How does the company's salesforce compare to
competitors salesforce?
• Different Problems: The “How” through Action
Plans
• Huge Problem:
• Performance objectives aren’t broken down to
the action plans required to execute.
• What happens: We’re out of alignment.
• We don’t have the available resources
• We don’t have the funding
• Timelines of different departments collide
• Our stakeholders aren’t on board or coordinated
• The Biggest Obstacle: Alignment
• What to Check out for Alignment
• Do employees throughout the organization know the
mission?
• Are the processes clearly enough articulated?
• Is everyone walking and talking in alignment?
• Do we have clearly defined values and does everybody
really demonstrate them?
• What is the gap between what we (the Leadership Team)
want and what we want them (the organization) to do?
(World-class companies keep raising the bar and
creating a gap.)
• What are you doing now and what could you do if you
got it right - if every individual were nailing it?
• More to check out for Alignment
• Why can’t you execute? Because you’re not aligned.
• Is the strategy/business planning internally
credible?
• Is it credible lower down to people charged with
execution?
• What are the dislocations? (People, timing,
resources, technology, funding)
• Is there is alignment in communication and in the
messages going up and down?
• Is there is execution alignment - a gap between
what we’re trying to achieve ad what we’re actually
achieving (both relative to plan and in terms of
potential)?
• So what’s different in this Approach to
Measuring
• Clarity of Measures
• Alignment – with the mission, the plan,
the stakeholders, available resources
• Drilling down from objectives to criteria
and action plans – are the plans in
alignment with the objectives, the
resources, the time lines, customer and
stakeholder needs
 Continuous Learning

• Why is Continuous Learning Important?

• Peter Senge’s definition “The Learning Organization”
• Question for all of you: Do you have a learning
organization?
• Are you willing to invest in people?
• Is it worth it?
• If you don’t, how can you encourage your people to
learn?
• Concept of CANI : Continuous and Never-ending
Improvement
• Need to continually upgrade the quality of:
• Our people
• Systems
• Processes
• Procedures
• Resources.
• And if we don’t, somebody else will do it and take
away our business.
People: Personal and Professional
Development

Inputs, Outputs &

Performance Management

Tasks

Inputs Outputs

Behaviors, Deliverables,
Competencies, Performance
Technical Skills Objectives

8
Strategic Planning
Model
 What is Strategic
Planning?
• Process to establish priorities on what you will
accomplish in the future
• Forces you to make choices on what you will do
and what you will not do
• Pulls the entire organization together around a
single game plan for execution
• Broad outline on where resources will get allocated
 Why do Strategic
Planning?
• If you fail to plan, then you plan to fail – be
proactive about the future
• Strategic planning improves performance
• Counter excessive inward and short-term thinking
• Solve major issues at a macro level
• Communicate to everyone what is most important
 Fundamental Questions
to Ask
• Where are we now? (Assessment)
• Where do we need to be? (Gap / Future End
State)
• How will we close the gap (Strategic Plan)
• How will we monitor our progress
 A Good Strategic Plan
should . . .
• Address critical performance issues
• Create the right balance between what the
organization is capable of doing vs. what the
organization would like to do
• Cover a sufficient time period to close the
performance gap
• Visionary – convey a desired future end state
• Flexible – allow and accommodate change
• Guide decision making at lower levels –
operational, tactical, individual
Strategic Planning Model
A B C D E
Where we are Where we want to be How we will do it How are we doing

Assessmen Baseline Component Down to Evaluate

t s Specifics

• Environmental • Situation – Past, • Mission & • Performance • Performance

Scan Present and Vision Measurement Management
Future
• Background • Significant • Values / • Targets / • Review Progress
Information Issues Guiding Standards of – Balanced
Principles Performance Scorecard
• Situational • Align / Fit with • Major Goals • Initiatives and • Take Corrective
Analysis Capabilities Projects Actions

• SWOT – • Gaps • Specific • Action Plans • Feedback

Strength’s, Objectives upstream –
Weaknesses, revise plans
Opportunities,
Threats
 Pre-Requisites to
Planning
• Senior leadership commitment
• Who will do what?
• What will each group do?
• How will we do it?
• When is the best time?
Assessment
 Assessment Model: Assessme
nt
S W O T
Internal
InternalAssessment:
Assessment:
Organizational
Organizationalassets,
assets,
resources,
resources,people,
people,culture,
culture,
systems, partnerships,
systems, partnerships,
suppliers,
suppliers,......
External
ExternalAssessment:
Assessment:
Marketplace,
Marketplace,competitor’s,
competitor’s,
social trends, technology,
social trends, technology,
regulatory
regulatoryenvironment,
environment,
economic
economiccycles
cycles..
SWOT SWOT

Good Points Possible Pitfalls

• Easy to Understand • Needs to be Analytical and
• Apply at any organizational level Specific
• Be honest about your
weaknesses
 Assessme
Strength’s nt

• Strength’s – Those things that you do well, the

high value or performance points
• Strengths can be tangible: Loyal customers,
efficient distribution channels, very high quality
products, excellent financial condition
• Strengths can be intangible: Good leadership,
strategic insights, customer intelligence, solid
reputation, high skilled workforce
• Often considered “Core Competencies” – Best
leverage points for growth without draining your
resources
 Assessme
Weaknesses nt

• Weaknesses – Those things that prevent you from

doing what you really need to do
• Since weaknesses are internal, they are within
your control
• Weaknesses include: Bad leadership, unskilled
workforce, insufficient resources, poor product
quality, slow distribution and delivery channels,
outdated technologies, lack of planning, . . .
 Assessme
Opportunities nt

• Opportunities – Potential areas for growth and

higher performance
• External in nature – marketplace, unhappy
customers with competitor’s, better economic
conditions, more open trading policies, . .
• Internal opportunities should be classified as
Strength’s
• Timing may be important for capitalizing on
opportunities
 Assessme
Threats nt

• Threats – Challenges confronting the organization,

external in nature
• Threats can take a wide range – bad press
coverage, shifts in consumer behavior, substitute
products, new regulations, . . .
• May be useful to classify or assign probabilities to
threats
• The more accurate you are in identifying threats,
the better position you are for dealing with the
“sudden ripples” of change
Baseline
 Baseline
Why create a baseline?
• Puts everything about the organization into a
single context for comparability and planning
• Descriptive about the company as well as the
overall environment
• Include information about relationships –
customers, suppliers, partners, . . .
• Preferred format is the Organizational Profile
 Organizational Profile
B aseline

1. Operating Environment
• Products and Services – Suppliers, Delivery
Channels, Contracts, Arrangements, . . .
• Organizational Culture – Barriers, Leadership,
Communication, Cohesiveness . . . .
• Workforce Productivity – Skill levels, diversity,
contractor’s, aging workforce, . . .
• Infrastructure – Systems, technology, facilities, . .
• Regulatory – Product / Service Regulation, ISO
Quality Standards, Safety, Environmental, . . .
 Organizational ProfileB aseline

2. Business Relationships
• Organizational Structure – Business Units,
Functions, Board, Management Layers, . . .
• Customer Relationships – Requirements,
Satisfaction, Loyalty, Expectations, . . .
• Value Chain – Relationship between everyone in
the value chain . . . .
• Partner Relationships – Alliances, long-term
suppliers, customer partnerships, . . .
 Organizational Profile
B aseline
3. Key Performance
Categories
• Customer
• Products and Services
• Financial
• Human Capital
• Operational
• External (Regulatory Compliance, Social
Responsibility, . . . )
 Baseline
Gap Analysis
Baseline / Org Challenges /
Profile SWOT

Gap
Gap == Basis
Basis for
for
Long-Term
Long-Term
Strategic
Strategic Plan
Plan
Compone
nts
 Major Components of the
C ompone
Strategic Plan / Down to nts

Action
Strategic Plan

Action Plans
Mission Why we exist
Evaluate Progress

Vision What we want to be

Goals What we must achieve to be successful

Objectives O1 Specific outcomes expressed in

O2
measurable terms (NOT activities)

Initiatives Planned Actions to

AI1 AI2 AI3 Achieve Objectives

Measures Indicators and

M1 M2 M3 Monitors of success

Targets T1 T1 T1 Desired level of

performance and timelines
 Compone
Mission Statement nts

• Captures the essence of why the organization

exists – Who we are, what we do
• Explains the basic needs that you fulfill
• Expresses the core values of the organization
• Should be brief and to the point
• Easy to understand
• If possible, try to convey the unique nature of your
organization and the role it plays that differentiates
it from others
 Examples – Good and Bad
C ompone
nts
Mission Statements
NASA

To Explore the Universe and Search

for Life and to Inspire the Next
Generation of Explorers

Does a good job of

expressing the core values of
the organization. Also
conveys unique qualities
about the organization.
Walt Disney

To Make People Happy

Too vague and and unclear.
Need more descriptive
information about what
makes the organization
special.
 Compone
Vision nts

• How the organization wants to be perceived

in the
future – what success looks like
• An expression of the desired end state
• Challenges everyone to reach for something
significant – inspires a compelling future
• Provides a long-term focus for the entire
organization
 Compone
Examples of Vision Descriptors nts
• Adept • Equal • Informative • Solid
• Aggressive • Disciplined • Innovative • Solvent
• Agile • •
Effective Leading • Stable
• Aligned
• Efficient • Logical • State of the
• Assertive
• Enduring • Major Art
• Available
• Expanding • Nimble • Strong
• Best-in-
class • Expert • Pioneering • Streamlined
• Challenging • Fast • Protected • Sufficient
• Clear • Fast-paced • Organized • Strategic
• Competent • • • Sustainable
Financially-sound Over-Arching
• Complex • Timely
• Focused • Quick
• Compliant
• Growth • Ready • Value-added
• Conservative
• Healthy • Responsive • Vigilant
• Coordinated
• Improving • Savvy • Visionary
• Critical
• Incentivized • Simple • World-class
• Direct
 Guiding Principles and
C ompone
nts

Values
• Every organization should be guided by a set of
values and beliefs
• Provides an underlying framework for making
decisions – part of the organization’s culture
• Values are often rooted in ethical themes, such as
honesty, trust, integrity, respect, fairness, . . . .
• Values should be applicable across the entire
organization
• Values may be appropriate for certain best
management practices – best in terms of quality,
exceptional customer service, etc.
 Examples of C ompone
Guiding Principles and nts

We
Values
Weobey
obeythe
thelaw
lawand
anddo
donot
notcompromise
compromisemoral
moralor
orethical
ethicalprinciples
principles––ever!
ever!
We
Weexpect
expecttotobe
bemeasured
measuredbybywhat
whatwe
wedo,
do,as
aswell
wellas
aswhat
whatwewesay.
say.

We
Wetreat
treateveryone
everyonewith
withrespect
respectand
andappreciate
appreciateindividual
individualdifferences.
differences.
We
We carefully consider the impact of business decisions on ourpeople
carefully consider the impact of business decisions on our peopleand
andwe
we
recognize exceptional contributions.
recognize exceptional contributions.

We
Weare
arestrategically
strategicallyentrepreneurial
entrepreneurialininthe
thepursuit
pursuitofofexcellence,
excellence,encouraging
encouragingoriginal
originalthought
thought
and its application, and willing to take risks based on sound business judgment.
and its application, and willing to take risks based on sound business judgment.

We
Wearearecommitted
committedtotoforging
forgingpublic
publicand
andprivate
privatepartnerships
partnershipsthat
thatcombine
combinediverse
diversestrengths,
strengths,
skills and resources.
skills and resources.
 Compone
Goals nts

• Describes a future end-state – desired outcome

that is supportive of the mission and vision.
• Shapes the way ahead in actionable terms.
• Best applied where there are clear choices about
the future.
• Puts strategic focus into the organization – specific
ownership of the goal should be assigned to
someone within the organization.
• May not work well where things are changing fast
– goals tend to be long-term for environments that
have limited choices about the future.
 Compone
Developing Goals nts

• Cascade from the top of the Strategic Plan –

Mission, Vision, Guiding Principles.
• Look at your strategic analysis – SWOT,
Environmental Scan, Past Performance, Gaps . .
• Limit to a critical few – such as five to eight goals.
• Broad participation in the development of goals:
Consensus from above – buy-in at the execution
level.
• Should drive higher levels of performance and
close a critical performance gap.
 Compone
Examples of Goals nts

Reorganize
Reorganizethe
theentire
entireorganization
organizationfor
forbetter
betterresponsiveness
responsivenesstotocustomers
customers

We
Wewill
willpartner
partnerwith
withother
otherbusinesses,
businesses,industry
industryleaders,
leaders,and
andgovernment
government agencies
agenciesininorder
ordertoto
better
bettermeet
meetthe
theneeds
needsofofstakeholders
stakeholdersacross
acrossthe
theentire
entirevalue
valuestream.
stream.

Manage
Manageourourresources
resourceswith
withfiscal
fiscalresponsibility
responsibilityand
andefficiency
efficiencythrough
throughaasingle
singlecomprehensive
comprehensive
process
processthat
thatisisaligned
alignedtotoour
ourstrategic
strategicplan.
plan.

Improve
Improvethe
thequality
qualityand
andaccuracy
accuracyofofservice
servicesupport
supportinformation
informationprovided
providedtotoour
ourinternal
internal
customers.
customers.

Establish
Establishaameans
meansby
bywhich
whichour
ourdecision
decisionmaking
makingprocess
processisismarket
marketand
andcustomer
customerfocus.
focus.

Maintain
Maintainand
andenhance
enhancethe
thephysical
physicalconditions
conditionsofofour
ourpublic
publicfacilities.
facilities.
 Compone
Objectives nts

• Relevant - directly supports the goal

• Compels the organization into action
• Specific enough so we can quantify and
measure the results
• Simple and easy to understand
• Realistic and attainable
• Conveys responsibility and ownership
• Acceptable to those who must execute
• May need several objectives to meet a goal
 Compone
Goals vs. Objectives nts

GOALS OBJECTIVES

Very short statement, few Longer statement, more

words descriptive
Broad in scope Narrow in scope
Directly relates to the Indirectly relates to the Mission
Mission Statement Statement
Covers long time period Covers short time period (such 1
(such as 10 years) year budget cycle)
 Compone
Examples of Objectives nts

Develop
Developaacustomer
customerintelligence
intelligencedatabase
databasesystem
systemtotocapture
captureand
andanalyze
analyzepatterns
patternsininpurchasing
purchasing
behavior across our product line.
behavior across our product line.

Launch
Launchatatleast
leastthree
threevalue
valuestream
streampilot
pilotprojects
projectstotokick-off
kick-offour
ourtransformation
transformationtotoaaleaner
leaner
organization.
organization.

Centralize
Centralizethe
theprocurement
procurementprocess
processfor
forimprovements
improvementsininenterprise-wide
enterprise-widepurchasing
purchasingpower.
power.

Consolidate
Consolidatepayable
payableprocessing
processingthrough
throughaaP-Card
P-CardSystem
Systemover
overthe
thenext
nexttwo
twoyears.
years.

Monitor
Monitorandandaddress
addressemployee
employeemorale
moraleissues
issuesthrough
throughan
anannual
annualemployee
employeesatisfaction
satisfactionsurvey
survey
across all business functions.
across all business functions.
Down to
Specifics
 Down to
What are Action Plans? Specifics

• The Action Plan identifies the specific steps that will be taken to achieve the initiatives and strategic objectives – where the rubber meets the road
• Each Initiative has a supporting Action Plan(s) attached to it
• Action Plans are geared toward operations, procedures, and processes
• They describe who does what, when it will be completed, and how the organization knows when steps are completed
• Like Initiatives, Action Plans require the monitoring of progress on Objectives, for which measures are needed

Objectives

Initiatives

Action Plans
 Characteristics of D own to
Specifics

Action Plans
• Assign responsibility for the successful completion of the Action Plan. Who
is responsible? What are the roles and responsibilities?
• Detail all required steps to achieve the Initiative that the Action Plan is
supporting. Where will the actions be taken?
• Establish a time frame for the completion each steps. When will we need to
take these actions?
• Establish the resources required to complete the steps. How much will it
take to execute these actions?
• Define the specific actions (steps) that must be taken to implement the
initiative. Determine the deliverables (in measurable terms) that should
result from completion of individual steps. Identify in-process measures to
ensure the processes used to carry out the action are working as intended.
Define the expected results and milestones of the action plan.
• Provide a brief status report on each step,
step whether completed or not. What
communication process will we follow? How well are we doing in executing our
action plan?
• Based on the above criteria, you should be able to clearly define your
action plan. If you have several action plans, you may have to prioritize.
 Down to
Action Plan Execution Specifics

• Requires that you have answered the Who, What, How,

Where, and When questions related to the project or initiative
that drives strategic execution
• Coordinate with lower level sections, administrative and
operating personnel since they will execute the Action Plan in
the form of specific work plans
• Assign action responsibility and set timelines – Develop
working plans and schedules that have specific action steps
• Resource the project or initiative and document in the form of
detail budgets (may require reallocation prior to execution)
• Monitor progress against milestones and measurements
• Correct and revise action plans per comparison of actual
results against original action plan
 Quantify from Action Level
D own to

Up Specifics

in terms of Measurements
• Measure your milestones – short-term outcomes at
the Action Item level.
• Measure the outcomes of your objectives.
• Try to keep your measures one per objective.
• May want to include lead and lag measures to
depict cause-effect relationships if you are
uncertain about driving (leading) the desired
outcome.
• Establish measures using a template to capture
critical data elements
 Down to
Measurement Template Specifics

(Insert (Insert division (Insert department Risk Frame area (Insert objective (Insert (Insert reporting
organization name) name) objective supports owner) measurement contact info)
name) owner)

Objective Description – description of objective purpose, in sufficient detail for personnel not References – source
familiar with the objective to understand its intent. Objective descriptions are typically two or documentation for objective and
three paragraphs long. This will appear in the pop-up window when you mouse over the objective description
objective in the Balanced Scorecard System.

Comments – additional information about the objective not covered in above blocks, such as recommendations for further
revision, additional organizations objective impacts, recommendations for coordination / alignment with other objectives, etc.
Measure Name - The name Measure Description – description of the measure, Measure Formula – Data Source - The
exactly as you want it to include its intent, data source, and organization formula used to source of the data –
appear in the Balanced responsible for providing measure data. This will calculate measure manual, data
Scorecard, including the appear in the pop-up window when you mouse over value (if any) spreadsheet, or
measure number (i.e. Percent the measure in the Balanced Scorecard. database name and
Employees Satisfied, etc.) contact familiar with
the data

Measure Weight - the relative weight of the measure based on the impact it has on Measure Reporter – Person responsible
the overall objective. The total weights for all measures for an objective must add to for providing measure data. Include the
100 name, organization and email.

Target Maximum – Maximum expected value for the measure. Effective Date – Frequency – How often Units – Units
Date the target first target data will be reported of measure
becomes effective

Target – Point where the measure goes from green to amber

 Criteria for Good Down to
Specifics

Measures
Integrity – Complete; useful; inclusive of
several types of measure; designed to
measure the most important activities of
the organization
Reliable: Consistent
Accurate - Correct
Timely – Available when needed: designed to
use and report data in a usable timeframe
Confidential and Secure: Free from
inappropriate release or attack
Examples of Measurements Down to
Lead Indicators Specifics

• Average time to initiate customer

contact => shorter time should lead to
better customer service
• Average response time to incident =>
below average response times should
lead to increased effectiveness in
dealing with incident
• Facilities that meet facility quality
A1 rating => should lead to improved
operational readiness for meeting
customer needs
Examples of Measurements
D own to
Specifics

Lag Indicators
• Overall customer satisfaction rating =>
how well you are doing looking back
• Business Units met budgeted service
hour targets => after the fact
reporting of service delivery volume
• Number of category C safety accidents
at construction sites => historical
report of what has already taken place
 Down to
Targets Specifics

• For each measurement, you should have at

least one target
• Targets should stretch the organization to
higher levels of performance
• Incremental improvements over current
performance can be used to establish your
targets
• Targets put focus on your strategy
• When you reach your targets, you have
successfully executed your strategy
 Examples of Targets Down to
Specifics

Average Time to Process New 65 days Year 60 days Year 55 days Year
Employee Setups in DB 2007 2008 2009

Utilization Rate for Rental 90% for 92% for Year 95% for Year
Housing Units Year 2007 2008 2009
Toxic Sites meeting in-service 55% for Year 70% for Year 95% for Year
compliance 2007 2008 2009
Personnel Fully Trained in 65% by 2rd 75% by 3th 90% by 4th
Safety and Emergency Quarter Quarter Quarter
Open Positions Filled after 30 75 positions 100 positions 135 positions
day promotion period Sept 2007 Jan 2008 July 2008

% Reduction in Orders Filled 50% by Year 65% by Year 85% by Year

Short in 1st Cycle 2008 2009 2010
 Down to
Sanity Check . . . Specifics

Make sure everything is linked and

connected for a tight end-to-end model
for driving strategic execution.

OBJECTIVE
Improve Employee
Satisfaction

MEASURE / TARGET
Measure 90%
Employee
Percent Satisfaction

Satisfaction gap INITIATIVE

Survey Rating 45% ACTION PLAN
Employee
Target Productivity Identify issues per a
90% favorable Improvement company wide survey
overall Target Actual Program
International Marketing
• Trade policy
• Culture
• Consumer buying
power
• Product
strategies
 Obstacles to Trade:
Protectionism
• Differing interests of
consumers and manufacturers
• Benefits of trade tend to be
more diffused than benefits to
specific groups of
protectionism
 Approaches to
Protectionism
• Tariffs
• Quotas
• “Voluntary” export
restrictions
• Subsidies to
domestic
producers/exporters
• Non-tariff barriers
– legal obstacles
– differential
treatment
 Cultural Lessons
• Diet Coke is named Light Coke in
Japan--dieting was not well regarded
• Red circle trademark was unpopular
in Asia due to its resemblance of
Japanese flag
• Packaging of products is more
important in some countries than in
U.S.
• Advertisement featuring man and dog
failed in Africa--dogs were not seem
as man’s best friend
 More Cultural
Lessons...
• Cologne ad featuring a man “attacked”
by women failed in Africa
• Food demonstration did well in
Chinese stores but not in Korean
ones--older women were insulted by
being “taught” by younger
representatives
• Pauses in negotiations
• Level of formality
 Definitions
• Culture: “That complex
whole which includes
knowledge, belief, art,
morals, custom, and any
other capabilities and
habits acquired by man as a
member of society.”

Alternative definition: “Meanings that are

shared by most people in a group”
[at least to some extent]. (Adapted from Peter and
Olson, 1994)
 Hofstede’s Cultural
Dimensions
• Individualism (vs. Based on interviews with
collectivism) IBM executives throughout
• Power distance the World--1980s
• Masculine vs. feminine
• Strong vs. weak
uncertainty avoidance
• Short vs. long term
orientation
(Confucianist dynamics)
– “The Foolish Old Man Who
Moved the Mountain”
 Negotiation Content
• Non-task sounding
• Task-related exchange of
information
• Persuasion
• Concessions and agreements
Geography--Surprisingly
Impactful
• U.S. and most Western European
areas are highly generally
accessible
• Compare to areas in the
developing World:
– China
– Russia
– Latin America (even Mexico), Africa
• Communication vs. shipping
 Climate and Topography:
The Case of Latin America
• 4,500 by 3,000 miles (at widest)
• 48% forests
• West coast dominated by mountain
ranges
• 5% of land arable
• Natural barriers inhibiting growth
• Large proportion of residents in
cities; people in rural areas often do
not associate themselves with
countries
 Climate and Topography:
The Case of Latin America
• 4,500 by 3,000 miles (at widest)
• 48% forests
• West coast dominated by mountain
ranges
• 5% of land arable
• Natural barriers inhibiting growth
• Large proportion of residents in
cities; people in rural areas often do
not associate themselves with
countries
 China: Geography
• Very rapid
progress on
Shanghai
infrastructure
• Rural villages are
difficult to
access
• Strong regional
differences even
within the country
 Some Issues in Culture
• Time • Symbols
– monochronic vs. – colors
polychronic
– historical
– meanings
associations
• Personal space
– preferred distance
• Friendship and
– territoriality acquaintance
– interaction • Agreements
with/ignoring people
in close proximity • Etiquette
 Eastern vs. Western
Culture
• Differences in
pain mana
– Values
– Perceptions of
• Objects
• Reality
– Stability vs.
change
– Control
– Perceived roles
 Perceived Control Over
Reality
• World is not generally seen as
predictable
– Trends are not expected to
continue
• Individual has little control
over the world
• BUT
– Outcome is believed to be tied to
effort, not individual skill
 More Tendencies
• Westeners tend to rate
themselves
– More unique than average and what
they are
– “Above average” in ability
• Easteners tend to rate
themselves
– Less unique than they really are
– “Below average”
 Proverbs
• Western: “The early bird gets
the worm”
• Eastern:
– “The first bird in the flock gets
shot”
– “A nail that stands out will be
hammered down.”
 Source: Richard E. Nisbett, The Geography of Thought: How Asians and
Westeners Think Differently … and Why, New York, 2003, The Free Press

Values
Issue Western Value Eastern Value
Distinctiveness of Want to be distinctive Not valued; emphasis on
people tie to group
Perceived control Significant; values determine Modest—societal values
choices are already established
Emphasis Success and achievement; Best outcome for relevant
relationships may get in the way group (e.g., family, work
group)
Self-esteem Strive to feel good; assurances Tied to belonging with
wanted group
Relationships Equality or superior position Clearly defined;
hierarchical
Rules Same rules apply to all Depend on context and
relationship
 Some implications
• Thanking people—for things they
are clearly supposed to do?
• Why the need for a choice
between 40 different brands of
cereal?
 Socialization
• Western textbook: “See Dick
run. See Dick play. See Dick
run and play.”
• Chinese: “Big brother takes
care of little brother. Big
brother loves little brother.
Little brother loves big
brother.”
 Perception of People
• Western: People have characteristics
independent of the situation
– Fundamental attribution error: People
attribute their own behavior to the
circumstances but that of others to
innate characteristics.
• Eastern: Person is connected;
behavior is the result of specific
roles played at the time
INTERNATIONAL BUSINESS – WHY ?
•Highly competitive business environment – competition
from multi-nationals.
•Business firms should increase their top lines and reduce
costs to retain their bottom lines.
•One of the options, which some feel is a must, is to
internationalize the business operations.
•Business firms should therefore develop proper strategies
to globalize operations.
 INTERNATIONAL MARKETING – WHY?

• INTERNATIONAL MARKETING – WHY?

• Completion from MNCs in Domestic Market.
• To increase Top line in order to keep steady
bottom line with rising costs.
• Maximize profits.
• Global sourcing by multinationals has made export
of components and products more lucrative.
• Reduction of duty and barriers by members of the
WTO has made has made global markets more
attractive.
• Convergence of tastes of customers globally has
resulted in development of global
products/services.
• The growth of buying power worldwide, including
developing countries.
• “International Marketing: Marketing
products/services across national borders by a
national or multinational company”.
 3 Stages of International Marketing:

• Depends on involvement of the firm -

• Export Marketing
– marketing across political boundaries
• Multinational Marketing
– marketing activities include other
operations in more than one country.
• International Business
– where organizations focus on global
competitive advantage and spread their value
creation activities globally.
 International Trade
Environment
• Trade Barrier By many countries earlier to protect
domestic Industry.
• Tariff Barriers Barriers by imposition of
Duties (import duty) and taxes.
• India once has duty of 300% on some imported items
but today reduced to 30 - 20%.
• Non-Tariff Barriers Other than tariff such as:
• Licensing
• Import Quota
• Voluntary Export Restraints
• Administrating protections.
• Some of the Administrative Barriers
–
• Safeguards against import surges
threatening domestic industry.
• Health Standards as NTB.
• Foreign Exchange Regulations not
releasing FE for import.
• Trading Blocks Line –
• A S E A N
• European Union, etc.
• S A A R C
 Market Selection:

Decide Marketing Objective Define Parameters of Market Selection Preliminary Screening

Evaluation by Detailed study

Metrix & and short
Selection listing
Normal Marketing Objectives:

• Profit More profitable in

International Market.
• Sales Volume To increase sales
volume and grow.
• Competition To beat domestic
competition, compete globally – even
counter competition.
• Government Policy Incentives for
export or government policy not to
allow volume exclusion of some
industries.
 Evaluation Attributes:
• General: Political Economy
• Currency
• Infrastructure
• Government Regulations/Bureaucracy
• Tax
• Can it be a market hub?
• Specific: Demand
• Competition/Price Sensivity
• Manufacturing cost
• Government Policy/Incentives for business
• Cultural influence on Marketing Mix.
 Strategic International Market Entry Choices
Leveraging Internal
Competency
Managing Uncertainty
- Asset Specificity
- Environmental
- Strategic Resource
- Behavioral
- Context Specificity

Choice of International
Mode of Entry

Internalization Collaboration

Direct Exports Indirect Exports

Contractual Agreements
Greenfield Investments -Licensing
- Franchising
- Syndication
- Turnkey Projects
Acquisitions
Equity Joint Ventures
- Minority
- Equal
- Majority
 Entry Mode Selection
• Risk Tradeoffs
• Return
• Control
• Investment
Market Entry Strategies
 Indirect Exporting
• Exporting via intermediaries
in domestic market
– Via domestic clients
– Export houses/ trading companies
– Piggybacking
– Co-operative export venture
– Clients buying offices in home
market
 Direct Exporting

1. Exporting via intermediaries

in foreign market
2. Direct selling to firms
within the foreign market
(e.g. large companies-
industrial goods)
3. Mail order
4. Via local sales office
5. Direct to government body
 Contrasting Advertising
Perspectives (Aithison 2002)
• Western • Asian
– “Atomistic”—broken – Holistic
down to smallest
component parts – “Everything
– “Unique selling relates to
propositions” everything else”
– “How to” – How things “fit
– Positioning together” and
– May be “dull and “relate”
boring”
– “Copy focused”
– Visual and oral

Jim Aitchison, How Asia Advertises,

New York: Wiley, 2002.
 Advertising Content
Comparisons
• American:
– Individual benefit and pleasure
(e.g., “Make your way through the
crowd)
• Korean
– Collective values (e.g., “We have
a way of bringing people together)
 Debate and Conflict
• “The first person to raise his voice has
lost the argument.” (Chinese proverb)
• Use of indirection and projection
• Face-to-face vs. anonymous comments
• Western adversarial “rule of law” based
on consistent universal ideals vs.
solution for the case at hand in context
Relationships, Education,
and Work
• Western
– Standing out; being “better”
– Self perceived favorably
– Self-esteem building
– Work longer on successful job
• Eastern
– Harmony
– Must “weed out” personal characteristics that
might annoy others
– Taught self-criticism
– Not recognized in profession until after many
years of practice
– Work longer on unsuccessful job
 Physical Product vs.
Communication Adaptations
Communication Communication
adaptations not adaptations
needed needed
(extension)
Product Some industrial Bicycle; fast food;
adaptations not equipment; some chewing gum
needed electrical
(extension) equipment
Product Gasoline; laundry Greeting cards
adaptations detergent
needed
Domestic Compass-equipped prayer rug; hand
equivalent does powered washing machine
not exist
(product
invention)
 CONSUMER INCOMES AND
BUYING POWER

• Measuring country wealth

– gross domestic product
– “purchase parity” vs. nominal
• Government role in the economy
– Tax burden
– Services provided by the Government—
e.g., health care, education
Country of Origin
Effects
• Perception of product
– quality (e.g., Japan, Germany)
– elegance and style (e.g., France, Italy)
• Historical associations
• Positioning strategies
– Emphasis on origin (e.g., French wine)
– De-emphasis/obfuscation of of country of
origin (e.g., French beer, American
products with French language labels)
 Nominal vs. Purchase Parity
Adjusted GNPs—Examples (2003)

Country
United State
Source: World Bank (http://www.worldbank.org/data/databytopic/GNIPC.pdf)
 The Hamburger Standard (from
the Economist)

Country Local Price in US$ Buying power

relative to U.S.

U.S. $2.71 1.00

Britain 3.14 .75
Egypt 1.35 2.00
Mexico 2.18 1.24
China 1.20 2.26
Switzerland 4.59 0.59
Market Entry Strategies
• Exporting • Joint venture
– Low investment – Considerable investment
– Low control of – More control
promotion – Able to benefit from
partner’s experience
• Licensing – Must work with partner
– Low investment • Direct investment
– Low control of – Large investment
promotion, – Risky
positioning, and
– Greater control
quality
– May lack knowledge of
– Able to benefit from market
existing
distribution and
market knowledge
Market Positioning Strategies
Across Countries
• Häagen-Dazs—U.S. vs. Japan
• Corona Beer—Mexico vs. U.S.
• Mercedes-Benz—Europe vs. U.S.
• McDonald’s
– U.S.
– Europe
– Developing countries—e.g., China
 U.S. Laws of Interest to
firms with U.S.
Involvement
• Anti-trust
• Foreign Corrupt
Influences
• Anti-boycott laws
• Trading With the Enemy
The International Life
Cycle
• Market for older technology
• “Leap frogging”
tends to exist in less
developed countries
– Manufacturing of older
generation technology--e.g.,
Pentium I computers
– Resale of capital equipment—
e.g., DC 8 aircraft, old three
part canning machines
• Some countries tend to be
more receptive to
innovation than others
– Going directly from
old technology to the
very newest, skipping
intermediate step
(e.g., wireless rather
than wired technology)
• Shortening
of product
life
cycles