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Global Strategic Planning

Objectives
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Through this chapter, the student will be exposed to:

• Understand the definition and importance of the global strategic plan-

ning process (GSPP)
• The significance of foreign markets in relation to the GSPP
• Understand the strategic formulation process
• Draft objectives and strategies within a global framework.

Opening Case
Diebold
For most of its 142-year history, Diebold, Inc., never worried much about
global strategy. As a premier name in bank vaults and then automated
teller machines (ATMs) and security systems the North Canton (Ohio)-based
company focused on US financial institutions, content to let partners hawk
what they could abroad. But in 1998, with the US ATM market saturated,
Diebold decided it had to be more ambitious.
Since then, Diebold has taken off. Sales of security devices, software, and
services surged 38 percent last year, to $1.74 billion, led by a 146 percent
jump in overseas sales, to $729 million. The momentum has continued this
year. With ATM factories in Asia, Latin America, and Europe, international
sales have gone from 22 percent of the total to 40 percent in just two years,
and will soon overtake North America.
209

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 210 International Business
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The ventures overseas have taken Diebold to whole new directions. In

China where it now has half of the fast-growing ATM market, it is also
helping the giant International Commercial Bank of China design its self-
service branches and data network. In Brazil, Diebold owns and manages
a network of 5000 ATMs, as well as surveillance cameras, for a state-
owned bank. In Colombia, it’s handling bill collection for a power utility.
In Taiwan, where most consumers still prefer to pay bills in cash, Diebold
is about to introduce ATMs that both accept and count stacks of up to 100
currency notes and weed out counterfeits. And in South Africa, its ATMs
for the techno-illiterate scan fingerprints for identification.
Diebold didn’t plunge willy-nilly into overseas markets. “We tend to put
a high emphasis on analyzing the daylights out of things before we go in,”
says Michael J. Hillock, Diebold’s international operations president. In the
1980s, wary of doing it alone, it used foreign electronics giant Philips to
distribute its ATMs, before forging a manufacturing and sales joint venture
Buy this file fromwith IBM. By 1998, though, it needed faster overseas growth to lift its bottom
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line. And Diebold figured it knew enough to assert more control over foreign
operations. So, Diebold bought IBM’s stake, snapped up the ATM units of
France’s Groupe Bull and Holland’s Getronics, gained majority ownership
of its China ATM manufacturing venture, and bought Brazilian partner
Procomp Amazonia Industria Electronica, a top Latin American electronics
company.
Diebold found it could serve much broader needs in emerging markets
than in the United States. Across Latin America, consumers use banks to
pay everything from utility bills to taxes. So Diebold ATMs handle these
services, 24 hours a day. In Argentina, where filing taxes is a nightmare,
citizens can now fill out returns on a PC, store them on disk, and have
their disks scanned on one of 5000 special Diebold terminals, most of them
at banks. Red Link, which owns the biggest network for the tax service,
gave Diebold the job because “they are extremely flexible and can adapt
technology to solve any problem,” says Commercial Manager Armando
Avagnina. Diebold is also landing new contracts across Latin America to
manage bank ATM networks.
The $240 million acquisition of Brazil’s Procom also gave Diebold an
entree into an entirely new line: It landed a huge contract to supply electronic
voting machines for Brazil’s presidential election last year. Now Diebold is
getting into the voting machine business in the United States. Globalization,
it seems, can even unveil new opportunities in the home country.

Question: What is Diebold’s international challenge? What is your opinion

of Diebold’s international strategy?

Source: Business Week, August 20, 2001, Issue 3746, p. 138.

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 Global Strategic Planning 211

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Introduction
Beyond the standard steps in a traditional business plan, strategic planning
is geared especially to the objective of being competitive. The degree to
which an individual, an enterprise, a nation, or a region can produce goods
and services that meet the tests of global marketplace while maintaining or
increasing real income is even more dependent on operational processes, not
just products and markets. Of growing importance to products and markets
are the questions of how the product is made; how it is taken to the market;
how it is received, sold, and serviced in the market; and how it changes in
relation to the changing environment.
How the manager as an individual, the firm as an organization, the
industry as a sector, the state as an economic policymaker, and the region as
an economic actor factor into these processes are crucial aspects of strategic
planning for competitiveness. Planning per se means looking for threats,
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strengths, and weaknesses, and devising strategies to exploit
or counter particular aspects of the overall environment. It is future-oriented
but sensitive to the past. It is a process within which decisions are designed
before they are taken and evaluated so as to increase the probability of a
successful outcome.

Overview on Global Strategic Planning

Global planning necessitates an awareness that decisions taken by man-
agers, firms, industries, nations, and regions are done so in a cross-cultural
environment.
Competitiveness is now a global fact of business life, and all companies
must think internationally and plan globally. Even if the company in question
markets its products only domestically, its strategic planning must take into
consideration the nature of its industry worldwide, the policies of its national
government on international issues, its overall regional environment, and
even global trade and financial issues among others. The company’s exter-
nal environmental considerations (e.g., national trade balance) and internal
environment (e.g., labor–management relations in the firm) must be factored
into the process of planning. How these external and internal aspects affect
its competitiveness is core to strategic planning and, therefore, is more than
acquiring a competitive advantage. It is strategy to come with competition,
to achieve competitiveness.
Much of the literature on achieving competitiveness has focused on struc-
tural aspects of the business environment, which should be taken into con-
sideration by corporate strategic planners. It is almost uniformly accepted

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