 All right, perfect. So I wanted us to first today talk about the difference between objectives and tactics. And a lot of times these terms are used interchangeably, but they're actually quite different. So let's talk about the difference between the two. Objectives are really focused on the end result. And objectives are generally set first. And then your tactics are think of as the day-to-day things or the week-to-week things that need to be done in order for your strategy to be effective. Whether you're setting objectives or tactics, we always want to make sure they're specific and they're measurable. So what I mean by that is that we want to know that at the end of it, did we meet our goal? So if your objectives or your tactics are too vague, it's hard to measure at the end to know if you were successful or not. So we want to make sure that they're specific enough, but also that we have some way to measure it at the end, again, to know if we've achieved our goals and objectives. So I want us to talk a little bit about strategies that some organizations use when they enter new markets. And I want to frame this in the context of globalization. And these are ultimately the different levels that an organization can enter into a new market, specifically a global market. And these are listed from most expensive or, excuse me, least expensive and involved to most expensive and involved. So let's talk about each of them in turn. So exporting, as you probably already know, is you're producing a product or a service and you sell that in a different place, in a different geographic area. This is not very involved because you don't need to be as concerned about the laws and the regulations in the other country because you're simply exporting the goods and services. Mike, was there a comment or a question? Oh, okay. All right. So the next level of involvement in a global environment is licensing. And licensing means you are in a contract with a different organization and you are licensing your brand name, your idea, something along those lines, and giving them essentially permission to utilize your product or service. This happens in quite a few industries. The fashion industry comes to mind about licensing, where they may license a particular brand, allow a company to manufacture, say, home goods under that brand name. So licensing is a little bit more involved than exporting, but still not as involved as contract manufacturing. Contract manufacturing happens a lot, especially in this day and age of globalization, in that you are essentially partnering with a different organization and allowing them to manufacture goods on your behalf. So it's a little bit different than licensing, and I see that I skipped franchise, so we'll go back to that. But contract manufacturing is involved because it's usually a long-term partnership between two organizations. So think about car manufacturing, for example, a particular car brand may manufacture with a company in China, for example, to produce a certain part and ship that part to wherever it needs to go. Franchising, going back a little bit here, franchising is definitely more involved in licensing in that it's not usually just allowing the use of a brand name, but allowing the use of a concept. So if you think of fast food restaurants and hotel chains, that type of thing, oftentimes they work under a franchise agreement. And the franchise agreement is, again, more in depth, and usually there are a lot of rules and restrictions. So an organization might decide to franchise. Suppose there is a coffee company in another country, coffee shop, they may franchise that coffee shop and allow others throughout the globe to also open up a coffee shop under the same name. So think about franchising as not just brand name, but processes. And that's a really important difference between either licensing or contract manufacturing is that it tends to be a big idea rather than just the name brand or a few components. So if you think about operations and processes, that's really where franchising is different from the others that we've talked about. A joint venture is extremely involved. This usually involves a long-term contract between two or more organizations where maybe you're doing, you have a contract for manufacturing and marketing, and they're handling certain other areas of your business as well. So really, really involved to do a joint venture. And it takes a lot of time, as you can imagine, from the strategic perspective to choose your partner for a joint venture, but also to negotiate the contract with them. And then direct investment is our most involved and most expensive direct manufacturing involves actually setting up operations in a particular country. So rather than any of these other options, direct investment means ultimately to you're going to go to a country, you're going to buy a warehouse or buy space in that country, hire employees, and of course be constrained to all of the laws and regulations within that country. So very, very involved. I do have a graphic here that I want to show you. This is also in the readings that you'll do in Unit 1, but you can see low risk, low investment, low control on one end of the spectrum. And our other end of the spectrum is the high risk, high investment, high control. So you can see that direct investment falls definitely at that end, the higher risk, whereas the lowest risk would be exporting or licensing. Do you have any questions on this? Well, we'll give the people a second here. If anyone wants to let me know if my mic is now working, that'd be great. The good news is if you couldn't hear my voice, you're not missing out. I'm not the subject expert here. But I'm not seeing any questions right now in the chat, but again, if anyone has any, yet we have it down here, none for now. So I guess we can keep going. Someone said that, not that we had no comments. One of the questions is they don't have any questions. Okay, perfect. That works. That works. Okay, so let's take a look at something else that's really important as you think about formulating your, the strategic direction of your organization. And this is the North American industry classification system. And this is important to know whether you're doing business in North America or other places in the world have something similar to this. And it's essentially just a way to tell how you can compare with your competitors. Because as we look at developing our strategy, we want to know what our competitors are doing. So one way to really research your competitors is to find out the classification of your particular industry. So as it's noted here, it's important to strategy, it's important to research the other organizations that are doing the same thing that you're doing. And essentially what it does is it groups establishments into industries based on similarities of their production processes. You'll notice when you go through the readings in this unit, I believe that there's a link to the website with all of the classifications, but there are a lot. So this is a really good place to start for research as you're researching your competitors as the first step of developing your strategy. Because then you have a really clear picture of where organizations are grouped. And then you can really dig into the research and find out what their core competencies are, for example. However, having said that, at least the NAICS is developed specifically for statistical purposes and a tax reporting. But it can be a really good resource as you dig into your research. And I do want to show you an example here. There are many more than this, but I just wanted to give you an idea of how ultimately they classify. And you can see that there are utilities as a sector, wholesale trade as a sector, retail trade as a sector, and many others listed here. So again, the importance of knowing this or knowing that this information is available is to ultimately help you with your research as you dig in and begin to develop your organizational strategy. I'm going to skip this since we just asked for questions. So you already know this, but I do want to point it out again, our first step when we're looking at formulating our organizational strategy is to determine the environment in which we operate. So we could do that through industry classifications because we want to know what our competitors are doing, how much revenue they have, how many employees they have. And so we want to do that, but we also want to look at the internal environment as well. So there are two tools, there are many tools, but two that I want us to talk about specifically today to do that analysis is a pest analysis. And that would be a method to look at the external environment and then a SWOT analysis, which helps you look at the internal environment. So we're going to hold off today talking about SWOT because we'll get into a lot of depth in SWOT analysis in Unit 2, but I do want to talk a little bit about pest analysis. As we go through this, remember that a pest analysis is looking at the external environment and it stands for political, economic, social, and technological. So let's look at an example. So these are some questions as you're going through and thinking about developing your strategy when you're applying the past or the pest analysis. So before you think about your strategy, you want to analyze the political environment in the country you're going to be operating within. So you want to look at stability of the government, things like what are the local policies on taxes and how might this affect your organization. You may want to look at trade agreements like NAFTA or the EU and how that's going to impact the organization. You also want to look, of course, at trade regulations and social welfare policies of the particular country in which you're operating. As you can imagine, we also want to look at the economic environment. That's really important when we're formulating a strategy. So what are the interest rates of within the country you're going to be operating? What is inflation? What is inflation looking to be at? And how might these factors affect your business as you enter the market? You also want to look at employment levels and how those levels may be changing due to the economic situation that the country happens to be in. You'll want to look at the gross domestic product or GDP of the country in which you're thinking about operating. And also exchange rates. This is an important one because this can make production of a product or a service cheaper or less expensive when you compare it to your home country. So those are a few questions that you'll want to ask yourself as you think about the organization. So let's talk a little bit about the socio-cultural aspects. And this one is really important in terms of how you look at doing business. And think of it as culture, in a way, and the culture of the organization. So what are lifestyle trends in the country in which you're operating? What are the demographics? And by demographics, I mean things like age, marital status, average number of children, that type of thing. Very important. The level of education, income levels within that country. And of course, this is important because you're not able to, if your product is a prestige product, for example, there may be some organization or some countries that you can't sell to because they may not have the level of income in order to afford that product. So very, very important to consider there. You'll want to also consider the local religions, the influence on religion within that particular culture, and what attitudes consumers may have based on those religious beliefs. You'll want to think about the level of consumerism, how often people buy, what kinds of things they buy, what is important to them in terms of the types of needs that they may have. Also looking at legislation on social aspects, like how a country views vacation time, how they view maternity leave, that type of thing. You'll also want to consider the attitudes toward work and leisure. Vacation time, those kinds of aspects can be really important when you're formulating your strategy. You'll also want to look at the technical or technological aspects. This, of course, is a big one because it is constantly changing, as we all know, as technology does. So here you'll want to consider things like the focus on technology, how important is technology within that particular environment? What are rules around intellectual property in a particular country? And in terms of that, how fast is technology changing? Is it changing really fast? If it is, your strategy may be different than if adoption of technology is slow in the country you're operating within. And you also, this is really important, too, want to consider the role of technology in competitive advantage. Can the use of technology give you a competitive advantage, for example? So the last two I would like to look at, and then I'll entertain questions, environmental and legal. And this is where the L and E come in in a pestle analysis. And environmental, as you know, is extremely important. So what are local issues surrounding the environment? Are there any environmental issues that you want to be concerned about? You can also look here at laws around environments such as recycling, how you get rid of waste, that type of thing. And are there activities that happen within that country around the environment, like Greenpeace or PETA, that you need to concern yourself with? And especially environmental protection laws is really important as well. So kind of along those lines, our last element that we want to look at are legal issues. And that's ultimately what regulations do we need to consider? This is a huge thing that we want to consider before we consider our strategy and especially moving into a global market. What type of intellectual property laws are there? What consumer protection laws are there for safe products? Even things like, I don't know, for example, labeling of products, labeling of food products. Every country has a different set of laws and rules around how things are supposed to be labeled. So you'll want to consider this for sure. Safety laws, particularly for employees, are going to vary from country to country. So you'll want to have an awareness of these. You'll also want to think about the different types of employment laws that may exist. There may be required vacation time. There may be a limit to the number of hours that someone can work. All of these are going to be factors that ultimately go into your strategy. So any questions on this? I'll give just a minute or so. A little bit of time there. I'll take this time to mention that we had some very nice, we didn't have any questions, but we had some very nice comments on our last video, which just to pass along to you, they were very nice. They thought everything was very helpful, but a good reminder for everyone now that if you're watching this later, you can leave a comment if you have a question that maybe you're seeing this later, and maybe we can address it at the start of a future video if you don't particularly have a question right now, but we'll give everyone a little bit of time to see if they have any. Well, I'm not seeing anything come through right about now, so and we're not too well delayed. So yeah, just a reminder, anytime you have a question, you can put it down there in the chat or I'll leave it in the comment later. Well, let's go ahead and move on then. So we're going to shift gears a little bit and I want us to talk a little bit about a really prevalent theory in terms of strategy, and that is Porter's Five Forces. So this is part of that. I thought we could just go back. So we just got a question and I figure we just. Oh, perfect. Yes. So the question we have here is from the lucrative leadership podcast and they want to know how do you define outcomes? Outcomes in the context of and their and their importance to aligning coherence inside the organization. Okay, so outcomes in terms of objectives, that's that's the way that I'm under understanding that question. Hopefully that's the way it was meant. If not, feel free to go ahead and comment and we can clarify a little bit. Really the first step to determining what your outcomes are is to do this internal and external analysis because it's difficult to know where you want to go unless you don't know where you're at currently. So I would say that that's an important first step. And then as you go through and really narrow down your strategy and your chosen strategy, that is the point where you will define what the outcome should be. Oftentimes the outcomes are financial related, so it might be return on investment. It might be a particular number of sales. So oftentimes I would say that it really is a based on financial, but there could be other things too. So maybe you want to increase market share, which that sort of has to do with financial a little bit too. But increasing market share would mean obtaining more customers. So when you set those bigger picture outcomes, that's where you would then go and create tactics in order to ultimately meet those outcomes. So suppose your outcome or objective is to increase market share, well then your tactics might be remember those are the smaller things you're going to do to help meet that bigger objective. So it might be things like hire some a new person to do social media, maybe taking customer feedback and revising the product or service that we're offering. So it would then get very specific ultimately to help you meet that objective. Does that certify? They had some other relative things, but I think you hit on some of it. If there's more clarification, feel free to put it in the chat and we'll come back to it. We'll let you move on to the next part and we'll have another time for questions here coming up. Okay, perfect. So as we talked about, we need to look at the internal and external environment. So the Porter's Fight Forces model and you're going to hear more about Porter a little bit later on because Porter has a model for the actual development of strategy that we will be addressing in a future unit. But Porter's Fight Forces really looks at the external environment and things that you want to consider within the external environment before you move forward with development of your strategy. So let's go through each of these and talk a little bit about them. So the threat of new entrants, let's start there. This is the area where you want to think about how easy would it be for a competitor to do exactly what you're doing, produce the same kind of product or service. And this is an important thing to consider because if it's really easy for a competitor to come into your market space and take market share from you, you may want to consider a strategy that does something a little bit different so that it isn't as easy for them to come in and that and leverage that market share. So this is a very important aspect. Another important aspect that is similar to threat of new entrants is threat of substitute products. So if you think about and we often say products but we mean products and services too. So threat of substitute products or services means how easy is it for customers to be able to find an alternative to what it is that you're offering. If you think about ride share apps for example, there are only a handful of them. So it's there is a bit of a threat of substitute products but not as much as say if you go buy a loaf of bread at the store where there are many many substitutes. So depending on the threat of this, there is going to be a possibly a different direction that you want to go in your strategy so that the products, your products or services aren't easily substitutable from the customer's perspective. So let's look next at rivalry, the competitive rivalry within an industry. This is important to understand because it involves the number of firms that are within a particular industry and how they can impact your pricing structure. One of the best examples here is airlines and even hotels. If you want to buy a plane ticket and you go online and you look at one airline, probably a similar airline is going to have a similar price within the same route. So when you look at competitive rivalry, you want to know how much can your competitors drive down prices for your particular product or service. And it's important to note because this can drastically reduce your profitability when another competitor has a lot of control. If you think about any time you bought an airline ticket, oftentimes we just go with the lowest price. So understanding this as an organization as we're thinking about developing our strategy will help us choose the right strategy that can drive us a little bit more to avoiding this as an issue within a very competitive marketplace. I want us to look at the bargaining power of customers and the bargaining power of suppliers kind of in the same way because they're similar just different stakeholders. So the bargaining power of customers refers to how do customers, how much power do they have to help us drive down or force us to drive down prices of our product? So the sensitivity to price is really important here because customers do tend to be sensitive to price, particularly for some products. But there are other products that we don't have a lot of say in as customers. If you go buy gas for your car, we really don't have a lot of power as consumers to drive down that price. So the bargaining power of customers looks at how much power we have as customers to affect the price of a particular product or service. So when we think about this, we want from a strategic perspective, we want to know how much power our customers have in driving down a particular price, looking at supply and demand of that particular product or service. Obviously the ideal situation as an organization is that our customers don't have a lot of bargaining power on price. And that means that we as an organization aren't under a lot of pressure to have to handle price sensitivities within the marketplace. So in a similar way, the bargaining power of suppliers is important because if you think about just any organization, they need a lot of inputs in order to produce a product. So you may be buying your inputs from this supplier, another input from another supplier, and then pulling it all together and then manufacturing a particular product. But sometimes we find, and this is why it's important to strategy, is knowing how much power our suppliers have in the marketplace. How much power do they have to drive the price up of our raw materials to produce our product. Sometimes organizations will even find that suppliers will not want to work with a certain organization, which means that they don't have as many choices in which to get their raw materials. So really the bargaining power of suppliers relies on supply and demand and the power that an organization has. If you think about a large retailer, for example, I'm not going to name any specific ones, but think about the largest retailer that you know. One thing that they do really well is that they have the power over the supplier. So they are able to drive down prices because they have so much buying power within the marketplace. And that's what helps them keep their prices low is because from this strategic perspective and this external part of the environment, they have all of the power, not the suppliers. So important considerations as we think about the direction that we want to go for strategy, which we'll start to dig into a little bit more in the unit too. How do you actually formulate the strategy? Any questions on this? We'll give people an opportunity here to put some questions in. I think and the good news, I think you answered Lucative Leadership's question very well. They said thank you with two exclamation points. My pleasure. Let's see, we have another question coming in here about talent slash employee bargaining power. That is a really good point. I would say that that is not it's not one of Porter's five forces, but obviously it's extremely critical in a talent management situation and being able, in this type of knowledge economy as we're calling it, our people are everything, especially if you're producing a service as opposed to a product, but really in both types of sectors, that's going to be huge because of course if people are able to obtain a higher salary, maybe you have to pay people more for the specialized knowledge and skills that will definitely go into drive up the cost of creation of your product or service. We will talk a little bit more about the talent management piece and specifically employees and getting employees on board with our strategy. I believe that's in unit three, so we'll dig a little bit more in depth about some considerations as far as that goes a little bit later. Okay. Well, awesome. I'll let you know if we have any more feedback, but that was the only question we had for right now. Again, everyone in the chat, if you have any questions. Perfect. Well, this actually finishes us up for unit one and remember just to summarize a little bit, unit one is really all about looking at that external and internal environment in which we're going to need to operate. So no organization can successfully develop a strategy unless they have that figured out. As I said earlier, if you don't know where you're at, how do you know where you're going? We know that over the past few years, things like COVID have impacted everything worldwide and as a result of that, we really need to look at not just what is happening in the world, but what could happen. And of course, we're not mind readers or we don't have a crystal ball, but we need to look at all of the possibilities of things that could happen that could affect our business. And if you think about leadership within an organization, oftentimes the best leaders are those individuals that have a sense of a pulse, if you will, on what is going on in the world. So they can easily pivot and make changes to the strategy as these unexpected types of events happen. So what I really want you to take out of this unit in summary is you really need to look at the external environment, internal environment first before you can begin to develop your strategy. And oftentimes organizations will do this, not in a vacuum with the CEO and the executive suite involved, but they'll get even their employees involved too to talk about what kind of feedback are you hearing from customers? What kind of things are important for us to consider within the customer environment? So all of these data points that we gather helps us narrow down the direction that we should go within our organization. And that was really the focus of unit one and we'll dig in a little bit more starting next week in unit two on how do we go about actually formulating and then implementing the strategy. Any questions? So we actually do have, we have a question down here in the chat asking Kenny Butler asks, are there strategies to create substitute products as a way to enter a new market or disrupt it? Absolutely. We'll get into that a little bit more here in the next couple of weeks. But yes, because that is ultimately the goal in that if you have a product that is very substitutable, there are things that you can do and want to do in order to make that less so. One of the important ways that you can do that is maybe not an actual change to the product or service, but how your customer views that product or service. So you can do a marketing campaign, for example, that really differentiates your product from others that would be good substitutes in the marketplace. Customers are very sensitive to price. So we may want to keep the same price, but really make our product better in the eyes of the consumers so they no longer believe that it's really a substitute, that it's more a, oh, this product is really different. Again, that's the psychological aspect and that would be probably the most important strategy to implement in that situation is to look at how can we make the product not be a substitute in our customer's minds. So that may be through a little bit better quality and maybe through really amazing customer service. It may be through a variety of things that would be tactics that the organization can implement. Does that answer the question? Well, I'll give a spiel about everyone joining us next time and give everyone a chance to potentially respond in the chat. And I would say, of course, definitely join us next time for our first review of Unit 2. If you're finding this afterwards, obviously, go catch up on the course, go catch up on the videos we've done before. If you have any questions, leave them in the comments in the chat. We'll try and address them in the next time. I'm just kind of stalling here. Thanks everyone for joining us. Oh, we do. We have another question coming in here. All right. Is governance covered in future units slash models? Absolutely. So governance I'm assuming in terms of you're operating in a particular country and there's a governmental laws and regulations. That's how I'm taking the question. That's how I'm reading it as well. You can clarify this down in the comments. Okay, perfect. So we're not going to get into because every country is so different. In future units, we won't dig in too deep about specific laws and regulations of a variety of countries. But we will look at the bigger picture and talk about the types of things that you should consider, you know, such as human resource management laws, product safety laws, that type of thing. So while we won't dig into specifics or take a deep dive because every country is so different, we will talk about it in more of a general perspective for sure. And we have another question coming in here. We got people excited this morning here or evening or afternoon as we've established around the world. Should the strategy be for to have a new product? Or should you focus more on creating a brand while entering the market? That's a good question. I wouldn't say that one is more important than the other. Many companies will create a new product that customers actually don't want. And so we don't want to just do that as a form of strategy just to do it. We obviously want to make sure that that new product or service is different. We're able to easily differentiate it from our competitors and so forth. I think personally, this is not, this is my personal opinion in my experience, branding is extremely important and maybe even more important if you only have so much money to spend, I would spend my money on branding versus creation of a new product. Because remember branding is how the customer views your product or service in their mind. Whether that be, oh, it's prestigious, it's dependable, it's reliable, it's any of those things. That's ultimately what gets your customers to buy. Usually we're not buying a product. We're trying to solve a problem when we buy the product or we're trying to make ourselves feel good about buying a particular product. So I personally speaking, I think that branding is really important, although creation of a new product certainly has its place in organizational strategy too. Okay, well, if we'll give everyone another chance if there's any more questions. But if not, I can give the closing spiel again about joining us again next time and leaving comments below if you have any questions and you're catching us later. But if not, first of all, I obviously want to thank you for doing an incredible job teaching everybody. I want to thank everyone for joining us and we look forward to seeing you guys back here next week for Unit 2. Thank you everybody. Bye now.