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INTERNATIONAL BUSINESS

STRATEGY

INTERNATIONAL BUSINESS
SESSION – 13 &14
RAVENSHAW MANAGEMENT CENTER
MBA-II – NOV.
B.S.PANI
Developing Competitive Strategies and
Strategic Options
• Key Strategic Factors
- Competitive strategies provide competitive
advantages.
- Identification of Distinctive Competences – activities
that the organization does better than its competitors
e.g Production, Engineering, logistics, R&D, product
innovation , skills, resources access , adaptability to
change, organizational strength etc.
- Distinctive Competences can create barriers to
imitation and help sustain competitive advantage
Developing Competitive Strategies and
Strategic Options
• Creating a Strategic Fit :-
- Accurate identification of internal and external conditions that
is relevant to the dynamic competitiveness.
- Match the available skills and resources to strategic options.
- Strategic options depend upon
- Corporate objectives
- Target market characteristics
- Defining action plan
- Building and operating
the implementation plan.
- Success in IB depends heavily upon the
organization's ability to reshape strategies in
response to changing global environments and
markets.
Factors Contributing positively
towards gaining competitive advantage
• Purchasing and supply
• Research and Development
• Product Innovation
• Design
• Patents
• Production Technology
• Quality and intensity of promotion
• Production and brand performance
• Pricing
• Delivery and Technical support services
• Financial and commercial terms on offer.
Competition Analysis
• Process of scanning existing and potential
competition.
• Planning competitive counter moves – strongest
player normally makes the first competitive move in
the market
• Resource allocation – Allocate to maximize
competitive position with respect to the competitor
chosen to compete with.
• Selection of competition to compete with depends
upon the likely cost of winning.
• The resultant competitive position can become the
most valued asset of the organization.
Factors that limit Industry Profitability
( Simmonds 1986 :HBR)-1
Influencing Factor Will lower Profitability Will raise profitability

Rivalry among Numerous or equal size One dominant


competitors/structure of
competition.
Growth Slow Rapid

Differentiation Negligible Significant

Capacity Increment Large Small

Exit Barrier High Low

Ease of Entry Easy Difficult

•Scale Threshold Easy Difficult


•Access to distribution
•Common technology
Factors that limit Industry Profitability
( Simmonds 1986 :HBR)-2
• Bargaining Power of Buyers / Clients
Influencing Factors Will lower Profitability Will Raise Profitability

•Number of Buyers Few Many

Purchase Volume Large Small

Profitability target of clients Low High

Impact on end product Unimportant Important


performance and quality

Potential to back integrate & Significant / Easy Not Possible / Difficult


Ability to switch to substitute
or ther suppliers
Factors influencing Changing of
competitive strategies
Demographic Changes in profile of population by age, sex, socio
economic class or geographic location

Psychographic Changes in the lifestyle of the buyers and the way it


reflects on their purchasing habits.

Demand Fundamental changes in taste, usage pattern or


consumption.

Technological Market New processes Vs Obsolescence


Position SWOT of Product, Service, organization systems etc.
Distribution system Changes in sales and distribution channels – either driven
by changes in business environment or buyers’
preference.
Price/Profit relationship Changes in search of improved results
- Low Profit/High TO Vs High profit/low TO
Regulations Response to Law, codes, standards, regulations,
inspectorates etc.
Factors influencing Competitive success

Environmental Factors
-Rate or technological change
-Nature of competition
-Intensity of competition
Organisational Factors Strategic Factors
-Long term objectives
-Size
-Time horizon
- Structure
-Product- market strategy
- Culture
-Manufacturing Capacity

Managerial Factors
Marketing Factors -Communication
-Use of Market Research - Attitude
-Customer Services - Leadership Style

- Product Quality
Pricing Philosophy

Business Performance