INTERNATIONAL STRATEGIC MANAGEMENT

By : Prof. V.P.KAKKAR AIBS, NOIDA

MODULE 1

1
INTRODUCTION & COURSE REVIEW

2 CONCEPT OF STRATEGY & STRATEGIC MANAGEMENT .

security Smoking. major products ) FUNCTIONAL POLICIES ( Marketing. Production. ) PROCEDURE AND STANDARD OPERATING PLAN ( Handling incoming orders. use of company car etc) . Research.loitering around plant. major customers. Shipping to foreign countries ) RULES ( Delivery of pay cheques . Finance Material & Quality management etc. servicing customer complaints.PYRAMID OF BUSINESS POLICY MAJOR POLICY Lines of business ( Code of ethics ) SECONDRY POLICIES ( Selection of geographical area.

PRE DETERMINED COURCE OF ACTION HAS DEFINITE DIRECTION SUSTAINABLE COMPETITIVE ADVANTAGE: Delivering superior value to target customer at the same cost or delivering equal customer value at lower cost relative to your competitor. on a continuing basis. MOVING FROM WHERE YOU ARE TO WHERE YOU WANT TO BE IN NEAR FUTURE THROUGH A SERIES OF DECISIONS AND ACTIONS. ALLOCATION OF RESOURCES FOR CARRYING OUT THESE GOALS.STRATEGY • GREEK WORD STRATEGIA – Science of guiding & Directing • COMPLEX PROCESSOF DETERMINING LONG TERM GOALS & COURSE OF ACTIONS NEEDED TO BE CARRIED OUT. • • • .

risk taking and creativity GROUP DECISION MAKING: Participation • . Intelligence. Education. Values Cognition.STRATEGIC DECISION MAKING • • • • • SETTING REALISTIC GOALS: Challenging but achievable RATIONALITY: Exercising best choice among alternatives CREATIVITY: Decision creative and original through brainstorming VARIABILITY : Every situation is unique DEMOGAFIC FACTORS: Age.

pace and timing of growth ENVIRONMENT The fit between business and its environment PORTFOLIOS OF BUSINESSES Product-market scope and postures STRATEGY Strategy is its concern . sustainable organizational capability CORPORATE STRATEGY In one word corporate strategy is its concern . extent. not the operational activities INTEGRATION Integration is its concern . not a particular function CREATING CORE COMPETENCIES / COMPETITIVE ADVANTAGE Creating long term .CONCERNS OF STATEGIC PLANNING • • • • • • • • FUTURE Long term dynamics is its concern not day-to-day tasks GROWTH Direction.

Activating Strategies. INTENTS Adopting Business Model. Formulating CORPORATE & BUSINESS LEVEL Strategies. Systems& Processes.EVALUATION Performing Strategic Evaluation.STRATEGIC MANAGEMENT ESTABLISHMENT OF VISION & MISSION statements. Exercising Strategic CONTROL Control and Reformulating Strategies . Setting Goals & Objectives FORMULATION of STATEGIES Conducting SWOT. Business Definition STRAT. Behavioral & Functional implementation And Operationalising strategies IMPLEMENTATION OFSTRATEGIES REVIEW. Strategic Plan. Designing Structure. Strategic Analysis Strategic Choice.

STRATEGIC MANAGEMENT ENVIRONMENT SCANNING STRATEGY FORMATION MISSION (Reason for existence) OBJECTIVES (What results to accomplish & by when ) STRATEGIES (Plan to achieve Mission&Objectives) POLICIES (Broad guidelines for decision PROGRMS Activities needed To accomplish plans BUDGETS Cost of programs PROCEDURE Sequence of steps needed to do the job PERFORMANCE Actual results STRATEGY IMPLEMENTATION EVALUATION & CONTROL EXTERNAL SOCIETAL TASK ENVIRONMETAL INTERNAL STRENGTS WEAKNESSES • structure •Culture ( Beliefs. ompetencies. xpectations. Skills.Values ) • Resourses.Knowledge Making) FEEDBACK / LEARNING .

3 NATURE OF INTERNATIONAL STRATEGIC MANAGEMENT .

EXPORT & INTERNATIONAL STRATEGY FIRM A OPERATES IN COUNTRY X FIRM A OPERATES IN COUNTRY X Y EXPORT TO COUNTRY Y SINGLE COUNTRY STRATEGY EXPORT STRATEGY SUBSIDIARY S3 SUBSIDIARY S1 THE CENTRE SUBSIDIARY S2 INTERNATIONAL STRATEGY SUBSIDIARY S4 .SINGLE COUNTRY.

GLOBAL STRATEGY SUBSIDIARY S1 SUBSIDIARY S2 SUBSIDIARY S6 THE CENTRE SUBSIDIARY S3 SUBSIDIARY S5 SUBSIDIARY S4 .

4 LEVELS OF STRATEGY & EVOLUTION OF STRATEGIC MANAGEMENT .

HIERARCHY OF STRATEGY CORPORATE STRATEGY BUSINESS STRATEGY FUNCTIONAL STRATEGY .

GUARD REPUTATION COMPETITIVE STRATEGY ATTAIN SUSTAINABLE COMPETITIVE ADVANTAGE BY: .QUALITY Etc. Functional Level Managers are responsible for: developing annual objectives & short term implementation Plans. GOOD PARENTING . LEVERAGING RESOURSES .STRATEGY AT DIFFERENT LEVELS CORPORATE STRATEGY PURPOSE OR MISSION SHAREHOLDER VALUE ? STAKEHOLDER INTEREST? ASPIRATIONAL ? MEANS : . DEVELOPING CAPABILITIES AND .OR DIFFERENTIATING OR OCCUPYING A NICHE OPERATIONAL FUNCTIONAL LEVELSTRATEGY HR.FINANCE.PRODUCTN MARKETING. . COMPETING ON COST. SELECT PORTFOLIO .

PHASE III : EXTERNALLY ORIENTED PLANNING ( STRATEGIC PLANNING ) : Seeking increased responsiveness to markets and competition by trying to think strategically.HOW HAS STRATEGIC MANAGEMENT EVOLVED • PHASE I: BASIC FINANCIAL PLANNING : Seeking better operational control by trying to meet budget . . PHASE IV : STRATEGIC MANAGEMENT : Seeking a competitive advantage by considering implementation and evaluation and control when formulating strategy. . . PHASE V : INTERNATIONAL / GLOBAL STRATEGIC MANAGEMENT : Managing a worldwide competitive advantage . PHASE II : FORECAST BASED PLANNING : Seeking more effective planning for growth by trying to predict the future beyond next year.

5 STRATEGIC MANAGEMENT PROCESS .

WEAKNESSES I I ORG.OBJECTIVES VII GENERATION & EVALUATION OF STRATEGIC ALTERNATIVES VIII IMPLEMENT BEST ALTERNATIVE IV EXT. OPP. MISSION . MISSION . CURRENT PERFORM . OBJECTIVES . POLICIES II ORG. ANALYSIS .ANCE.STENGTHS .STRATEGIES . THREATS REWORK AS NEEDED IX MONITORING . III REVIEW BOARD OF DIRECTORS & TOP. ENV.STRATEGIC MANAGEMENT PROCESS IV INTERNAL’ ANALYSIS . MGMT V SELECTION OF STRATEGIC FACTORS VI REVIEW REDEFINE . . .

MODULE 2 .

FABRICATION PRODUCT DISTRIBUTOR RETAILER PRODUCER .6 TYPICAL VALUE CHAIN OF A MANUFACTURED PRODUCT RAW MATERIAL PRIMARY MANUF.

Machines.otion ) SERVICES ( Installation.Finance.Mgmt. development ) 7 TECHNOLOGY DEVELOPMENT ( R&D.A CORPORATE VALUE CHAIN FIRM INFRASTRUCTURE ( Gen.Supplies) INBOUND LOGISTICS (RAW MAT) OPERATIONS ( Machining. Repair ) PRIMARY ACTIVITIES .Process & Product Development0 PROFIT MARGIN PROCUREMENT ( Purchasing of Raw Materials. Plg) SUPPORT ACTIVITIES HUMAN RESOURCE DEVELOPMENT ( Recruitment.Accounting. Training. Prom . Testing ) OUTBOUND LOGISTICS ( Distribution ) MARKETING & SALES ( Advt. ( Assembly.

beginning with basic Raw materials coming from suppliers to a series of value added activities involved in producing and marketing a product. • • • • • ending with distributor getting the final goods into the hands of ultimate customer Focus of value chain: To examine corporation in the context of overall chain of value creating activities of which firm may only be a small part.) or to guarantee cost effective and proper distribution ( Forward Int.VALUE CHAIN ANALYSIS • Value Chain: Linked set of value creating activities. ) . ii) Downstream activities: Refining the oil. AMCO: Great expertise in downstream activities like marketing and retailing. drilling and moving crude oil to refinery. Transporting and marketing of Gasoline and Refined Oil to distributors and gas station retailers Ex: British Petroleum: Dominant in upstream activities like exploration. Merger combined their core competencies In analyzing value chain a firm operates up and down the entire chain but usually has area of prime expertise called – centre of gravity Differences among competitor’s value chain are key sources of competitive advantage Backward & Forward integration One of the strategic moves: Moving forward or backwards along the value chain in order to reduce costs. guarantee access to key raw materials ( Backward Int.Oil exploration. INDUSTRY VALUE CHAIN ANALYSIS: 2 segments i) Upstream Activities: Petroleum Industry.

SERVICE: Installation.CORPORATE VALUE CHAIN • • • Framework for identifying competitive advantage Differences among competitor’s value chain are key source of competitive advantage Each corporation has internal value chain of activities. internal analysis of firm involves analyzing a series of different value chains . OPERATIONS: Product manufacturing ( Machining. Product & Process development 9 PROCUREMENT: MP&IC. Purchasing. Activities performed by any firm can be grouped under 9 areas PRIMARY ACTIVITIES 1. MARKETING & SALES: Advertising. Outsourcing and Material Handling & Storage • • Each of the Product line has its distinctive value chain For several products. OUTBOUND LOGISTICS: Warehousing & Distribution 4. Promotion etc. Handling and warehousing 2. Assembly & Testing) 3. 5. Repairs & After sale service SUPPORT ACTIVITIES 6 FIRM’S INFRASTRUCTURE 7 HUMAN RESOURCE DEVELOPMENT 8 TECHNOLOGY DEVELOPMENT: R&D .. INBOUND LOGISTICS: Raw mat.

8 EXTERNAL ENVIRONMENT .

COMPANY AND ENVIRONMENT ENVIRONMENT INPUTS PROCESSES ACTIVITIES OPERATIONS PLANNING MANUFACTURING INSPECTION PACKING OUTPUTS MEN MACHINE MATERIAL METHODS MONEY GOODS SERVICES SALES PROFITS OBJECTIVES GOALS CORRECTIVE TARGETS ACTION FEEDBACK ENVIRONMENT .

PEST FACTORS POLITICAL TECHNOLOGICAL ECONOMIC SOCIAL .

TECHNOLOGYIMAGE CONSUMER BUYING PATTERNS ETHNIC/RELIGIOUS FACTORS TECHNOLOGICAL TECHNOLOGY ACCESS. TERM & CHANGE ECONOMIC ECONOMY SITUATION & TRENDS TAXATION INTEREST & EXCHANGE RATES MARKET & TRADE CYCLE SOCIAL LIFESTYLE TRENDS DEMOGAPHICS COMPANY ATTITUDES & OPINIONS BRAND.PESTLE MATRIX POLITICAL CURRENT/FUTURE LEGISLATION REGULATORY BODIES GOVT.COMPANY . POLICIES GOVT.PATENTS MATURITY OF TECHNOLOGY REPLACEMENT TECHNOLOGY / SOLUTIONS INNOVATION POTENTIAL MANUFACTURING MATURITY & CAPACITY LEGAL INTERNATIONAL LAW EMPLOYMENT LAW COMPETITIOM LAW HEALTH & SAFETY LAW REGIONAL LEGISLATION ENVIRONMENTAL ENVIRONMENTAL IMPACT ENVIRONMENTAL LEGISLATION ENERGY CONSUMPTION WASTE DISPOSAL .LICENSING.

COMMERCE FINANCIAL INSTITUTIONS REGULATORY PROVISIONS SKILL LEVEL OF WORKFORCE IR CLIMATE .CONSTITUENTS OF MICRO ENVIRONMENT MARKETING INTERMEDIARIES MARKETS TYPES & DEMANDS COMPETITION SUPPLIERS MICROENVIRONMENT E.

MARKETS & BRANDS CHANGING TASTES & PREFERENCES OF CUSTOMERS THE NEW AFFLUENCE OF CONSUMER SOCIO-CULTURAL & POLITICO-LEGAL CHANGES BUSINESS BOUNDRIES GETTING BLURRED ( DUE TO OVERARCHING TECNOLOGIES : FASTER INTERNET. E-GOVERNANCE & E-COMMERCE COMMUNICATION.ENVIRONMENTAL CHANGES WHICH FORCE THE FIRMS TO ADOPT STRATEGIC PERSPECTIVE • • • • • • • • CHANGES IN TECHNOLOGY PROLIFERATION OF NEW PRODUCTS FASTER COMMERCIALISATION OF NEW IDEAS EMERGENCE OF GLOBAL FIRMS. etc ) .

Provides best possible fit between the firm & Ext.NEW DEMANDS FIRMS HAD TO FACE ( CONSEQUENT TO ENVIRONMENTAL CHANGES ) • • • • • • TO BE STRATEGICALLY ALERT TO BE FUTURE .ORIENTED TO BE ABLE TO TAKE RISKS IN TAPPING OPPORTUNITIES TO BE INSULATED ENOUGH AGAINST ENVIRONMENTAL THREATS TO DEVELOP COMPETENCE FOR ASSIMILATING CHANGES FASTER TO RESPOND EFFECTIVELY AND MORE ECONOMICALLY ( It helps avoid haphazard response to environment. Prepares the firm to not only face future but even shape the future in its favor. Helps build sustainable competitive advantage. ) . Env.

9 INTERNAL ENVIRONMENT .

A SWOT CHECKLIST
INTERNAL STRENGTHS: MANY PRODUCT LINES? BROAD MARKET COVERAGE? MANUFACTURING COMPETENCE? GOOD MARKETING SKILLS? GOOD INVENTORY MANAGEMENT? R&D? INFORMATION SYSTEM? GOOD HUMAN RESOURCES? BRAND EQUITY? COST ADVANTAGE? APPROPRIATE ORG. STRUCTURE? APPROPRIATE CONTROL SYSTEMS? ABILITY TO MANAGE STRAT. CHANGE Etc

INTERNAL WEAKNESSES: NARROW PRODUCT LINES? RISING MANUFACTURING COST? POOR MARKETING PLAN? POOR MATERIAL MANAGEMENT? INADEQUATE HUMAN RESOURCES LOSS OF BRAND NAME?LACK OF CORPORATE DIRECTION? LACK OF CORPORATE CONTROL POOR FINANCIAL MANAGEMENT INAPPROPRIATE ORG. STRUCTURE & CONTROL SYSTEMS HIGH CONFLICTS, POLITICS? Etc

SWOT CHECKLIST
POTENTIAL ENV. OPPORTUNITIES . . NEW MARKETA/BUSINESSES?
. COST OF DIFFERENTIATION ADV? . PROFITABLE NEW ACQUISITIONS? . BRAND NAME CAPITAL IN NEW AREAS . R&D SKILLS IN NEW AREAS . VERTICAL INTEGRATION( FORWARD/BACKWARD) . DIVERSIFICATION . OTHERS?

POTENTIAL ENV. THREATS . ATTACK ON CORE BUSINESSES?
. INCREASE IN DOMESTIC/ FOREIGN COMPETITION? . CHANGE IN CUSTOMER TASTE . BARRIERS TO ENTRY . NEW OR SUBSTITUTE PRODUCTS . INDUSTRY COMPETITION . SLOWDOWN IN ECONOMY . TAKEOVERS . LOWER MARKET GROWTH RATE . OTHERS?

MACKENZIE’S 7S MODEL
STRUCTURE STRATEGY SHARED VISION SYSTEMS

SKILLS STAFF

STYLE

MODULE 3
VISION,MISSION & BUSINESS DEFINITION

12
STRATEGIC INTENTS
• To achieve success, organizations have to primarily focus on hierarchy of strategic intents – Vision, Definition, Business Model, Goals Objectives

Mission, Business

• Framework within which organization operate and adopt a predetermined direction • Purposes the organizations strive for.

. accumulating. contemplating and utilizing precious & scarce resources in such a manner that these are stretched to meet the aspirations of a company. FIT : Positioning the firm by matching its organizational resources to its environment.CONCEPT OF STRETCH. conserving.LEVERAGE & FIT STRETCH : Misfit between Resources & Aspirations LEVERAGE : Refers to concentrating.

. yet it is a powerful motivator to action. • This is what a person or an organization would ultimately like to attain in the near future. • A vision is generally more dreamt than it is articulated • By its nature it may be as good as a dream.VISION • Future aspirations that lead to an inspiration • Basic & at the top of hierarchy of strategic intents • Aspirations expressed as strategic intent should lead to an end.

GOOD VISION STATEMENTS • Inspiring & exhilarating • Help in the creation of a common identity and a shared sense of purpose. • Foster long term thinking. • Foster risk. • Make sense as these are practical. represent integrity and are meant to benefit stakeholders.taking and experimentation. • Competitive. original and unique. . • Truly genuine.

It rests on core values & core purposes. . Core Ideology : Defines enduring character of an organization that remains unchangeable .ENVISIONING PROCESS A Well conceived vision has 2 major components 1. Envisioned Future : A long term. time bound goal and vivid description of what it would be like to achieve that goal. 2.

plans and goals A puller into the future A reflection of what makes an organization unique Inspire & motivate A VISION SHOULD NOT BE: A ‘ high concept statement’ or an advertising slogan A strategy/view from top A history of proud past A soft business issue Passionless . A VISION SHOULD BE: An organization charter of core values & principles The ultimate source of our priorities.WHAT A VISION SHOULD AND SHOULDN’T BE • .

productivity and innovations. profitability . competitive and profitable Engineering enterprise providing total business solutions.A FEW VISION STATEMENTS VISION 2001 0F BHEL A world-class . innovative . VISION OF IOC Indian Oil aims to achieve international standards of excellence in all aspects of energy and diversified business with focus on Customer delight through quality products & services . VISION OF CANARA BANK To emerge as the best bank in customer service.

• Many strategists/consultants contribute to the building up of mission statements. • When defined explicitly. character and image which helps to achieve the vision. technologies and markets. there may even be a need for revising its Mission statements as . provides enlightenment to insiders and outsiders on what the organization stands for. services. identity.• • MISSION It is purpose / reason behind existence of any organization Derived from VISION and reflects the corporation’s philosophy . CHARACTERISTICS OF A MISSION SATEMENTS FEASIBLE PRECISE CLEAR MOTIVATING DISTINCTIVE INDICATES MAJOR COMPONENTS OF STRATEGY INDICATES HOW OBJECTIVES ARE TO BE ACHIEVED HOW MISSION STATEMENTS ARE FRMULATED Derived from particular set of tasks and priorities and reflects corporate philosophy • Executive committee is setup to formally discuss • Help of consultants also taken for an in-depth analysis of an organization and to suggest an appropriate Mission statement • A Mission statement once formulated should serve an organization for many years • As the organization grows with time and goes on adding new products.

Industry. Transportation .FEW MISSION STATEMENTS • BHEL To be a leading engineering enterprise providing quality systems goods and services in the field of Energy. . Infrastructure and other potential areas • RANBAXY To become research based International pharma company • UTI To keep the common man in sharper focus to encourage savings and investment habits among them.

Company with several businesses has separate BD for each of its business. 3 dimensions provide scope for further activities and facilitates understanding of company’s performance areas At corporate level .can have more accurate BD at SBUlevel BD offers unique insights to companies operating in a competitive market. A single business firm has simple Business Definition. . Mgmt in many ways Indicates choice of objectives and helps exercising best choice. Each division of highly diversified co.BD concerns itself with a wider meaning of 3 dimensions.BUSINESS DEFINITION • Defined along 3 parameters CUSTOMER GROUPS: WHO is being satisfied CUSTOMER FUNCTIONS: WHAT is being satisfied ALTERNATIVE TECHNOLOGIES: HOW the need is being satisfied • • • • • • • Provides powerful insights into understanding and defining business Helpful in Strat. where customer is an important stakeholder of the firm.

Quartz Analog EX: MODI XROX Customer Groups: ‘Individual Organization . Alternative Technologies: High quality and state-of-the-art tecnology available with Xrox of US.EXAMPLES EX: Time Keeping Business: Customer Groups: ‘Individual customers” & Industrial Customers” Customer Functions: Finding time. departments Customer Functions: Provide communication with ease of reproduction. Govt. Recording time. Using watches as fashionable accessories and gift items. Quartz digital. . Alternative Technologies: Mechanical.

GOALS & OBJECTIVES GOALS: • What an org. hopes to achieve/accomplish in a future period of time. measurable & comparable . • Provide basis for Strategic Decision making. translates its purpose into long term goals ) . OBJECTIVES: • Ends that tell how goals shall be achieved • Define org’s relationship with Environment. • OBJECTIVES: .Short Term GOALS Generalized Qualitative Long Term( Org.Concrete & specific Make goals operational -Quantitative. • Help org to achieve VISION & MISSION. Represent future state or outcome of an effort put in now. • Provides standards for performance appraisals.

Reality: Operational objective not the broad official objectives Quality: Capable enough to provide direction and tangible basis for evaluation. Investment HR: Training. Community Service. Market segment. Customer service. Objectives must correlate with each other Should be set within constraints Should cover all aspects of functioning. Rural Development etc. Net profit as % of sales. Verifiability: basis on which to decide whether Objective met or not. Return on shareholders capital. Medium & Short term Measurable & Controllable Challenging Diff. Long Term..Promotion Growth: Output. . Marketing: Sales volume. Sales T/O. Welfare IR Social Responsibility: Environment. Understandable Concrete & Specific ( Say 10% increase in sales ) Periodicity :Related to time frame.OBJECTIVE SETTING • • • • • • • • • • • EX Profit: ROI.

MODULE 4 .

GLOBALISE THE STRATEGY . DEVELOP CORE BUSINESS STRATEGY CORE BUSINESS STRATEGY 2. INTERNATIONALISE THE STRATEGY C O U N T R Y A C O U N T R Y B C O U N T R Y C C O U N T R Y D C O U N T R Y E 3.TOTAL GLOBAL STRATEGY 1.

INTERNATIONAL STRATEGIES PRESSURES FOR COST REDUCTION GLOBAL STRATEGY ( OFFERING STANDARDISED PRODUCTS / SERVICES) TRANSNATIONAL STRATEGY (LOCATED IN A DEVELOPED COUNTRY) INTERNATIONAL STRATEGY (UNDER DEVELOPED COUNTRIES WHERE PRODUCT/SERVICES NOT AVAILABLE ) MULTIDOMESTIC STRATEGY ( SUITING TO NATIONAL CONDITIONS ) PRESSURES FOR LOCAL RESPONSIVENESS .

INDUSTRY GLOBALISATION POTENTIAL MARKET DRIVERS COST DRIVERS INDUSTRY GLOBALISATION POTENTIAL GOVERNMENT DRIVERS COMPETITIVE DRIVERS .

THE GLOBALISATION TRIANGLE GLOBAL STRATEGY LEVERS BENEFITS & COSTS OF GLOBALISATION INDUSTRY GLOBALISATION DRIVERS GLOBAL ORGANISATION DRIVERS .

A FRAMEWORK OF GLOBAL STRATEGY INDUSTRY GLOBALISATION DRIVERS I MARKET COST GOVT COMPETITIVE GLOBAL STRATEGY LEVERS GLOBAL MARKET PARTICIPATION GLOBAL PRODUCTS GLOBAL LOCATION GLOBAL MARKETING GLOBAL COMPETITIVE MOVES BENEFITS / COSTS OF GLOBAL STRATEGY GLOBAL ORGANISATION DRIVERS PARENT ORG’S ABILITY ( POSITION & RESOURCES) TO IMPLEMENT A GLOBAL STRATEGY ) .

GLOBAL IDENTITY . CENTRALISED GLOBAL AUTHORITY . GLOBAL STRATEGIC PLANNING .BUDGETING & INFORMATION SYSTEMS ) ABILITY TO DEVELOP AND IMPLEMENT GLOBAL STRATEGY CULTURE ( VALUES & RULES THAT GUIDE BEHAVIOUR ) .FREQUENT TRVEL .MULTICOUNTRY CAREERS .STATEMENTS & ACTIONS OF LEADERS ( HUMAN RESOURCES OF WORLDWIDE BUSINESS ) PEOPLE . GLOBAL MIS . COMMITMENT TO WORLDWIDE ( VS DOMESTIC ) EMPLOYMENT .USE OF FOREIGN NATIONALS .MANAGEMENT AND ORGANISATION FACTORS AFFECTING GLOBAL STRATEGY (GLOBAL ORGANISATION DRIVERS ) ORGANISATION STRUCTURE . CROSS COUNTRY COORDINATION ( REPORTING RELATIONSHIPS ) . STRONG BUSINESS DIVISION MANAGEMENT PROCESSES ( PLG. GLOBAL BUDGETING . INTERDEPENDENCE VS AUTONOMY OF BUSINESSES . INTERNATIONAL DIVISION .

MARKET GLOBALISATION DRIVERS • COMMON CUSTOMER NEED –PER CAPITA INCOME CONVERGING AMONG INDUSTRIALISED NATIONS & CONVERGENCE OF LIFE STYLES & TASTES GLOBAL CUSTOMERS • GROWTH OF GLOBAL & REGIONAL CHANNELS • TRANSFERABLE MARKETING – PUSH TO DEVELOP GLOBAL • INCREASED TRAVEL CREATING ADVERTISING & ESTABLISHMENT OF WORLD BRANDS • LEAD COUNTRIES .

COST GLOBALISATION DRIVERS • GLOBAL SCALE ECONOMIES – CONTINUING PUSH FOR ECONOMIES OF SCALE STEEP EXPERIENCE CURVE EFFECT SOURCING EFFICIENCIES FAVOURABLE LOGISTICS DIFFERENCES IN COUNTRY COSTS.LABOUR & RAW MATERIAL Etc. • HIGH PRODUCT DEVELOPMENT COST • FAST CHANGING TECHNOLOGY • • • • .WRT TRANSPORTATION.

GOVRNMENT GLOBALISATION DRIVERS • • • • • • • FAVOURABLE TRADE POLICIES COMPATIBLE TECHNICAL STANDARDS COMMON MARKETING REGULATIONS GOVT. OWNED COMPETITORS AND CUSTOMERS HOST GOVT’S CONCERNS REDUCTION IN TARRIF & NON TARRIF BARRIERS DECLINE IN ROLE OF GOVTS AS PRODUCER & CONSUMERS – ie ENCOURAGING PRIVATISATION • SHIFT TO OPEN MARKET ECONOMIES .

COMPETITIVE GLOBALISATION DRIVERS • HIGH EXPORTS AND IMPORTS – CONTINUOUS INCREASE IN THE LEVEL OF WORLD TRADE • COMPETITORS FROM DIFFERENT CONTINENTS – MORE COUNTRIES BECOMING KEY COMPETITIVE BATTLE GROUNDS • INTERDEPENDENCE OF COUNTRIES – GROWTH OF GLOBAL NETWORKS • COMPETITORS GLOBALISED – RISE OF NEW COMPETITORS INTENT UPON BECOMING GLOBAL COMPETITOR INCREASED OWNERSHIP OF CORPORATIONS BY FOREIGN ACQUIRORS . . INCREASED GLOBAL STRATEGIC ALLIANCES .

INTERNET& INTRANET .OTHER DRIVERS • REVOLUTION IN INFORMATION & COMMUNICAION ( PERSONAL COMPUTORS. FSCIMILE MACHINES ) • GLOBALISATION OF FINANCIAL MARKETS ( LISTING OF CORPORATIONS ON MULTIPLE EXCHANGES ) • IMPROVEMENTS IN BUSINESS TRAVELS ( RISE OF INTERNATIONAL HOTEL CHAINS ) .

GLOBAL STRATEGY LEVERS • MARKET PARTICIPATION ( CHOICE OF COUNTRY MARKET IN WHICH TO CONDUCT BUSINESS AND LEVEL OF ACTIVITY.AND OTHER MARKETING ELEMENTS IN DIFFERENT COUNTRIES ) • COMPETITIVE MOVES ( EXTENT OF COMPETITIVE MOVES IN DIFFERENT COUNTRIES ) . PARTICULARLY IN TERMS OF MARKET SHARE ) • PRODUCT / SERVICE ( EXTENT TO WHICH A WORLDWIDE BUSINESS OFFERS THE SAME OR DIFFERENT PRODUCTS IN DIFFERENT COUNTRIES • LOCATION OF VALUE ADDING ACTIVITIES ( WHERE TO LOCATE ACTIVITIES THAT COMPRISE ENTIRE VALUE ADDED CHAIN – FROM RESEARCH TO PRODUCTION TO AFTER SALE SERVICE • MARKETING ( EXTENT TO WHICH WORLDWIDE BUSINESS USES SAME BRAND NAMES.ADVERTISING.

I N C R E A S I N G I N T E R N A T I O N A L I S A T I O N TYPE OF CUSTOMERS BUY IN FOREIGN MARKRTS FROM FOREIGN SUPPLIER BUY IN DOMESTIC MARKET FROM FOREIGN SUPPLIER BUY IN DOMESTIC MARKETS FROM DOMESTIC SUPPLIER FOREIGN CUSTOMER GLOBAL CUSTOMER INTERNATIO NAL CUSTOMER FREE LOCAL CUSTOMER NO HQ INVOLVEME NT HQ RECOMMENDS STANDARDS? PRODUCTS CONTROLL ED LOCAL CUSTOMER HQ MANDATES STANDARDS/ PRODUCTS HQ DOES THE PURCHASING INCREASIBG GLOBALISATION OF PURCHASING .

BUSINESS GROWTH / COMPETITIVE SRENGTH MATRIX WILDCAT COUNTRIES HI GROWTH POTENTIAL OF BUSINESS IN COUNTRY STAR COUNTRIES LO DOG COUNTRIES LO CASH COW COUNTRIES HI COMPETITIVE STRENGTH OF BUSINESS IN COUNTRY .

in return for some form of payment) FRANCHISING (Right to use a business format. usually Brand Name.exchange programme ) PERCEIVED RISK INTERNATIONAL JOINT VENTURE WHOLLY OWNED LOW LOW HIGH CONTROL . transfers knowledge.MODES OF ENTRY HIGH EXPORTING ( Firm produces in home country & markets in overseas markets ) LICENSING ( International co. technology Patent for a limited period of time to an overseas co.

HR. . uncertain & volatile environments. it fails. MM & Marketing plans • Operating modes of multinational firm abroad has to be dynamic to cope up with changing situations. • Greater problems in formulating corporate plans • Frequent fluctuations in value of currencies • Turbulent political developments • Uncertainties in supply of materials • Non availability of adequate information for developing International standards • Encounter typical problems like : subsidiary in Japan may require careful assessment of Finance.PROBLEMS IN GLOBAL STRATEGIC PLANNING • Global plg. Operations. • Entirely based on future. as it has to handle more complicated. if future events don’t occur as expected.an extension of Domestic Plg is more complex.

PROBLEMS IN GLOBAL STRATEGIC PLANNING • Issues of little significance in domestic planning assume a greater importance abroad. • Non availability or less reliability of the information about various aspects of environment of potential host countries. impose restrictions on International trade. . Consumer groups. TU’s. • Pressures due to prejudices of local authorities. Govts. Eg reliable supplies of high quality components may not be a problem in domestic market but simple decision to buy instead of naking it may not be true abroad. • Logistics problem in countries lacking infrastructural support • Inventory supplies have to be kept at higher levels than home due to uncertainties involved.

It is a process not an event. It’s the process of integration of world into one huge market. • • • • • • . For developing countries. capital & people across political and economic boundaries and is a process by which enterprises become interdependent and interlinked globally. Offers extensive opportunities for worldwide development and getting integrated to global economy. It has no beginning or end. In economic terms . It is fast becoming imperative for modern businessdue to: 1) crumbling trade barriers 2) global flow of capital & technology 3)Information explosion 4) Intensity of global market competition 5) Changing life styles and demand for innovative products etc… It offers free flow of information. it offers prospects of integration with rest of developed economy. goods.GLOBALISATION • Concerned with degree of standardization of products and practices plus high level of co-ordination and integration of activities in the company’s value chain.

material and Human resources • Reduces corruption due to free market trade. best practices and people across subsidiaries. OTHER BENEFITS: • Leads to economic integration and globalized economy. • Arbitrage benefits: using resources in one country for the benefit of another country.GLOBALISATION BENEFITS: • Cost benefits: Economies of scale due to standardization & Logistics management • Timing benefits: Coordinated approach in product launching and implementation strategies • Learning benefits: Coordinated transfer of information. • Reduces inflation due to cost efficiencies • Benefits customers: quality products at competitive price. SOCIAL BENEFITS • Creates overall wealth for all nations as specialization increases trade. • Better allocation of financial . • Transition from multinational to global competitiveness .

MODULE 5 .

•Threat of forward integration POTENTIAL ENTRANTS •Economies of scale •Absolute cost advantage •Switching cost •Access to distribution •Govt. GOVT) BARGAINING POWER OF COMPETITIVE SUPPLIERS RIVALARY ( INDUSTRY SUPPLIERS COMPETITORS ) BARGAINING POWER OF THREAT OF SUBSTITUTE PRODUCTS BUYERS •Buyer’s concentration •No of suppliers •Switching cost •Substitute products •Threat of backward Integration SUBSTITUTES •Functional similarity •Price/Performance trend •Product identity . policy THREAT OF NEW ENTRANTS OTHER STAKEHOLDERS (RELATIVE POWER OF UNIONS.concentration •No.PORTER’S MODEL • BARGAINING • POWER SUPPLIERS •Supp. of buyers •Switching cost •Substitute raw mat.

ETOP ( ENVIRONMENTAL THREAT & OPPORTUNITY PROFILE 0 ENVIRONMENTAL SECTOR MARKET TECHNOLOGICAL SUPPLIER ECONOMIC REGULATORY POLITICO – LEGA SOCIO – CULTURAL INTERNATIONAL NATURE OF IMPACT IMPACT OF EACH SECTOR .

SAP ( STRATEGIC ADVANTAGE PROFILE ) CAPABILITY NATURE IMPACT OF EACH FACTOR FACTOR OF IMPACT 1 2 3 4 5 6 FINANCE MARKETING 0PERATIONSP PERSONNEL INFORMATION GENERAL MANAGEMENT .

CONSOLIDATED SWOT PROFILE ENVIRONMENTAL FACTOR MARKET TECHNOLOGICAL SUPPLIAR ECONOMIC REGULATORY POLITICAL SOCIO – CULTURAL INTERNATIONAL NATURE OF IMPACT STRATEGIC ADVANTAGE FACTOR NATURE OF IMPACT FINANCE MARKETING OPERATIONS PERSONNEL INFORMATION MANAGEMENT GENERAL MANAGEMENT .

SWOT MATRIX and STRATEGIES OPPRTUNITIES QUADRANT 2 TURNAROUND STRATEGY QUADERANT 1 AGGRESSIVE STRATEGY QUADERANT 4 QUADERANT 3 DEFENSIVE STRATEGY THREATS WEAKNESSES STREGTHS DIVERSIFICATION STRATEGY .

OPPORTUNITY MATRIX HIGH Impact of Opportunities LOW MODERATE ATTRACTIONS HIGH ATTRACTIONS MODERATE ATTRACTIONS LOW ATTRACTIONS HIGH Occurrence LOW .

THREAT MATRIX MAJOR THREATS MODERATE THREATS HIGH IMPACT OF THREATS LOW MODERATE THREATS MINOR THREATS HIGH OCCURENCE LOW .

TOW’s MATRIX SAP ETOP 1 2 3 4 1 2 3 4 1 2 3 4 W OW O 1 2 3 4 S OS Turnaround Strategies Aggressive Strategies Take advantage of (Use strengths to take (Opportunities by overcoming advantage Of opportunities) Weaknesses) T TW Defensive Strategies ( To minimize weaknesses & avoid Threats ) (Consider corporations strengths To avoid threats) Diversification strategies TS .

5 0.1 .8 0.5 1 6 4 2 Relative market share 0.BCG GROWTH SHARE MATRIX 20 18 16 STARS QUESTION MARKS HIGH LOW HIGH Market Growth 14 rate 12 10 8 6 4 2 0 LOW 10 8 CASH COWS DOGS 1.

GE 9 CELL MATRIX G INDUSTRY ATTRACTIVENESS HIGH G QUESTION MARKS G MEDIUM Y AVERAGE BUSINESS R LOW PROFIT PRODUCER R R ZONE AVERAGE WEAK GREEN G INVEST/EXPAND STRONG BUSINESS STREGTH / COMPETITIVE YELLOW Y SELECT/EARN RED R HARVEST/DIVEST POSITION .

HOFER’S MODEL .

STRICKLAND’S GRAND STRATEGY SELECTION MATRIX .

MODULE 6 .

where competitive advantage is either won or lost. • Other initiatives: Accurate Demand Forecasting. corporations operate through their business strategies . Capacity utilization Economies of scale. Leas at affected by bargaining power of supplier a firm can adopt price increase to some extent though operational effectiveness. • Achieve efficiency at all levels for lowering costs.At business level most competitive interaction occurs.GENERIC STRATEGIES • Below Corporate Level Strategies. the strategies to be used by individual businesses HOW GENERIC STRATEGIES EMERGE • As humans function with their limbs. RISKS Competitors imitate cost reduction quickly. Effective entry barrier for potential entrants. Cost saving technologies. COST LEADERSHIP • Vigorous cost reduction programmers and make all possible attempts to achieve the lowest cost. Not a market friendly approach if customers interest is ignored Low cost leadership doesn’t always work. • Corporate strategies lay down the framework in which business strategies operate. BENEFITS Threat of cheaper substitutes offset to some extent by lowering price. . • Cumulative cost across the value chain is lower than competitor • Analyze cost drivers and optimization of costs • Commanding high price by introducing innovative product and by building brand loyalty.

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based on • Demographic characteristics ( Age. once committed it’s difficult to move on to other market segment. Commonly used as basis for identifying customer groups. CONSTRAINTS. Major players not interested in niche • BENEFITS Protected from competition from other firms who do not have ability to cater to niche markets.FOCUS BUSINESS STRATEGY Attempt is to serve narrow strategic target effectively and efficiently Relies on either cost leadership or differentiation but cater to narrow segment of total market. • • . Niche marker big enough to be profitable • and has potential for growth. Northern/sourthern0 0 Life style ( Traditional / Modern } Firms seeking to adopt Focus Strategy has to locate a niche in the market where Cost • Leaders and Differentiators are not operating • Identifying gaps not covered by Cost Leaders and Differentiators Uniqueness in the segment. income. higher costs may cause customers to move low price products cost leaders. builds up brand loyalty. Or customer. Developing distinctive competencies – a difficult process. specialization. gender.powerful barrier to new entrants and substitutes. occupation ) Geographic segmentation (Rural/urban.

managing & nurturing diff. Grand strategies revolve around one basic question : Whether to continue or change business to improve efficiency and effectiveness. Use of single or combination of 2 or more depends upon multiplicity and complexities of business. Corporate level strategies indicating the choice of direction a firm adopts for achieving its vision. businesses in portfolio.GRAND STRATEGIES • • • • • Basic framework of master strategies. Strategies Also tell about decisions relating to allocation of resources among different businesses. Corp. classifies broadly various rules of business Provide guidance for major actions for meeting long term objectives and basic direction for strategic action Blueprints for action. • .

STABILITY STRATEGIES Adopted by an organization when it attempts an incremental improvement of functional performance. Continue with present business PROFIT STRATEGY: Reduce investments. Industry downturn and competitive pressures for sustaining profitability by whatever means till situation improves. Govt’s attitude. Increase productivity wrt external factors like: Economic recession. NO CHANGE STRATEGY: Conscious decision to do nothing new. PAUSE/ PROCEED WITH CAUTION : Consolidation before a firm goes for expansion. 2 1 . 1. cut costs .

CONCENTRATION STRATEGIES • Simple 1st level expansion strategy. broadening the scope of its business for improving overall performance. time. . Followed when companies aim at high growth. markets & customer needs. energy & effort in specific areas INTEGATION STRATEGIES • Combining activities relating to present activities of firm • Widening scope of business Vertical Integration : Going up & down the value chain Going for forward or backward integration or both at a time. All progressive organizations plan for substantial growth due to increasing economy. Horizontal integration : Same type of products . aims at convergence of resources • Focus on Intensification / Specialization • Rely on where you are best at ie focusing on limited areas • Creating a separate niche/ identity in selective areas by investing money. strategies as growth is the way of life.•EXPANSION STRATEGIES Most popular corp.

Manufacturing .development for achieving strategically significant objectives that are mutually beneficial and beyond what a single firm may reach alone.• Grown exponentially in the last few years. can help multinational firms to transform their operations. Electronic equipment etc. • Reasons: rapidly changing technology. Shorter PLC etc’ • If managed properly. INTERNATIONAL STRATEGIC ALLIANCES . Pharma. Computers. CONCEPT A strategic cooperative agreement or agreements between two or more firms from at least 2 countries. fierce competition. get insights that would be extremely difficult for the multinational firms to learn and act on their own. which involves exchange. • Very popular instrument to cope up with fastly changing global competition and found in wide range of sectors: Airlines. gain access to new technology. sharing or co.

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