International Strategies

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International Strategic Management is an ongoing management planning process aimed at developing strategies to allow an organization to expand abroad and compete internationally. …

International Strategic Management is an ongoing management planning process aimed at developing strategies to allow an organization to expand abroad and compete internationally.
An organization must be able to determine what products or services they intend to sell, where and how the organization will make these products or services, where they will sell them, and how the organization will acquire the necessary resources for these tasks. Even more importantly an organization must have a strategy on how it expects to outperform its competitors.

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  • Global Strategy: standardized product, economies of scale, cross-cultural learning. Examples : texas instruments, caterpillar, and otis elevator. Transnational strategy : move material, people, ideas, across national boundaries; economies of scale; and cross-cultural learning. Examples : coca-cola, and nestle. International strategy : import/export, or license existing product. Examples : US steel, and harleydavidson. Multidomestic strategy : use existing domestic model globally, franchise, joint venture, subsidiaries. Examples : Heinz, McDonald’s, the body Shop, and Hard Rock Cafe.

Transcript

  • 1. +Unit 3: Organizational Design & StrategyLesson 6: International Strategies
  • 2. + 2 Major Drivers of Globalization Technology • Extended reach & Communication • Transitioned from few bankers to many individuals Finance who hold sovereign debts of many countries Information • Bridged countries, people, products & services • Growth of trade has been accelerated by expansion of Recognition new areas of expertise that are being created • Faster decision making through telecommunication, Decision-Making computerization, digitizationRIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 3. 3RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 4. + 4 Porter’s Diamond Model for Competitive Advantage  Firm Strategy  Demand Conditions  World is dominated by dynamic  More demanding the conditions | Direct competition customers, higher the pressure drives organizations to increase to constantly improve innovation & productivity competitiveness via innovative products & superior quality  Related Supporting Industries  Factor Conditions  Proximity of upstream or  ‘Key Factors’ of production downstream industries (skilled labor, capital, & facilitates exchange of infrastructure) are created & information & promotes continuous exchange of ideas difficult to duplicate leading to &innovations competitive advantageRIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 5. 5 Local Cost Reduction Responsiveness• For commodity type • Consumer tastes & products – price is preferences, main competitive infrastructure, weapon distribution channel,• When competitors and demands of are based in low- host government cost locations • Difficult to transfer• Liberalization of distinctive world trade – greater competencies international between countries competitionRIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 6. + 6 Strategic Choices to Compete in International Markets  Global Strategy: standardized product, economies of scale, cross-cultural learning.  Examples : Texas Instruments, Caterpillar, and Otis Elevator  Transnational Strategy : move material, people, ideas, across national boundaries; economies of scale; and cross-cultural learning.  Examples : Coca-Cola, and Nestle.  International Strategy : import/export, or license existing product.  Examples : US steel, and Harley Davidson.  Multi-domestic Strategy : use existing domestic model globally, Franchise, JV  Examples : Heinz, McDonald’s, The Body Shop, and Hard Rock Cafe.RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 7. + 7 Strategic Choices to Compete in International Markets  International Strategy  Multi-Domestic Strategy  Valuable skills & products transferred to foreign markets where local competitors  Oriented towards achieving maximum lack this skills & products local responsiveness  Centralized product development  Extensively customize the product functions; HQ retain tight control on offering & marketing strategies marketing & product strategy  Low pressure for local responsiveness &  High pressures for local responsiveness cost reductions & low pressure for cost reduction  Global Strategy  Transnational Strategy  Increase profitability through benefits of  Operations not confined to any cost reduction (experience-curve) & country/region; Low cost & product location economies differentiation strategy  Production, Marketing, & R&D are based  Operate globally while maintaining high in few favorable locations level of local responsiveness  Standardized product to reap benefits of  High pressure for cost reductions & local economies of scale responsivenessRIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 8. + 8 Strategies for Indian Companies Learn to Compete  Sonys slogan to articulate its competitive spirit was BMW: "Beat Matsushita Whatever”  Ford Motor Company ridiculed the "GM-Toyota" alliance as a way to kindle competitiveness in its personnel and used "Beat Toyota" as a rallying theme.  Indian businesses are low on both substance and spirit relating to competition.There is a genuine need for change in the internal environment of Indian firms that can foster hyper- competitive thinking and behavior.  An enduring competitive culture should be nurtured through on- going formal trainingRIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 9. + 9 Strategies for Indian Companies Imitate Leaders  Komatsu patterned its dealer network after Caterpillar’s | Seiko imitated Rolexs styling | Canon copied Xeroxs features | Fuji followed Kodaks marketing techniques  Imitation is the logical alternative when pioneering is not on the cards.  Indian businesses can imitate the functional strategies of successful U.S. firms in product design (style, features), packaging (aesthetics, convenience), marketing (branding, promotions, advertising themes), and sales (pre and post-sales customer contact).RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 10. + 10 Strategies for Indian Companies Enter Niche Markets  Curried food (canned, frozen) and spicy dry snacks are in high demand among U.S. urbanites  Canned mango, guava, papaya, coconut, and fruit juices. Exotic fruits such as jack fruit and chiku in cans and iced tea in spicy flavors (example, cardamom)  Rising health concerns are making U.S. consumers avoid personal care products that use synthetics and animal tallow and, instead, opt for those that use natural ingredients such as herbs, grains, and vegetable tallow.RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 11. + 11 Strategies for Indian Companies Band Together Domestically  Alliances with domestic firms are an effective way to meet the threats of a common, but bigger, foreign enemy with deep pockets.  Cooperation with suppliers/competitors in product development, production, and marketing enhances competence through shared learning  U.S. electronic firms banded together during the 1960s and formed Sematech (an R&D consortium) that helped to fight subsidized competition from Japan and South Korea  Chrysler partnered with parts suppliers to reduce product development time as a way to respond to foreign competition.RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 12. + 12 Strategies for Indian Companies Seek Cross Border Alliances  Cross-border alliances foster vital international ties that a firm can use to enhance its technical competence, market image, financial viability, and overall prestige.  Increasing market share internationally is a much better strategy than defending ones turf locally because the latter is comparatively more expensive in the long-runRIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 13. + 13 Strategies for Indian Companies Learn to Adapt  In a complex and dynamic global competitive environment, adaptive capability is the key to survival and growth.  Adaptation requires accepting change, creating several change scenarios, and developing an internal competency that will introduce the necessary change rapidly.  Indian businesses will find themselves on the road to rapid growth when they have learned to think and act adaptively.RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012
  • 14. Hardy Alexander Founder & Director | Triune Global Bangalore – 560077 Contact: +91 96864 48698 Email: halexander@triuneglobal.com My Blog: dayscore.wordpress.com +Thank you April 23, 2012 RIMS, Bangalore | PGDM 2nd Year, Strategic Management 14