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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Unit 3: Organizational Design & Strategy
Lesson 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, digitization
RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012

3. 3
RIMS, 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 advantage
RIMS, 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
competition
RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012

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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

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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 responsiveness
RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012

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Strategies for Indian Companies
Learn to Compete
 Sony's 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 training
RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012

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Strategies for Indian Companies
Imitate Leaders
 Komatsu patterned its dealer network after Caterpillar’s | Seiko
imitated Rolex's styling | Canon copied Xerox's features | Fuji
followed Kodak's 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

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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

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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

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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 one's turf locally because the latter is
comparatively more expensive in the long-run
RIMS, Bangalore | PGDM 2nd Year, Strategic Management April 23, 2012

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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