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INTERNATIONAL

INTERNATIONAL
STRATEGIC MANAGEMENT

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strategic strategic Presentation Transcript

    • INTERNATIONAL
    • STRATEGIC MANAGEMENT
    • MODULE 1
  • 1
    • INTRODUCTION & COURSE REVIEW
  • 2
    • CONCEPT OF STRATEGY
    • &
    • STRATEGIC MANAGEMENT
  • PYRAMID OF BUSINESS POLICY PROCEDURE AND STANDARD OPERATING PLAN ( Handling incoming orders, servicing customer complaints, Shipping to foreign countries ) FUNCTIONAL POLICIES ( Marketing, Production, Research, Finance Material & Quality management etc. ) MAJOR POLICY Lines of business ( Code of ethics ) SECONDRY POLICIES ( Selection of geographical area, major customers, major products ) RULES ( Delivery of pay cheques ,loitering around plant, security Smoking, use of company car etc)
  • STRATEGY
    • GREEK WORD STRATEGIA – Science of guiding & Directing
    • COMPLEX PROCESSOF DETERMINING LONG TERM GOALS & COURSE OF ACTIONS NEEDED TO BE CARRIED OUT, ALLOCATION OF RESOURCES FOR CARRYING OUT THESE GOALS. MOVING FROM WHERE YOU ARE TO WHERE YOU WANT TO BE IN NEAR FUTURE THROUGH A SERIES OF DECISIONS AND ACTIONS.
    • 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.
  • 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. Education, Intelligence, Values
    • Cognition. risk taking and creativity
    • GROUP DECISION MAKING: Participation
  • CONCERNS OF STATEGIC PLANNING
    • FUTURE
    • Long term dynamics is its concern not day-to-day tasks
    • GROWTH
    • Direction, extent, 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 ; not the operational activities
    • INTEGRATION
    • Integration is its concern ; not a particular function
    • CREATING CORE COMPETENCIES / COMPETITIVE ADVANTAGE
    • Creating long term , sustainable organizational capability
    • CORPORATE STRATEGY
    • In one word corporate strategy is its concern
  • STRATEGIC MANAGEMENT
    • ESTABLISHMENT OF
    • STRAT. INTENTS
    • FORMULATION of
    • STATEGIES
    • IMPLEMENTATION
    • OFSTRATEGIES
    • REVIEW,EVALUATION
    • CONTROL
    VISION & MISSION statements, Business Definition Adopting Business Model, Setting Goals & Objectives Conducting SWOT, Formulating CORPORATE & BUSINESS LEVEL Strategies, Strategic Analysis Strategic Choice, Strategic Plan. Activating Strategies, Designing Structure, Systems& Processes, Behavioral & Functional implementation And Operationalising strategies Performing Strategic Evaluation, Exercising Strategic Control and Reformulating Strategies
  • STRATEGIC MANAGEMENT ENVIRONMENT SCANNING STRATEGY FORMATION STRATEGY IMPLEMENTATION EVALUATION & CONTROL
    • EXTERNAL
    • SOCIETAL
    • TASK
    • ENVIRONMETAL
    • INTERNAL
    • STRENGTS
    • WEAKNESSES
    • structure
    • Culture ( Beliefs,
    • xpectations,Values )
    • Resourses, Skills,
    • ompetencies,Knowledge
    MISSION (Reason for existence) OBJECTIVES (What results to accomplish & by when ) STRATEGIES (Plan to achieve Mission&Objectives) POLICIES (Broad guidelines for decision Making) PROGRMS Activities needed To accomplish plans BUDGETS Cost of programs PROCEDURE Sequence of steps needed to do the job PERFORMANCE Actual results FEEDBACK / LEARNING
  • NATURE OF INTERNATIONAL STRATEGIC MANAGEMENT 3
  • SINGLE COUNTRY, EXPORT & INTERNATIONAL STRATEGY Y THE CENTRE SUBSIDIARY S3 SUBSIDIARY S1 SUBSIDIARY S2 SUBSIDIARY S4 FIRM A OPERATES IN COUNTRY X FIRM A OPERATES IN COUNTRY X EXPORT TO COUNTRY Y SINGLE COUNTRY STRATEGY INTERNATIONAL STRATEGY EXPORT STRATEGY
  • GLOBAL STRATEGY THE CENTRE SUBSIDIARY S6 SUBSIDIARY S5 SUBSIDIARY S1 SUBSIDIARY S2 SUBSIDIARY S3 SUBSIDIARY S4
  • 4
    • LEVELS OF STRATEGY
    • &
    • EVOLUTION
    • OF
    • STRATEGIC MANAGEMENT
  • HIERARCHY OF STRATEGY CORPORATE STRATEGY BUSINESS STRATEGY FUNCTIONALSTRATEGY
  • STRATEGY AT DIFFERENT LEVELS CORPORATE STRATEGY PURPOSE OR MISSION SHAREHOLDER VALUE ? STAKEHOLDER INTEREST? ASPIRATIONAL ? MEANS : . GOOD PARENTING . SELECT PORTFOLIO . GUARD REPUTATION COMPETITIVE STRATEGY ATTAIN SUSTAINABLE COMPETITIVE ADVANTAGE BY: . LEVERAGING RESOURSES . DEVELOPING CAPABILITIES AND . COMPETING ON COST,OR DIFFERENTIATING OR OCCUPYING A NICHE OPERATIONAL FUNCTIONAL LEVELSTRATEGY HR,FINANCE,PRODUCTN MARKETING,QUALITY Etc. Functional Level Managers are responsible for: developing annual objectives & short term implementation Plans.
  • HOW HAS STRATEGIC MANAGEMENT EVOLVED
    • PHASE I: BASIC FINANCIAL PLANNING : Seeking better operational control by trying to meet budget
    • . PHASE II : FORECAST BASED PLANNING : Seeking more effective planning for growth by trying to predict the future beyond next year.
    • . PHASE III : EXTERNALLY ORIENTED PLANNING ( STRATEGIC PLANNING ) : Seeking increased responsiveness to markets and competition by trying to think strategically.
    • . 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
  • 5
    • STRATEGIC MANAGEMENT PROCESS
  • STRATEGIC MANAGEMENT PROCESS I I II ORG. CURRENT PERFORM - ANCE. III V VI VII VIII IX REWORK AS NEEDED IV MONITORING INTERNAL’ ANALYSIS .STENGTHS .WEAKNESSES REVIEW BOARD OF DIRECTORS & TOP. MGMT IV EXT. ENV. ANALYSIS . OPP. . THREATS ORG. . MISSION . OBJECTIVES .STRATEGIES . POLICIES SELECTION OF STRATEGIC FACTORS REVIEW REDEFINE . MISSION .OBJECTIVES GENERATION & EVALUATION OF STRATEGIC ALTERNATIVES IMPLEMENT BEST ALTERNATIVE
    • MODULE 2
  • TYPICAL VALUE CHAIN OF A MANUFACTURED PRODUCT RAW MATERIAL PRIMARY MANUF. FABRICATION PRODUCT PRODUCER DISTRIBUTOR RETAILER 6
  • A CORPORATE VALUE CHAIN SUPPORT ACTIVITIES PROFIT MARGIN INBOUND LOGISTICS (RAW MAT ) FIRM INFRASTRUCTURE ( Gen.Mgmt,Accounting,Finance, Plg) HUMAN RESOURCE DEVELOPMENT ( Recruitment, Training, development ) OPERATIONS ( Machining, ( Assembly, Testing ) OUTBOUND LOGISTICS ( Distribution ) MARKETING & SALES ( Advt. Prom - otion ) SERVICES ( Installation, Repair ) PRIMARY ACTIVITIES 7 TECHNOLOGY DEVELOPMENT ( R&D,Process & Product Development0 PROCUREMENT ( Purchasing of Raw Materials, Machines,Supplies)
  • VALUE CHAIN ANALYSIS
    • Value Chain : Linked set of value creating activities, 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.
    • INDUSTRY VALUE CHAIN ANALYSIS: 2 segments
    • i) Upstream Activities : Petroleum Industry- Oil exploration, drilling and moving crude oil to refinery.
    • ii) Downstream activities : Refining the oil, Transporting and marketing of Gasoline and Refined Oil to distributors and gas station retailers
    • Ex : British Petroleum: Dominant in upstream activities like exploration. AMCO: Great expertise in downstream activities like marketing and retailing. 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.) or to guarantee cost effective and proper distribution ( Forward Int. )
  • 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. Activities
    • performed by any firm can be grouped under 9 areas
    • PRIMARY ACTIVITIES
    • INBOUND LOGISTICS: Raw mat. Handling and warehousing
    • OPERATIONS: Product manufacturing ( Machining, Assembly & Testing)
    • OUTBOUND LOGISTICS: Warehousing & Distribution
    • MARKETING & SALES: Advertising, Promotion etc..
    • SERVICE: Installation, Repairs & After sale service
    • SUPPORT ACTIVITIES
    • FIRM’S INFRASTRUCTURE
    • HUMAN RESOURCE DEVELOPMENT
    • TECHNOLOGY DEVELOPMENT: R&D , Product & Process development
    • PROCUREMENT: MP&IC, Purchasing, Outsourcing and Material Handling & Storage
    • Each of the Product line has its distinctive value chain
    • For several products, internal analysis of firm involves analyzing a series
    • of different value chains
  • 8
    • EXTERNAL ENVIRONMENT
  • COMPANY AND ENVIRONMENT MEN MACHINE MATERIAL METHODS MONEY INPUTS PROCESSES OUTPUTS ENVIRONMENT ENVIRONMENT ACTIVITIES OPERATIONS PLANNING MANUFACTURING INSPECTION PACKING GOODS SERVICES SALES PROFITS OBJECTIVES GOALS TARGETS FEEDBACK CORRECTIVE ACTION
  • PEST FACTORS POLITICAL TECHNOLOGICAL ECONOMIC SOCIAL
  • PESTLE MATRIX ECONOMIC REGULATORY BODIES GOVT. POLICIES GOVT. TERM & CHANGE ECONOMY SITUATION & TRENDS TAXATION INTEREST & EXCHANGE RATES MARKET & TRADE CYCLE POLITICAL CURRENT/FUTURE LEGISLATION SOCIAL LIFESTYLE TRENDS DEMOGAPHICS COMPANY ATTITUDES & OPINIONS BRAND,COMPANY ,TECHNOLOGYIMAGE CONSUMER BUYING PATTERNS ETHNIC/RELIGIOUS FACTORS TECHNOLOGICAL TECHNOLOGY ACCESS,LICENSING,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
  • CONSTITUENTS OF MICRO ENVIRONMENT MICROENVIRONMENT FINANCIAL INSTITUTIONS SUPPLIERS MARKETING INTERMEDIARIES COMPETITION REGULATORY PROVISIONS IR CLIMATE E- COMMERCE SKILL LEVEL OF WORKFORCE MARKETS TYPES & DEMANDS
  • 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, 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 COMMUNICATION, INTERNET, E-GOVERNANCE & E-COMMERCE etc )
  • 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.
    • Provides best possible fit between the firm & Ext. Env.
    • Helps build sustainable competitive advantage.
    • Prepares the firm to not only face future but even shape
    • the future in its favor. )
  • 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 STRATEGY SKILLS STRUCTURE SHARED VISION STAFF SYSTEMS STYLE
    • MODULE 3
    • VISION,MISSION
    • &
    • BUSINESS DEFINITION
  • 12
    • STRATEGIC INTENTS
    • To achieve success, organizations have to primarily
    • focus on hierarchy of strategic intents – Vision, Mission, Business Definition, Business Model, Goals
    • Objectives
    • Framework within which organization operate and adopt a predetermined direction
    • Purposes the organizations strive for.
  • CONCEPT OF STRETCH,LEVERAGE & FIT
    • STRETCH : Misfit between Resources & Aspirations
    • LEVERAGE : Refers to concentrating, accumulating,
    • conserving. 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.
  • 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.
    • 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, yet it is a
    • powerful motivator to action.
  • GOOD VISION STATEMENTS
    • Inspiring & exhilarating
    • Help in the creation of a common identity and a shared sense of purpose.
    • Competitive, original and unique.
    • Make sense as these are practical.
    • Foster risk- taking and experimentation.
    • Foster long term thinking.
    • Truly genuine, represent integrity and are meant to benefit stakeholders.
  • ENVISIONING PROCESS
    • A Well conceived vision has 2 major components
    • Core Ideology : Defines enduring character of an organization that remains unchangeable . It rests on
    • core values & core purposes.
    • Envisioned Future : A long term, time bound goal and vivid description of what it would be like to achieve that goal.
  • WHAT A VISION SHOULD AND SHOULDN’T BE
    • A VISION SHOULD BE :
    • An organization charter of core values & principles
    • The ultimate source of our priorities, 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 FEW VISION STATEMENTS
    • VISION 2001 0F BHEL
    • A world-class , innovative , competitive and profitable
    • Engineering enterprise providing total business solutions.
    • VISION OF CANARA BANK
    • To emerge as the best bank in customer service,
    • profitability , productivity and innovations.
    • 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
  • MISSION
    • It is purpose / reason behind existence of any organization
    • Derived from VISION and reflects the corporation’s philosophy , identity,
    • character and image which helps to achieve the vision.
    • When defined explicitly, provides enlightenment to insiders and outsiders
    • on what the organization stands for.
    • Many strategists/consultants contribute to the building up of mission statements.
    • 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
    • D erived 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, services, technologies
    • and markets, there may even be a need for revising its Mission statements as
  • FEW MISSION STATEMENTS
    • BHEL
    • To be a leading engineering enterprise providing quality systems goods and services in the field of Energy,
    • Transportation , Industry, 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.
  • 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. Mgmt in many ways Indicates choice of objectives
    • and helps exercising best choice.
    • A single business firm has simple Business Definition. 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 ,BD concerns itself with a wider meaning of 3 dimensions.
    • Each division of highly diversified co.can have more accurate BD at SBUlevel
    • BD offers unique insights to companies operating in a competitive market.
    • where customer is an important stakeholder of the firm.
  • EXAMPLES
    • EX: Time Keeping Business:
    • Customer Groups: ‘Individual customers” & Industrial Customers”
    • Customer Functions: Finding time, Recording time, Using watches as
    • fashionable accessories and gift items.
    • Alternative Technologies: Mechanical. Quartz digital, Quartz Analog
    • EX: MODI XROX
    • Customer Groups: ‘Individual Organization , Govt. departments
    • Customer Functions: Provide communication with ease of reproduction.
    • Alternative Technologies: High quality and state-of-the-art tecnology
    • available with Xrox of US.
  • GOALS & OBJECTIVES
    • GOALS :
    • What an org. hopes to achieve/accomplish in a future period of time. Represent future state or outcome of an effort put in now.
    • OBJECTIVES:
    • Ends that tell how goals shall be achieved
    • Define org’s relationship with Environment;
    • Help org to achieve VISION & MISSION;
    • Provide basis for Strategic Decision making;
    • Provides standards for performance appraisals,
    • OBJECTIVES: GOALS
    • - Concrete & specific Generalized
    • Make goals operational
    • -Quantitative, measurable Qualitative
    • & comparable
    • - Short Term Long Term( Org. translates its purpose
    • into long term goals )
  • OBJECTIVE SETTING
    • Understandable
    • Concrete & Specific ( Say 10% increase in sales )
    • Periodicity :Related to time frame. Long Term, Medium & Short term
    • Measurable & Controllable
    • Challenging
    • Diff. Objectives must correlate with each other
    • Should be set within constraints
    • Should cover all aspects of functioning .
    • Verifiability : basis on which to decide whether Objective met or not.
    • Reality : Operational objective not the broad official objectives
    • Quality : Capable enough to provide direction and tangible basis
    • for evaluation.
    • EX
    • Profit : ROI, Net profit as % of sales, Return on shareholders capital.
    • Marketing : Sales volume, Market segment, Customer service.Promotion
    • Growth : Output, Sales T/O, Investment
    • HR : Training, Welfare IR
    • Social Responsibility : Environment, Community Service, Rural Development etc..
  • MODULE 4
  • TOTAL GLOBAL STRATEGY CORE BUSINESS STRATEGY
    • DEVELOP CORE
    • BUSINESS STRATEGY
    • 2. INTERNATIONALISE THE STRATEGY
    • 3. GLOBALISE 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
  • INTERNATIONAL STRATEGIES PRESSURES FOR COST REDUCTION PRESSURES FOR LOCAL RESPONSIVENESS GLOBAL STRATEGY ( OFFERING STANDARDISED PRODUCTS / SERVICES) TRANSNATIONAL STRATEGY (LOCATED IN A DEVELOPED COUNTRY) MULTIDOMESTIC STRATEGY ( SUITING TO NATIONAL CONDITIONS ) INTERNATIONAL STRATEGY (UNDER DEVELOPED COUNTRIES WHERE PRODUCT/SERVICES NOT AVAILABLE )
  • INDUSTRY GLOBALISATION POTENTIAL INDUSTRY GLOBALISATION POTENTIAL MARKET DRIVERS COMPETITIVE DRIVERS COST DRIVERS GOVERNMENT DRIVERS
  • THE GLOBALISATION TRIANGLE BENEFITS & COSTS OF GLOBALISATION GLOBAL STRATEGY LEVERS INDUSTRY GLOBALISATION DRIVERS GLOBAL ORGANISATION DRIVERS
  • A FRAMEWORK OF GLOBAL STRATEGY GLOBAL STRATEGY LEVERS GLOBAL MARKET PARTICIPATION GLOBAL PRODUCTS GLOBAL LOCATION GLOBAL MARKETING GLOBAL COMPETITIVE MOVES I BENEFITS / COSTS OF GLOBAL STRATEGY INDUSTRY GLOBALISATION DRIVERS MARKET COST GOVT COMPETITIVE GLOBAL ORGANISATION DRIVERS PARENT ORG’S ABILITY ( POSITION & RESOURCES) TO IMPLEMENT A GLOBAL STRATEGY )
  • MANAGEMENT AND ORGANISATION FACTORS AFFECTING GLOBAL STRATEGY (GLOBAL ORGANISATION DRIVERS ) PEOPLE MANAGEMENT PROCESSES CULTURE ORGANISATION STRUCTURE ABILITY TO DEVELOP AND IMPLEMENT GLOBAL STRATEGY . CENTRALISED GLOBAL AUTHORITY . INTERNATIONAL DIVISION . STRONG BUSINESS DIVISION . GLOBAL IDENTITY . COMMITMENT TO WORLDWIDE ( VS DOMESTIC ) EMPLOYMENT . INTERDEPENDENCE VS AUTONOMY OF BUSINESSES .USE OF FOREIGN NATIONALS .MULTICOUNTRY CAREERS .FREQUENT TRVEL .STATEMENTS & ACTIONS OF LEADERS . GLOBAL MIS . GLOBAL STRATEGIC PLANNING . GLOBAL BUDGETING . CROSS COUNTRY COORDINATION ( PLG,BUDGETING & INFORMATION SYSTEMS ) ( REPORTING RELATIONSHIPS ) ( VALUES & RULES THAT GUIDE BEHAVIOUR ) ( HUMAN RESOURCES OF WORLDWIDE BUSINESS )
  • MARKET GLOBALISATION DRIVERS
    • COMMON CUSTOMER NEED – PER CAPITA INCOME CONVERGING AMONG INDUSTRIALISED NATIONS & CONVERGENCE OF LIFE STYLES & TASTES
    • INCREASED TRAVEL CREATING GLOBAL CUSTOMERS
    • GROWTH OF GLOBAL & REGIONAL CHANNELS
    • TRANSFERABLE MARKETING – PUSH TO DEVELOP GLOBAL 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- WRT TRANSPORTATION,LABOUR & RAW MATERIAL Etc.
    • HIGH PRODUCT DEVELOPMENT COST
    • FAST CHANGING TECHNOLOGY
  • 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
  • OTHER DRIVERS
    • REVOLUTION IN INFORMATION & COMMUNICAION
    • ( PERSONAL COMPUTORS, INTERNET& INTRANET , 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, 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,AND OTHER MARKETING ELEMENTS IN DIFFERENT COUNTRIES )
    • COMPETITIVE MOVES
    • ( EXTENT OF COMPETITIVE MOVES IN DIFFERENT COUNTRIES )
  • TYPE OF CUSTOMERS GLOBAL CUSTOMER FOREIGN CUSTOMER INTERNATIONAL CUSTOMER FREE LOCAL CUSTOMER CONTROLLED LOCAL CUSTOMER BUY IN FOREIGN MARKRTS FROM FOREIGN SUPPLIER BUY IN DOMESTIC MARKET FROM FOREIGN SUPPLIER BUY IN DOMESTIC MARKETS FROM DOMESTIC SUPPLIER NO HQ INVOLVEMENT HQ RECOMMENDS STANDARDS? PRODUCTS HQ MANDATES STANDARDS/ PRODUCTS HQ DOES THE PURCHASING INCREASIBG GLOBALISATION OF PURCHASING 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
  • BUSINESS GROWTH / COMPETITIVE SRENGTH MATRIX WILDCAT COUNTRIES DOG COUNTRIES CASH COW COUNTRIES HI LO LO HI COMPETITIVE STRENGTH OF BUSINESS IN COUNTRY GROWTH POTENTIAL OF BUSINESS IN COUNTRY STAR COUNTRIES
  • MODES OF ENTRY EXPORTING ( Firm produces in home country & markets in overseas markets ) LICENSING ( International co. transfers knowledge, technology Patent for a limited period of time to an overseas co, in return for some form of payment) FRANCHISING (Right to use a business format, usually Brand Name- exchange programme ) INTERNATIONAL JOINT VENTURE WHOLLY OWNED LOW HIGH HIGH CONTROL PERCEIVED RISK LOW
  • PROBLEMS IN GLOBAL STRATEGIC PLANNING
    • Global plg- an extension of Domestic Plg is more complex; as it has to handle more complicated, uncertain & volatile environments.
    • Entirely based on future, if future events don’t occur as expected;
    • it fails.
    • 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, HR, Operations, MM & Marketing plans
    • Operating modes of multinational firm abroad has to be dynamic
    • to cope up with changing situations.
  • PROBLEMS IN GLOBAL STRATEGIC PLANNING
    • Issues of little significance in domestic planning assume
    • a greater importance abroad. 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.
    • Pressures due to prejudices of local authorities, Govts,
    • TU’s, Consumer groups, impose restrictions on International trade.
    • Non availability or less reliability of the information about
    • various aspects of environment of potential host countries.
  • 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.
    • Offers extensive opportunities for worldwide development and getting integrated to global economy.
    • For developing countries, it offers prospects of integration with
    • rest of developed economy.
    • In economic terms , It’s the process of integration of world into one huge market.
    • It is a process not an event. It has no beginning or end.
    • 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, goods, capital & people across political and economic boundaries and is a process by which enterprises become interdependent and interlinked globally.
  • 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, best practices and people across subsidiaries.
    • Arbitrage benefits: using resources in one country for the benefit
    • of another country.
    • SOCIAL BENEFITS
    • Creates overall wealth for all nations as specialization increases trade.
    • Reduces inflation due to cost efficiencies
    • Benefits customers: quality products at competitive price.
    • Better allocation of financial ,material and Human resources
    • Reduces corruption due to free market trade.
    • OTHER BENEFITS :
    • Leads to economic integration and globalized economy.
    • Transition from multinational to global competitiveness
    • MODULE 5
  • PORTER’S MODEL
    • BARGAINING
    • POWER
    • POTENTIAL ENTRANTS
    • Economies of scale
    • Absolute cost advantage
    • Switching cost
    • Access to distribution
    • Govt. policy
    • SUBSTITUTES
    • Functional similarity
    • Price/Performance
    • trend
    • Product identity
    • BUYERS
    • Buyer’s concentration
    • No of suppliers
    • Switching cost
    • Substitute products
    • Threat of backward
    • Integration
    • SUPPLIERS
    • Supp.concentration
    • No. of buyers
    • Switching cost
    • Substitute raw mat.
    • Threat of forward
    • integration
    OTHER STAKEHOLDERS ( RELATIVE POWER OF UNIONS, GOVT) THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTE PRODUCTS BARGAINING POWER OF SUPPLIERS COMPETITIVE RIVALARY ( INDUSTRY COMPETITORS ) BARGAINING POWER OF SUPPLIERS
  • 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 FACTOR NATURE OF IMPACT IMPACT OF EACH FACTOR 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 FINANCE MARKETING OPERATIONS PERSONNEL INFORMATION MANAGEMENT GENERAL MANAGEMENT NATURE OF IMPACT
  • SWOT MATRIX and STRATEGIES OPPRTUNITIES THREATS WEAKNESSES STREGTHS QUADRANT 2 TURNAROUND STRATEGY QUADERANT 1 AGGRESSIVE STRATEGY QUADERANT 4 DEFENSIVE STRATEGY QUADERANT 3 DIVERSIFICATION STRATEGY
  • OPPORTUNITY MATRIX HIGH ATTRACTIONS MODERATE ATTRACTIONS HIGH LOW HIGH LOW Impact of Opportunities Occurrence MODERATE ATTRACTIONS LOW ATTRACTIONS
  • THREAT MATRIX HIGH LOW HIGH LOW OCCURENCE IMPACT OF THREATS MAJOR THREATS MODERATE THREATS MODERATE THREATS MINOR THREATS
  • TOW’s MATRIX ETOP SAP OW TS Take advantage of (Opportunities by overcoming Weaknesses) (Use strengths to take advantage Of opportunities) (Consider corporations strengths To avoid threats) Aggressive Strategies Turnaround Strategies Diversification strategies 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 W S O OS T TW Defensive Strategies ( To minimize weaknesses & avoid Threats )
  • BCG GROWTH SHARE MATRIX 0 10 20 12 14 16 18 2 4 6 8 10 8 6 4 2 1.5 1 0.8 0.5 0.1 STARS CASH COWS QUESTION MARKS DOGS Market Growth rate Relative market share LOW HIGH HIGH
  • GE 9 CELL MATRIX PROFIT PRODUCER QUESTION MARKS AVERAGE BUSINESS BUSINESS STREGTH / COMPETITIVE POSITION INDUSTRY ATTRACTIVENESS STRONG AVERAGE WEAK HIGH MEDIUM LOW ZONE GREEN YELLOW RED INVEST/EXPAND SELECT/EARN HARVEST/DIVEST G Y R G G G Y R R R
  • HOFER’S MODEL
  • STRICKLAND’S GRAND STRATEGY SELECTION MATRIX
    • MODULE 6
  • GENERIC STRATEGIES
    • Below Corporate Level Strategies, the strategies to be used by
    • individual businesses
    • HOW GENERIC STRATEGIES EMERGE
    • As humans function with their limbs; corporations operate through
    • their business strategies .At business level most competitive interaction occurs; where competitive advantage is either won or lost.
    • Corporate strategies lay down the framework in which business strategies operate.
    • COST LEADERSHIP
    • Vigorous cost reduction programmers and make all possible attempts to achieve the lowest cost.
    • Achieve efficiency at all levels for lowering costs.
    • 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.
    • Other initiatives: Accurate Demand Forecasting, Capacity utilization
    • Economies of scale, Cost saving technologies.
    • BENEFITS
    • Threat of cheaper substitutes offset to some extent by lowering price, Effective entry
    • barrier for potential entrants, Leas at affected by bargaining power of supplier a firm can adopt price increase to some extent though operational effectiveness.
    • RISKS
    • Competitors imitate cost reduction quickly, Not a market friendly approach if customers interest is ignored Low cost leadership doesn’t always work;
    • DIFFERENTIATION :
    • Providing unique characteristics/special features to product/service
    • demanded by customers, who are willing to pay.
    • Customers prefer differentiated products/services which offers them a utility they value. Such products and services stand apart in the
    • market and attract customers due to its special featured attributes.
    • A differentiated firm can charge a premium price & commands customer loyalty.
    • Creating value at every point by providing special features and
    • attributes.
    • Features that raise performance at lower cost, enhance buyer
    • satisfaction, maintain/enhance quality.
    • Innovative ability of firm is important. strong R&D base required
    • Adopted when customer’s needs preferences are diversified and
    • market is too large to be satisfied by standardized products
    • BENEFITS
    • Firm can charge a premium price, Reduces competitive rivalry
    • Creates brand loyal customers, Barrier for new entrants
    • Risks
    • Long-term perceived uniqueness difficult to maintain, Several
    • differentiators adopting similar differentiation, Fails if not valued by
    • customer.
    • versified,
    • Market too large to be satisfied by standardized products
    • 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. Or customer.
    • Commonly used as basis for identifying customer groups. based on
    • Demographic characteristics ( Age, gender, income, occupation )
    • Geographic segmentation (Rural/urban, 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. Niche marker big enough to be profitable
    • and has potential for growth.
    • Major players not interested in niche
    • BENEFITS
    • Protected from competition from other firms who do not have ability to
    • cater to niche markets, builds up brand loyalty, specialization- powerful barrier to new entrants and substitutes.
    • CONSTRAINTS; Developing distinctive competencies – a difficult process,
    • once committed it’s difficult to move on to other market segment, higher costs may cause customers to move low price products cost leaders.
  • GRAND STRATEGIES
    • Basic framework of master strategies, 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. 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.
    • Corp. Strategies Also tell about decisions relating to allocation of resources among different businesses, managing & nurturing diff. businesses in portfolio.
    • Grand strategies revolve around one basic question : Whether to continue or change business to improve efficiency and effectiveness.
    • STABILITY STRATEGIES
    • Adopted by an organization when it attempts an incremental improvement of functional performance.
    • NO CHANGE STRATEGY : Conscious decision to do nothing new. Continue with present business
    • PROFIT STRATEGY : Reduce investments, cut costs , Increase productivity wrt external factors like: Economic recession, Govt’s attitude, Industry downturn and competitive pressures for sustaining profitability by whatever means till situation improves.
    • PAUSE/ PROCEED WITH CAUTION : Consolidation before a firm goes for expansion.
    • EXPANSION STRATEGIES Most popular corp. strategies as growth is the way of life. All progressive organizations plan for substantial growth due to increasing economy, markets & customer needs. Followed when companies aim at high growth, broadening the scope of its business for improving overall performance. .
    • CONCENTRATION STRATEGIES
    • Simple 1 st level expansion strategy, 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, time, 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.
    • Horizontal integration : Same type of products
  • INTERNATIONAL STRATEGIC ALLIANCES
    • Grown exponentially in the last few years.
    • Very popular instrument to cope up with fastly changing global competition and found in wide range of sectors: Airlines, Pharma, Manufacturing , Computers, Electronic equipment etc.
    • Reasons: rapidly changing technology, fierce competition, Shorter PLC etc’
    • If managed properly, can help multinational firms to transform their operations, gain access to new technology, get insights that would be extremely difficult for the multinational firms to learn and act on their own.
    • CONCEPT
    • A strategic cooperative agreement or agreements between two or more firms from at least 2 countries, which involves exchange, sharing or co- development for achieving strategically significant objectives that are mutually beneficial and beyond what a single firm may reach alone.
  •