The document discusses globalization and its impact on industry structure, highlighting the significance of global economy interactions and resource dynamics. It outlines the importance of capabilities and competencies for businesses to thrive in a competitive global market and details the primary and support activities in value chain analysis. Furthermore, it emphasizes the necessity for companies to adapt to changes brought about by globalization, which has transformed operations, created new opportunities, and increased competition.

1. SAHYADRI COMMERCE AND MANAGEMENT
COLLEGE, SHIMOGA.
Subject: Strategic Management and Business Policy
Topic: Module-2:
Unit-2: Globalization and Industry Structure
Presented By,
Srujana C S
Sahana G
II MBA

2. Meaning of Globalization and Industry Structure:
Global Economy is also referred to as world economy. This
term refers to international exchange of goods and services that
is expressed in monetary units of money. It may also mean as the
free movement of goods, capital, services, technology, and.
Industry structure refers to the composition and characteristics
of the market in which a company operates. It includes factors
such as the number and size of companies in the market, the
level of product differentiation, the bargaining power of suppliers
and buyers, and the threat of new entrants and substitutes.

3. Globalization and industry structure have a significant impact
on resources, including:
1. Access to resources: Globalization increases access to resources, such
as labor, materials, and markets.
2. Resource allocation: Industry structure influences how resources are
allocated, with some industries being more resource-intensive than others.
3. Resource utilization: Globalization and industry structure affect how
resources are utilized, with some companies adopting more efficient
resource use practices.
4. Resource scarcity: Globalization can lead to increased competition for
resources, exacerbating scarcity.
5. Resource pricing: Industry structure and globalization influence resource
pricing, with some resources becoming more expensive due to increased
demand.

4. Some resources affected by globalization and industry
structure include:
1. Labor: Globalization has led to a global labor market, with companies
seeking skilled and low-cost labor.
2. Energy: Industry structure and globalization impact energy consumption
and production, with some industries being more energy-intensive.
3. Water: Globalization and industry structure affect water usage, with some
industries being more water-intensive.
4. Raw materials: Globalization increases demand for raw materials, such as
metals, minerals, and agricultural products.
5. Financial resources: Globalization provides access to global financial
markets, influencing funding and investment.

5. Capabilities and Competencies
A capability is a combination of behaviours, skills, processes and knowledge
that affects an outcome. Competency is the measure of how a person performs
a capability.
In the context of globalization and industry structure,
capabilities and competencies play a crucial role:
Capabilities:
1. Global reach: Ability to operate and manage global supply chains,
distribution networks, and customer relationships.
2. Cultural adaptability: Capability to understand and adapt to diverse
cultural contexts, enabling effective communication and collaboration.

6. 3. Innovation: Capability to develop and commercialize new products,
services, and processes, driving competitiveness.
4. Digitalization: Capability to leverage digital technologies, enabling efficient
operations, innovation, and customer engagement.
5. Partnership and collaboration: Capability to form and manage strategic
partnerships, alliances, and joint ventures.
Competencies:
1. Global mindset: Ability to think and act globally, understanding diverse
cultural, economic, and political contexts.
2. Language skills: Proficiency in multiple languages, facilitating
communication and collaboration across borders.

7. 3. Cultural intelligence: Ability to understand and navigate diverse cultural
norms, values, and beliefs.
4. Adaptability and resilience: Ability to adapt to changing global market
conditions, regulatory environments, and customer needs.
5. Digital literacy: Ability to effectively utilize digital technologies, data
analytics, and social media.
Industry structure influences the development of capabilities
and competencies, as companies must respond to:
1. Global competition: Developing capabilities and competencies to
compete effectively in global markets.
2. Industry convergence: Blurring of industry boundaries, requiring
companies to develop new capabilities and competencies.

8. 3. Regulatory environments: Navigating diverse regulatory requirements,
necessitating capabilities and competencies in compliance and risk
management.
4. Technological disruption: Leveraging digital technologies, data
analytics, and innovation to stay competitive.
Value chain analysis:
Value chain analysis is a strategic process that can increase profit margins
and provide a competitive advantage for companies of all sizes. Within this
analysis, businesses identify areas where the value of specific production
and sales activities can be increased.

10. Primary activities
The first are primary activities which include the five main activities. All five
activities are directly involved in the production and selling of the actual
product. They cover the physical creation of the product, its sales, transfer to
the buyer as well as after sale assistance. The five primary activities are
inbound logistics, operations, outbound logistics, marketing & sales and
service. Even though the importance of each category may vary from industry
to industry, all of these activities will be present to some degree in each
organization and play at least some role in competitive advantage.

11. Inbound Logistics
Inbound logistics is where purchased inputs such as raw materials are often
taken care of. Because of this function, it is also in contact with external
companies such as suppliers. The activities associated with inbound logistics
are receiving, storing and disseminating inputs to the product. Examples:
material handling, warehousing, inventory control, vehicle scheduling and
returns to suppliers.
Operations
Once the required materials have been collected internally, operations can
convert the inputs in the desired product. This phase is typically where the
factory conveyor belts are being used. The activities associated with operations
are therefore transforming inputs into the final product form. Examples:
machining, packaging, assembly, equipment maintenance, testing, printing and
facility operations.

12. Outbound Logistics
After the final product is finished it still needs to find its way to the customer. Depending
on how lean the company is, the product can be shipped right away or has to be stored
for a while. The activities associated with outbound logistics are collecting, storing and
physically distributing the product to buyers. Examples: finished goods warehousing,
material handling, delivery vehicle operations, order processing and scheduling.
Marketing & Sales
The fact that products are produced doesn’t automatically mean that there are people
willing to purchase them. This is where marketing and sales come into place. It is the job
of marketeers and sales agents to make sure that potential customers are aware of the
product and are seriously considering purchasing them. Activities associated with
marketing and sales are therefore to provide a means by which buyers can purchase the
product and induce them to do so. Examples: advertising, promotion, sales force,
quoting, channel selection, channel relations and pricing. A good tool to structure the
entire marketing process is the Marketing Funnel.

13. Service
In today’s economy, after-sales service is just as important as promotional
activities. Complaints from unsatisfied customers are easily spread and shared
due to the internet and the consequences on your company’s reputation might
be vast. It is therefore important to have the right customer service practices in
place. The activities associated with this part of the value chain are providing
service to enhance or maintain the value of the product after it has been sold
and delivered. Examples: installation, repair, training, parts supply and product
adjustment.

14. Support Activities
The second category is support activities. They go across the primary activities
and aim to coordinate and support their functions as best as possible with
each other by providing purchased inputs, technology, human resources and
various firm wide managing functions. The support activities can therefore be
divided into procurement, technology development (R&D), human resource
management and firm infrastructure. The dotted lines reflect the fact that
procurement, technology development and human resource management can
be associated with specific primary activities as well as support the entire
value chain.

15. Procurement
Procurement refers to the function of purchasing inputs used in the firm’s value chain,
not the purchased inputs themselves. Purchased inputs are needed for every value
activity, including support activities. Purchased inputs include raw materials, supplies
and other consumable items as well as assets such as machinery, laboratory
equipment, office equipment and buildings. Procurement is therefore needed to assist
multiple value chain activities, not just inbound logistics.
Technology Development (R&D)
Every value activity embodies technology, be it know how, procedures or technology
embodied in process equipment. The array of technology used in most companies is
very broad. Technology development activities can be grouped into efforts to improve
the product and the process. Examples are telecommunication technology, accounting
automation software, product design research and customer servicing procedures.
Typically, Research & Development departments can also be classified here.

16. Human Resource Management
HRM consists of activities involved in the recruiting, hiring (and firing), training,
development and compensation of all types of personnel. HRM affects the
competitive advantage in any firm through its role in determining the skills and
motivation of employees and the cost of hiring and training them. Some
companies (especially in the technological and advisory service industry) rely
so much on talented employees, that they have devoted an entire Talent
Management department within HRM to recruit and train the best of the best
university graduates.

17. Firm Infrastructure
Firm infrastructure consists of a number of activities including general
(strategic) management, planning, finance, accounting, legal, government
affairs and quality management. Infrastructure usually supports the entire value
chain, and not individual activities. In accounting, many firm infrastructure
activities are often collectively indicated as ‘overhead’ costs. However, these
activities shouldn’t be underestimated since they could be one of the most
powerful sources of competitive advantage. After all, strategic management is
often the starting point from which all smaller decisions in the firm are being
based on. The wrong strategy will make it extra hard for people on the work
floor to perform well.

19. Core Competencies:
A core competency is a unique element that can not be easily replicated by
other companies. Therefore, a company can identify its core competencies by
thinking through how the company is different from other businesses.
Understanding Core Competencies
The concept of distinctive competencies revolves around making a collective
effort to achieve one goal, i.e., delivering the best output. People in an
organization with diversified skills collaborate to manufacture or produce the
desired end product. The business can then use this end product for its
separate units and individual product lines.
The idea was first introduced by C.K. Prahalad and Gary Hamel in their article
“The Core Competence of the Corporation,” published in Harvard Business
Review in 1990. It clearly stated the significance of the core competencies in
business in developing core products to be used in its other products.

20. The writers used the analogy of a large tree as a diversified business to
illustrate their point. They considered the smaller branches as business units,
the roots system as distinctive competencies, the trunk as the core product,
and the leaves, flowers, and fruits as end products.
According to the core competencies definition provided by Prahalad and
Hamel, the existence of the tree, i.e., business and its end products, would be
affected if the root system, i.e., core capabilities, is weak. Therefore, when
consumers prefer products of a particular brand, the competitors must figure
out its distinctive competencies.
While allowing a business to expand in different markets, these unique traits
add value to the customer service. Since each industry functions differently,
the core capabilities might vary for companies based on their operation.

21. Conclusion:
Globalization has changed the way industries work by increasing competition,
leading to mergers and outsourcing, and creating new opportunities for
growth and innovation. It has also made global supply chains more complex
and interconnected. As a result, businesses have had to adapt to stay
competitive, and new industries and companies have emerged. Overall,
globalization has transformed the way industries operate, bringing both
benefits and challenges.