This document discusses international management strategies for multinational companies (MNCs). It covers generic competitive strategies like low cost leadership and differentiation. It also discusses competitive advantage through distinctive competencies and a company's value chain. Both offensive and defensive strategies are explained as well as related and unrelated diversification approaches. The effects of globalization and national context on convergence and divergence of management strategies are also summarized. Key topics include industry analysis, identifying success factors, and adapting traditional strategic formulation to MNCs.

1. CHAPTER : 04
COURSE: INTERNATIONAL MANAGEMENT
COURSE INSTRUCTOR : SIR ZULFIQAR FAREED

2. GROUP MEMBERS
S.NO NAME OF STUDENT QUALIFICATION EXPERIENCE
I HIRA NOOR KHAN(GL) MASTERS IN
ECONOMICS AND
FINANCE
O’LEVELS
MATHEMATICS
TEACHER/ SECTION
HEAD OF PRIMARY
II AQSA MASOOD B.COM ELEMENTARY
TEACHER AT AVID
SCHOOL
III TAIMUR HASSAN B.COM CASHIER AT SONARI
BANK
IV AAMIR ISLAM TEACHER AT
KARACHI
UNIVERSITY
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3. TOPICS
• Generic Competitive Strategies.
• Competitive Advantage And Value Chain.
• Distinctive Competencies.
• Offensive and Defensive Strategies.
• Traditional Strategy, Formulation apply on MNCs.
• Basic MN Diversification.
• National Context affects(Convergence, Divergence)
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4. Generic Competitive StrategiesGeneric Competitive Strategies
Generic strategies represent very basic ways that bothGeneric strategies represent very basic ways that both
domestic and multinational companies achieve anddomestic and multinational companies achieve and
maintain competitive advantage.maintain competitive advantage.
Competitive advantage
• A competitive advantage is one gained over competitors by offering
consumers better value. You increase value by decreasing prices or
increasing benefits and services to justify the higher prices.
The two basic types of competitive advantage combined with the scope of
activities for which a firm seeks to achieve them, lead to three generic
strategies for achieving above average performance in an industry:
• Cost leadership
• Differentiation
• Focus.
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5. Low Cost Leadership Strategy
Companies that adopt a low cost strategy produce or deliver
products or services equal to those of their competitors. Low
cost of products without sacrificing quality acceptable for the
consumer. Cost saving that improve efficiency any where
from the creation of the product.
Differentiation Strategy
Differentiation strategy calls for a company to provide a
product or service with distinguishing qualities valued by
customers.
• A highly skilled and creative product development team
• A strong sales and marketing team.
• A company reputation for quality and innovation.
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6. • Focus Strategy
Focus strategy is just what it sounds like: concentrate on a
particular customer, product line, geographical area, market
niche, etc. The idea is to serve a limited group of customers
better than your competitors who serve a broader range of
customers.
It involves focusing the cost leadership or differentiation on a
small scale
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7. COMPETITIVE ADVANTAGE ANDCOMPETITIVE ADVANTAGE AND
VALUE CHAINVALUE CHAIN
• One convenient way of thinking about firm’s activities is
called the value chain.
Porter used term Value Chain :
To represent all the activities that a firm uses “to design,
produce, market, deliver and support its product”.
Porter divide the value chain into Primary and support activities.
These activities represent:
• The process of creating good and services.
• The organizational system necessary to support the creative
activities.
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8. Primary Activities:Primary Activities:
ItIt involve the physical actions of creating , selling and after
sale services. Early activities dealing with suppliers called Up
stream and dealing with distributers are called down stream.
Support Activities:Support Activities:
It include the human resource management, organizational
design , control and firm basic technology.
Value chain identifies the area in the process where MNCs can
find resources of differentiation and low cost.
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9. DISTINCTIVE COMPETENCIES
Distinctive competencies are the strengths anywhere in the
value chain that allow a company to outperform rivals in
areas such as efficiency , quality , innovation, or customer
service
DISTINCTIVE
COMPETENCIES
RESOURCES CAPABILITIES

10. Resources:
Resources are the inputs into a company’s production or
services processes. Resources can be both tangible and
intangible such as building, equipment, trained employees,
patents, trademarks, etc.
Capabilities:
Capabilities represent the ability of companies to assemble
and coordinate their available resources in ways that lead to
lower costs or differentiated output.

11. Sustaining Competitive Advantage
• For long-term profitability, successful low-cost or
differentiation strategy must be sustainable.
• Sustainable means that strategies are not easily neutralized
or attacked by competitors.
• Sustainable leads to capabilities that have four characteristics.
– Valuable capabilities
– Rare capabilities
– Difficult to imitate capabilities
– Nonsubstitutable capabilities

12. Valuable capabilities: Valuable capabilities create demand for a
company’s services or products or give companies cost
advantage.
Rare capabilities: Rare capabilities are those that a company
possesses but that no competition or only a few competitors
also possess.
Difficult to imitate capabilities: Difficult to imitate capabilities
are those capabilities that are not easily copied by
competitors .
Nonsubstitutable capabilities: Non substitutable capabilities
leave no strategic equivalent available to competitors.

13. Offensive And Defensive Competitive
Strategies
Offensive strategies:
In offensive strategies, companies directly target
rivals from whom they want to capture market
share.
Defensive strategies:
In defensive strategies, companies seek to beat back
or discourage the offensive strategies of rivals.

14. Examples of offensive strategies
• Direct Attacks: Direct attacks include price cutting,
adding new features, comparison that show lesser
quality in competitors products.
• End-run offensives: with these strategies, companies
try to avoid direct competition and seek unoccupied
markets.
• Preemptive competitive strategies: These strategies
involve being the first to gain a particular
advantageous position.
• Acquisitions: This can be the most effective
competitive strategy against rivals because the
acquired competitor no longer exists

15. Multinational Diversification Strategy
Related diversification:
In related diversification, companies start or acquire
businesses that are similar in some way to their original
or core business. Firms choose related diversification for
three basic reasons: sharing of activity, transfer of core
competencies, and developing market power.
Unrelated Diversification:
In unrelated diversification, firms acquire businesses
in any industry. Their main concern is whether a
business represents a good financial investment.
Businesses can be acquired as long-term
investments.

16. STRATEGY FORMULATION:
TRADITIONAL APPROACHES.
Strategy Formulation Is A Process Which Managers Use To
Select Strategy For The Company.
•Managers Uses Popular Type Of Information Analysis To
Formulate Successful strategies.
INDUSTRY AND COMPITITIVE ANALYSIS.
•Industries identify the main competitive arenas of a
companies businesses.
•Managers must understand their industries well to formulate
good strategies.
•Understand the economic character of the industries.
Managers knows about the driving forces of change and
completion in the industry.

17. Issues influence strategy
selection.
• Market size.
• Ease of entry and exit.
• Economies of scale in production.
• E.g. Market with high growth rate often attract new
competitors.
• Companies must prepared to evoke defensive
strategies against new rivals.

18. Key Success Factors(ksf)
• The factors that lead to success in an industry are
called key success factors. like
• Innovative technology or product.
• Broad product line.
• Price advantages
• Quality of human resources.
• Cost position for raw material.
• Experience of firm in business.
• R n D quality.
• Financial assets .
• Product quality.

19. Company-situation Analysis.
• The most common tool for a company-situation analysis
is called SWOT .
• The SWOT has an internal component, which focuses on
an organization’s STRENGTHS and WEAKNESSES ,and
external component, which focuses on OPPORTUNITIES
OR THREATS from the environment.

20. • Corporate Strategies
Top management’s overall plan for the entire
organization and its strategic business units.
• Types of Corporate Strategies
– Growth: expansion into new products and
markets
– Stability: maintenance of the status quo
– Renewal: redirection of the firm into new markets

21. Convergence & DivergenceConvergence & Divergence
TheoryTheory
• The convergence theory increasing similarity of management
practice is called convergence.
Cross border competition, trade, mergers & acquisitions
provide more opportunities to learn about & copy successful
managerial practices from anywhere in the world.
• Divergence theory maintains the opposite, namely that
cultural diversity will persist or even be reinforced by the
rejection of external team spirit.
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22. GLOBALIZATION & BOTHGLOBALIZATION & BOTH
THEORIESTHEORIES
• There is no doubt that globalization is everywhere. Trade,
communication, technology, migration are all areas in which
we are becoming more and more globalised. Some suggest
that this globalization is fueling convergence. Due to advances
in technology such as the Internet.
• It is clear that convergence has occurred particularly in
western cultures, with advances in technology greatly aiding
all flows of globalization, while on the other hand
divergence is also obvious in that globalization has
contributed to a greater gap between developed and
developing countries.
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23. National Context
• The national context comprises of respective
national cultures & social institutions of any society.
Four key social Institutions :
(most like to influence the business environment)
• Economic system ( socialism or capitalism )
• Level of Industrialization
• Type of religion
• Educational type
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24. Effect of globalization onEffect of globalization on
convergence strategies forconvergence strategies for
MNCsMNCs
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25. CONCLUSIONCONCLUSION
• MULTINATIONAL STRATEGIC MANAGEMENT
BASED ON:
• Generic Strategies of low cost and
differentiation.
• To compete the rivals of MNCs.
• To use Offensive and defensive strategies.
• To have related and unrelated portfolios to
formulate the strategies.
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26. Multinational Managers should :Multinational Managers should :
• Determine the Best plan of His/ Her company
and the competitive and general
environment.
• Aware of differences because they affect the
collaborator and competitor.
• Modify and change strategies in response to
new opportunity.
• Tackle other issues related to the strategy .
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