2. RECAPITULATE
• We discussed what is structure of global organizations and dimension of Multinationalism
• We discussed the benchmarks to check if a company is multinational
• We discussed organizational structural approaches and factors influencing organizational structure
• We discussed 7 types of fundamental organizational structures
• We discussed the factors to be considered while choosing organizational structure
• We discussed various issues faced by global organizational structures
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3. LEARNING OUTCOMES
After this lecture students will be able to POs Knowledge
Level
Understand what is strategy PO4 K2
Understand concept of global integration and local
responsiveness
PO4 K3
Understand International Strategic predispositions PO4 K4
Understand process of setting strategies PO4 K4
Understand components of international strategies PO4 K2
Understand process of strategy formulation PO4 K3
Understand Competitive strategies used by businesses PO4 K3
Understand how to engage in strategic evaluation and
control
PO4 K2
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5. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• Strategy is a planned set of actions that managers employ to make best use of
the firm’s resources and core competencies to gain competitive advantage.
• When developing strategies, managers start by examining the firm’s specific
strengths and weaknesses.They then analyze the particular opportunities and
challenges that confront the firm.
• Once they understand the firm’s strengths, weaknesses, opportunities, and
challenges, they decide which customers to target, what product lines to offer,
how best to contend with competitors, and how generally to configure and
coordinate the firm’s activities around the world.
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6. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• Firms should strive to develop:“global-scale efficiency in its existing activities;
multinational flexibility to manage diverse country-specific risks and
opportunities; and learn from international exposure and exploit that learning on
a worldwide basis”.
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Objectives
Efficiency Flexibility Learning
7. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• A global team is an internationally distributed group of employees charged with a
specific problem-solving or best-practice mandate that affects the entire organization.
• Global integration is the coordination of the firm’s value-chain activities across
multiple countries to achieve worldwide efficiency, synergy, and cross-fertilization in
order to take advantage of similarities between countries.
• Firms that emphasize global integration make and sell products and services that are
relatively standardized—that is, uniform or with minimal adaptation—to capitalize on
converging customer needs and tastes worldwide. Such firms compete on a regional
or worldwide basis.They seek to minimize operating costs by centralizing value-chain
activities and emphasizing economies of scale.
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8. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• In contrast to global integration, many companies seek to respond to specific
conditions in individual countries.Accordingly, local responsiveness refers to
managing the firm’s value-chain activities, and addressing diverse opportunities
and risks, on a country-by-country basis. It emphasizes meeting the specific needs
of customers in individual markets.
• When they operate internationally, firms try to strike the right balance between
the objectives of global integration and local responsiveness.
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9. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• International Strategic predispositions
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• They rely on the values and interests of the parent country in
formulating and implementing strategic plan.
Ethnocentric
• They tailor its strategic plan to meet the needs of the host country
culture. If firm operates in more than one country an overall plan will
be adopted to meet specific needs
Polycentric
• They will be interested in both profits as public acceptance it uses
strategies to address local and regional needs
Regiocentric
• They view operations from a global perspective they offer global
products with local variations
Geocentric
10. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
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Conduct
environmental
scanning
Formulate
international
strategies
Implement
strategies
Measure and
evaluate
performance
11. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• Quality of senior management with Four major traits:
• International mindset and cosmopolitan values
• Willingness to commit resources
• Strategic vision
• Willingness to invest in human assets
• Organizational Cultures Shared formed through values,
behavioral norms, systems, policies and procedures.
• A global team is an internationally distributed group of
employees charged with a specific problem-solving or
best-practice mandate that affects the entire
organization.
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Global
Firm
Strategy
Organization
al Structure
Organization
al Processes
Organizational
Culture
Visionary
Leadership
12. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• A typical MNC is often caught between two extremes ; need to standardise
products to achieve scale economies or customise all activities to suit specific
local needs.
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13. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
Goal setting should be always preceded by goal formation
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14. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
► Components of International Strategy
► Distinctive competence:Distinctive competence,the first component of international strategy,
answers the question:“What do we do exceptionally well, especially as compared to our
competitors?”
► A firm’s distinctive competence may be cutting-edge technology,efficient distribution networks,
superior organizational practices, or well-respected brand names.
► Scope of operations:Scope may be defined in terms of geographical regions,such as countries,
regions within a country, or clusters of countries.Or it may focus on market or product niches
within one or more regions, such as the premium-quality market niche, the low-cost market niche,
or other specialized market niches.
► Resource deployment:Resource deployment might be specified along product lines, geographical
lines, or both.This part of strategic planning determines relative priorities for a firm’s limited
resources.
► Synergy:The goal of synergy is to create a situation in which the whole is greater than the sum of
the parts.
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16. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• Corporate strategy attempts to define the domain of businesses in which the firm intends to
operate.
• Single business strategy - calls for a firm to rely on a single business, product, or service for all
its revenue.
• Related diversification - the most common corporate strategy, calls for the firm to operate in
several different but fundamentally related businesses, industries, or markets at the same time.
• Unrelated diversification - firm operates in several unrelated industries and markets. For
example, GE owns such diverse business units as a lighting manufacturer, a medical technology
firm, an aircraft engine producer, a home appliance manufacturer, and an investment bank.These
operations are unrelated to each other, and there is little reason to anticipate synergy among
such diverse operations and businesses.
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17. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• Business strategy seeks to answer the question:“How should we compete in
each market we have chosen to enter?”
• Firms that pursue corporate strategies of related diversification or unrelated
diversification tend to bundle sets of businesses together into strategic business
units (SBUs). In firms that follow the related diversification strategy, the products
and services of each SBU are somewhat similar to each other.
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18. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• Differentiation strategy: It attempts to establish and maintain the image (either real or
perceived) that the SBU’s products or services are fundamentally unique from other products
or services in the same market segment.
• Many international businesses today are attempting to use quality as a differentiating factor. If
successful at establishing a high-quality image, they can charge higher prices for their products
or services.
• Overall cost leadership:The overall cost leadership strategy calls for a firm to focus on
achieving highly efficient operating procedures so that its costs are lower than its competitors’.
• This allows it to sell its goods or services for lower prices.A successful overall cost leadership
strategy may result in lower levels of unit profitability due to lower prices but higher total
profitability because of increased sales volume.
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19. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• A focus strategy calls for a firm to target specific types of products for certain
customer groups or regions, such as a retailer specializing in maternity clothes or “big
and tall” clients.
• Doing this allows the firm to match the features of specific products to the needs of
specific consumer groups.These groups might be characterized by geographical
region, ethnicity, purchasing power, tastes in fashion, or any other factor that
influences their purchasing patterns.
• Functional strategies attempt to answer the question:“How will we manage the
functions of finance, marketing, operations, human resources, and R&D in ways
consistent with our international corporate and business strategies?”
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20. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• The final phase of international strategic management is evaluation and control. It
involves examination of MNCs performance for purpose of determining
• How well the organization has done
• What corrective actions need to be taken at this level of performance
• Strategy evaluation includes two basic activities
• Assessing the actual results and comparing them with the expected ones.
• Taking corrective actions to ensure that performance conforms to plans
• Strategy evaluation can be painful and sensitive task
• Too much emphasis on evaluating strategies may be expensive and counter productive at the same
time too little or no evaluation can create even worse problems
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21. STRATEGIESTO GAIN GLOBAL COMPETITIVE
ADVANTAGE
• Quantitative criteria are mainly employed to evaluate the performance of the
firm. Financial ratios are used to make three critical comparisons:
• Comparing the firm’s performance over different time periods
• Comparing firm’s performance to competitors
• Comparing firm’s performance to industry averages
• Key ratios used are: ROE, ROI, profit margin, market share, debt to equity, EPS, Sales growth
assets growth
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22. REFERENCES
The material in the presentation has been taken from the following books or from internet where
sourcing has been shared as footnotes on slides:
• Cherunilam, Francis (5th Ed., 2011), International Business, PHI
• K.Aswathappa, (6th Ed., 2015), International Business, McGraw Hill Education.
For further study please refer to the following books or the miscellaneous study material shared with
you
• Tamer, Cavusgil, Gary, Knight,(3rd Ed., 2013), International Business: Strategy, Management and the New Realities, Pearson
Education
• Hill C.W. (8th Ed., 2016), Global BusinessToday, McGraw Hill Education
• Sinha, P.K., (1st Ed., 2012), International Business Management, Excel Books.
• Deresky, (8th Ed., 2013), International Business Management:Managing across Borders and Culture, Pearson Education
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