1. INTERNATIONAL
BUSINESS MANAGEMENT
UNIT 3: INTERNATIONAL
STRATEGIC MANAGEMENT
Prepared and presented by,
N. Ganesha Pandian,
Assistant Professor,
Madurai School of
Management,
Madurai.
References:
1. International Business : K
Aswathappa
2. International Business-
competing in the global
market : Charles W L Hill and
Arun K Jain
Year : II Semester : IV
1
2. Strategic Compulsions – Standardization vs.
Differentiation
Strategic Options
Global Portfolio Management
Global Entry Strategy
Different Forms of International Business – Advantages
Organizational Issues of International Business
Organizational Structures
Controlling of International Business – Approaches to
Control
Performance of Global Business
Performance Evaluation System. 2
3. Nature of international strategic
management
Strategic management is concerned with the
process of formulating, implementing and
evaluating strategies to achieve a firm’s
objectives
Geographic differences, cultural and national
differences and variations in business
practices and different norms makes it
difficult
3
4. Framework for international
strategic management
Five phase of planning and analysis
1. Recognizing antecedents
2. External and internal analysis
3. Strategic analysis and choice
4. Leveraging competitive advantage and
process
5. Implementation and integration
4
5. International strategic planning
International strategic planning is a
process of evaluating the internal and
external environment by multinational
organizations, through which they set their
long term and short term goals and then
they implement a specific plan of action in
order to achieve those objectives
5
6. Area of strategic compulsions
Orientation of globalization
Emerging e-commerce and culture
Cut throat competition
Diversification
Active pressure group
Motive for CSR Corporate social
responsibility and ethics
6
7. International strategic
management process
Four dispositions of strategic management
process in international business
Ethnocentric orientation
Polycentric orientation
Regio centric predisposition
Geocentric
7
8. Steps in Strategic management
process
Scanning of global environment
Formulation of strategies
Implementation of strategies
Measure and evaluate performance
8
10. Strategy formulation
Major strategic options
Worldwide integration
National responsiveness
Regional responsiveness
Multifocal emphasis
10
11. Strategy implementation
Location
Ownership
Functional strategies
Evaluation and control
Return on investment
Return on equity
Profit margin
Market share
Debt to equity
Earnings per share
Sales growth
Assets growth
11
12. Standardization Vs Differentiation
According to Levitt, represents local
marketing Vs global marketing and focus on
the central question of whether a
standardized (global) or a differentiated
(local), country specific marketing approach
1. Regional perspective
2. Marketing process perspective
3. Marketing components/marketing mix
perspective
12
13. Strategic Options
Global strategy
International strategy
Trans-national strategy
Multi-domestic strategy
13
14. Factors affecting strategic options
External constraints
Intra-organizational forces and managerial power-
relations
Values and preferences and managerial attitudes
risk
Impact of past strategy
Time constraints in choice of strategy
Information constraints
Competitors’ reaction
14
15. Global portfolio investment
Global portfolio investment means the
purchase of stocks, bonds and money market
instrument by foreigners for the purpose of
realizing financial return which does not result
in foreign management, ownership or control
Portfolio investment is part of the capital
account on the balance of payment statistics
15
16. Factors affecting Global portfolio
investment
Tax rates on interest and dividends
Interest rates
Exchange rates
16
17. Problems of Global portfolio
investment
Unfavorable exchange rate movement
Frictions in international financial market
Manipulation of security prices
Unequal access to information
17
18. Global entry strategies
Level of
involvement:
1. Wholly owned
subsidiary
2. Company
acquisitions
3. Assembly
operations
4. Joint venture
5. Strategic
alliances
6. Contract
Manufacture
7. Licensing
8. Direct marketing
9. Distribution and
agents
10. Sales force
11. Trading
companies
12. Export
management
companies
18
19. Global Entry Strategies
Exporting as an entry strategies
1. Indirect exporting
2. Direct exporting
Manufacturing strategies without FDI
1.Licensing
2. Franchising
3. Contract manufacture
4. Turnkey projects
5. Management contracts
19
21. Factors affecting the entry mode
External factors
1. Market size
2. Market growth
3. Government regulations
4. Level of competition
5. Level of risk
Internal factors
1. Company objectives
2. Availability of company resources
3. Level of commitment
4. International experience
5. Flexibility
21
22. Organizational structure
An organizational structure defines how
activities such as task allocation, co-
ordination and supervision are directed
towards the achievement of organizational
aims.
22
23. Designing organization
structure
Includes the analysis of following aspects:
1. External environment
2. Overall aims and purpose of the enterprise
3. Objectives
4. Activities
5. Decisions
6. Relationships
7. Organization structure
8. Job structure
9. Organization climate
10. Management style
11. Human resource
23
25. Methods of control system
Personal controls
Bureaucratic controls
Output controls
Cultural controls
Approaches tocontrol
Market approach
Rules approach
Corporate culture approach
25
26. Process of performance
measurement
Establishing standards of performance
Measure actual performance
Analyze performance and compare it with
standards
Construct and implement an action plan
Review and revise standards
26
27. Performance evaluation system
Defined as “Periodic review of operations to
ensure that the objectives of the enterprises
are being accomplished”
Various performance indicators:
1. Financial measures
a, Return on investment (ROI)
b, Budget as a success indicator
2. Non Financial measures
27
28. Types of performance evaluation
system
Budget programming
Management Audit
PERT (Program evaluation review
technique)
Management information system
28
29. Organization design
Organizational design is a step-by-step methodology which
identifies dysfunctional aspects of work flow, procedures,
structures and systems, realigns them to fit current business
realities/goals.
The following can be achieved:
Excellent customer service Increased profitability
Reduced operating costs
Improved efficiency and cycle time
A culture of committed and engaged employees
A clear strategy for managing and growing your business
29
33. Organizational control
Three types of organizational control
systems are:
1. Responsibility Centre Control
2. Generic Organizational Control
3. Planning Process Control
33
34. Establishing International Control
Systems
Control systems in international business are
established through four basic steps:
1. Set Control standards for performance
2. Measure actual performance
3. Compare performance against standards
4. Respond to deviations
34
35. Essential Controlling Techniques
Some of controlling techniques as below:
1. Accounting systems
2. Procedures
3. Performance ratios
35
37. PERFORMANCE OF GLOBAL
BUSINESS
Global Business Performance is a flexible, web based
solution that provides the key components to support
global decision making.
It offers the integration and management of multiple,
cross-country data sources including POS, retailer
direct, syndicated and consumer data.
Global Business Performance identifies trends and
opportunities and delivers sales and performance
insights across regions, countries and categories, only
days after data is available.
37