sm ppt whole

Slide 1: 

INTERNATIONAL STRATEGIC MANAGEMENT

Slide 2: 

MODULE 1

1 : 

1 INTRODUCTION & COURSE REVIEW

2 : 

2 CONCEPT OF STRATEGY & STRATEGIC MANAGEMENT

PYRAMID OF BUSINESS POLICY : 

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 : 

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 : 

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 : 

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 : 

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 : 

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 : 

NATURE OF INTERNATIONAL STRATEGIC MANAGEMENT 3

SINGLE COUNTRY, EXPORT & INTERNATIONAL STRATEGY : 

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 : 

GLOBAL STRATEGY THE CENTRE SUBSIDIARY S6 SUBSIDIARY S5 SUBSIDIARY S1 SUBSIDIARY S2 SUBSIDIARY S3 SUBSIDIARY S4

4 : 

4 LEVELS OF STRATEGY & EVOLUTION OF STRATEGIC MANAGEMENT

HIERARCHY OF STRATEGY : 

HIERARCHY OF STRATEGY CORPORATE STRATEGY BUSINESS STRATEGY FUNCTIONALSTRATEGY

STRATEGY AT DIFFERENT LEVELS : 

STRATEGY AT DIFFERENT LEVELS

HOW HAS STRATEGIC MANAGEMENT EVOLVED : 

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 : 

5 STRATEGIC MANAGEMENT PROCESS

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

Slide 20: 

MODULE 2

TYPICAL VALUE CHAIN OF A MANUFACTURED PRODUCT : 

TYPICAL VALUE CHAIN OF A MANUFACTURED PRODUCT RAW MATERIAL PRIMARY MANUF. FABRICATION PRODUCT PRODUCER DISTRIBUTOR RETAILER 6

A CORPORATE VALUE CHAIN : 

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

VALUE CHAIN ANALYSIS : 

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 : 

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 : 

8 EXTERNAL ENVIRONMENT

COMPANY AND ENVIRONMENT : 

COMPANY AND ENVIRONMENT MEN MACHINEMATERIAL METHODS MONEY INPUTS PROCESSES OUTPUTS ENVIRONMENT ENVIRONMENT ACTIVITIESOPERATIONSPLANNINGMANUFACTURINGINSPECTIONPACKING GOODSSERVICESSALESPROFITS OBJECTIVESGOALSTARGETS FEEDBACK CORRECTIVE ACTION

PEST FACTORS : 

PEST FACTORS POLITICAL TECHNOLOGICAL ECONOMIC SOCIAL

PESTLE MATRIX : 

PESTLE MATRIX ECONOMIC REGULATORY BODIES GOVT. POLICIES GOVT. TERM & CHANGE ECONOMY SITUATION & TRENDS TAXATION INTEREST & EXCHANGE RATES MARKET & TRADE CYCLE

CONSTITUENTS OF MICRO ENVIRONMENT : 

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 CHANGESWHICH FORCE THE FIRMS TO ADOPT STRATEGIC PERSPECTIVE : 

ENVIRONMENTAL CHANGESWHICH 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 ) : 

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 : 

9 INTERNAL ENVIRONMENT

A SWOT CHECKLIST : 

A SWOT CHECKLIST

SWOT CHECKLIST : 

SWOT CHECKLIST

MACKENZIE’S 7S MODEL : 

MACKENZIE’S 7S MODEL STRATEGY SKILLS STRUCTURE SHARED VISION STAFF SYSTEMS STYLE

Slide 36: 

MODULE 3 VISION,MISSION & BUSINESS DEFINITION

12 : 

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 : 

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 : 

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 : 

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 : 

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 : 

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 : 

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 : 

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 Derived 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 : 

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 : 

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 : 

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 & 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 : 

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 : 

MODULE 4

TOTAL GLOBAL STRATEGY : 

TOTAL GLOBAL STRATEGY CORE BUSINESS STRATEGY DEVELOP CORE BUSINESS STRATEGY 2. INTERNATIONALISE THE STRATEGY 3. GLOBALISE THE STRATEGY COUNTRYA COUNTRY B COUNTRYC COUNTRYD COUNTRYE

INTERNATIONAL STRATEGIES : 

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 INDUSTRYGLOBALISATIONPOTENTIAL MARKET DRIVERS COMPETITIVE DRIVERS COST DRIVERS GOVERNMENT DRIVERS

THE GLOBALISATION TRIANGLE : 

THE GLOBALISATION TRIANGLE BENEFITS & COSTS OF GLOBALISATION GLOBAL STRATEGY LEVERS INDUSTRY GLOBALISATION DRIVERS GLOBAL ORGANISATIONDRIVERS

A FRAMEWORK OF GLOBAL STRATEGY : 

A FRAMEWORK OF GLOBAL STRATEGY GLOBAL STRATEGY LEVERS GLOBAL MARKET PARTICIPATION GLOBAL PRODUCTS GLOBAL LOCATIONGLOBAL MARKETINGGLOBAL COMPETITIVE MOVES I BENEFITS / COSTSOF GLOBAL STRATEGY INDUSTRY GLOBALISATION DRIVERS MARKET COST GOVT COMPETITIVE GLOBAL ORGANISATION DRIVERS PARENT ORG’S ABILITY ( POSITION & RESOURCES) TO IMPLEMENT A GLOBALSTRATEGY )

MANAGEMENT AND ORGANISATION FACTORS AFFECTING GLOBAL STRATEGY(GLOBAL ORGANISATION DRIVERS ) : 

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 : 

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 : 

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

GOVRNMENTGLOBALISATION DRIVERS : 

GOVRNMENTGLOBALISATION 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

COMPETITIVEGLOBALISATION DRIVERS : 

COMPETITIVEGLOBALISATION 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 : 

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 : 

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 : 

TYPE OF CUSTOMERS GLOBAL CUSTOMER FOREIGN CUSTOMER INTERNATIONAL CUSTOMER FREELOCAL 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 INCR EASING INTERNATIONALISATION

BUSINESS GROWTH / COMPETITIVE SRENGTH MATRIX : 

BUSINESS GROWTH / COMPETITIVE SRENGTH MATRIX WILDCAT COUNTRIES DOG COUNTRIES CASH COWCOUNTRIES HI LO LO HI COMPETITIVE STRENGTH OF BUSINESS IN COUNTRY GROWTHPOTENTIAL OFBUSINESS INCOUNTRY

MODES OF ENTRY : 

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 : 

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 : 

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 : 

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 : 

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

Slide 70: 

MODULE 5

PORTER’S MODEL : 

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 : 

ETOP( ENVIRONMENTAL THREAT & OPPORTUNITY PROFILE 0

SAP ( STRATEGIC ADVANTAGE PROFILE ) : 

SAP ( STRATEGIC ADVANTAGE PROFILE )

CONSOLIDATED SWOT PROFILE : 

CONSOLIDATED SWOT PROFILE

SWOT MATRIX and STRATEGIES : 

SWOT MATRIX and STRATEGIES OPPRTUNITIES THREATS WEAKNESSES STREGTHS

OPPORTUNITY MATRIX : 

OPPORTUNITY MATRIX HIGH ATTRACTIONS MODERATE ATTRACTIONS HIGH LOW HIGH LOW Impact of Opportunities Occurrence

THREAT MATRIX : 

THREAT MATRIX HIGH LOW HIGH LOW OCCURENCE IMPACT OF THREATS

TOW’s MATRIX : 

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

BCG GROWTH SHARE MATRIX : 

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 : 

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

HOFER’S MODEL : 

HOFER’S MODEL

STRICKLAND’S GRAND STRATEGY SELECTION MATRIX : 

STRICKLAND’S GRAND STRATEGY SELECTION MATRIX

Slide 83: 

MODULE 6

GENERIC STRATEGIES : 

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;

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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

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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 : 

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.

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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 STRATEGIESMost 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.. : 

EXPANSION STRATEGIESMost 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 1st 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 : 

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.