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Title LayoutSUBTITLE
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Production and Operations Management
Course Instructor: Prof. SameeUllah
NATIONAL UNIVERSITY OF MODERN LANGUAGES
BBA-7
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Group Members
• Tahmeena Batool• Mehak Athar • Waqar Ahmad Minhas• H. M. Nouman Riaz
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Discussion Circle
MNC, TNC, international and
Multi domestic org
Why companies go global?
MNC’s of China,
Russia, UK & Sri lanka
Global Strategy
Conclusion
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Going Global
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Globalization Globalization is the tendency of businesses, technologies, or philosophies to spread throughout the world.
This process is powered by interconnected market place.
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Global Strategy
Global strategy as defined in business terms is an organization's strategic guide to globalization.
A sound global strategy should address these questions:
What will be the extent of market presence in the world?
How to build the necessary global presence?
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General terms definition Reasons for going global
Waqar Ahmad Minhas
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According to ILO (International Labor Organization):
“MNC is any corporation that has its
management head quarters in one country i.e.
(Home Country)
&
operates in several other countries i.e.
(Host Countries).”
Difference in Terms : Definitions
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International companies Importers and exporters, they have no investment outside of their home country.
Global companies They have invested and are present in many countries. Just like MNC’s.
Transnational companies They are much more complex organizations. They have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market
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Multinational Organizations, Transnational Organizations, InternationalOrganizations and Multi-Domestic Organizations are engaged in same activity.
A slight difference of Multi-Domestic organizations from all others is:
The product features or service designs of Multi-Domestic organization define locality.
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Common Characteristic
MNC MNE TNC iO Mdc
“Multi-National “ Multi-National “Transnational “International “Multi-Domestic
Corporation” Enterprise” Corporation” Organization” Company”
International Business
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Why Organizations Go Global?User’s perspective:
Every country does not have all resources, so
there is a need of international business in order to
export resources,
That are abundant in our country and to import
resources that are not available in our country.
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Why Organizations Go Global? Cont.… Company’s perspective:
Increase Market Share
Secure cheaper premises & labor
Avoid Tax & Trade barriers
Enhance profitability
Diversification against Risk
Less competition
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MNC from Russia MNC’s in Russia
Opportunities, challenges and strategies
Tahmeena Batool
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Challenges
•Construction Permits
•Registering Property
•Getting Electricity
•Government Interference
•Protectionism
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McDonalds vs Communism
• McDonald was compared in Russia as communist dictatorship
• It took 12 years of negotiation and stressed efforts to establish it in Russia
• McDonalds entered in soviet union on Jan 31, 1991.
• After opening, 30,000 consumers came to McDonalds.
• Now Pushkin Square’s McDonalds is most busiest McDonalds restaurant.
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McDonald’s Strategy in Russia
• Offered signature items (local individual identity)
• Local food preferences
• Offered breakfast for early leavers (people who left home early morning for work)
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McDonald’s Strategy in Russia cont.….
• Introduced a concept of side café named as “McCafe” without formal dining area
•Pricing strategy was structured in compatibility with Russian budget
•Competed Starbucks on the bases of price
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Coca cola’s strategies in Russia
• Introduction of new products i.e. citrus flavored energy drinks
• Packaging for home dining • Below market prices• Filled all advertisement spaces
by allocating more budget.
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Starbucks in Russia
• In Sep, 2007 Starbucks entered in Russian Market
• Customization of Interior and furnishing• Social meetings and personal works got
separate places • Incorporated culture and traditions• I.e. “Lubok” art of Russia is engraved on walls
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CSRKeeping corporate social responsibilityin view Starbucks
• Prohibited alcoholic beverages• SmokingEven it causes
• Loss of those Russian’s customers who Smoke• Space for those competitorswho sell alcohol.
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MNC’s in China
Reasons for expansion
Mehak Athar
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Introduction
• Collapsible tube, first introduced by Colgate, in 1896.• Catered audience in Singapore, Nepal and India• In 1992, Colgate established domestic production
units• Colgate products are marketed in China using the
transcription • As of 2002, Colgate occupied 20% of the market share
for toothpastes in China (prediction became fact)
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Reason for ExpansionLocal suppliers can close the cost gap (cost reduction): Colgate became China’s top oral care company, in large part by cutting production costs and passing those savings on to consumers
The result: The price of a 65-gram tube of toothpaste dropped almost 63% from 4.8 renminbi in 1996 to 1.8 renminbi in 2003 (or from about 59 cents to 22 cents). The price differential between Colgate and local brands fell even more dramatically—from 270% to just 44%.
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Introduction
• World's second largest restaurant chain
• 18,875 outlets in 118 countries (2014)
• KFC is a subsidiary of Yum! Brands, a restaurant company.
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“The sky is the limit”Sam Su, head of operations in china for Yum!
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Why went globe?• 3900 stores in china (Enhanced profitability)
• In 2006, KFC profits in China, Thailand, and Taiwan jumped by 37%, while domestic profits here in America only increased by 3%.
• Due to China’s crave for the Colonel’s chicken and the fact that China’s population is much greater than that of the US.
(Scope and cheap resources i.e. labor)
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McDonalds in Sri lankaReason and Strategy Waqar Ahmad Minhas
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Reason for expansion
•As part of Asia pacific , Srilanka got importance.
•Population of Asia was trying to maintain living standards in late 19th
• Increased spending (Enhanced Profitability)
•Cheap labor (cost cutting)
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Strategy to Enter• Franchising
• Segmentation (household, lower class, upper class)
But McDonalds, in Sri lanka, does not go for sales promotion, because there it differentiates itself through
Promotional Price
Different Menu
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MNC from United KingdomePeek Freans goes global Nouman Riaz
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• A former biscuit making
• 1861 to 1931 company constantly innovated its products
• Global reach of company starts from Common Wealth countries
Peek Freans
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Going Global• Global popularity of Tea and Coffee (increased market share)
• Independent production units (Reduced Transportation Costs)
• Variety Demand (Diversification)
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