strategic

1.

INTERNATIONAL

STRATEGIC MANAGEMENT

MODULE1

INTRODUCTION & COURSE REVIEW

CONCEPT OF STRATEGY

5. 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) 6. STRATEGY

GREEK WORDSTRATEGIA Science of guiding & Directing

COMPLEX PROCESSOF DETERMININGLONG 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 THROUGHA 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 costrelative to your competitor, on a continuing basis.

7. 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

8. 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

9. STRATEGICMANAGEMENT

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 & Functionalimplementation And Operationalising strategies Performing Strategic Evaluation, Exercising StrategicControl and Reformulating Strategies 10. STRATEGIC MANAGEMENT ENVIRONMENT SCANNING STRATEGY FORMATION STRATEGY IMPLEMENTATION EVALUATION & CONTROL

EXTERNAL

SOCIETAL

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 Costof programs PROCEDURE Sequence of steps needed to do the job PERFORMANCE Actual results FEEDBACK / LEARNING 11. NATURE OFINTERNATIONAL STRATEGIC MANAGEMENT 3 12. 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 13. GLOBAL STRATEGY THE CENTRE SUBSIDIARY S6 SUBSIDIARY S5 SUBSIDIARY S1 SUBSIDIARY S2 SUBSIDIARY S3 SUBSIDIARY S4 14. 4

LEVELS OF STRATEGY

EVOLUTION

15. HIERARCHY OF STRATEGY CORPORATE STRATEGY BUSINESS STRATEGY FUNCTIONALSTRATEGY 16. STRATEGYAT DIFFERENT LEVELS CORPORATE STRATEGY PURPOSE OR MISSION SHAREHOLDER VALUE ? STAKEHOLDER INTEREST? ASPIRATIONAL ? MEANS : . GOOD PARENTING . SELECT PORTFOLIO . GUARD REPUTATION COMPETITIVE STRATEGY ATTAIN SUSTAINABLE COMPETITIVE ADVANTAGE BY: . LEVERAGING RESOURSES . DEVELOPING CAPABILITIES AND . COMPETING ON COST,OR DIFFERENTIATING OR OCCUPYING A NICHE OPERATIONALFUNCTIONAL LEVELSTRATEGY HR,FINANCE,PRODUCTN MARKETING,QUALITY Etc. Functional Level Managers are responsible for: developing annual objectives & short term implementationPlans. 17. 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 growthby 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

STRATEGIC MANAGEMENT PROCESS

19. STRATEGICMANAGEMENT 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 20.

MODULE2

21. TYPICAL VALUE CHAINOF A MANUFACTURED PRODUCT RAW MATERIAL PRIMARY MANUF. FABRICATION PRODUCTPRODUCER DISTRIBUTOR RETAILER 6 22. 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 TECHNOLOGYDEVELOPMENT ( R&D,Process & Product Development0 PROCUREMENT (Purchasing of Raw Materials, Machines,Supplies) 23. 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 andmarketing 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 competitors 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. )

24. CORPORATE VALUE CHAIN

Framework for identifying competitive advantage

Differences among competitors 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

FIRMS 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

EXTERNAL ENVIRONMENT

26. COMPANY AND ENVIRONMENT MEN MACHINE MATERIAL METHODS MONEY INPUTS PROCESSES OUTPUTS ENVIRONMENT ENVIRONMENT ACTIVITIES OPERATIONS PLANNING MANUFACTURING INSPECTION PACKING GOODS SERVICES SALES PROFITS OBJECTIVES GOALS TARGETS FEEDBACK CORRECTIVE ACTION 27. PEST FACTORS POLITICAL TECHNOLOGICAL ECONOMIC SOCIAL 28. PESTLEMATRIX ECONOMIC REGULATORY BODIESGOVT. POLICIES GOVT. TERM & CHANGE ECONOMY SITUATION & TRENDS TAXATION INTEREST & EXCHANGE RATES MARKET & TRADE CYCLE POLITICAL CURRENT/FUTURE LEGISLATION SOCIAL LIFESTYLE TRENDS DEMOGAPHICS COMPANY ATTITUDES & OPINIONS BRAND,COMPANY ,TECHNOLOGYIMAGE CONSUMER BUYING PATTERNS ETHNIC/RELIGIOUSFACTORS TECHNOLOGICAL TECHNOLOGY ACCESS,LICENSING,PATENTS MATURITY OF TECHNOLOGY REPLACEMENT TECHNOLOGY / SOLUTIONS INNOVATION POTENTIAL MANUFACTURING MATURITY & CAPACITY LEGAL INTERNATIONAL LAW EMPLOYMENT LAW COMPETITIOM LAW HEALTH & SAFETY LAW REGIONAL LEGISLATION ENVIRONMENTAL ENVIRONMENTAL IMPACT ENVIRONMENTAL LEGISLATION ENERGY CONSUMPTION WASTE DISPOSAL 29. CONSTITUENTS OF MICRO ENVIRONMENT MICROENVIRONMENT FINANCIAL INSTITUTIONS SUPPLIERS MARKETING INTERMEDIARIES COMPETITION REGULATORY PROVISIONS IR CLIMATE E- COMMERCE SKILL LEVELOF WORKFORCE MARKETS TYPES & DEMANDS 30. ENVIRONMENTAL CHANGES WHICH 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 :FASTERCOMMUNICATION, INTERNET, E-GOVERNANCE &E-COMMERCE etc )

31. 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 MOREECONOMICALLY

( 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. )

INTERNAL ENVIRONMENT

33. A SWOT CHECKLIST INTERNAL STRENGTHS : MANY PRODUCT LINES? BROAD MARKET COVERAGE? MANUFACTURING COMPETENCE? GOOD MARKETING SKILLS? GOOD INVENTORY MANAGEMENT? R&D? INFORMATION SYSTEM? GOOD HUMAN RESOURCES? BRAND EQUITY? COST ADVANTAGE? APPROPRIATE ORG. STRUCTURE? APPROPRIATE CONTROL SYSTEMS? ABILITY TO MANAGE STRAT. CHANGE Etc INTERNAL WEAKNESSES : NARROW PRODUCT LINES? RISING MANUFACTURING COST? POOR MARKETING PLAN? POOR MATERIAL MANAGEMENT? INADEQUATE HUMAN RESOURCES LOSS OF BRAND NAME?LACK OF CORPORATE DIRECTION? LACK OF CORPORATE CONTROL POOR FINANCIAL MANAGEMENT INAPPROPRIATE ORG. STRUCTURE & CONTROL SYSTEMS HIGH CONFLICTS, POLITICS?Etc 34. SWOT CHECKLIST POTENTIAL ENV. OPPORTUNITIES . .NEW MARKETA/BUSINESSES? . COST OF DIFFERENTIATION ADV? . PROFITABLE NEW ACQUISITIONS? . BRAND NAME CAPITAL IN NEWAREAS . R&D SKILLS IN NEW AREAS . VERTICAL INTEGRATION-( FORWARD/BACKWARD) . DIVERSIFICATION .OTHERS? POTENTIAL ENV. THREATS .ATTACK ON COREBUSINESSES? . INCREASE IN DOMESTIC/ FOREIGNCOMPETITION? . CHANGE IN CUSTOMERTASTE . BARRIERS TO ENTRY . NEW OR SUBSTITUTEPRODUCTS . INDUSTRY COMPETITION . SLOWDOWN IN ECONOMY . TAKEOVERS . LOWER MARKET GROWTH RATE . OTHERS? 35. MACKENZIES7S MODEL STRATEGY SKILLS STRUCTURE SHARED VISION STAFF SYSTEMS STYLE 36.

MODULE3

VISION,MISSION

BUSINESS DEFINITION

37. 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.

38. 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.

39. VISION

Futureaspirationsthat lead to aninspiration

Basic & at the top of hierarchy of strategic intents

Aspirations expressed as strategic intent should lead to

an end.

Thisis 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.

40. 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.

41. ENVISIONING PROCESS

A Well conceived visionhas2 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.

42. WHAT A VISION SHOULD AND SHOULDNT 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 statementor an advertising slogan

A strategy/view from top

A history of proud past

A soft business issue

Passionless

43. A FEW VISION STATEMENTS

VISION 2001 0F BHEL

A world-class , innovative , competitive and profitable

Engineeringenterprise providing total business solutions.

VISION OF CANARA BANK

To emerge as the best bank in customerservice,

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

44. MISSION

It is purpose / reason behind existence of any organization

Derived from VISION and reflects thecorporations 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

MOTIVATING

DISTINCTIVE

INDICATES MAJOR COMPONENTS OF STRATEGY

INDICATES HOW OBJECTIVES ARE TO BE ACHIEVED

HOW MISSION STATEMENTS ARE FRMULATED

D erived 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

45. FEW MISSION STATEMENTS

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 pharmacompany

To keep the common man in sharper focus to encourage

savings and investment habits among them.

46. BUSINESS DEFINITION

Defined along 3 parameters

CUSTOMER GROUPS :WHOis being satisfied

CUSTOMER FUNCTIONS :WHATis being satisfied

ALTERNATIVE TECHNOLOGIES :HOWthe 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 companys 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 stakeholderof the firm.

47. 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.

48. GOALS & OBJECTIVES

GOALS :

What an org. hopes to achieve/accomplishin a future period of time. Represent future state or outcome of an effort put in now.

OBJECTIVES:

Ends that tell how goals shallbe achieved

Define orgs relationship with Environment;

Help orgto achieve VISION & MISSION;

Provide basis for Strategic Decision making;

Provides standards for performance appraisals,

OBJECTIVES:GOALS

- Concrete & specificGeneralized

Make goals operational

-Quantitative, measurableQualitative

&comparable

- Short TermLong Term( Org. translates its purpose

into long term goals )

49. 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 mustcorrelatewith each other

Should beset within constraints

Shouldcover 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.

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..

50. MODULE4 51. TOTAL GLOBAL STRATEGY CORE BUSINESS STRATEGY

DEVELOP CORE

BUSINESS STRATEGY

2. INTERNATIONALISE THE STRATEGY

3. GLOBALISE THE

STRATEGY

C O U N T R Y A C O U N T R Y B C O U N T R Y C C O U N T R Y D C O U N T R Y E 52. INTERNATIONAL STRATEGIES PRESSURES FOR COST REDUCTION PRESSURES FOR LOCAL RESPONSIVENESS GLOBAL STRATEGY ( OFFERING STANDARDISED PRODUCTS / SERVICES) TRANSNATIONAL STRATEGY (LOCATED IN A DEVELOPEDCOUNTRY) MULTIDOMESTIC STRATEGY ( SUITING TO NATIONAL CONDITIONS ) INTERNATIONAL STRATEGY (UNDER DEVELOPED COUNTRIESWHERE PRODUCT/SERVICES NOT AVAILABLE ) 53. INDUSTRY GLOBALISATION POTENTIAL INDUSTRY GLOBALISATION POTENTIAL MARKET DRIVERS COMPETITIVEDRIVERS COST DRIVERS GOVERNMENT DRIVERS 54. THE GLOBALISATION TRIANGLE BENEFITS& COSTS OF GLOBALISATION GLOBAL STRATEGY LEVERS INDUSTRY GLOBALISATION DRIVERS GLOBALORGANISATION DRIVERS 55. AFRAMEWORK OF GLOBAL STRATEGY GLOBAL STRATEGY LEVERS GLOBAL MARKET PARTICIPATION GLOBAL PRODUCTS GLOBAL LOCATION GLOBAL MARKETING GLOBAL COMPETITIVE MOVES I BENEFITS / COSTS OF GLOBAL STRATEGY INDUSTRY GLOBALISATION DRIVERS MARKET COST GOVT COMPETITIVE GLOBAL ORGANISATION DRIVERS PARENT ORGSABILITY ( POSITION & RESOURCES) TO IMPLEMENT A GLOBAL STRATEGY ) 56. 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 TOWORLDWIDE ( VS DOMESTIC ) EMPLOYMENT . INTERDEPENDENCE VSAUTONOMY OF BUSINESSES .USE OF FOREIGN NATIONALS .MULTICOUNTRY CAREERS .FREQUENT TRVEL .STATEMENTS & ACTIONSOF 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 ) 57. MARKETGLOBALISATIONDRIVERS

COMMON CUSTOMER NEED PER CAPITA INCOME CONVERGING AMONG INDUSTRIALISED NATIONS & CONVERGENCE OFLIFE STYLES & TASTES

INCREASED TRAVEL CREATINGGLOBAL CUSTOMERS

GROWTH OFGLOBAL & REGIONAL CHANNELS

TRANSFERABLE MARKETING PUSH TO DEVELOP GLOBAL ADVERTISING & ESTABLISHMENT OF WORLD BRANDS

LEAD COUNTRIES

58. COSTGLOBALISATION DRIVERS

GLOBALSCALEECONOMIES CONTINUING PUSH FOR ECONOMIES OF SCALE

STEEPEXPERIENCE CURVEEFFECT

SOURCINGEFFICIENCIES

FAVOURABLELOGISTICS

DIFFERENCESINCOUNTRY COSTS-WRT TRANSPORTATION,LABOUR & RAW MATERIAL Etc.

HIGH PRODUCT DEVELOPMENTCOST

FAST CHANGING TECHNOLOGY

59. GOVRNMENT GLOBALISATION DRIVERS

FAVOURABLE TRADE POLICIES

COMPATIBLE TECHNICAL STANDARDS

COMMON MARKETING REGULATIONS

GOVT. OWNED COMPETITORS AND CUSTOMERS

HOST GOVTS CONCERNS

REDUCTION IN TARRIF & NON TARRIF BARRIERS

DECLINE IN ROLE OF GOVTS AS PRODUCER & CONSUMERS ieENCOURAGING PRIVATISATION

SHIFT TO OPEN MARKET ECONOMIES

60. COMPETITIVE GLOBALISATION DRIVERS

HIGH EXPORTS AND IMPORTS CONTINUOUS INCREASE IN THE LEVEL OF WORLD TRADE

COMPETITORS FROM DIFFERENT CONTINENTS

MORE COUNTRIES BECOMINGKEY 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

61. 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 )

62. GLOBAL STRATEGY LEVERS

MARKETPARTICIPATION

( CHOICE OF COUNTRY MARKET IN WHICH TO CONDUCT BUSINESSAND 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 )

63. TYPE OF CUSTOMERS GLOBAL CUSTOMER FOREIGN CUSTOMER INTERNATIONAL CUSTOMER FREE LOCAL CUSTOMER CONTROLLED LOCAL CUSTOMER BUY IN FOREIGNMARKRTSFROM FOREIGNSUPPLIER BUY IN DOMESTIC MARKET FROM FOREIGN SUPPLIER BUY IN DOMESTICMARKETS FROM DOMESTIC SUPPLIER NO HQ INVOLVEMENT HQ RECOMMENDS STANDARDS? PRODUCTS HQ MANDATES STANDARDS/ PRODUCTS HQ DOES THE PURCHASING INCREASIBGGLOBALISATION OF PURCHASING I N C R E A S I N G I N T E R N A T I O N A L I S A T I O N 64. BUSINESS GROWTH / COMPETITIVE SRENGTHMATRIX WILDCATCOUNTRIES DOG COUNTRIES CASH COW COUNTRIES HI LO LO HI COMPETITIVE STRENGTH OF BUSINESS IN COUNTRY GROWTH POTENTIAL OF BUSINESS IN COUNTRY STAR COUNTRIES 65. 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 WHOLLYOWNED LOW HIGH HIGH CONTROL PERCEIVED RISK LOW 66. PROBLEMS INGLOBAL 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 dont 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 ofFinance, HR, Operations, MM & Marketing plans

Operating modes of multinational firm abroad has to be dynamic

to cope up with changing situations.

67. PROBLEMS INGLOBAL 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,

TUs, Consumer groups, impose restrictions on International trade.

Non availability or less reliability of the information about

various aspects of environment of potential host countries.

68. GLOBALISATION

Concerned with degree of standardization of products and practices

plus high level of co-ordination and integration of activities in the companys 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 , Its 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 whichenterprises become interdependent and interlinked globally.

69. 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 globalizedeconomy.

Transition frommultinational to global competitiveness

MODULE5

71. PORTERS MODEL

BARGAINING

POTENTIAL ENTRANTS

Economies of scale

Absolute cost advantage

Switching cost

Access to distribution

Govt. policy

SUBSTITUTES

Functional similarity

Price/Performance

Product identity

BUYERS

Buyers 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 72. ETOP ( ENVIRONMENTAL THREAT & OPPORTUNITY PROFILE 0 ENVIRONMENTALSECTOR MARKET TECHNOLOGICAL SUPPLIER ECONOMIC REGULATORY POLITICO LEGA SOCIO CULTURAL INTERNATIONAL NATUREOF IMPACT IMPACT OF EACH SECTOR 73. SAP( STRATEGIC ADVANTAGE PROFILE ) CAPABILITY FACTOR NATURE OF IMPACT IMPACT OF EACH FACTOR 1 2 3 4 5 6 FINANCE MARKETING 0PERATIONSP PERSONNEL INFORMATION GENERAL MANAGEMENT 74. CONSOLIDATEDSWOT PROFILE ENVIRONMENTAL FACTOR MARKET TECHNOLOGICAL SUPPLIAR ECONOMIC REGULATORY POLITICAL SOCIO CULTURAL INTERNATIONAL NATURE OF IMPACT STRATEGIC ADVANTAGE FACTOR FINANCE MARKETING OPERATIONS PERSONNEL INFORMATIONMANAGEMENT GENERAL MANAGEMENT NATURE OF IMPACT 75. SWOTMATRIX and STRATEGIES OPPRTUNITIES THREATS WEAKNESSES STREGTHS QUADRANT 2 TURNAROUND STRATEGY QUADERANT 1 AGGRESSIVESTRATEGY QUADERANT 4 DEFENSIVESTRATEGY QUADERANT 3 DIVERSIFICATIONSTRATEGY 76. OPPORTUNITY MATRIX HIGHATTRACTIONS MODERATEATTRACTIONS HIGH LOW HIGH LOW Impact of Opportunities Occurrence MODERATE ATTRACTIONS LOWATTRACTIONS 77. THREAT MATRIX HIGH LOW HIGH LOW OCCURENCE IMPACT OF THREATS MAJOR THREATS MODERATE THREATSMODERATE THREATS MINOR THREATS 78. TOWs MATRIX ETOP SAP OW TS Takeadvantage of(Opportunities by overcomingWeaknesses) (Use strengths to takeadvantage Ofopportunities) (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 W S O OS T TW Defensive Strategies ( To minimize weaknesses & avoid Threats ) 79. 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 80. GE9 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 G G G Y R R R 81. HOFERS MODEL 82. STRICKLANDS GRAND STRATEGY SELECTION MATRIX 83.

MODULE6

84. 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 offsetto 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.

Competitors imitate cost reduction quickly,Not a market friendly approach if customers interest is ignored Low cost leadership doesnt always work;

DIFFERENTIATION :

Providing unique characteristics/special featuresto 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 customers 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

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

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

Demographiccharacteristics ( Age, gender, income, occupation )

Geographicsegmentation(Rural/urban, Northern/sourthern0 0

Life style ( Traditional / Modern }

Firms seeking to adoptFocus 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 its difficult to move on to other market segment, higher costs may cause customers to move low price products cost leaders.

87. GRAND STRATEGIES

Basicframework 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.

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 , Increaseproductivity wrt external factors like: Economic recession, Govts attitude, Industry downturn and competitive pressuresfor sustaining profitability by whatever means till situation improves.

PAUSE/ PROCEED WITH CAUTION: Consolidation before a firm goes for expansion.

EXPANSION STRATEGIES Most 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 1 stlevel 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

90. 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 firmsto 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.

strategic

Business

postures strategy strategy

global strategy

strategic evaluation

strategic management

word corporate strategy

strategies plan

goals objectives

effective planning