INTERNATIONAL

STRATEGIC
MANAGEMENT

Author- Himanshu Sisodia

 BUSINESS POLICY

MAJOR POLICY
Lines of business
( Code of ethics )
SECONDRY POLICIES
( Selection of geographical area,
major customers, major products )
FUNCTIONAL POLICIES
( Marketing, Production, Research, Finance
Material & Quality management etc. )

PROCEDURE AND STANDARD OPERATING PLAN

( Handling incoming orders, servicing customer complaints,
Shipping to foreign countries )
RULES
( Delivery of pay cheques ,loitering around plant, security
Smoking, use of company car etc)
 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
• 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
• 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
ESTABLISHMENT OF VISION & MISSION statements, Business Definition
STRAT. INTENTS Adopting Business Model, Setting Goals & Objectives

FORMULATION of
Conducting SWOT, Formulating CORPORATE &
STATEGIES BUSINESS LEVEL Strategies, Strategic Analysis
Strategic Choice, Strategic Plan.

IMPLEMENTATION
Activating Strategies, Designing Structure, Systems&
OFSTRATEGIES
Processes, Behavioral & Functional implementation
And Operationalising strategies

REVIEW,EVALUATION
CONTROL Performing Strategic Evaluation, Exercising Strategic
Control and Reformulating Strategies
 STRATEGIC MANAGEMENT
ENVIRONMENT STRATEGY STRATEGY EVALUATION
SCANNING FORMATION IMPLEMENTATION & CONTROL
MISSION
(Reason for existence)
EXTERNAL
SOCIETAL OBJECTIVES
(What results to
TASK
accomplish & by
ENVIRONMETAL when )

STRATEGIES
INTERNAL (Plan to achieve
Mission & Objectives)
STRENGTS
POLICIES PROGRMS
WEAKNESSES Activities needed
(Broad guidelines
• structure for decision To accomplish plans

•Culture ( Beliefs, Making)

BUDGETS
xpectations,Values ) Cost of
• Resourses, Skills, programs

ompetencies,Knowledge PROCEDURE PERFORMANCE

Sequence of Actual results
steps needed
to do the job

FEEDBACK / LEARNING
 NATURE OF
INTERNATIONAL STRATEGIC MANAGEMENT
 SINGLE COUNTRY, EXPORT & INTERNATIONAL
STRATEGY

FIRM A
OPERATES
FIRM A OPERATES IN COUNTRY X Y
IN COUNTRY X

EXPORT TO COUNTRY Y
SINGLE COUNTRY STRATEGY EXPORT STRATEGY

SUBSIDIARY SUBSIDIARY
S1 S3

THE CENTRE
SUBSIDIARY
SUBSIDIARY
S2
S4
INTERNATIONAL STRATEGY
 GLOBAL STRATEGY

SUBSIDIARY SUBSIDIARY
S1 S2

SUBSIDIARY SUBSIDIARY
S6 THE CENTRE
S3

SUBSIDIARY
SUBSIDIARY
S4
S5
LEVELS OF STRATEGY
&
EVOLUTION
OF
STRATEGIC MANAGEMENT
HIERARCHY OF STRATEGY

CORPORATE STRATEGY

BUSINESS STRATEGY

FUNCTIONAL
STRATEGY
 STRATEGY AT DIFFERENT LEVELS
CORPORATE STRATEGY COMPETITIVE STRATEGY OPERATIONAL

PURPOSE OR MISSION ATTAIN SUSTAINABLE FUNCTIONAL

SHAREHOLDER VALUE ? COMPETITIVE ADVANTAGE BY: LEVELSTRATEGY
STAKEHOLDER INTEREST? HR,FINANCE,PRODUCTN
ASPIRATIONAL ? . LEVERAGING RESOURSES MARKETING,QUALITY
. DEVELOPING CAPABILITIES Etc.
MEANS : AND
. COMPETING ON COST,OR Functional Level Managers
. GOOD PARENTING DIFFERENTIATING OR are responsible for:
. SELECT PORTFOLIO OCCUPYING A NICHE developing annual objectives
. GUARD REPUTATION & short term implementation
Plans.
 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
STRATEGIC MANAGEMENT
PROCESS
 STRATEGIC MANAGEMENT PROCESS
IV
INTERNAL’
ANALYSIS
.STENGTHS
.WEAKNESSES

I II III V VI VII VIII

I
ORG. REVIEW
ORG. REVIEW SELECTION GENERATION
. MISSION CURRENT BOARD OF OF & IMPLEMENT
. OBJECTIVES PERFORM STRATEGIC REDEFINE EVALUATION BEST
DIRECTORS
.STRATEGIES - ANCE. FACTORS . MISSION OF
. POLICIES
& .OBJECTIVES STRATEGIC ALTERNATIVE
TOP. MGMT
ALTERNATIVES

IV REWORK AS
EXT. ENV. NEEDED
ANALYSIS IX
. OPP. MONITORING
. THREATS
 TYPICAL VALUE CHAIN
OF A MANUFACTURED PRODUCT

RAW PRIMARY PRODUCT

FABRICATION DISTRIBUTOR RETAILER
MATERIAL MANUF. PRODUCER
 A CORPORATE VALUE CHAIN

FIRM INFRASTRUCTURE
( Gen.Mgmt,Accounting,Finance, Plg)

SUPPORT HUMAN RESOURCE DEVELOPMENT

( Recruitment, Training, development ) PROFIT
ACTIVITIES
MARGIN
TECHNOLOGY DEVELOPMENT
( R&D,Process & Product Development0

PROCUREMENT
( Purchasing of Raw Materials, Machines, Supplies)
INBOUND OPERATIONS OUTBOUND MARKETING SERVICES
LOGISTICS ( Machining, LOGISTICS & SALES ( Installation,
(RAW MAT) ( Assembly, ( Distribution ) ( Advt. Prom Repair )
Testing ) - otion )
PRIMARY ACTIVITIES
 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
• 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
1. INBOUND LOGISTICS: Raw mat. Handling and warehousing
2. OPERATIONS: Product manufacturing ( Machining, Assembly & Testing)
3. OUTBOUND LOGISTICS: Warehousing & Distribution
4. MARKETING & SALES: Advertising, Promotion etc..
5. SERVICE: Installation, Repairs & After sale service

SUPPORT ACTIVITIES
6 FIRM’S INFRASTRUCTURE
7 HUMAN RESOURCE DEVELOPMENT
8 TECHNOLOGY DEVELOPMENT: R&D , Product & Process development
9 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
COMPANY AND ENVIRONMENT
ENVIRONMENT

INPUTS PROCESSES OUTPUTS

ACTIVITIES
MEN OPERATIONS GOODS
MACHINE PLANNING SERVICES
MATERIAL MANUFACTURING SALES
METHODS INSPECTION PROFITS
MONEY PACKING

OBJECTIVES
GOALS
CORRECTIVE TARGETS FEEDBACK
ACTION

ENVIRONMENT
 PEST FACTORS

POLITICAL TECHNOLOGICAL

ECONOMIC SOCIAL
 PESTLE MATRIX
POLITICAL
ECONOMIC
CURRENT/FUTURE LEGISLATION
ECONOMY SITUATION & TRENDS
REGULATORY BODIES
TAXATION
GOVT. POLICIES
INTEREST & EXCHANGE RATES
GOVT. TERM & CHANGE
MARKET & TRADE CYCLE

SOCIAL TECHNOLOGICAL
LIFESTYLE TRENDS TECHNOLOGY ACCESS,LICENSING,PATENTS
DEMOGAPHICS MATURITY OF TECHNOLOGY
COMPANY ATTITUDES & OPINIONS REPLACEMENT TECHNOLOGY / SOLUTIONS
BRAND,COMPANY ,TECHNOLOGYIMAGE INNOVATION POTENTIAL
CONSUMER BUYING PATTERNS MANUFACTURING MATURITY & CAPACITY
ETHNIC/RELIGIOUS FACTORS

LEGAL ENVIRONMENTAL
INTERNATIONAL LAW ENVIRONMENTAL IMPACT
EMPLOYMENT LAW ENVIRONMENTAL LEGISLATION
COMPETITIOM LAW ENERGY CONSUMPTION
HEALTH & SAFETY LAW WASTE DISPOSAL
REGIONAL LEGISLATION
CONSTITUENTS OF MICRO ENVIRONMENT

MARKETS
MARKETING TYPES & COMPETITION
INTERMEDIARIES DEMANDS

E- COMMERCE
SUPPLIERS

MICROENVIRONMENT

SKILL LEVEL
FINANCIAL OF WORKFORCE
INSTITUTIONS

REGULATORY
IR CLIMATE
PROVISIONS
 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 : FASTER COMMUNICATION,
INTERNET, E-GOVERNANCE & E-COMMERCE etc )
 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. )
INTERNAL ENVIRONMENT
 A SWOT CHECKLIST
INTERNAL STRENGTHS: INTERNAL WEAKNESSES:
MANY PRODUCT LINES? NARROW PRODUCT LINES?
BROAD MARKET COVERAGE? RISING MANUFACTURING COST?
MANUFACTURING COMPETENCE?
GOOD MARKETING SKILLS? POOR MARKETING PLAN?
GOOD INVENTORY MANAGEMENT? POOR MATERIAL MANAGEMENT?
R&D? INADEQUATE HUMAN RESOURCES
INFORMATION SYSTEM?
GOOD HUMAN RESOURCES?
LOSS OF BRAND NAME?LACK OF
BRAND EQUITY? CORPORATE DIRECTION?
COST ADVANTAGE? LACK OF CORPORATE CONTROL
APPROPRIATE ORG. STRUCTURE? POOR FINANCIAL MANAGEMENT
APPROPRIATE CONTROL SYSTEMS? INAPPROPRIATE ORG. STRUCTURE
ABILITY TO MANAGE STRAT. CHANGE
& CONTROL SYSTEMS
Etc
HIGH CONFLICTS, POLITICS? Etc
 SWOT CHECKLIST
POTENTIAL ENV. OPPORTUNITIES POTENTIAL ENV. THREATS
. . ATTACK ON CORE BUSINESSES?
. NEW MARKETA/BUSINESSES? . INCREASE IN DOMESTIC/
. COST OF DIFFERENTIATION ADV? FOREIGN COMPETITION?
. PROFITABLE NEW ACQUISITIONS? . CHANGE IN CUSTOMER
TASTE
. BRAND NAME CAPITAL IN NEW
. BARRIERS TO ENTRY
AREAS . NEW OR SUBSTITUTE
. R&D SKILLS IN NEW AREAS PRODUCTS
. VERTICAL INTEGRATION- . INDUSTRY COMPETITION
( FORWARD/BACKWARD) . SLOWDOWN IN ECONOMY
. DIVERSIFICATION . TAKEOVERS
. OTHERS? . LOWER MARKET GROWTH
RATE
. OTHERS?
MACKENZIE’S 7S MODEL

STRUCTURE

STRATEGY SYSTEMS

SHARED
VISION

SKILLS STYLE

STAFF
 VISION, MISSION
&
BUSINESS DEFINITION
 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
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

• 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
• 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

A Well conceived vision has 2 major components

1. Core Ideology : Defines enduring character of an

organization that remains unchangeable . It rests on
core values & core purposes.

2. 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
• 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
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
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
• 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
• 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 . It 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
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:
• 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
• 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..
 TOTAL GLOBAL STRATEGY
1. DEVELOP CORE
BUSINESS STRATEGY CORE BUSINESS STRATEGY

2. INTERNATIONALISE
THE STRATEGY

C C C C C
O O O O O
U U U U U
N N N N N
3. GLOBALISE THE T T T T T
STRATEGY R R R R R
Y Y Y Y Y

A B C D E
 INTERNATIONAL STRATEGIES

GLOBAL TRANSNATIONAL
PRESSURES STRATEGY STRATEGY
FOR
COST REDUCTION ( OFFERING STANDARDISED (LOCATED IN A
PRODUCTS / SERVICES) DEVELOPED COUNTRY)

INTERNATIONAL MULTIDOMESTIC
STRATEGY STRATEGY

(UNDER DEVELOPED ( SUITING TO NATIONAL

COUNTRIES WHERE CONDITIONS )
PRODUCT/SERVICES
NOT AVAILABLE )

PRESSURES FOR LOCAL RESPONSIVENESS

INDUSTRY GLOBALISATION POTENTIAL
MARKET DRIVERS

INDUSTRY
COST GLOBALISATION
GOVERNMENT
DRIVERS POTENTIAL
DRIVERS

COMPETITIVE DRIVERS
 THE GLOBALISATION TRIANGLE
GLOBAL STRATEGY LEVERS

BENEFITS & COSTS

OF
GLOBALISATION

INDUSTRY GLOBAL
GLOBALISATION ORGANISATION
DRIVERS DRIVERS
 A FRAMEWORK OF GLOBAL STRATEGY
INDUSTRY
GLOBALISATION
DRIVERS
I
MARKET GLOBAL STRATEGY LEVERS
COST
GOVT BENEFITS /
COMPETITIVE GLOBAL MARKET PARTICIPATION
GLOBAL PRODUCTS COSTS
GLOBAL LOCATION OF
GLOBAL MARKETING GLOBAL
GLOBAL COMPETITIVE MOVES STRATEGY
GLOBAL
ORGANISATION
DRIVERS

PARENT ORG’S ABILITY

( POSITION & RESOURCES)
TO IMPLEMENT A GLOBAL
STRATEGY )
 MANAGEMENT AND ORGANISATION FACTORS
AFFECTING GLOBAL STRATEGY
(GLOBAL ORGANISATION DRIVERS )

ORGANISATION . CENTRALISED GLOBAL AUTHORITY

. INTERNATIONAL DIVISION
STRUCTURE . STRONG BUSINESS DIVISION
( REPORTING
. GLOBAL MIS RELATIONSHIPS
. GLOBAL STRATEGIC PLANNING )
. GLOBAL BUDGETING
. CROSS COUNTRY COORDINATION

ABILITY TO DEVELOP
MANAGEMENT AND IMPLEMENT CULTURE
PROCESSES GLOBAL STRATEGY ( VALUES & RULES
( PLG,BUDGETING & THAT
INFORMATION SYSTEMS ) GUIDE BEHAVIOUR )
. GLOBAL IDENTITY
. COMMITMENT TO WORLDWIDE
( VS DOMESTIC ) EMPLOYMENT
. INTERDEPENDENCE VS
.USE OF FOREIGN NATIONALS
AUTONOMY OF BUSINESSES
.MULTICOUNTRY CAREERS
.FREQUENT TRVEL
PEOPLE
( HUMAN RESOURCES OF
.STATEMENTS & ACTIONS OF
WORLDWIDE BUSINESS )
LEADERS
 MARKET
GLOBALISATION DRIVERS
• COMMON CUSTOMER NEED –PER CAPITA INCOME
CONVERGING AMONG INDUSTRIALISED NATIONS & CONVERGENCE OF
LIFE STYLES & TASTES
• GLOBAL CUSTOMERS
INCREASED TRAVEL CREATING
• GROWTH OF GLOBAL & REGIONAL CHANNELS
• TRANSFERABLE MARKETING – PUSH TO DEVELOP GLOBAL
ADVERTISING & ESTABLISHMENT OF WORLD BRANDS
• LEAD COUNTRIES
 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
 GOVRNMENT
GLOBALISATION 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
 COMPETITIVE
GLOBALISATION 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
• 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
• 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 )
I
N
C

TYPE OF CUSTOMERS
R
E
A
S
I
N
G BUY IN
FOREIGN FOREIGN
I MARKRTS
N FROM
CUSTOMER
T FOREIGN
E SUPPLIER
R GLOBAL CUSTOMER
N BUY IN
A DOMESTIC
INTERNATIO
T MARKET NAL
I FROM CUSTOMER
O FOREIGN
N SUPPLIER
A
L BUY IN
I FREE CONTROLL
DOMESTIC ED
S MARKETS LOCAL
A CUSTOMER LOCAL
FROM
T DOMESTIC CUSTOMER
I SUPPLIER
O HQ DOES THE
N NO HQ HQ RECOMMENDS HQ MANDATES
INVOLVEME STANDARDS? STANDARDS/ PURCHASING
NT PRODUCTS PRODUCTS

INCREASIBG GLOBALISATION OF
PURCHASING
BUSINESS GROWTH / COMPETITIVE SRENGTH
MATRIX

STAR
HI WILDCAT
COUNTRIES
GROWTH
COUNTRIES
POTENTIAL
OF
BUSINESS
IN
COUNTRY

LO
DOG CASH COW
COUNTRIES COUNTRIES

LO HI
COMPETITIVE STRENGTH OF BUSINESS IN COUNTRY
 MODES OF ENTRY

HIGH 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,
PERCEIVED in return for some form of payment)
RISK FRANCHISING
(Right to use a business format,
usually Brand Name- exchange
programme )
INTERNATIONAL JOINT
VENTURE
WHOLLY
OWNED
LOW

HIGH
LOW

CONTROL
 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
• 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
• 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
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
 PORTER’S MODEL
POTENTIAL ENTRANTS
•Economies of scale OTHER
•Absolute cost STAKEHOLDERS
advantage (RELATIVE POWER OF
•Switching cost UNIONS, GOVT)
•Access to distribution
•Govt. policy
THREAT OF NEW ENTRANTS

SUPPLIERS BARGAINING BARGAINING BUYERS

•Supp.concentration POWER OF COMPETITIVE POWER OF •Buyer’s concentration
•No. of buyers RIVALARY •No of suppliers
SUPPLIERS ( INDUSTRY BUYERS
•Switching cost
COMPETITORS )
•Switching cost
•Substitute raw mat. •Substitute products
•Threat of forward •Threat of backward
integration THREAT OF SUBSTITUTE PRODUCTS
Integration
SUBSTITUTES
•Functional similarity
•Price/Performance
trend
•Product identity
 ETOP
( ENVIRONMENTAL THREAT & OPPORTUNITY PROFILE 0

ENVIRONMENTAL NATURE IMPACT OF EACH SECTOR

SECTOR OF IMPACT

MARKET

TECHNOLOGICAL

SUPPLIER

ECONOMIC

REGULATORY

POLITICO – LEGA

SOCIO – CULTURAL

INTERNATIONAL
 SAP
( STRATEGIC ADVANTAGE PROFILE )
CAPABILITY NATURE IMPACT OF EACH FACTOR
FACTOR OF
IMPACT
1 FINANCE
2 MARKETING
3 0PERATIONSP
4 PERSONNEL
5 INFORMATION
6 GENERAL
MANAGEMENT
 CONSOLIDATED SWOT PROFILE
ENVIRONMENTAL NATURE OF STRATEGIC NATURE OF
FACTOR IMPACT ADVANTAGE FACTOR IMPACT
MARKET

TECHNOLOGICAL FINANCE

SUPPLIAR MARKETING

ECONOMIC OPERATIONS

REGULATORY PERSONNEL

POLITICAL INFORMATION MANAGEMENT

SOCIO – CULTURAL GENERAL MANAGEMENT

INTERNATIONAL
 SWOT MATRIX and STRATEGIES

OPPRTUNITIES
QUADRANT 2 QUADERANT 1

TURNAROUND AGGRESSIVE
STRATEGY STRATEGY

QUADERANT 4 QUADERANT 3

DEFENSIVE DIVERSIFICATION
STRATEGY STRATEGY
THREATS

WEAKNESSES STREGTHS
 OPPORTUNITY MATRIX

HIGH MODERATE
HIGH
ATTRACTIONS ATTRACTIONS
Impact
of
Opportunities

MODERATE LOW
LOW ATTRACTIONS ATTRACTIONS

HIGH LOW

Occurrence
 THREAT MATRIX
MAJOR MODERATE
THREATS THREATS
HIGH

IMPACT
OF
THREATS
MODERATE MINOR
LOW
THREATS THREATS

HIGH LOW

OCCURENCE
 TOW’s MATRIX

SAP 1 W 1 S
2 2
ETOP 3 3
4 4
O OW OS
1
Turnaround Strategies
2 Take advantage of Aggressive Strategies
3 (Opportunities by overcoming (Use strengths to take
4 Weaknesses) advantage Of opportunities)
T TW
1 Defensive Strategies
TS
2 Diversification strategies
3 ( To minimize weaknesses (Consider corporations
4 & avoid Threats ) strengths
To avoid threats)
 BCG GROWTH SHARE MATRIX
HIGH 20

18

16
Market STARS QUESTION MARKS
Growth 14
rate
12
10

8
6
CASH COWS DOGS
4

0 1.5 1 0.1
10 8 6 4 2 0.8 0.5
LOW Relative market share
 GE 9 CELL MATRIX
G G
QUESTION
INDUSTRY ATTRACTIVENESS

HIGH MARKS

G Y R
AVERAGE
MEDIUM
BUSINESS

PROFIT R R
PRODUCER
LOW

ZONE
GREEN G INVEST/EXPAND STRONG AVERAGE WEAK
YELLOW Y SELECT/EARN BUSINESS STREGTH / COMPETITIVE
RED R HARVEST/DIVEST POSITION
 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;
 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.
 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
• 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.
STABILITY STRATEGIES
Adopted by an organization when it attempts an incremental improvement of
functional performance.

1. NO CHANGE STRATEGY: Conscious decision to do nothing new. Continue

with present business

2 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.

2 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 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
 CHALLENGES OF LEADING AN ORGANISATION

( STRATEGIC LEADERSHIP )

• Influence the behavior of subordinates so that they work

willingly & enthusiastically towards attainment of organizational goals.
• Situational leadership as per contingency of situation.
• Tasks involved include : Anticipating, Envisioning, Empowering,
Direction. Growth & development, in addition to planning, organizing, staffing.
directing, coordinating & controlling skills
• Determining strategic direction : Core ideology & future shape
• Effectively managing organization resource portfolio ( Financial capital, organization
capital, Social capital & Human capital )
• Sustaining an effective organization culture ( OCTAPACE CULTURE )
• Charisma, vision , Drive, Desire to lead, Honesty & Integrity, Self – confidence,
intelligence, Job related knowledge , Energetic, assertive & sociable
• To lead from front and be a role -model.
• Sustaining a definite direction, growth, development & competitive advantage for
realizing its vision, goals & objectives in a global competitive environment.
• Encouraging participation, recognition and maintaining high morale of employees at
all times.
• Suitable reward & punishment system for Ethical/Unethical behavior.
Author- Himanshu Sisodia