Course Title: International Strategic Management

Course Code: EIB 516/531

Submitted to
Dr Chowdhury Saima Ferdous
Professor
Departement of International Business
Faculty of Business Studies
University of Dhaka

Submitted by

Name: Gazi Md Abu Saleh

ID No.: 801826056
Department of International Business
Faculty of Business Studies
University of Dhaka.

Submission Date: 16/06/2021

 Ans. to the question no 1

Superior Profitability: The superior profitability goes to those firms that can create superior
value by differentiating the product and/or driving down the costs so that consumers value the
product and pay a premium price; the issue is about the gap between value and Cost is the „Value
creation‟ which determines firm‟s positioning in business sector.

Competitive advantage: Competitive advantage refers to a factor which allows a company or

country to produce a product or service or particular products or services more efficiently than
competitors do.

Ans. to the question no 2

‘Industry is nothing but customer needs’ means industries are established for the fulfillments
of customer needs. We can see the differences in industries in different countries due to their
individual‟s food habit, culture, choice, religion etc. So, it can be easily understood how
customer needs plays vital roles for creating industries.

Ans. to the question no 3

Strategy: A company‟s strategy is an action plan outperforming its competitors and for gaining
superior profitability.

Differences between strategy and planning are given bellow:

Levels of Strategy Planning

comparison
Meaning 1. Best plan opted for desired 1.Planning is thinking in advance, for actions
outcome. which are going to take place.
Relation 2.Related to action 2.Related to thinking
Basis 3. Practical considerations 3. Assumptions
Term 4. Long term 4. Depending upon the circumstances
Nature 5. Competitive 5. Preventive
 Ans. to the question no 5

Business Environment is the most important aspect of any business. The forces which constitute the
business environment are its suppliers, competitors, media, government, customers, economic
conditions, investors and multiple other institutions working externally.

PESTEL Model:

A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the macro-
environmental (external marketing environment) factors that have an impact on an organization.
The result of which is used to identify threats and weaknesses which is used in a SWOT analysis.

1. Political Factors: These are all about how and to what degree a government intervenes in the
economy. This can include – government policy, political stability or instability in overseas
markets, foreign trade policy, tax policy, labor law, environmental law, trade restrictions and so
on.

2. Economic Factors: Economic factors have a significant impact on how an organization does
business and also how profitable they are. Factors include – economic growth, interest rates,
exchange rates, inflation, disposable income of consumers and businesses and so on.

3. Social Factors: Also known as socio-cultural factors, are the areas that involve the shared
belief and attitudes of the population. These factors include – population structures and growth,
age distribution, health consciousness, career attitudes and so on. These factors are of particular
interest as they have a direct effect on how marketers understand customers and what drives
them.

4. Technological Factors: We all know how fast the technological landscape changes and how
this impacts the way we market our products. Technological factors affect marketing and the
management thereof in three distinct ways: a) New ways of producing goods and services b)
New ways of distributing goods and services c) New ways of communicating with target
markets.

5. Environmental Factors: These factors have only really come to the forefront in the last
fifteen years or so. They have become important due to the increasing scarcity of raw materials,
pollution targets, doing business as an ethical and sustainable company, carbon footprint targets
set by governments (this is a good example were one factor could be classes as political and
environmental at the same time). These are just some of the issues marketers are facing within
this factor. More and more consumers are demanding that the products they buy are sourced
ethically and if possible from a sustainable source.

6. Legal factors Legal factors include - health and safety, equal opportunities, advertising
standards, consumer rights and laws, product labeling and product safety. It is clear that
companies need to know what is and what is not legal in order to trade successfully. If an
organization trades globally this becomes a very tricky area to get right as each country has its
own set of rules and regulations.

Importance of PESTEL model:

A PESTEL analysis is often used as a broad fact-finding activity. It helps an organization

establish the external factors that could impact decisions made inside the organization. An
organization on its own cannot affect these factors – nor can these factors directly affect the
profitability of an organization.

Ans. to the question no 6

External environment: External environment is an environment which is outside of the

organism, which pertains to the physical, chemical, biological and social conditions surrounding
the organism. Supplement. The external environment is used in contrast to the
internal environment of the organism.

6 questions that are helping to analyze external environment are given bellow:

I. What are the relevant external factors in the industry?

II. What is the level of competitiveness in the industry?
III. What are the industry driving forces?
IV. What are the rival‟s positions in market of industry?
V. What are the next probable moves of rivals?
VI. What are the Key success factors?
 Ans. to the question no 7

Internal environment: Internal environment is a component of the

business environment, which is composed of various elements present inside the
organization, that can affect or can be affected with, the choices, activities and decisions of
the organization.

6 questions that are helping to analyze internal environment are given bellow:

I. How well the company‟s present strategy working?

II. What are the company‟s competitively important resources and capabilities?
III. Is company able to seize market opportunity and nullify external threat?
IV. Are the company‟s cost structure and value proposition competitive?
V. Is the company competitively stronger or weaker than rivals?
VI. What strategic issues and problems merit front-burner managerial attention?

Ans. to the question no 8

Strategic factors: Key success factors are those key issues that are strategically
relevant and that will determine the success of any company in a particular industry and
at a given stage in its life cycle. The economics, technology, and socio-political setting of
the industry determine what they are.

Key success factors: Key success factors are those key elements which are required for
an organization to accomplish or exceed their desired goals. It is imperative that these
factors be given proper attention and are adhered so as to attain the desired objective.
 Ans. to the question no 9
Barriers to entry: Barriers to entry is a business term describing factors that can prevent
or impede newcomers into a market or industry sector, and so limit competition. These
can include high start-up costs, regulatory hurdles, or other obstacles that prevent new
competitors from easily entering a business sector. Barriers to entry benefit existing firms
because they protect their market share and ability to generate revenues and profits

Ans. to the question no 10

Differences between corporate level strategy and business level strategy are given
bellow:

BASIS FOR BUSINESS STRATEGY CORPORATE STRATEGY

COMPARISON
AMeaning Business Strategy is the strategy Corporate Strategy is stated in
n framed by the business the mission statement, which
managers to strengthen the explains the business type and
overall performance of the ultimate goal of the firm.
enterprise.

Created by Middle level management Top level management

Nature Executive and Governing Decisive and Legislative

Relates to Selection of plan to fulfill the Business selection in which the

objectives of organization. company should compete.

Deals with Particular business unit or Entire business organization

division

Term Short term strategy Long term strategy

Focus Competing successfully in the Maximizing profitability and

marketplace. business growth.

Approach Introverted Extroverted

Major strategies Cost Leadership, Focus and Expansion, Stability and

Differentiation Retrenchment.
 Ans. to the question no 11
A diagram of a drawn SWOT analysis is given bellow:

Opportunities

Weekness
SWOT Strength
Analysis

Threats

Ans. to the question no 12

Decisions made at corporate level: Typically, major investment and

divestment decisions are made at this level by top management. Mergers and
Acquisitions (M&A) is also an important part of corporate level strategy.

Decisions made at business level: In business level, the firm uses to gain a competitive
advantage by exploiting core competencies in specific product markets. It indicates the
choices the firm has made about how it intends to compete in individual product markets.

Decisions made at corporate level: Corporate level decisions are part of multi-tiered
process that owners and managers use to: Define a plan of action. Hit a specific target.
Achieve business goals.
 Ans. to the question no 13

Strategic business unit: A relatively autonomous division of a large company that

operates as an independent enterprise with responsibility for a particular range of
products or activities.

Ans. to the question no 14

The BCG matrix assesses the company‟s product portfolio by placing each product,
division or SBU (strategic business unit) on a 2×2 grid. How does the BCG matrix work
in detail? The placement of products on the grid is done by investigating two dimensions,
which are the axes of the grid: the product life cycle and the experience curve. Since both
criteria are rather hard to quantify, proxy values are used to illustrate these two
dimensions. The product life cycle is reflected by market growth, and the experience
curve is mirrored by the relative market share. These two values have to be identified for
each product/division/SBU to place them on the grid. Based on the position of each
product/division/SBU on the BCG matrix, investment or disinvestment decisions can be
taken. The graphic below shows the BCG matrix.

Question Marks

Question marks are low-share business units in high-growth markets. They require cash to hold
their share, let alone increase it. The company needs to think hard about question marks – which
ones should be built into stars, and which ones should be phased out? Question marks have the
following characteristics:

 Low relative market share in a relatively young but promising market (growing)
 Potential of becoming stars if the market share can be increased
 If necessary market share is not reached, question marks are likely to turn into dogs as soon as
the market gets more mature
 Careful analysis is needed to determine whether to invest or not.
Stars

Stars are high-growth, high-share businesses or products. They often need heavy
investment to finance their rapid growth. Eventually, their growth will slow down, and
they will turn into cash cows. Stars have the following characteristics:
 High market share in a promising market
 To turn a star into a future cash cow, heavy investment is needed to fight competition and expand
market share.

Cash Cows

Cash cows are low-growth, high-share businesses or products. These established and successful
SBUs need less investment to maintain their market share. As a result, they produce cash that the
company uses to pay its bills and to support other SBUs that need investment. As we have
learned, question marks and stars require heavy investment, which usually comes from the
profitable cash cows. Cash cows have the following characteristics:

 High market share in a slowly growing or mature market

 Create the highest cash flow
 No further investment should be undertaken due to limited or non-existent growth potential
 The company should try to “milk” the cash cows as long as possible.

Dogs

Dogs are low-growth, low-share businesses and products. They may generate enough cash to
maintain themselves, but do not promise to be large sources of cash flow. Dogs have the
following characteristics:

 Low relative market share in a slowly growing or declining market

 Products do mostly not generate large profit and may usually just break even
 The company should divest dogs, as these products have a negative effect on the overall
profitability of the company. Instead of carrying dogs along, the company should better focus on
products or SBUs with greater potential.
 Ans. to the question no. 15
Porter’s five force model: Porter‟s five force model includes of following five elements.
such as:
Bargaining power of suppliers: Less the bargaining power of suppliers, more the chance of
profitability. The bargaining power of suppliers will be less if they are more in number, small in
size and not a unique service provider. Similarly, business‟s ability to switch to substitute
suppliers is also a favorable point.
Bargaining power of customers: Less the bargaining power of customers, more the chance of
profitability. The bargaining power of customers will be less if they are more loyal, more in
number, greater switching cost, small in size and not having appropriate substitute at lower price
from competitors.
Competitive rivalry: When rivalry competition is high, advertising and price wars can ensue,
which can hurt a business's bottom line. Rivalry competition is high when there are just a few
competitors of same strength and product quality in an expanding industry and those industries
where consumers can easily switch for little cost. The growth of industry also affects the intensity
of rivalry in between them. The mature stage of an industry, slowly rising demand and declining
demand forces intensity rise up.
Threat of new entrants: It depends on the following two issues. First issue is the reactive action
of the existing firms within the industry in context to the possible price discount, rammed-up
advertising, coupon selling, product differentiation and additional customer services. Second
issue is the barrier of entry for the new entrant into the industry. A barrier of entry positively
proportional to the following factors: 1. Cost advantage enjoyed by the incumbents due to
economy of sale, location economy, learning curve, access and control on the resources, relation
with suppliers and customer‟s royalty. 2. High capital requirements, customer‟s network effect
and loyalty to wellrecognized brands.
Threat of substitute products or services: This force studies how easy it is for consumers to
switch from a business's product or service to that of a competitor. It looks at number of
competitors, their price and product quality and importantly their profit to cross check the
possibility to overcome the price war.