INTERNATIONAL

STRATEGIC MANAGEMENT

MODULE 1

1
INTRODUCTION & COURSE REVIEW

2
CONCEPT OF STRATEGY
&
STRATEGIC MANAGEMENT

PYRAMID OF 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
STATEGIES

IMPLEMENTATION
OFSTRATEGIES

Conducting SWOT, Formulating CORPORATE &

BUSINESS LEVEL Strategies, Strategic Analysis
Strategic Choice, Strategic Plan.
Activating Strategies, Designing Structure, Systems&
Processes, Behavioral & Functional implementation
And Operationalising strategies

REVIEW,EVALUATION
Performing Strategic Evaluation, Exercising Strategic
CONTROL
Control and Reformulating Strategies

STRATEGIC MANAGEMENT
ENVIRONMENT
SCANNING

EXTERNAL
SOCIETAL
TASK
ENVIRONMETAL

INTERNAL
STRENGTS
WEAKNESSES
structure
Culture ( Beliefs,
xpectations,Values )
Resourses, Skills,

STRATEGY
FORMATION

STRATEGY
IMPLEMENTATION

EVALUATION
& CONTROL

MISSION
(Reason for existence)
OBJECTIVES
(What results to
accomplish & by
when )
STRATEGIES
(Plan to achieve
Mission&Objectives)
POLICIES
(Broad guidelines
for decision

PROGRMS
Activities needed
To accomplish plans

Making)
BUDGETS
Cost of
programs

ompetencies,Knowledge

PROCEDURE
Sequence of
steps needed
to do the job

FEEDBACK / LEARNING

PERFORMANCE
Actual results

NATURE OF
INTERNATIONAL STRATEGIC MANAGEMENT

SINGLE COUNTRY, EXPORT & INTERNATIONAL

STRATEGY
FIRM A
OPERATES
IN COUNTRY X

FIRM A OPERATES
IN COUNTRY X

EXPORT TO COUNTRY Y

SINGLE COUNTRY STRATEGY

EXPORT STRATEGY
SUBSIDIARY
S3

SUBSIDIARY
S1
THE CENTRE
SUBSIDIARY
S2
INTERNATIONAL STRATEGY

SUBSIDIARY
S4

GLOBAL STRATEGY
SUBSIDIARY
S1

SUBSIDIARY
S6

SUBSIDIARY
S5

SUBSIDIARY
S2

THE CENTRE

SUBSIDIARY
S3

SUBSIDIARY
S4

4
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
SHAREHOLDER VALUE ?
STAKEHOLDER INTEREST?
ASPIRATIONAL ?

ATTAIN SUSTAINABLE
COMPETITIVE ADVANTAGE
BY:

FUNCTIONAL
LEVELSTRATEGY
HR,FINANCE,PRODUCTN
MARKETING,QUALITY
Etc.

MEANS :
. GOOD PARENTING
. SELECT PORTFOLIO
. GUARD REPUTATION

. LEVERAGING RESOURSES
. DEVELOPING CAPABILITIES
AND
. COMPETING ON COST,OR
DIFFERENTIATING OR
OCCUPYING A NICHE

Functional Level Managers

are responsible for:
developing annual objectives
& 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
IORG.
. MISSION
. OBJECTIVES
.STRATEGIES
. POLICIES

II
ORG.
CURRENT
PERFORM
- ANCE.

III
REVIEW
BOARD OF
DIRECTORS
&
TOP. MGMT

V
SELECTION
OF
STRATEGIC
FACTORS

IV
EXT. ENV.
ANALYSIS
. OPP.
. THREATS

VI
REVIEW
REDEFINE
. MISSION
.OBJECTIVES

VII
GENERATION
&
EVALUATION
OF
STRATEGIC
ALTERNATIVES

VIII

IMPLEMENT
BEST
ALTERNATIVE

REWORK AS
NEEDED

IX
MONITORING

MODULE 2

6
TYPICAL VALUE CHAIN
OF A MANUFACTURED PRODUCT

RAW
MATERIAL

PRIMARY
MANUF.

FABRICATION

PRODUCT
DISTRIBUTOR
PRODUCER

RETAILER

A CORPORATE VALUE CHAIN

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

HUMAN RESOURCE DEVELOPMENT

( Recruitment, Training, development )

TECHNOLOGY DEVELOPMENT

PROFIT
MARGIN

( R&D,Process & Product Development0

PROCUREMENT
( Purchasing of Raw Materials, Machines,Supplies)
INBOUND
LOGISTICS
(RAW MAT)

OPERATIONS
( Machining,
( Assembly,
Testing )

OUTBOUND
LOGISTICS
( Distribution )

PRIMARY ACTIVITIES

MARKETING
& SALES
( Advt. Prom
- otion )

SERVICES
( Installation,
Repair )

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 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. )

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
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
FIRMS 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

MEN
MACHINE
MATERIAL
METHODS
MONEY

OUTPUTS

PROCESSES
ACTIVITIES
OPERATIONS
PLANNING
MANUFACTURING
INSPECTION
PACKING

OBJECTIVES
GOALS
CORRECTIVE TARGETS
ACTION

ENVIRONMENT

GOODS
SERVICES
SALES
PROFITS

FEEDBACK

PEST FACTORS

POLITICAL

ECONOMIC

TECHNOLOGICAL

SOCIAL

PESTLE MATRIX
POLITICAL
CURRENT/FUTURE LEGISLATION
REGULATORY BODIES
GOVT. POLICIES
GOVT. TERM & CHANGE

SOCIAL
LIFESTYLE TRENDS
DEMOGAPHICS
COMPANY ATTITUDES & OPINIONS
BRAND,COMPANY ,TECHNOLOGYIMAGE
CONSUMER BUYING PATTERNS
ETHNIC/RELIGIOUS FACTORS

LEGAL
INTERNATIONAL LAW
EMPLOYMENT LAW
COMPETITIOM LAW
HEALTH & SAFETY LAW
REGIONAL LEGISLATION

ECONOMIC
ECONOMY SITUATION & TRENDS
TAXATION
INTEREST & EXCHANGE RATES
MARKET & TRADE CYCLE

TECHNOLOGICAL
TECHNOLOGY ACCESS,LICENSING,PATENTS
MATURITY OF TECHNOLOGY
REPLACEMENT TECHNOLOGY / SOLUTIONS
INNOVATION POTENTIAL
MANUFACTURING MATURITY & CAPACITY

ENVIRONMENTAL
ENVIRONMENTAL IMPACT
ENVIRONMENTAL LEGISLATION
ENERGY CONSUMPTION
WASTE DISPOSAL

CONSTITUENTS OF MICRO ENVIRONMENT

MARKETING
INTERMEDIARIES

MARKETS
TYPES &
DEMANDS

COMPETITION

E- COMMERCE

SUPPLIERS
MICROENVIRONMENT

SKILL LEVEL
OF WORKFORCE

FINANCIAL
INSTITUTIONS
REGULATORY
PROVISIONS

IR CLIMATE

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
INTERNET, E-GOVERNANCE & E-COMMERCE

etc )

COMMUNICATION,

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

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. )

TO RESPOND EFFECTIVELY AND MORE

INTERNAL ENVIRONMENT

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

SWOT CHECKLIST
POTENTIAL ENV. OPPORTUNITIES
.
. NEW MARKETA/BUSINESSES?
. COST OF DIFFERENTIATION ADV?
. PROFITABLE NEW ACQUISITIONS?
. BRAND NAME CAPITAL IN NEW
AREAS
. R&D SKILLS IN NEW AREAS
. VERTICAL INTEGRATION( FORWARD/BACKWARD)
. DIVERSIFICATION
. OTHERS?

POTENTIAL ENV. THREATS

. ATTACK ON CORE
BUSINESSES?
. INCREASE IN DOMESTIC/
FOREIGN COMPETITION?
. CHANGE IN CUSTOMER
TASTE
. BARRIERS TO ENTRY
. NEW OR SUBSTITUTE
PRODUCTS
. INDUSTRY COMPETITION
. SLOWDOWN IN ECONOMY
. TAKEOVERS
. LOWER MARKET GROWTH
RATE
. OTHERS?

MACKENZIES 7S MODEL
STRUCTURE
STRATEGY

SYSTEMS
SHARED
VISION

STYLE

SKILLS
STAFF

MODULE 3
VISION,MISSION
&
BUSINESS DEFINITION

12
STRATEGIC INTENTS
To achieve success, organizations have to primarily
focus on hierarchy of strategic intents Vision,
Mission, Business Definition, Business Model, Goals
Objectives
Framework within which organization operate and adopt
a predetermined direction
Purposes the organizations strive for.

CONCEPT OF STRETCH,LEVERAGE
& FIT
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 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 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 corporations 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 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 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 orgs relationship with Environment;

Help org to achieve VISION & MISSION;

Provide basis for Strategic Decision making;

Provides standards for performance appraisals,

OBJECTIVES:
- Concrete & specific
Make goals operational

GOALS
Generalized

-Quantitative, measurable
& comparable

Qualitative

- 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..

MODULE 4

TOTAL GLOBAL STRATEGY

1. DEVELOP CORE
BUSINESS STRATEGY

CORE BUSINESS STRATEGY

2. INTERNATIONALISE
THE STRATEGY

3. GLOBALISE THE
STRATEGY

C
O
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N
T
R
Y

C
O
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N
T
R
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C
O
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R
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C
O
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C
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N
T
R
Y

INTERNATIONAL STRATEGIES

PRESSURES
FOR
COST REDUCTION

GLOBAL
STRATEGY
( OFFERING STANDARDISED
PRODUCTS / SERVICES)

TRANSNATIONAL
STRATEGY
(LOCATED IN A
DEVELOPED COUNTRY)

INTERNATIONAL
STRATEGY

MULTIDOMESTIC
STRATEGY

(UNDER DEVELOPED
COUNTRIES WHERE
PRODUCT/SERVICES
NOT AVAILABLE )

( SUITING TO NATIONAL
CONDITIONS )

PRESSURES FOR LOCAL RESPONSIVENESS

INDUSTRY GLOBALISATION POTENTIAL

MARKET DRIVERS

COST
DRIVERS

INDUSTRY
GLOBALISATION
POTENTIAL

COMPETITIVE DRIVERS

GOVERNMENT
DRIVERS

THE GLOBALISATION TRIANGLE

GLOBAL STRATEGY LEVERS

BENEFITS & COSTS

OF
GLOBALISATION

INDUSTRY
GLOBALISATION
DRIVERS

GLOBAL
ORGANISATION
DRIVERS

A FRAMEWORK OF GLOBAL STRATEGY

INDUSTRY
GLOBALISATION
DRIVERS
I

MARKET
COST
GOVT
COMPETITIVE

GLOBAL
ORGANISATION
DRIVERS
PARENT ORGS ABILITY
( POSITION & RESOURCES)
TO IMPLEMENT A GLOBAL
STRATEGY )

GLOBAL STRATEGY LEVERS

GLOBAL MARKET PARTICIPATION
GLOBAL PRODUCTS
GLOBAL LOCATION
GLOBAL MARKETING
GLOBAL COMPETITIVE MOVES

BENEFITS /
COSTS
OF
GLOBAL
STRATEGY

MANAGEMENT AND ORGANISATION FACTORS

AFFECTING GLOBAL STRATEGY
(GLOBAL ORGANISATION DRIVERS )
ORGANISATION
STRUCTURE
. GLOBAL MIS
. GLOBAL STRATEGIC PLANNING
. GLOBAL BUDGETING
. CROSS COUNTRY COORDINATION

MANAGEMENT
PROCESSES

( REPORTING

. CENTRALISED GLOBAL AUTHORITY

. INTERNATIONAL DIVISION
. STRONG BUSINESS DIVISION

RELATIONSHIPS
)

ABILITY TO DEVELOP
AND IMPLEMENT
GLOBAL STRATEGY

( PLG,BUDGETING &
INFORMATION SYSTEMS )

.USE OF FOREIGN NATIONALS

.MULTICOUNTRY CAREERS
.FREQUENT TRVEL
.STATEMENTS & ACTIONS OF
LEADERS

PEOPLE

( HUMAN RESOURCES OF
WORLDWIDE BUSINESS )

CULTURE
( VALUES & RULES THAT
GUIDE BEHAVIOUR )
. GLOBAL IDENTITY
. COMMITMENT TO
WORLDWIDE
( VS DOMESTIC ) EMPLOYMENT
. INTERDEPENDENCE VS
AUTONOMY OF BUSINESSES

MARKET
GLOBALISATION DRIVERS
COMMON CUSTOMER NEED PER CAPITA INCOME
CONVERGING AMONG INDUSTRIALISED NATIONS & CONVERGENCE OF
LIFE STYLES & TASTES

GLOBAL CUSTOMERS
GROWTH OF GLOBAL & REGIONAL CHANNELS
TRANSFERABLE MARKETING PUSH TO DEVELOP GLOBAL

INCREASED TRAVEL CREATING

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 GOVTS 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
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

TYPE OF CUSTOMERS
BUY IN
FOREIGN
MARKRTS
FROM
FOREIGN
SUPPLIER

FOREIGN
CUSTOMER

GLOBAL CUSTOMER

BUY IN
DOMESTIC
MARKET
FROM
FOREIGN
SUPPLIER
BUY IN
DOMESTIC
MARKETS
FROM
DOMESTIC
SUPPLIER

INTERNATIO
NAL
CUSTOMER

CONTROLL
ED
LOCAL
CUSTOMER

FREE
LOCAL
CUSTOMER
NO HQ
INVOLVEME
NT

HQ RECOMMENDS
STANDARDS?
PRODUCTS

HQ MANDATES
STANDARDS/
PRODUCTS

HQ DOES THE
PURCHASING

INCREASIBG GLOBALISATION OF PURCHASING

BUSINESS GROWTH / COMPETITIVE SRENGTH

MATRIX

HI
GROWTH
POTENTIAL
OF
BUSINESS
IN
COUNTRY

LO

WILDCAT
COUNTRIES

DOG
COUNTRIES
LO

STAR
COUNTRIES

CASH COW
COUNTRIES
HI

COMPETITIVE STRENGTH OF BUSINESS IN COUNTRY

MODES OF ENTRY
EXPORTING
( Firm produces in home country & markets in overseas markets )

HIGH

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

PERCEIVED
RISK

(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 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 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,
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.

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 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

MODULE 5

PORTERS MODEL
BARGAINING
POWER

POTENTIAL ENTRANTS
Economies of scale
Absolute cost
advantage
Switching cost
Access to distribution
Govt. policy
THREAT OF NEW ENTRANTS

SUPPLIERS
Supp.concentration
No. of buyers
Switching cost
Substitute raw mat.
Threat of forward
integration

BARGAINING
POWER OF COMPETITIVE
SUPPLIERS

OTHER
STAKEHOLDERS
(RELATIVE POWER OF
UNIONS, GOVT)

BARGAINING
POWER OF

RIVALARY
( INDUSTRY
SUPPLIERS
COMPETITORS )

THREAT OF SUBSTITUTE PRODUCTS

SUBSTITUTES
Functional similarity
Price/Performance
trend
Product identity

BUYERS
Buyers concentration
No of suppliers
Switching cost
Substitute products
Threat of backward
Integration

ETOP
( ENVIRONMENTAL THREAT & OPPORTUNITY PROFILE 0
ENVIRONMENTAL
SECTOR
MARKET
TECHNOLOGICAL
SUPPLIER
ECONOMIC
REGULATORY
POLITICO LEGA
SOCIO CULTURAL
INTERNATIONAL

NATURE
OF IMPACT

IMPACT OF EACH SECTOR

SAP
( STRATEGIC ADVANTAGE PROFILE )
CAPABILITY
FACTOR
1
2
3
4
5
6

FINANCE
MARKETING
0PERATIONSP
PERSONNEL
INFORMATION
GENERAL
MANAGEMENT

NATURE IMPACT OF EACH FACTOR

OF
IMPACT

CONSOLIDATED SWOT PROFILE

ENVIRONMENTAL
FACTOR
MARKET

NATURE OF
IMPACT

STRATEGIC
ADVANTAGE FACTOR

TECHNOLOGICAL

FINANCE

SUPPLIAR

MARKETING

ECONOMIC

OPERATIONS

REGULATORY

PERSONNEL

POLITICAL

INFORMATION
MANAGEMENT

SOCIO CULTURAL
GENERAL MANAGEMENT
INTERNATIONAL

NATURE OF
IMPACT

SWOT MATRIX and STRATEGIES

OPPRTUNITIES

QUADRANT 2
TURNAROUND
STRATEGY

QUADERANT 1
AGGRESSIVE
STRATEGY

QUADERANT 4 QUADERANT 3
DEFENSIVE
STRATEGY

DIVERSIFICATION
STRATEGY

THREATS
WEAKNESSES

STREGTHS

OPPORTUNITY MATRIX
HIGH

MODERATE
ATTRACTIONS

HIGH
ATTRACTIONS

Impact
of
Opportunities
LOW

MODERATE
ATTRACTIONS

LOW
ATTRACTIONS

HIGH

LOW
Occurrence

THREAT MATRIX

HIGH

MAJOR
THREATS

MODERATE
THREATS

MODERATE
THREATS

MINOR
THREATS

IMPACT
OF
THREATS

LOW

HIGH

LOW
OCCURENCE

TOWs MATRIX
SAP
ETOP
1
2
3
4
1
2
3
4

1
2
3
4

W
OW

Turnaround Strategies

1
2
3
4

S
OS

Aggressive Strategies
Take advantage of
(Use strengths to take
(Opportunities by overcoming
advantage Of opportunities)
Weaknesses)

TW
Defensive Strategies
( To minimize weaknesses
& avoid Threats )

TS

Diversification strategies
(Consider corporations
strengths
To avoid threats)

BCG GROWTH SHARE MATRIX

HIGH

20
18
16
STARS

Market
Growth 14
rate
12

QUESTION MARKS

10
8
6
CASH COWS

DOGS

2
0
LOW

10

1.5
1
6
4
2
Relative market share

0.8

0.5

0.1

GE 9 CELL MATRIX
INDUSTRY ATTRACTIVENESS

G
QUESTION
MARKS

HIGH

AVERAGE
BUSINESS

MEDIUM

LOW

PROFIT
PRODUCER

ZONE
AVERAGE
WEAK
GREEN G INVEST/EXPAND STRONG
BUSINESS STREGTH / COMPETITIVE
YELLOW Y SELECT/EARN
RED
R HARVEST/DIVEST POSITION

HOFERS MODEL

STRICKLANDS GRAND STRATEGY SELECTION

MATRIX

MODULE 6

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 doesnt always work;

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 its 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

PROFIT STRATEGY: Reduce investments, cut costs , Increase

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

PAUSE/ PROCEED WITH CAUTION : Consolidation before a

firm goes for expansion.

EXPANSION 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
CONCENTRATION STRATEGIES
scope of its business
for improving overall performance.
Simple 1st level expansion strategy, aims at convergence of
.

resources
Focus on Intensification / Specialization
Rely on where you are best at ie focusing on limited areas
Creating a separate niche/ identity in selective areas by investing
money, time, energy & effort in specific areas
INTEGATION STRATEGIES
Combining activities relating to present activities of firm
Widening scope of business
Vertical Integration : Going up & down the value chain Going for
forward or backward integration or both at a time.
Horizontal integration : Same type of products

INTERNATIONAL STRATEGIC ALLIANCES

Grown exponentially in the last few years.
Very popular instrument to cope up with fastly changing global
competition and found in wide range of sectors: Airlines, Pharma,
Manufacturing , Computers, Electronic equipment etc.
Reasons: rapidly changing technology, fierce competition, Shorter
PLC etc
If managed properly, can help multinational firms to transform their
operations, gain access to new technology, get insights that would
be extremely difficult for the multinational firms to learn and act on
their own.
CONCEPT
A strategic cooperative agreement or agreements between two or
more firms from at least 2 countries, which involves exchange,
sharing or co- development for achieving strategically significant
objectives that are mutually beneficial and beyond what a single firm
may reach alone.