International business strategy
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International Business Strategy. Session 1 :. Faculty: Prof. K. Rangarajan. Session Date:. A Few Points to ponder. Africa is rated as the preferred destination for FDIs in the coming years.

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International business strategy

International Business Strategy

Session 1 :

Faculty:

Prof. K. Rangarajan

Session Date:


A few points to ponder

A Few Points to ponder

  • Africa is rated as the preferred destination for FDIs in the coming years.

  • Excess Capacity especially in the wake of WTO is becoming a strategic issue of top priority (Steel, Textile, Polyester etc.)

  • Greenfield Investments is the preferred form for investment in developing countries.

  • The No. of Parent Cos of TNCs operating in world economy is around 82k

  • Only 2 coys from India are ranked in the top 100 non-financial TNCs by Foreign Assets from the Developing Countries.

  • The R & D expenditure by Business firms in Tanzania is negligible

  • The downslide of Traditional industries like Textiles in Tanzania

  • Growing interdependence of global economies

  • Growing Economic Turbulence across the world

  • Crash of TNCs like Standard Oil, Union Carbide, Enron, Lehman ………


International business strategy

Challenge of Strategic Management

Competitive success is transient...unless care is taken to preserve competitive position


International business strategy

StrategicCompetitiveness

Achieved when a firm successfully formulates and implements a value-creating strategy

Sustained Competitive Advantage

Occurs when a firm develops a strategy that competitors are not simultaneously implementing

Provides benefits which current and potential competitors are unable to duplicate

Above-Average Returns

Returns in excess of what an investor expects to earn from other investments with similar risk


International business strategy

Commitments

Decisions

Actions

The Strategic Management Process

Involves the full set of:

which are required for firms to achieve:

Strategic Competitiveness

Sustained Competitive Advantage

Above-Average Returns


International business strategy

Fundamental nature of competition is changing

The pace of change is relentless....

and increasing

  • Rapid technological changes

  • Rapid technology diffusions

Traditional industry boundaries are blurring, such as...

  • Dramatic changes in information and communication technologies

  • Computers

  • Telecommunications

  • Cons. Electronics

  • Increasing importance of knowledge

21st Century Competitive Landscape


International business strategy

Traditional sources of competitive advantage no longer guarantee success

The global economy is changing

  • People, goods, services and ideas move freely across geographic boundaries

  • New opportunities emerge in multiple global markets

  • Markets and industries become more internationalized

New keys to success include:

  • Flexibility

  • Innovation

  • Speed

  • Integration

21st Century Competitive Landscape


International business strategy

Concept of Strategy:

Strategy is the direction and scope of an organization over the long term, which achieves advantage for the organization through its configuration of resources within the changing environment, to meet the needs of markets and to fulfill stakeholders’ expectations.

Features

- Concerned with or affect the long-term direction

-         Achieve some advantage for the organization

-         Scope of an organization

-     Match making of the activities of the organization

with the environment

-  Building on or stretching an organisation’s resources/ competences


International business strategy

Strategy as Plan:

Consciously intended course of action which may be in the form of guidelines/report guiding decision making.

Strategy as Ploy:

Short-term tactic or a maneuver, intended to outwit a competitor.

Strategy as Pattern:

It is after-the-fact view which emerges over a period of time.


International business strategy

Strategy as Position:

Managers see their firm as occupying a space within an environment in terms of Market share, Profits, Assets etc.

Strategy as Perspective:

This is a way of perceiving the world, and individuals in an organization are united by common thinking and behaviour.

Eg.: Lucent Tech. claims that it makes the things that make communications work.


International business strategy

  • Strategic Management:

  •  Set of decisions and actions resulting in formation and implementation of strategies designed to achieve the objectives of an organization.

    • Determining the mission of the company

    • Developing a company profile that reflects internal conditions and capabilities

    • Assessment of the company’s external environment

    • Analysis of possible options & desirable options

    • Strategic choice of a particular set of long-term objectives and grand strategies

    • Development of business and operational strategies

    • Review & evaluation


International business strategy

Company mission

What is possible?

Internal Environment

Company

Profile

External environment Operating and IndustryAnalysis

What is

desired?

Strategic Choice

Grand strategy

Long-term objectives

Policies

Operating strategies

Annual objectives

Institutionalization of strategy

Legend

Major impact

Minor impact

Control and evaluation

Strategic Management Process


International business strategy

  • Levels of Strategy:

  • Corporate Level – Choice of business, dividend policies, sources of long term financing and priorities for growth

  • Business Level – Plant location, marketing segmentation and geographic coverage, and distribution channels

  • Functional Level – Levels of Inventory, degree of supervision, selection of production equipment etc.


International business strategy

Managerial Decisions (Vs) Strategic Levels:

FeaturesCorporateBusiness Functional

TypeConceptualMixed Operational

MeasurabilityJudgmentsSemi Quantifiable

FrequencyPeriodic/Periodic/ Periodic

SporadicSporadic

Relation to Present ActInnovativeMixed Supplement

RiskWideModerate Low

Profit PotentialLargeMedium Small

CostMajorMedium Modest

Time HorizonLong-rangeMedium Short

FlexibilityHighMedium Low

CooperationRequiredConsiderableModerate Little


Three big strategic questions

Three Big Strategic Questions

  • Where Are We Now?

  • Where Do we Want to Go?

  • How Will We Get There?


Crafting a strategy

Crafting a Strategy

  • HOW to out-compete rivals and win a competitive advantage

  • HOW to respond to changing industry and competitive conditions

  • HOW to defend against threats to company's well-being

  • HOW to pursue attractive opportunities


International business strategy

Actual Company Strategy

Company Experiences, Know-how, Resource Strengths and Weaknesses, and Competitive Capabilities

Abandoned strategy features

PLANNED STRATEGY

New initiatives plus ongoing strategy features continued form prior periods

Adaptive reactions to

changing circumstances

REACTIVE STRATEGY

A Company’s Actual Strategy Is Partly Planned and Partly Reactive


International business strategy

Responsibility of corporate-level managers

A Single-Business Company

Two-Way influence

Responsibility of heads of major functional activities within a business

Two-Way influence

Responsibility of plant managers, geographic unit managers, and lower-level supervisors

The Strategy-Making Pyramid

Business Strategy

Functional Strategies (R&D, manufacturing, marketing, finance, human resources, etc.)

Operating Strategies

(regions and districts, plants, departments within functional areas)


International business strategy

A Diversified Company

Responsibility of corporate-level managers

Corporate Strategy

Responsibility of business-level general managers

Two-Way influence

Business Strategies

Responsibility of heads of major functional activities within a business unit or division

Two-Way influence

Functional Strategies (R&D, manufacturing, marketing, finance, human resources, etc.)

Responsibility of plant managers, geographic unit managers, and lower-level supervisors

Two-Way influence

Operating Strategies

(regions and districts, plants, departments within functional areas)

The Strategy-Making Pyramid


An organization s mission

An organization’s Mission

  • Reflects Management’s vision of what the organization seeks to do and to become

  • Sets forth a meaningful direction for the organization

  • Indicates an intent to stake out a particular business position

  • Outline “Who we are, What we do, and Where we are headed”.


Mission statement

Mission Statement

Enduring Statements of Purpose that distinguish one organisation from other similar enterprises.

  • Insure unanimity of purpose

  • Arouse positive feelings about the firm

  • Provide direction

  • Provide a basis for objectives and strategies

  • Serve as a focal point

  • Resolve divergent views among managers.


Components of mission statement

Components of Mission Statement

  • Customers (the target market)

  • Products/Services (offerings and value provided to customers)

  • Geographic Markets (where the firm seeks customers)

  • Technology (the technology used to produce and market products)

  • Concern for Survival/Growth/Profits (the firm’s concern for financial soundness)

  • Philosophy (the firm’s values, ethics, beliefs)

  • Public Image (contributions the firm makes to communities)

  • Employees (the importance of managers and employees)

  • Distinctive Competence (how the firm is different or better than competitors)


Examples mission and vision statements

Examples: Mission and Vision Statements

Microsoft Corporation

Empower people through great software anytime, anyplace, and on any device.

our mission is to enable people and businesses throughout the world to realize their full potential. We consider our mission statement a promise to our customers. We deliver on that promise by striving to create technology that is accessible to everyone—regardless of age or ability..


Microsoft values

Microsoft - Values

  • As a company, and as individuals, we value integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our customers, shareholders, partners, and employees by honoring our commitments, providing results, and striving for the highest quality.


Examples mission and vision statements1

Examples: Mission and Vision Statements

Intel

Our vision: Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce. Intel’s core missionis being the building block supplier to the Internet economy and spurring efforts to make the Internet more useful. Being connected is now at the center of people’s computing experience. We are helping to expand the capabilities of the PC platform and the Internet.


Fresh look at intel

Fresh Look at Intel

  • Our missionDelight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.Our valuesCustomer orientationResults orientationRisk takingGreat place to workQualityDisciplineOur objectivesExtend our silicon technology and manufacturing leadershipDeliver unrivaled microprocessors and platformsGrow profitability worldwideExcel in customer orientation


Examples mission and vision statements2

Examples: Mission and Vision Statements

Mission Statement of Jet Airways

Jet Airways will be the most preferred domestic airline in India. It will be the automatic first choice carrier for the travelling public and set standards, which other competing airlines will seek to match.Jet Airways will achieve this pre-eminent position by offering a high quality of service and reliable, comfortable and efficient operations. Jet Airways will be an airline which is going to upgrade the concept of domestic airline travel - be a world class domestic airline. Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability, achieving healthy, long-term returns for the investors and providing its employees with an environment for excellence and growth.


Examples mission and vision statements3

Examples: Mission and Vision Statements

Mission Statement of Videocon

Vision & Mission

Videocon’s mission: a reflection of continuity and change

Videocon’s mission expression has been crafted to envelope both extant and emerging realities:

“To delight and deliver beyond expectation through ingenious strategy, intrepid entrepreneurship, improved technology, innovative products, insightful marketing and inspired thinking about the future.”


Setting objectives

Setting Objectives

  • The purpose is to convert the mission into Specific Performance Targets

  • Serve as yardsticks for tackling company progress and performance.

  • Should be set at levels that require stretch and disciplined effort.


Two types of objectives are needed

Two Types of Objectives are Needed

  • FINANCIAL OBJECTIVES

  • STRATEGIC OBJECTIVES

    * Short-Run

    * Long-Run


Why is a company s strategy constantly evolving

Why is a Company’s Strategy Constantly Evolving?

  • Changing market conditions.

  • Moves of competitors.

  • New technologies and production capabilities.

  • Evolving buyer needs and preferences.

  • Political and regulatory factors.

  • New windows of opportunity.

  • Fresh ideas to improve the current strategy.

  • A crisis situation


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