9 global strategies

1

Global Strategic Management

Dr.L.Prakash Sai

Trade

Investments Information

People

Globalisation

Consumer

Convergence

Capital

Flow

IT and

Communications

Deregulation and

Trade agreements

Cross-borders

Innovation

Cross-borders

Marketing

Cross-cultural

Management

Cross-borders

Sourcing and

Production

2

VARYING STAGES OF GLOBALISATION

Physical commodities

Scale-driven business goods and

services

Manufactured commodities

Labor skill/productivity-driven consumer

goods

Brandable, regulated consumer goods

Professional business services

Historically highly regulated (nationally)

industries

High interaction cost consumer goods

and services

Locally regulated or high transportation

cost good and services

Government services

Petroleum, mineral ores, timber

Aircraft engines, construction equipment,

semiconductors, airframes, shipping, refineries,

machine tools, telecom equipment

Refined petroleum products, aluminum, specialty

steel, bulk pharmaceuticals, pulp, specialty

chemicals

Food, television production, retail distribution,

funeral homes, small business services

Construction materials, real property, education,

household services, medical care

Civil servants, national defense

1

2

3

4

5

6

7

8

9

10

Local

Global

Consumer electronics, personal computers,

cameras, automobiles, televisions

Beer, shoes, luxury goods, pharmaceuticals, movie

production

Investment banking, legal services, accounting

services, consulting services

Personal financial services, Service providers:

telecommunications, electronic power

Historically Globalization

took place in 3 stages

Export

(Trade)

Internationalisation

(Multinational)

Global Integration

(Global)

3

Local Universal

Source: Ohmae

Factors limiting universality Culture/habits Design taste Language Size/package Technical

system User/

application None

Example

• Fish sausage • Root beer • Boxer shorts • Rice cooker

• Furniture • Refrigerator • Processed food

• Word processor • Computer

• Textile • Automobile (seat size) • Soft drinks

• Colour TV (PAL system in European voltage)

• Portable radio/cassette player (youths in US) • White liqueur (young females in Japan)

• Watch • Motorcycle • Petrochem. products • Piano • Money (capital market)

Must modify locally Could be shared globally

Degree of universality of product

GIS 27

Key functions

Technology

Product application

Product concept

Marketing concept

Motivation for Competing Internationally

Gain access to

new customers

Capitalize on core

competencies

Help

achieve

lower costs Spread

business risk across wider market base

Obtain access to

valuable natural

resources

4

Generic international strategies

Global

Strategy

Response to homogeneous

consumer tastes

Centralized production

– Maximize economies of

scale

– Recover high up-front

R&D costs

Expose organization to

developments in key markets

Fight competitive moves in

one country with a counter-

move in another

Spread risk across a number

of regions

Products tailored for

local tastes

Produced, marketed,

and distributed

locally

Value chains

replicated in each

region

– Higher costs

Locally Responsive

Strategy

Transnational

Strategies

Some localization

of products

– Regional

Also cost

advantages from

global economies

of scale

– Global

components

– Local

customization

of discernible

elements

5

Competing Multinationally - Strategic Issues

Whether to customize a company’s offerings in each different country

market to match preferences of local buyers or offer a mostly

standardized product worldwide.

Whether to employ essentially the same basic competitive strategy in

all countries or modify the strategy country by country.

Where to locate a company’s production facilities, distribution centers,

and customer service operations to realize the greatest locational

advantages.

Whether and how to efficiently transfer a company’s resource

strengths and capabilities from one country to another to secure

competitive advantage.

International vs. Global Competition

International

Competitor

Global

Competitor

Company operates in a select few

foreign countries, with modest

ambitions to expand further

Company markets products in 50 to

100 countries and is expanding

operations into additional country

markets annually

6

Multi-Country Strategy

Strategy is matched to local market needs

Different country strategies are called for when

Significant country-to-country differences in customers’ needs

exist

Buyers in one country want a product different

from buyers in another country

Host government regulations preclude

uniform global approach

Two drawbacks:

1. Poses problems of transferring

competencies across borders

2. Works against building a unified competitive advantage

Global Strategy

Strategy for competing is similar in all country markets

Involves

Coordinating strategic moves globally

Selling in many, if not all, nations where a significant market exists

Works best when products and buyer requirements are similar from

country to country

Competitive conditions across country markets are strongly linked

Many of same rivals compete in many of the same country markets

A true international market exists

A firm’s competitive position in one country is affected by its position in

other countries

Competitive advantage is based on a firm’s world-wide operations and

overall global standing

7

Multi-country Strategy vs. Global Strategy

Design Production Marketing

OTIS UK

Service Design Production Marketing

OTIS GERMANY

Service


OTIS FRANCE


OTIS ITALY

Service

Compete against

German and multinational

competitors

For

the German market

UK and multinational

competitors

For

the UK market

Compete against

French and multinational

competitors

For

the French market

Compete against

Italian and multinational

competitors

For

the Italian market

Compete against


OTIS UK

ServiceDesign Production Marketing

OTIS UK


OTIS GERMANY


OTIS GERMANY

Service


OTIS FRANCE


OTIS FRANCE


OTIS ITALY


OTIS ITALY

Service

Compete against

German and multinational

competitors

For

the German market

UK and multinational

competitors

For

the UK market

Compete against

French and multinational

competitors

For

the French market

Compete against

Italian and multinational

competitors

For

the Italian market

Compete against

A Multinational Competitive Configuration

8

OTIS UKDesign

Production

Marketing

OTIS GERMANY

Service

OTIS FRANCE

MarketingMarketing

Marketing Service

Service Service

Design

Design

Production

Production

Production

OTIS ITALY

OTIS

EUROPE

Local marketLocal market

Local market Local market

OTIS UKDesignDesign

ProductionProduction

MarketingMarketing

OTIS GERMANY

ServiceService

OTIS FRANCE

MarketingMarketingMarketingMarketing

MarketingMarketing ServiceService

ServiceService ServiceService

DesignDesign

DesignDesign




OTIS ITALY

OTIS

EUROPE

Local marketLocal market

Local market Local market

A Global Competitive Configuration

Competing in Foreign Markets - Strategic Options

Exporting

Licensing

Franchising strategy

Multi-country strategy

Global strategy

Strategic alliances or joint ventures

9

Trade Blocs

European Union (EU)

African Union (AU)

Union of South American Nations (UNASUR)

Caribbean Community (CARICOM)

Central American Integration System (SICA)

Arab League (AL)

Central American Common Market (CACM)

European Free Trade Association (EFTA)

Eurasian Economic Community (EAEC)

Association of Southeast Asian Nations (ASEAN)

Central European Free Trade Agreement (CEFTA)

North American Free Trade Agreement (NAFTA)

South Asian Association for Regional Cooperation (SAARC)

Pacific Islands Forum (PIF)

Thank You

9 global strategies

Business

Transcript of 9 global strategies