Kazmi Strategy Mgt Lessons Part 8

STRATEGIC MANAGEMENT AND BUSINESS POLICYTHIRD EDITIONAZHAR KAZMIChapter 6Corporate-level strategies: Internationalisation, Cooperation and Digitalisation

(c) Dr. Azhar Kazmi 2008

Learning objectives - 1Explain the context for internationalisation strategiesDescribe and exemplify four types of international strategiesExplain the various modes of entry to international marketsEnumerate the advantages and disadvantages of internationalisationDiscuss the growing importance of regionalisation strategies, strategies for the bottom-of-the-pyramid, and local companies competing with global companies


Learning objectives -2 Discuss the motives for international strategies of Indian organisations and the phenomenon of the Indian MNCDescribe the types, conditions of use, benefits and drawbacks of three cooperative strategies: mergers and acquisitions, joint ventures, and strategic alliancesExplain the principles underlying digitalisation strategiesDescribe the role of digitalisation in value chain and value systemExplain the digitalisation strategiesDiscuss digitalisation strategies in Indian organisations


Internationalisation strategiesInternational strategies are a type of expansion strategies that require organisations to market their products or services beyond the domestic or national market.


Context for internationalisation strategiesLowering of trade and investment barriers between nations Easing of regulations governing trade and investment


Porters diamond for competitive advantage of nationsAdapted from M.E. Porter: The Competitive Advantage of Nations Harvard Business Review, March- April 1990, p. 77.


Factors determining internationalisation strategiesCost pressures denote the demand on a firm to minimise its unit costs. By doing so, the firm tries to derive full benefits from economies of scale and location economies. Ideally, the firm seeks a single low-cost location, producing globally standardised products and marketing it widely around the world to achieve economies of scale. Pressures for local responsiveness makes a firm tailor its strategies to respond to national-level differences in terms of variables like customer preferences and tastes, government policies, or business practices. In doing so, the firm customises its products and services to the requirements of the individual country-market it is serving.


Four types of internationalisation strategiesBased on C.A. Bartlett & S. Ghoshal: Managing Across Borders (Boston, M.A.: Harvard Business School Press, 1989)


International entry modesExport entry modesDirect exports Indirect exports Contractual entry modesLicensingFranchisingOther forms Investment entry modesJoint ventures and strategic alliancesIndependent ventures or wholly-owned subsidiaries


Born-global firmsBorn-global firms are business organisation that, from or near their founding, seek superior international performance from the application of knowledge-based resources to the sale of outputs in multiple countries. G. A. Knight and S. T. Cavusgil: Innovation, organizational capabilities, and the born-global firm Journal of International Business Studies (2004) 35, 124-141.


Strategic decisions in internationalisationWhich international markets to enter? Timing of entry into international markets Scale of entry into international markets


Regionalisation strategiesHome base strategiesPortfolio strategiesHub strategiesPlatform strategiesMandate strategies


Strategies for bottom-of-the-pyramidAsking for easy payments in instalmentsDramatic cost-cuttingOffering products in small packagesCharging prices by pay-by-useDirect distribution by avoiding costly marketing intermediaries


Strategy Options for Local Companies in Competing against Global Companies Dodge rivals by shifting to a new business model or market nicheContend on a global scaleDefend by using home-field advantagesTransfer company expertise to cross-border marketsIndustry pressures to globaliseResources and competitive capabilitiesHighLowTailored for home marketTransferable to other countriesAdapted from N. Dawar & T. Frost, Competing with Giants: Survival strategies for Local Companies in Emerging Markets Harvard Business Review, 77:1, (Mar-Apr 1999), p. 122.


Cooperative strategiesMergers and acquisitions (or takeovers)Joint venturesStrategic alliances


Types of mergers and acquisitionsHorizontal mergersVertical mergersConcentric mergersConglomerate mergers


Important issues in mergers and acquisitionsStrategic issuesFinancial issuesManagerial issuesLegal issues


Types of joint venturesBetween two Indian organisations in one industry Between two Indian organisations across different industries Between an Indian organisation and a foreign organisation in India Between an Indian organisation and a foreign organisation in that foreign country Between an Indian organisation and a foreign organisation in a third country


Types of strategic alliancesProcompetitive alliancesNon-competitive alliancesCompetitive alliancesPrecompetitive alliances


Digitalisation strategiesTerms used in the context of digitalisationComputerisationElectronisationDigitisation


Comparison of digital with traditional strategyAdapted from L. Downes & C. Mui: The end of strategy Strategy & Leadership. Nov/Dec 1998, Vol. 26, Issue 5.


Digitalisation transforms the value chain and value systemDeconstructionDisintermediationRe-intermediationIndustry morphingCannibalisationTechno-intensificationRe-chanelling


E-business patternsE-channel patternClick-and-brick patternE-portal patternE-market maker or net-market patternPure e-digital pattern


Kazmi Strategy Mgt Lessons Part 8

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