Strategies for International Competition_GlobalOperations
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Transcript of Strategies for International Competition_GlobalOperations
8/7/2019 Strategies for International Competition_GlobalOperations
http://slidepdf.com/reader/full/strategies-for-international-competitionglobaloperations 1/37
Strategies forInternational Competition
By
DeepaChandrasekar
8/7/2019 Strategies for International Competition_GlobalOperations
http://slidepdf.com/reader/full/strategies-for-international-competitionglobaloperations 2/37
The Roots of International Strategy
� The three states of mind or attitudes
that are inferred from the managerial
practices:
�Ethnocentrism
�Polycentrism
�Geocentrism
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Ethnocentrism
� Strategic decisions are
made at headquarters;
� Limited subsidiary
autonomy;� Key positions in
domestic and foreign
operations are held by
headquarters·personnel;
� PCNs manage
subsidiaries.
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Polycentrism
� Strategic decisions are
made at headquarters;
� Limited subsidiary
autonomy;
� Key positions indomestic and foreign
operations are held by
headquarters·
personnel;� PCNs manage
subsidiaries.
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Geocentric
� A global approach -
worldwide integration;
� View that each part of
the organization
makes a uniquecontribution;
� Nationality is ignored
in favor of ability:� Best person for the job;
� Color of passport does not
matter when it comes to
rewards, promotion and
development.
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Facilitators
� Market Saturation
� Political Reasons
� Cheap Labor.
� Availability of resources
� Technological advancements
� Economies of scale and scope
� Competitive Pressure
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Where to Expand Internationally
�� Rating factors to evaluate where to expandRating factors to evaluate where to expand
� Political Risk
� Cultural Distance
� Geographic Distance
� Economic Environment� Foreign Exchange Volatility
� Market Size
� Market Growth
� Regulatory Environment
�� Firms may then deriveFirms may then derive� Measure of country risk from these ratings
� Measure of expected return
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Strategic Planning For Foreign Market Entry
1. Identify the company·s objective in its Foreign MarketEntry.
2. Preliminary Country Screening
3. What are the Opportunities and Constraints in the Target
Market?
4. What Capabilities, Resources, and Skills are needed to
succeed in the Foreign Market?
5. Does the company have the Core Capabilities and
Resources to Score High on the key Success Factors?What
are our Strengths andWeakness on the Key Success
Factors?6. Should the company Enter the target Market, and How?
7. Compare and Rank the Targeted Countries.
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Identify the company·s objective in its
Foreign Market Entry.
� Management should be clearly understand the
objective for entering the foreign market
� The objective could be«
� Cheap Labor.
� Availability of resources
� Technological advancements
� Economies of scale and scope
� Competitive Pressure
� Reduce the Risk
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Managing Portfolio Of Country
Subsidiaries
Two Approaches areTwo Approaches are
�� Host Country Attractiveness VersusHost Country Attractiveness Versus
Competitive Strength MatrixCompetitive Strength Matrix
�� International Risk Versus Return PortfolioInternational Risk Versus Return Portfolio
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Host Country Attractiveness VersusHost Country Attractiveness Versus
Competitive Strength MatrixCompetitive Strength Matrix
CollaborativeStrategies
Growth Strategies
Defensive
Strategies
Cross-
SubsidizationStrategies
Firm-Level Competitive Strength in Each Host Country
Host
Country
Attractiveness
Low High
High
Low
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International Risk Versus Return Portfolio
Negative to Low Medium High
High
Medium
Low
Selectively
Grow
Harvest & DivestOr Licensing
Increase
Resources
to Match Risk or International
Joint Venture
Cross-Subsidize Grow Industry Leadership
Host
Cou
ntry
risk
Expected Profits in each host country
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Modern International Strategic Orientations
High
High
Low
Low Local Responsiveness Pressures
GlobalIntegration
&
Coordination
Pressures
Global Orientation
(Chemicals, Heavy Metals
Extractive Industries)
Transnational Orientation
(Pharmaceuticals,
Telecommunications,
Financial Services)
International Orientation
(Cement, Fabric Mills)
Multi Domestic Orientation
(Consumer Nondurables)
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Value Chain Configuration & Strategic
Orientations Of Firms
Procurement
Eg., components, machinery, advertising, services
Support
Activities
Firm Infrastructure
Eg., Financing , Planning, investor relations
Human Resources Management
Eg., recruiting, training, compensation system
Technology Development
Eg., Product design, testing, process design, material & market research
Inbound
LogisticsEg.
Incoming
Material
storage
Operations
Component
Fabrication,
assembly
Branch
operation
OutboundLogistics
Eg. Order
Processing,
warehousing
Marketing &Sales
Eg., Sales
force,
promotion
After SalesService
Primary Activities
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Primary activities
� Primary activities are purchasing raw materials ,transporting to the factory , production , operations,
marketing and sales.
� Ex : Inbound Logistics .,Incoming Material storage
� Operations Component Fabrication, assembly, Branch operation
� Outbound LogisticsEg. Order Processing, warehousing
� Marketing & SalesEg., Sales force, promotion
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Supporting Activities in value chain
� Firm activities which are required to enhance theefficiency and effectiveness of the primary
activities are known as support activities.
� Examples
� Firm Infrastructure� Eg., Financing , Planning, investor relations
� Human Resources Management
� Eg., recruiting, training, compensation system
� Technology Development
� Eg., Product design, testing, process design, material &
market research
� Procurement Eg., components, machinery, advertising, services
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Down Stream Activities
Activities which are closely associated with the customers
Are known as down stream activitiesdown stream activities
Example: Advertisement in the newspaper , sales promotion , delivery,Supplying the products to the shops , retailers and wholesalers
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Upstream Activities
Activities which are uncoupled from the customers are
up stream activities .
Examples: purchasing the materials , Production , operations
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Worldwide Dispersal & Reintegration
� The Functional Scope Of Value Chain Dispersal &
Integration Strategies
� The Dispersion of companies various activities and functions of
the value chain and their locations in different parts of the world
to take advantage of the national differences.national differences.� Factors
� Comparative advantage of the country
� Efficiency gains from Economies of Scope and Scale
� Opportunity to innovate and learn from diverse culture
� Competitive pressure from domestic and foreign based
companies
� Benefits of flexibility and risk reduction
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Reintegration of activities & Functions
� Levels of Integration
� Stand alone integration
� Simple Integration
� Complex Integration
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Stand alone integration
France² VCR·s
Germany -Camcorde
rs
Tape
Recorders- Brazil
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Simple Integration
� Uni-directional � Multi- Directional
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Complex Integration
� Complex integration strategy arecharacterized by dispersal of the value
chain into discrete functions ² component
production, assembly, finance, R & D,
distribution and so on.� Example- Production Chain Manufacture
the Electric Fan might be� Purchasing @ France
� Manufacturing of Frame @ Mexico� Manufacturing of Blades @ India
� Manufacturing of Motor @ Germany
� Assembling in Singapore
� Marketing in North America
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Firm Level Strategies For International
Competitiveness
�Core Competency Leveraging
�Counter Attack
�Glocalization
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Core Competency Leveraging
� Strategy used by companies that are gainingprominence in a variety of businesses.
� Core Competence ² distinctive ability to excel in a
key area, upon which a company can build a
variety of businesses and develop new generations.� Core Products ² Intermediate linkages between
core competencies and end products
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Core Competency of Honda
Engines & power-train technology
� Core Product
� End Product
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Core Competency - Canon
Imaging
� Core Product � End Product
� Imaging
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Core CompetencySemiconductors & Digital Display
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Counter Attack
Japan companies ³attackedattacked ³ U.S Market
Lower Costs derived from the cheap labor
U.S Companies ³counter attackedcounter attacked´
Offshore assembly &manufacturing sites
in Asia to lower their production cost
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Glocalization
Glocalization of Management
Glocalization of Foreign Affiliates
Glocalization of Exports
Glocalization of Prodcuts
Glocalization of Production
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Glocalization of Foreign Affiliates
GEARING UP: Stefan Krause, CFO of BMW,
in front of the car that is to be assembled at
its proposed facility at Maraimalainagar
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Glocalization of Exports
� Using foreign production plants as export bases tothird party country market is yet another way to
become a ´localµ company in a foreign country.
� Example :
� Japanese have been exporting U.S Made Cars toJapan and Europe
� Opening plant in developing country and
exporting to other part of the world.
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Glocalization of Prodcuts
� local favorites
� McItaly burger in
Italy,
� Maharaja Mac inIndia,
� The McLobster in
Canada
� The Ebi Filit-O in
Japan.
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Glocalization of Prodcuts
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Thank You
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