Strategies for International Competition_GlobalOperations

8/7/2019 Strategies for International Competition_GlobalOperations

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Strategies forInternational Competition

DeepaChandrasekar

deepa.chandirrasekar@gmail.com

The Roots of International Strategy

� The three states of mind or attitudes

that are inferred from the managerial

practices:

�Ethnocentrism

�Polycentrism

�Geocentrism

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.

Polycentrism

� Strategic decisions are

made at headquarters;

� Limited subsidiary

autonomy;

� Key positions indomestic and foreign

operations are held by

headquarters·

personnel;� PCNs manage

subsidiaries.

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.

Facilitators

� Market Saturation

� Political Reasons

� Cheap Labor.

� Availability of resources

� Technological advancements

� Economies of scale and scope

� Competitive Pressure

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

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.

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

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

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

Country

Attractiveness

Low High

International Risk Versus Return Portfolio

Negative to Low Medium High

Medium

Selectively

Harvest & DivestOr Licensing

Increase

Resources

to Match Risk or International

Joint Venture

Cross-Subsidize Grow Industry Leadership

Expected Profits in each host country

Modern International Strategic Orientations

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)

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

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

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

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

Upstream Activities

Activities which are uncoupled from the customers are

up stream activities .

Examples: purchasing the materials , Production , operations

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

Reintegration of activities & Functions

� Levels of Integration

� Stand alone integration

� Simple Integration

� Complex Integration

Stand alone integration

France² VCR·s

Germany -Camcorde

Recorders- Brazil

Simple Integration

� Uni-directional � Multi- Directional

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

Firm Level Strategies For International

Competitiveness

�Core Competency Leveraging

�Counter Attack

�Glocalization

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

Core Competency of Honda

Engines & power-train technology

� Core Product

� End Product

Core Competency - Canon

Imaging

� Core Product � End Product

� Imaging

Core CompetencySemiconductors & Digital Display

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

Glocalization

Glocalization of Management

Glocalization of Foreign Affiliates

Glocalization of Exports

Glocalization of Prodcuts

Glocalization of Production

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

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.

� local favorites

� McItaly burger in

Italy,

� Maharaja Mac inIndia,

� The McLobster in

Canada

� The Ebi Filit-O in

Japan.

Thank You

Questions ????????

Strategies for International Competition_GlobalOperations

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