STRATEGY AND

MANAGEMENT
IN
INTERNATIONALORGANIZATI
ON
 STRATGEIC MANAGMENT
• STRATEGIC MANAGEMNET IS THE
COMBINATION OF THREE PROCESS :

STARGEY FORMULATION
STRATEGY IMPLEMENTATION
STARTEGY EVALUATION
 The Strategic Planning process

External
environment
Analysis
(opportunity & Goal
Strategic
Threat analysis) Formulation
Vision &
SWOT Analysis & Implementation
Mission
Strategy
Internal Formulation
Environment
(strengths/
Weakness
Analysis)

Feedback and control 3

 Concept of strategic Management

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 Assessment of the business environment

Internal environment
Analysis of each functional areas such as
finance , marketing human resources etc.
Study of management areas
Study of human side
Analysis of organizational strength and
weaknesses.
 External Environment Analysis

Social factors
 Demographic characteristics : population ,age , rural & urban mobility,
income distribution. For example baby boom in US after 1980’s world war.
 Social attitude and values : customs , beliefs ,ritual , changing life styles
,purchasing power .
 Rural India : rise in purchase power, education levels , increasing
awareness due to media. For example LG developed “no frill” TV for rural
areas named ”Sampoorna”.
 Family structure and changes in family values : both parents are
working .
 Education levels : awareness and consciousness of rights and work ethics ,
consumer rights awareness and Law.
 Change in ethical environment : increasing consumption of liquor and
tobacco .
 Social responsibilities of business : treatment to reduce pollution , forest
degradation , ban in use of plastic , companies adopting villages , creating
facilities for general public , health services.
 Non conventional energy sources : use of wind energy and solar energy
as a alternative source of energy , environment friendly practices.
Economic Factors
Capitalistic
Socialist or mixed economies
National economic policies such as annual budgets ,
liberalization , protection , taxation , fiscal and monetary
policies , rate of savings and investment , export –import
policies.
National economic indicators such as rate of growth of
GDP , National Income , inflation , per capita income
&disposable incomes.
 Technological Factors

Technology) revolution
Impact of IT (Information

Cutting edge technologies

ERP enterprise resources planning systems
For example :
Change from black and white TV to Plasma TV
Normal tyres to Radial tyres
Form narrowband to wireless broadband.
Fixed landline to mobile
Political & Regulatory Factors

Understanding of political and government regulatory philosophy

Political stability.
 Competitor Analysis

• Identifying competitors and the threats they pose ?

• Strategy of the competitors
• Strength and weakness of the competitors
• Competitive advantage and disadvantages of
relative competitors
• Competittors ,past , present and future strategies.
• Competitors respond to a new product or pricing
strategy.
 Source of information for competitor
analysis
Spying or Industrial espionage

Company involve intelligence agencies to collect information of competitors , trade

secrets , tender prices .this is very common practices in Japan and USA.
Japanese have technological information scanning & analysis system and
intelligence activities of MITI (Japanese Ministry of International trade & industry )
and JETRO (Japan External Trade Organization ) .
Mitsubishi International Corporation occupies two floors of Pan America Building in
New York and has a small army of people screening technical magazines and
contacting companies for brochures & other material.
Apart from them information are gathered from recorded data like company annual
reports , product brochures , observable data such as competitors pricing and
opportunistic data such as discussion with dealers , suppliers , customers and previous
management of the competitors
 Internal Analysis
Basic strategic management tools to evaluate
company resources and internal environment are :

• Present strategy
• Company’s resources
• SWOT analysis
• Value chain analysis
• Strategic cost analysis
• Competitive strength analysis
 STRATEGY
IMPLEMENTATION
• Allocation of sufficient resources (financial ,
personnel , time , technology support)
• Establishing a chain of command or some
alternative structure cross functional teams)
• Managing process which includes monitoring
results , comparing to benchmarks and best
practices , evaluating the efficacy and efficiency
of the process , controlling variances and
making adjustment to the process , controlling
for variances and making adjustment to the
process as necessary.
 Strategy evaluation
• Measuring the effectiveness of the
organizational strategy
• There are two approaches , the industrial
organization approach based on economic
theory and deals with issues like competitive
rivalry , resource allocation , economies of scale
assumptions –bounded rationality ,self discipline
behavior, profit maximization. The social
approach deals primarily with human
interactions assumptions –bounded rationality ,
satisfying behavior, profit sub-optimality
 Core competencies
• A Core competencies is the company’s key strength
which includes a number of constituent skills. For
example core competencies of Eureka Forbes is its
expertise in door-to-door selling. They are called
distinctive competencies.
• To be considered a distinctive competencies , the
competency must meet three test :
 Customer value
 Competitor unique
 Extendibility (developing new product/services or enter new
market)
 Cooperative strategies
• Cooperative strategies is used like competitive strategies to gain competitive
advantage within an industry by working with other firm.
• The two general types of cooperative strategies are collusion and strategic
alliances.
 Collusion is the active cooperation of firms within an industry to reduce output and
raise prices in order to get around the normal economic law of supply and demand.
Collusion may be explicit , in which firms cooperate through direct communication
and negotiation , or tactics in which firms cooperate indirectly through an informal
system of signals.
 A strategic alliances is a partnership of two or more corporations or business units to
achieve strategically significant objectives that are mutually beneficial.
 Mutual service consortia is a partnership of similar companies in similar industries
who pool their resources to gain a benefit that is too expensive to develop alone ,
such as advanced technology.

 Joint venture is a “cooperative business , activity , formed by two or more separate

organizations for strategic purpose
 Licensing arrangement is an arrangement in which the licensing firms grant rights to
another firm in another country or market to produce and /or sell a product .
 Value chain partnership is a strong and close alliance in which one company or unit
forms a long-term arrangement with a key supplier or distributor for mutual
advantage.
 Business level strategy
• Business level strategies details actions taken
to provide value to customers and gain a
competitive advantage by exploiting core
competencies in specific , individual product or
service markets.
• business level strategy is concerned with firm’s
position in an industry , relative to competitors
and to the five forces of competition
 Porters Principles of industry Competition

• Michael Porter in 1980 developed this principle

to evaluate industry competitive intensity .
• There are five fundamental forces which
determine the intensity of competition
Intensity of rivalry among existing competitors
Barriers to entry by new competitors
Availability of substitute products and services
Buyers bargaining power
Suppliers’ bargaining power.
 The five forces model of competition :
Firms in other industries
Offering substitute
products

Competitive pressures coming from the market

Attempts of outsiders to win buyers over to their products
Competitive Competitive
Rivalry among
Pressures Competing sellers Pressures
Suppliers growing out Competitive pressures Growing out
Of key Of supplier Jockeying for better market Buyers
Position and competitive Of supplier
inputs Ability to advantage Ability to
Exercise Competitive pressure
coming from the threat Exercise
Bargaining of entry of new Bargaining
Power and rivals power and
leverage Potential new leverage
entrants
 Crafting A Strategy

Strategies are converted into objectives which in turns are converted into
action plan and finally it is implemented, results are evaluated and
control measures are taken or changes are made responding to
unpredictable happenings in the surrounding environment.
Corporate strategy : to establish a business positions in diversified
industries and to improve market share.
Business strategy :it is concern with the performance of a specific
business line in the competitive market.
Functional strategy :it is concern with the strategy for various
department like R&D, production, marketing etc
Operating strategy : it is concern with frontline organizational units20
 Cultural differences and Globalization

Study of the Cultural background of the country and their

people can have significant influence on the organizational
decision and strategy policies.
Global sourcing and global markets
Value chain of multinational corporations such as GM , Ford
Motors car company , Hyundai have Globalize for competitive
advantage.
Satellite TV and other information systems have made us all
global citizens.
MNC’s firm spreading their operation all over world.
 Theory of international trade
• From the ancient time people belonging to different countries have
carried on trading activities . History records with many instances of
maritime trade of ancient India with several far east countries of the
globe , beside trading with Greece and Rome.
• The technology and the techniques connected with maritime trade
would have been different in different periods of history ; but the
fundamental objectives remains the same, namely , enriching the
nations by means of foreign trade. Study of international trade has the
following benefit and importance
 It broadens the mental outlook of the people
 It helps to develop international outlook
 It emphasizes the need for international co-operation
 It helps to study specific problem such as artificial tariff barriers , exchange
control , international immobility of factors of production and different
national policies.
 International trade :nature ,
scope and importance
• During 16th middle age , foreign trade was highly reguated and controlled by the
state which was considered to be omnipotent and omniscient . Every efforts was
made to accumulate gold by exporting manufactured goods in order to create a
favorable external balance of payment for massive gold inflows.
• The classical theory : Adam and Smith , the father of political economy , developed
the concept of free trade of economic liberalism , the philosophy being called
Laissez faire.
• During the course of 20th century , after world war I the nature of international trade
underwent substantial changes and refinement of the old theory became
indispensable. Abandonment of the gold standard , appearance of international
monopolies and cartels , post war hyper inflation and the great depression of the
thirties caused serious imbalance in the external balance of payment position of
several countries.
• New and modern literature : Jacob Viner’s book on “studies in the theory of
international trade” is a monumental and scholarly treatment of the history of the
doctrine.
 CORPORATE GOVEREANCE
ORGANIZATION STRUCTURE
• Organizational structure depends upon the product to be
developed. Wheel Wright and Clark define a continuum of
organizational between two extremes functional organizations
and project organizations
• Functional organizations are organized according to the
technological disciplines. Senior functional managers are
responsible for allocating resources.
• A project organization exists of product oriented flows : project
and teams. The project members leave their functional
department and devote all their time to the project
 Classification of organization
structure
• The product to be developed is comprehensible for one
person. one person likely to have all the knowledge
needed to develop manufacturing and assembly.
• The product to be developed has a fairly low complexity,
but total work is high. These kind of product are likely to
be developed within one functional department.
• The product to be developed consists of a lot of different
elements , such as software , PCB , power supply and
mechanical structure.
• The product is complex . Total work is very high .
Employees can thus participate on a full time basis.
 Human Organization structure
• According to the management science , most human organizations
fall roughly into four categories :
 Pyramid or hierarchies : an arrangement with leader who leads leaders. In
a hierarchy every employee tends to rise to his level of incompetence.
 Committees or juries : these consist of peers who decide as a group,
perhaps by voting. Committee are usually assigned to perform or lead
further actions after the group comes to a decision, whereas members of
a jury come to a decision.
 Matrix organization : this organizational type assigns ach worker two
bosses in two different hierarchies . One hierarchy is “functional “ and
assures that each type of expert in the organization is well trained, and
measured by a boss who is super-expert in the same field and the other
direction is “executive” and tries to get project completed using the
experts.
 Ecologies : this organizational has intense competition. Bad parts of the
organization starve . Good part get more work. Every body is paid for
what they actually do, and runs a tiny business that has to show a profit ,
or they are fired.
 Business strategy implementation

• Implementation strategy entails converting the

organization’s strategic plan into action through the
development of programs, budgets and procedures .It is
job of whole management team. all managers become
strategy implementers in their area of authority and
responsibility, and all employees are participants.
 Program : it is statement of the activities or step needed to
accomplish a single-use plan. It may involve restructuring the
corporation , changing company’s internal culture , or beginning a
new research \efforts.
 Budgets : is a statement of a corporation's programs in terms of
dollars.
 Procedures : (SOP) standard operating procedures are system of
sequential steps or techniques that describe in detail how a
particular task or job is to be done.
 Global strategic management
• A well defined global strategy can help a firm to gain competitive advantage .
This advantage can arise from the following resources :
 Efficiency
 Economics of scale from access to more customers and markets.
 Exploit anther country’s resources –labor , raw material
 Extend the product life cycle
 Operational flexibility – shift production as costs , exchange rates
 Strategic
 First mover advantage and only provider of a product to a market
 Cross subsidization between countries.
 Transfer prices
 Risk
 Diversify macroeconomic risk (business cycle not perfectly correlated among
countries)
 Diversifying operational risks (labor problems, earthquakes), war)
 Learning
 Broaden learning opportunities due to diversity of operating environment
 Reputation
 Crossover customers between markets
 Framework of strategic
objectives

Strategic objectives Sources of Competitive Advantage

Scope
National Scale of
economies
differences economies
Sharing
Efficiency operations Exploit factors Scale in each investments
cost differences activity and costs

Flexibility Market or policy- Balancing scale Portfolio

induced changes with strategic & diversification
operational risks
Societal differences Shared
Experience –cost
Innovation in management and learning
reduction and
organization across
And learning innovation
activities
The nature of competitive advantage in
global industries

• A global industry have a potential to compete in all markets of that

product or services.
• A global firm’s competitive advantage depends on economies of scale
and economies of scope gained across markets.
• Differences in country cost
• Common Customer needs favor globalization
• The existence of many global competitors will have a cost advantage
over local competitors and industry is ripe for globalization.
• Country comparative advantage resides in the factor endowments
and created endowments of particular region which includes land,
natural resources , labor.
• The following drivers determine an industry’s globalization potential :
 Cost drivers
 Location of strategic resources
 Global strategy
• Multi-domestic strategy
• Product customized for each market
• Product is same in all countries
• Centralized control little decision making
authority on the local level
• Effective when differences between countries
are small
• Advantage : cost , coordinated activities , faster
product development