CORPORATE LEVEL STRATEGIES

COOPERATION IS REQUIRED IN

COMPETITIVE WORLD AND TODAYS

BUSINESS ENVIRONMENT .
INTERNATIONALIZATION STRATEGY
THESE ARE THE EXPANSION
STRATEGIES THAT REQUIRES
ORGANIZATION TO MARKET THEIR
PRODUCTS OR SERVICES BEYOND THE
DOMESTIC OR NATIONAL MARKET.

WHY INTERNATIONALIZATION
STRATEGIES

MAJOR FACTORS:1.TECHNOLOGICAL
DEVELOPMENT
REDUCING
THE
TRANSPORTATION
COST,
IMPROVEMENT
IN
COMMUNICATION
TECHNOLOGY
,
TRADE AND INVESTING NATIONS AND
POLICY INDUCED, REDUCED TARIFF
RATES
AND
CROSS
BRODER
INVESTMENTS
AND
INCREASE
IN
INTERNATIONAL
TRADE
AND

2 . LOWERING OF TRADE AND

INVESTMENTS
3. EASE IN GOVERNING TRADE AND
INVESTMENTS .
4. INTENSIFICATION OF MARKETS ,
TRADE , FINANCE , TECHNOLOGY,
LABOUR,
TRANSPORTATION
AND
ECONOMIC INSTITUTION.

PORTERS MODEL OF COMPETITIVE ADVANTAGE OF

NATIONS:

PORTERS DIAMOND FOUR FACTORS ARE CALLED

DIAMOND DETERMINANATS:1. FACTOR CONDITIONS:- PRODUCTION INPUTS
2. DEMAND CONDITIONS:- NATURE AND SIZE OF
BUYER NEED.
3. RELATED AND SUPPORTING INDUSTRIES:EXISTENCE OF RELATED AND SUPPORTING
INDUSTRIES.
4. FIRM STRATEGY, STRUCTURE AND RIVARLY:CONDITIONS IN NATION RELATED WITH
COMPETITION.

TYPES OF INTERNATIONAL
STRATEGIES:

TWO SET OF FACTORS IMPENGE UPON

A FIRM DECISION TO ADOPT
INTERNATIONAL STRATEGIES:1. COST PRESSURE
2. PRESSURE FROM LOCAL
RESPONSIVENESS.

FOUR TYPES OF INTERNATIONAL STRATEGIES:

GLOBAL STRATEGIES :- LOW COST

BASED APPROACH BASED ON REAPING
THE BENEFITS OF EXPERIENCE CURVE
AND LOCATION
BASED ECONOMIES
AND OFFERING OF STANDARDIZED
PRODUCT
ACROSS
DIFFERENT
CONTURIES

TRANSNATIONAL STRATEGIES

COMBINESD APPROACH OF LOW COST

AND HIGH LOCAL RESPONSIVENESS
SIMULTANEOUSLY.

INTERNATIONAL STRATEGY

CREATES VALUE BY TRANSFERRING

PRODUCTS AND SERVICES TO FOREIGN
MARKET WHERE THESE ARE NOT
AVAILABLE.

MULTIDOMESTIC STRATEGY

ACHIEVE HIGHER LEVEL OF LOCAL

RESPONSIVENESS BY MATCHING THEIR
PRODUCT AND SERVICE OFFERING TO
NATIONAL CONDITIONS OPERATING IN
THE COUNTRIES THEY OPERATE.

INTERNATIONAL ENTRY MODE

1. EXPORT ENTRY MODE:- DIRECT AND

INDIRECT EXPORTS).
2. CONTRACTUAL ENTRY MODES:(LICENSING
,
FRANCHISING
AND
CONTRACTUAL ARRANGEMENTS.
3.
INVESTMENT
ENTRY
MODE:INDEPENDENT VENTURES AND WHOLY
OWNED SUBSIDIARIES.

BORN GLOBAL FIRM

BUSINESS ORGANIZATION THAT, FROM

OR NEAR THEIR FOUNDING, SEEK
SUPERIOR
INTERNATIONAL
PERFORMANCE FROM THE APPLICATION
OF KNOWLEDGE BASED RESOURCES
TO THE SALE OF OUTPUT IN MULTIPLE
COUNTRIES.

STRATEGIC DECISIONS IN INTERNATIONALISATION

1. WHICH INTERNATIONAL MARKET TO

ENTER?
2. TIMING OF ENTRY INTO
INTERNATIONAL MARKETS.
3. SCALE OF ENTRY INTO
INTERNATIONAL MARKETS.

ADVANTAGES AND DISADVANTAGES OF EXPANSION

STRATEGIES

ADVANTAGES:1. REALISING ECONOMIES OF SCALE.

2. REALISING ECONOMIES OF SCOPE.
3. EXPANSION AND EXTENSION OF
MARKETS.
4. REALISING LOCATION ECONOMIES.
SOME ADDITIONAL COST ARE ALSO
REQUIRED LIKE INFRASTRUCTURE AND
INFORMATIONAL COST

DISADVANTAGES

HIGHER RISKS
DIFFICULTY IN MANAGING CULTURAL
DIVERSITY
HIGH BEREAUCRATIC COST
HIGHER DISTRIBUTION COST
TRADE BARRIERS

REGIONALIZATION STRATEGIES

THIS CAN BE CONSIDERED AS AN

EXPRESSION OF SEMI GLOBLIZATION .
SEMI GLOBLIZATION IMPLIES NEITHER
EXTREME
GEOGRAPHICAL
FRAGMENTATION
OF
WORLD
IN
NATIONAL MARKETS , NOR COMPLETE
INEGRATION

FIVE TYPES OF REGIONALIZATION STRATEGIES

HOME BASED STRATEIGIES:- INVOLVES

MANUFACTURING FACILITIES IN HOME
COUNTRY AND EXPORTING FROM
THERE TO NEARBY COUNTRIES.
PORTFOLIO BASED STRATEGIES:-SET OF
INTERNATIONAL MANUFACTURING
FACILITIES BASED IN DIFFERENT
REGIONS.

HUB STRATEGIES

BUILDING OF NETWORK OF HUBS

(REGIONAL BASES).
PLATFORM STRATEGIES:- INVOLVING
MAINTAINING
INTERREGIONAL
PLATFORM
PROVIDING BACKEND
ACTIVITIES,DELIVERING ECONOMIES OF
SCALE AND SCOPE AND SPREADING
FIXED COSTS ACROSS REGIONS.

MANDATE
STRATEGIES:INVOLVES
PURSUING
ECONOMIES
OF
SPECIALIZATION
THROUGH
INTERREGIONAL
MANDATES
THAT
ASSIGN SPECIFIC PRODUCTS OR ROLES
TO PARTICULAR REGIONS.

STRATEGIES FOR POOR SOCIETY OR WEAKER

SECTION OF SOCIETY

STRATEGIES OF BOTTOM OF PYRAMID

DEPENDS ON TACTICS OF MAKING
PRODUCTS AND SERVICES AFFORDABLE
FOR POOR PEOPLE.
1. EASY PAYMENTS AND INSTALLMENTS
2. COST CUTTING
3. SMALL PACKAGES
4. CHARGING PRICES BY PAY BY USE.
5. DIRECT DISTRIBUTION.

STRATEGIES FOR LOCAL COMPANIES COMPETING WITH

GLOBAL COMPANIES

1. USING HOME FIELD ADVANTAGES :SITUATIONS WHERE THE PRESSURES

FOR GLOBAL COMPETITION ARE WEAK
AND A LOCAL FIRM HAS COMPETITIVE
STRENGTH WELL SUITED TO LOCAL
MARKET GOOD STRATEGY IS TO
CONCENTRATE ADVANTAGES TO ENJOY
IN THE HOME MARKET.

2. TRANSFERRING THE COMPANY EXPERTISE TO CROSS

BORDER MARKETS

LAUNCHING
INITIATIVES
TO
TRANSFER
ITS
EXPERTIZE TO CROSS BORDER MARKETS.
3. SHIFTING TO A NEW BUSINESS MODEL OR
MARKET NICHE:SHIFTING SOME PORTION OF
BUSINESS .
4. CONTENDING ON A GLOBAL LEVEL:- LOCAL
COMPANIES IN AN EMERGING MARKETS HAS
TRANSFERABLE RESOURCES AND CAPABILITIES, IT
CAN SOMETIMES LAUNCH SUCCESSFUL INITIATIVES
TO MEET THE PRESSURE FOR GLOBLIZATION HEAD
AND START TO COMPETE ON AGLOBAL LEVEL ITSELF.

COOPERATIVE STRATIGIES

COULD TAKE INTO ACCOUNT THE

POSSIBILITY OF MUTUAL COOPERATION
WITH COMPETITORS AND THE SAME
TIME COMPETING WITH THEM SO THAT
MARKET POTENTIAL COULD EXPAND.

COOPERATIVE STRATEGIES ARE AS FOLLOWS:

1. MERGERS AND ACQUISITIONS

2. JOINT VENTURES
3. STRATEGIC ALLIANCES.

MERGER AND ACQUISITIONS

Or take over's essentially involves the

external approach to expansion basically
two or occasionally more than two
entities are involved.
Joint
ventures
occurs
when
an
independent firm is created at least
between two other firms.
.

Strategic alliance are partnership

between firms where by their resources
, capabilities and core competencies
are combined to pursue mutual interest
to develop manufacture or distribute
goods and services

Types of merger and acquisitions:1. horizontal merger :- two or more

organizations in the same business.
2. vertical mergers :- combination of two
or more organization not necessarily in
the same business example footwear
manufacturing unit combines with the
tannery or with the chain of shoe stores.

Concentric merger:- when there is a

combination of two or more organization
related to each other in terms of customers
functions , customer groups , or alternative
technologies used. Example :- Hosiery
company combines with footwear companies
Conglomerate mergers:- when there is
combination of two or more organizations
unrelated to each other footwear company
combines with pharmaceutical companies.

REASONS FOR MERGERS AND AUQISITIONS:

Increase the value of organizational

stock , growth rate growth in
investment , stability in earning and
sales , diversification of product line ,
reduce competition , market coverage ,
quick resources , synergy.

WHY SELLER WISH TO MERGER :

To increase the value of owners stock

and investment
Increase growth rate
Stabilize operations.
Top management succession problem.

IMPORTANT ISSUES IN MERGER AND ACQUISITION

Strategic issue related with

commonality of interest .
Three financial issues :- valuation of
business , source of financing funds or
borrowed funds , taxation .
Managerial issues :- professional
management.
Legal issues in merger .

HOW MERGER AND ACQUISITION TAKES PLACE :

1. spell out the objectives

2. indicate how the objectives should
be achieved
3. access managerial qualities.
4. check the compatibility of business
cycle.
5. anticipate and solve the problem
early.
6. treat people with dignity band
concern.

PROS AND CONS OF MERGER AND ACQUISITION

It ensures proper management , offer easy

growth opportunities , crate mobility of
resources, avoid gestation period involved in
project , offer chance for sick unit to revive.
Opponent
of
takeovers
argues
:professionalism is replaced by money
power , no real asset creation by
organization to society ,interest of minority
shareholders are not protected, creates
monopolistic or oligopolistic tendencies.

JOINT VENTURE STRATEGIES :

An entity resulting from long term

contractual agreement between two or
more parties , to undertake mutually
beneficial economic activities ,exercise
joint control and contribute equity and
shares in the profit or losses of the
entity.

CONDITIONS OF JOINT VENTURES :

Gain access for new business

1. activity is uneconomical for an
organization to do alone.
2. high risk in business for sharing.
3. distinctive competencies.
4. to remove hurdles in business.

FIVE BASICS WHY JOINT VENTURE;

Technology
Geography
Regulations
Sharing of risk and capital
Intellectual exchanges

TYPES OF JOINT VENTURES

With in industries :- in one industry :ntpc and Indian railways for setting of
thermal power plant to meet railway
network across country.
Across different industries :- action aid
India and Tata social sciences offering
educational program for village people.
Across countries:- DLF AND NAKHEEL
PROPERTY DEVELOPER OF UAE.

STRATEGIC ISSUES IN JOINT

VENTURES:

ACHIEVING MUTUAL OBJECTIVES

ELIMINATING , REDUCING AND
CONTROLLING COMPETITION.
INCREASING MARKET SHARE.
IF TECHNOLOGY IS CRITICAL .
DIVERSIFICATION OF BUSINESS.
LEGAL AND REQULARITY HURDLES.

BENEFITS AND DRAWBACK IN JOINT VENTURES:

MAJOR BENEFITS:- MINIMIZING RISK ,

REDUCING INDIVIDUAL INVESTMENT IN
BUSINESS,
ACCESS
TO
FOREIGN
TECHNOLOGY
,
ACCESS
TO
GOVERNMENTAL AND POLITICAL SUPPORT .
DISADVANTAGES :- problem in equity
participation , foreign exchange regulation ,
lack of proper coordination , cultural and
behavioral differences.

WHY JOINT VENTURES FAIL :

Change of strategy
Regulatory change.
Success of joint venture.
Having partner hamper growth.
Lack of transparency.

STRATEGIC ALLIANCE

Two or more firms unite to pursue a set

of agreed upon goals, but remain
independent subsequent to the
formation of alliance
Partner firms shares benefits of allinace
and control over performance of
assigned task.
Contribute on major areas like
technology and product.

ALLIANCE MUST SATISFY ONE OF THESE CRITERIA:

It must be critical to the success of core

business goal or objectives
Critical to the development or
maintainance of a of a core
competencies.
Enables blocking competitive threath.
Create and maintain strategic choices
of firm
Mitigate significant risk to the business.

REASONS FOR STRATEGIC ALLIANCE

1. entering new markets

2. reducing manufacturing costs
3. developing and diffusing technology.

TYPES OF STRATEGIC ALLIANCES

1.Procompetitive alliance (low interaction / low

conflict):- these are inter industry, vertical
value chain relationship between their
manufactures and suppliers. Suppliers and
buyers firms entering upon long term
contracts contributes procompetitive alliances
2.non competitive alliance :- (high interaction /
low conflict) :- alliances can be entered upon
by firms that operates in the same industry
,they do not perceive each other as rival .

3. competitive alliance ( high interaction /

high conflict) :- alliance may be inter or intra
industry, this partnership brings two rival
firms in a cooperative arrangements.
Precompetitive alliance :-partnership brings
two firms from different often unrelated
industries to work on well defined actives
such as new technologies development.
Joint development of any item

MANAGING STRATEGIC ALLIANCE

1. clearly define a strategy and assign

responsibility.
2. phase in the relationship between
partners
3. blend culture
4. provide for an exit strategy.

PIT FALLS IN STRATEGIC ALLIANCE

Lack of trust , commitment ,

misunderstanding , conflict in goals and
objective , inadequate preparation for
entering, hasty implementation of
plans , controlling the relationship
rather than managing.
External conditions :- relation between
partners , human skills of mangers
involved , ,lack of leadership

DIGITALIZATION STRATEGIES :

It is a very vast concept encompassing a

number of areas such as business, social
sciences or technology
Digitalization :- is a technical term denoting
the conversion of analogue electrical signals
in to digital signal a process that takes place,
for instance, in the case of recording music
on a compact disk when physical sound
waves in the form of electrical sound signals
get converted into digtal electronic signals.

DIGITALIZATION IN SUCH AS

Computerization:- computers and

order to organize the data.
Electronisation :- physical data in to
electronic data digitalized and
networked.

PRINCIPLES OF DIGITALISATION STRATEGIES :

1. first stage :- organization must consider

reshaping the competitive landscape and the
architecture. ( performing servicing function ,
win the market before competitors do)
2. second stage :- organization must build
new connections by linking closely to the
customer( reduce human interface ,
continuity in every area , website must have
interface with customer , structuring every
transaction)

DIGITALIZATION TRANSFORMS THE VALUE CHAIN AND

VALUE SYSTEM IN SEVERAL DIFFERENT WAYS :

1. deconstruction
2. disintermediation
3. re intermediation
4. industry morphing:- traditional industries are
transforming in to entirely new types of
industries .traditional boundaries that defines a
particular business are being transformed thia
process is called morphing.
5. cannibalization
6. techno intensification

Last rechanneling. Distribution in

favour of internet based marketing
activities
Digitalization strategies :- three pahses
in digitalizing business
1. choosing among the e business
patterns
2. choosing e model
3. choosing e business design.

FIVE PATTERNS OF DIGITALIZATION

E channel pattern :- chain of relationship

between companies and customers and
between companies and their partners.
Click and brick pattern:- brick and mortar
firms are traditional organization click and
mortar firms are the new types of
organization that rely on information
technology traditional adopt some new
aspects of the new organization is called
click and brick pattern.

E market marker or net market

pattern :- online intermediaries that
connect different buyers and sellers
with in a common vertical industry.
Pure e digital product patterns :- many
product and services can be produced,
delivered consumed and licensed
ellectronically.