Unit III

INTERNATIONAL STRATEGIC MANAGEMENT

 International Strategic
management
Strategy is derived from the Greek word
Strategos
It means Generalship the actual direction
of military force
Strategy Mgt involves the analysis of internal
capabilities and external environment of a
firm in order to efficiently and effectively uses
the resources to meet organizational
objectives.
 Framework for
International Strategic management
International Strategic Management -
Overview

External / Internal Analysis

Strategic Choice and Positioning

Leveraging Competitive Advantage

Implementing the Strategic Plan

Integration
Strategic Compulsions
Strategic management includes strategic
planning, implementation, and
review/control of the strategy of an
organization.
The companies want survive in the
todays business competition, they must
sell their products in the global market
and enlarge their market.
The companies face the compulsion to be
global if they want to gain the global
market and more values.
Ex: Sony, Pepsi, Microsoft
Areas of Strategic
Compulsions
Orientation for Globalization
Emerging E-Commerce and Internet
Culture
Cut-Throat Competition
Diversification
Active pressure groups
Motive for corporate social
responsibility and ethics
 Standardization vs differentiation
Standardization or differentiation of the
marketing strategy are two extremes of a
continuum, i.e., as Differentiation increases
Standardization decreases, Conversely as
Differentiation decreases Standardization
increases.
Different aspects of Standardization vs
differentiation
Regional Perspective (Ex. EU, NAFTA, SAARC)
Marketing Process Perspective
Marketing Components / Marketing Mix Perspective
(Ex. Google, Nokia, Microsoft)
 Difference between
Standardization vs Differentiation
Basis of Standardization Differentiation
Difference
Application in marketing Companies should apply 4Ps in It is supported by strong market variety by
means the Same way in World wide. Market individualism and uniqueness.

Reason for Application Integration Access Regional or local Conditions

Product Offered Complete standardization Altering relevant feature according to

individual or geographic

Characteristics Doesnt have special Characters Product is differential from competitors

product.

Approach Increasing Commonality of Detailing the differentiation that exists

product between products and services

Economics of scale Higher productivity and lowers Increasing cost of production and lower
the total cost productivity

Need Satisfy the heterogeneous needs Satisfy a particular need of buyer

of the buyer

End Result Benefits buyer by lowering price Show sense of value to the buyer
Strategic options
Strategic options are creative alternative
action oriented responses to the external
situation that an organization (or group of
organizations) faces.
A Strategic option is a set of related options
that form a potential strategy.
Integration responsiveness
grid
Factors affecting strategic options
External Constraints
Intra-Organizational forces and
managerial power-relations
Values and preferences and
managerial attitudes towards risk
Impact of past strategy
Time constraints
Information constraints
Competitors reaction
Global portfolio management
Global portfolio investment (Mgt) means a
grouping of investment assets that focuses
on securities from foreign markets rather
than domestic market.
Examples
Purchase of shares
Purchase of bonds issued by Foreign Govt.
Acquisition of assets in Foreign Country
 Factors affecting Global Portfolio
Management
Tax rates on interest or dividends
Interest rates
Exchange rates
 Global entry strategies
Forms of international business
1.Trade related forms of international
business
Exports direct and indirect
Indirect Exports
Domestic Purchase
Export Houses
Piggybacking
Trading companies
Forms of international
business
2. Manufacturing Strategies without FDI
International licensing
International franchising
International Contract manufacturing
Turnkey Projects
Management contracts
Forms of international
business
3. Manufacturing Strategies with FDI

Joint Ventures
International strategic Alliance
Merger & Acquisition
Wholly owned subsidiaries
 Organizational issues of I.B
There are 3 issues
First, the different elements of a firms
organizational architecture must be internally
consistent.
Second, the organizational architecture must
match or fit the strategy of the firm strategy
and architecture must be, consistent.
Third, the strategy and architecture must be
consistent with competitive conditions prevailing
in the firms market strategy , architecture and
environment must be, consistent
Organisational stucture
A Functional Structure
A typical Product divisional Structure
One companys international
divisional structure
A world wide area structure
A world Wide product Divisional Structure
 A Functional Structure

Top
Managemen
t

Manufacturi
Purchasing Marketing Finance
ng

Buying Branch Accounting

Plants
Units Sales Unit Units
 A typical Product divisional
Structure
Head Quarters

Product Line Product

-A Line - B

Product Line
-C

Manufacturi
Purchasing Marketing Finance
ng

Accounting
Buying units Plants Sales unit
Units
 COMPANYS
International DIVISIONAL STRUCTURE

Head Quarters

Domestic Domestic Domestic Intl. Division

Division, product Division, product Division, product G.M
line - A line - A line - A Area Line

Country 2
Country -1
G.M
G.M
Product A,B
Product A,B and C
and C
A world wide area structure

Head Quarters

Middle
North Latin
Eastern
America America Europea Far East

n n n Area African Area
Area Area
Area
A world Wide product Divisional Structure

Head
Quarters

WorldWide Worldwide Worldwide

Product Product product
Division A Division B Division C

Area 2
Area 1
(Internation
(Domestic)
al)
A global matrix structure
Controlling of intrenational business
Personal Controls
Bureaucratic Controls
Output Controls
Cultural Controls
Approaches to control
Market approach
Rules approach
Corporate culture approach
 Performance evaluation
system
First, Incentive used often varies depending on the
employees and their tasks
Second, the successful execution of strategy in the
multinational firm often requires significant
cooperation between managers in different sub units
Contd
Third, the incentive system used within a
multinational enterprise often have to be
adjusted to account for national differences in
institutions and culture
Finally, it is important for managers to
recognize that incentive systems can have
unintented consequences.
Process of performance
measurement
Establish standards of performance

Measure actual performance

Compare actual with standards

Construct and implement an action plan

Review and revise standards

Objectives of performance
evaluation
To evaluate the economic
performance of its international
performance, this is frequently
referred to as an evaluation of the
units management performance.
To evaluate the units management
performance.
To monitor progress towards
corporate objectives including
strategic goals.
To assist efficient allocation of
resources.
Thank u