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GLOBAL ISSUES ON STRATEGIC MANAGEMENT

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STRATEGIC STRATEGIC MANAGEMENTMANAGEMENT

What is Strategic Management?What is Strategic Management?

Strategic management is the process of Strategic management is the process of developing and executing a series of developing and executing a series of competitive moves competitive moves to enhance the success of the organization to enhance the success of the organization both in the present and in the future.. both in the present and in the future.. It is a sound process that include an It is a sound process that include an analysis of the current business situation, analysis of the current business situation, the formulation of objectives and strategies the formulation of objectives and strategies based on that analysis, and an based on that analysis, and an implementation and evaluation procedure implementation and evaluation procedure that ensures progress toward each strategy that ensures progress toward each strategy and objective.and objective.focuses on the formulation of appropriate focuses on the formulation of appropriate strategic objectives based on a sound strategic objectives based on a sound understanding of the internal and external understanding of the internal and external environments faced by the firm. environments faced by the firm.

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GLOBALISATIONGLOBALISATION

The integration of national economies into The integration of national economies into the international economythe international economy through through trade, , foreign direct investment, , capital flows, , migration, the spread of , the spread of technology, and military presence.technology, and military presence. usually recognized as being driven by a usually recognized as being driven by a combination of economic, technological, combination of economic, technological, sociocultural, political, and biological sociocultural, political, and biological factors.factors.influenced the use of language across the influenced the use of language across the world. This street in Hong Kong, a former world. This street in Hong Kong, a former British colony, shows various signs, a few British colony, shows various signs, a few of which incorporate both Chinese and of which incorporate both Chinese and British English.British English.Japanese McDonald's fast food is an Japanese McDonald's fast food is an evidence of corporate globalizationevidence of corporate globalization

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Global strategic Global strategic managementmanagement

Global strategic management in a new world orderGlobal strategic management in a new world order The globalization of business has become so rapid that a new The globalization of business has become so rapid that a new field called "Global Strategic Management" has now emerged. field called "Global Strategic Management" has now emerged. This new field is a blend of strategic management and This new field is a blend of strategic management and international business that develops worldwide strategies for international business that develops worldwide strategies for global corporations.global corporations.Events such as the collapse of communism, the arrival of an Events such as the collapse of communism, the arrival of an environmental ethic, and other remarkable new developments environmental ethic, and other remarkable new developments signal that a new era is emerging in global affairs. signal that a new era is emerging in global affairs. This article describes a broader approach to global strategic This article describes a broader approach to global strategic management that encompasses these revolutionary changes.management that encompasses these revolutionary changes.project sponsored by the World Future Society called "WORLD project sponsored by the World Future Society called "WORLD 2000 focuses on conducting a global strategic management 2000 focuses on conducting a global strategic management process among business, govt, education, and other sectors of process among business, govt, education, and other sectors of societysociety

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Research in global Research in global strategic managementstrategic management

Editorial Objectives:-Editorial Objectives:- The focus of this series is the international dimension of The focus of this series is the international dimension of

strategic management. Through each original paper published strategic management. Through each original paper published on new issues of interest in the field it provides a rich on new issues of interest in the field it provides a rich understanding of international coverage of global strategic understanding of international coverage of global strategic management.management.Topicality:-Topicality:-

First published in 1990, topical volumes are published regularly First published in 1990, topical volumes are published regularly on an annual/bi-annual basis. On occasion a volume is on an annual/bi-annual basis. On occasion a volume is produced based on the proceedings of a key conference called produced based on the proceedings of a key conference called to debate a new aspect of international management strategy.to debate a new aspect of international management strategy.Key Benefits:-Key Benefits:-

Each volume provides regional and global perspectives on Each volume provides regional and global perspectives on current developments and research themes in an aspect of current developments and research themes in an aspect of international strategic management. international strategic management.

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CONT…CONT…

Key Audiences:Key Audiences:This series provides essential This series provides essential material for advanced students and decision-makers material for advanced students and decision-makers interested in the changing role of international interested in the changing role of international strategic management.strategic management. Coverage:Coverage:Topics of interest in this series include: the Topics of interest in this series include: the strategies of multinational enterprises; the nature and strategies of multinational enterprises; the nature and extent of globalization as it applies to firm strategy; extent of globalization as it applies to firm strategy; network relationships and organizational structures network relationships and organizational structures relevant to international strategic management; relevant to international strategic management; theories of international management; the implications theories of international management; the implications of international trade and investment agreements as of international trade and investment agreements as they affect business strategy;and other thematic they affect business strategy;and other thematic issues relevant to studies in international business issues relevant to studies in international business strategy.strategy.

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Ten Reasons Why Going Ten Reasons Why Going Global Is Advantageous Global Is Advantageous

To Your CompanyTo Your Company

1. Increases sales and profits (especially if fixed costs are tied to domestic 1. Increases sales and profits (especially if fixed costs are tied to domestic operations) = bigger chunk of growth gain.operations) = bigger chunk of growth gain.

2. Earns a greater return from a set of core competencies.2. Earns a greater return from a set of core competencies.

3. Generates economies of scale in production.3. Generates economies of scale in production.

4. Enhances local competitiveness and paves the way to larger, more lucrative 4. Enhances local competitiveness and paves the way to larger, more lucrative customers.customers.

5. Create jobs, productivity growth, and wealth.5. Create jobs, productivity growth, and wealth.

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CONT….CONT….

6. Enlarges the pie of potential investors.6. Enlarges the pie of potential investors.

7. Insulates seasonal domestic (local) sales by finding new 7. Insulates seasonal domestic (local) sales by finding new foreign markets and selling excess production capacity.foreign markets and selling excess production capacity.

8. Cuts costs through global outsourcing.8. Cuts costs through global outsourcing.

9. Reduces dependence on existing markets.9. Reduces dependence on existing markets.

10. Capitalizes on tax advantages.10. Capitalizes on tax advantages.

The knowledge you gain from learning the ropes of The knowledge you gain from learning the ropes of international business will make you open to new ideas, international business will make you open to new ideas, new approaches, new marketing techniques, new new approaches, new marketing techniques, new customers and new confidence to take on the world!customers and new confidence to take on the world!

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Global buisness environmentGlobal buisness environment

In order to operate succesfully in a global market,a manager In order to operate succesfully in a global market,a manager should understand the environmentvailing there.should understand the environmentvailing there.

The environment should be understood,analysed and then The environment should be understood,analysed and then used to one’s advantage.used to one’s advantage.

The environment may be devided into INTERNAL and The environment may be devided into INTERNAL and EXTERNAL.EXTERNAL.

INTERNAL ENVIRONMENT is related to internal variables of INTERNAL ENVIRONMENT is related to internal variables of market.market.

EXTERNAL FACTORS are uncontrollable factors as the firm EXTERNAL FACTORS are uncontrollable factors as the firm have no control over constraints.have no control over constraints.

The global buisness environmental factors are discussed as The global buisness environmental factors are discussed as follows:-follows:-

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Global buisness Environmental

factors

Economic variables

*global economy*indvidual economies

Legal and politicalvariables

Socio-culture variables

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GLOBAL BUSINESS GLOBAL BUSINESS ENVIRONMENTAL FACTORSENVIRONMENTAL FACTORS

ECONOMIC VARIABLESECONOMIC VARIABLESThe economic variables are the mos important factors which The economic variables are the mos important factors which

require proper strategic decision making.require proper strategic decision making. The economic factors prevailing in a global economy and The economic factors prevailing in a global economy and

factors of indvidual economy where one is to opreate factors of indvidual economy where one is to opreate should be understood before taking up opreations.should be understood before taking up opreations.

Secondly,economical variables keep on fluctuating or Secondly,economical variables keep on fluctuating or changing,so it is essential to adjust the plans as per the changing,so it is essential to adjust the plans as per the requirement of situation.requirement of situation.

It is further devided into Global economy and indvidual It is further devided into Global economy and indvidual economy which are discussed below:economy which are discussed below:

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CONT…CONT… GLOBAL ECONOMYGLOBAL ECONOMY::

various countries have economic relations with one another.the trade relations various countries have economic relations with one another.the trade relations among countries are based on mutual benefits.A global manager should know among countries are based on mutual benefits.A global manager should know volume of global trade,its composition and contents,pattern of world volume of global trade,its composition and contents,pattern of world trade,balance of payments,tarrifs,quotas etc. trade,balance of payments,tarrifs,quotas etc.

The manager should also assess the positon of his country in relation to world The manager should also assess the positon of his country in relation to world economic system.economic system.

INDVIDUAL ECONOMIES:-INDVIDUAL ECONOMIES:-

The economy of every country has its own composition,strenghts and The economy of every country has its own composition,strenghts and weaknesses.weaknesses.

global manager has to understand the divergent attributes of global manager has to understand the divergent attributes of domestic economies.domestic economies.

From buisness point of view,the availbility of infrastructural facilities From buisness point of view,the availbility of infrastructural facilities like roads,energylike roads,energy

banking,communication,water etc.the understanding of all this factors banking,communication,water etc.the understanding of all this factors will help a global manager in taking strategic decision about buisness.will help a global manager in taking strategic decision about buisness.

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LEGAL AND POLITICAL VARIABLES:-LEGAL AND POLITICAL VARIABLES:-

Legal and political variables dfine and restrict the area of operation of outside businessmenLegal and political variables dfine and restrict the area of operation of outside businessmen Government of time lays down role of foreign investors in industry and tradeGovernment of time lays down role of foreign investors in industry and trade International conventions and treaties should be clearly understoodInternational conventions and treaties should be clearly understood Knowledge of laws help manager to make decisionsKnowledge of laws help manager to make decisions

SOCIO-CULTURAL VARIABLES:-SOCIO-CULTURAL VARIABLES:- Directly influence marketing of products in any marketDirectly influence marketing of products in any market Cultural factors influence the way of living of people which further influence availability of Cultural factors influence the way of living of people which further influence availability of

goodsgoods Competition among suppliers forced them to adopt new and better ways of selling goodsCompetition among suppliers forced them to adopt new and better ways of selling goods manager should keep track of changing socio cultural factorsmanager should keep track of changing socio cultural factors Education system also influences supply of techniciansEducation system also influences supply of technicians Understanding of language, aspirations,likings etc is also necessaryUnderstanding of language, aspirations,likings etc is also necessary

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GLOBAL STRATEGIC GLOBAL STRATEGIC DECISIONSDECISIONS

MARKET SELECTION:MARKET SELECTION:before deciding factors like size of market,growth potential,distribution system etc before deciding factors like size of market,growth potential,distribution system etc should be studied should be studied also influenced by policy of the firm also influenced by policy of the firm position of the firm to cater to the demandposition of the firm to cater to the demand

MARKETING DECISION:MARKETING DECISION:strategies for domestic and foreign marketstrategies for domestic and foreign marketFunds required for entry in marketFunds required for entry in marketConsideration of risk factors Consideration of risk factors

METHOD OF ENTERING GLOBAL MARKET:METHOD OF ENTERING GLOBAL MARKET:

direct and indirect imports and exportsdirect and indirect imports and exportsLicencing or franchising Licencing or franchising Foreign subsidiary allianceForeign subsidiary allianceJoint ventureJoint venture

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CONT….CONT….

MARKETING MIX:MARKETING MIX:Variables of product,price,promotion and place should be plannedVariables of product,price,promotion and place should be planned

Use of Standardised marketing mix Use of Standardised marketing mix

Time saving and easy to controlTime saving and easy to control

MARKETINGMARKETING ORGANISATION: ORGANISATION: organisation act as tool to plan,control and coordinate global issues.organisation act as tool to plan,control and coordinate global issues.

Fixation of tasks and responsibilitiesFixation of tasks and responsibilities

Organisational options can be Organisational options can be functional,products,customer,area,matrix etcfunctional,products,customer,area,matrix etc

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BASIC ISSUES IN GLOBAL BASIC ISSUES IN GLOBAL BUSINESSBUSINESS

MODE OF OPERATIONS: MODE OF OPERATIONS: business can enter in form of business can enter in form of

joint venturejoint ventureOpen branchesOpen branchesFranchisingFranchisingEstablish subsidiary companyEstablish subsidiary company

there may be laws in some countries where mode of operations of foreign there may be laws in some countries where mode of operations of foreign companies is decided.So one has to adopt only that mode of operations companies is decided.So one has to adopt only that mode of operations

ALLOCATION OF RESOURCES: ALLOCATION OF RESOURCES: May be affected by organizational structure of the companyMay be affected by organizational structure of the companyResources may be transferred from a place where these are surplus to place Resources may be transferred from a place where these are surplus to place

where those are requiredwhere those are required

This type of balancing may save cost of providing fundsThis type of balancing may save cost of providing funds

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CONT…CONT…

PLANS AND POLICIES:PLANS AND POLICIES: these to be followed in following departmentsthese to be followed in following departments

ProductionProduction

FinanceFinance

MarketingMarketing

Research and development Research and development

LEADEARSHIP: LEADEARSHIP: Create a powerful teamCreate a powerful team

Mass communicate the new strategyMass communicate the new strategy

Form new teams to design and implement new changesForm new teams to design and implement new changes

Initiate new projectsInitiate new projects

Anchoring new approaches Anchoring new approaches

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STRATEGIES FOR GLOBAL STRATEGIES FOR GLOBAL BUSINESSBUSINESS

GLOBAL STRATEGY: GLOBAL STRATEGY: customer liking is same for both markets is presumed. customer liking is same for both markets is presumed. Standardised products can be sold simillarly in all marketsStandardised products can be sold simillarly in all marketsStandardised products have competitive advantage in economyStandardised products have competitive advantage in economyMay centralize R&D activities in one country , production may be May centralize R&D activities in one country , production may be decentralized decentralized

MULTIDOMESTIC STRATEGY: MULTIDOMESTIC STRATEGY: companies tries to achieve high level of responsiveness companies tries to achieve high level of responsiveness customer choices and preferences may be different in different countries customer choices and preferences may be different in different countries Mainly based on differentiationMainly based on differentiationCustomised products is requirement of these markets Customised products is requirement of these markets

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CONT…..CONT…..

INTERNATIONAL STRATEGY:INTERNATIONAL STRATEGY:

opening international division for exporting goods in countries where opening international division for exporting goods in countries where required required all control is retained at home office regarding productall control is retained at home office regarding productMNC’s have adopted this strategyMNC’s have adopted this strategyDoes not allow company to benefit from lowering cost or customizing Does not allow company to benefit from lowering cost or customizing products to global customersproducts to global customers

TRANSNATIONAL STRATEGY: TRANSNATIONAL STRATEGY: involves adoption of combined approach of low costs and high local involves adoption of combined approach of low costs and high local responsiveness responsiveness need to involve subsidiaries in generating ideasneed to involve subsidiaries in generating ideasDifficult to adopt these contradictory strategy Difficult to adopt these contradictory strategy