Slides Strat Managemnt Till First Internal Test

7/31/2019 Slides Strat Managemnt Till First Internal Test

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CORPORATEGOVERNANCE

Deals with laws, procedures,practices rules etc. relating tocorporate functioning:-

Companies Act 1956 Monopolies and restrictive trade

practices Act 1969 Foreign Exchange regulation Act 1973 Sick industries companies Act 1985

Security and Exchange Board of IndiaAct 1992


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CORPORATEGOVERNANCE

Security Contract Regulation Act1956

Listing Agreement of Stock Exchange The depository Act Consumer Forum Arbitration and Conciliation Act Codes prescribed by Chambers

SEBI Code on Corporate governance


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SEBI CODE (CLAUSE 49 LISTING CONDITIONS)CORPORATE GOVERNACE

Board of directors to have optimumcombination of executive and nonexecutive directors.

In case company has non executivechairman fifty percent of thedirectors to be non executive

Non executive chairman has an officeand paid allowances so that she/ hecan perform the duties


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A qualified empowered auditcommittee to be set up

Remuneration committee to be setup for deciding on thecompensations

Board meeting at least four time in ayear A director can not be a member in

more than ten companies


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SEBI CODE (CLAUSE 49 LISTINGCONDITIONS) CORPORATE

GOVERNACE A management discussion and

analysis report should form part of the annual report

Disclosures on all personal interestsand conflicts of interests by thedirectors

Brief Resume, nature of expertise ,and other directorships must beprovided to the share holders whileappointing a director


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Board committee under thechairmanship of non executivedirector to be formed to look into thecomplaints of all the shareholders

Power of share transfer should bedelegated to an officer or acommittee or to registrar andtransfer agents

Should obtain certificates from theauditors on adherence to the tenets


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Independent( NonExecutive Director)

Apart from receiving directorsremuneration does not have anymaterial pecuniary relation ship ortransactions, its promoters its seniormanagement , holding companies,its subsidiaries and associated

companies Is not related to promoters or

management at the board level or at

one level below the board


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Independent( NonExecutive Director)

Is not a partner or an executive of the statuary audit firm or internalaudit firm that is associated with thecompany

Is not a material supplier or serviceprovider to the company

Is not a substantial share holder( more than two percent)


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Corporate Governance. Nolonger a fashion statement

2002 The Year of the Apology Since the collapse of Enron in 2001

a spate of corporate misdoingshas been exposed.

Dennis Kozlowski, the then CEO of Tyco International, apologized toinvestors for a $1.9 billion loss andlayoffs of 7,100. Soon after hisapology he was indicted for alleged


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Hank Paulson, chairman of GoldmanSachs, gave a speech in which hesaid recent criticisms of the businesscommunity were deserved andthen went on to suggest wayscompanies like his could help restoreinvestor confidence.

Citigroups former CEO Sandy Weillapologized for certain activities "thatdo not reflect the way we believe


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James Rohr, chairman and CEO of PNC Financial Services Group,apologized for accountingirregularities that happened duringhis tenure.

Finally, McDonalds apologized toHindus, vegetarians and others formislabeling French fries and hashbrowns as vegetarian. The fast food


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What has really broughtCorporate Governance

center stage? The passion of the Sarbanes-OxleyAct (The SOX Act as it is known),makes it a mandatory requirement forCEOs/CFOs of knowledge no reportcontained a material untrue

statement or omitted a material factnecessary to make the report notmisleading.


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The Real Issue

The real issue:

Directors and Officers LiabilityInsurance (D&O)D&O is professional liability coveragefor legal expenses and liability toshareholders, bondholders, creditorsor others due to actions or omissionsby a director or officer of acorporation or a nonprofit

organization. In the U.S Average D&O


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What is CorporateGovernance?

is an art of managing companiesethically and efficiently for enhancingstakeholders value.

the entire gamut of corporategovernance system could be referredto as corporate ethical and valuessystem


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What is CorporateGovernance?

Shleifer and Vishny (1997) statethat Corporate governance dealswith the ways in which suppliers of finance to corporations assurethemselves of getting a return ontheir investment

Blsot (1995) argues that corporategovernance implicates the whole setof legal, cultural, and institutionalarrangements that determine whatpublicly traded corporations can do,


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Corporate Governance

A nations system of corporategovernance can be seen, (accordingto North, 1991) as an institutionalmatrix that structures the relationsamong owners, boards, and topmanagers, and determines the goalspursued by the corporation.


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Definition of CorporateGovernance

q OECD and the CadburyCommittee, UK, defined corporategovernance as: Asystem by which businesscorporations are directed and controlled

CII Desirable Corporate GovernanceCode defines thus: Corporate Governance deals with

laws, procedures, practices and


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Creating an ethical culture meansinstilling and maintaining acommitment to doing the right thing,this time and every time-so much sothat it becomes entwined in theessential DNA of the firm-- Wimmiam H Donaldson

Chairman, US Securities andExchange Commission (Remarksbefore the Bond Market Association,New York; April 20, 2005)

Th O id F A i


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The Outside Forces: ActivePlayers in Corporate

GovernanceMedia Professional Activists Analysts >Regulators > Market Players > Externa l

Organization Organizations Investmen t - SEBI- Institutional Auditors

Institute of Centre for Brokerage - Stock Exchange investors

Directors(IOD) Corporate House - RBI- Small investors

Governance Creditiors - Government -Grievance Association

- National > Share holders


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Active Players The ForceWithin

Employees(-WhistleBlowerProtection

Board of Directors (-Independence-Qualification )

Internal Auditirs(- Audit

Committee-Independence

-Rotation)

Top Management TeamCEO(- Dual role-Evaluation--Succession


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INFORMATION TO BE PLACEDBEFORE THE BOARD OF

DIRECTORS Annual operative plans, budgets and

updates Capital budgets and updates Quarterly results Minutes of meetings of audit

committees and other committees of the board Information on recruitments and

remunerations of senior officers ( one


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PLACED BEFORE THE

BOARD OF DIRECTORS Show cause, demand and penaltynotices

Fatal or serious accidents Material default in financial

obligations

Any issue, which involves possiblepublic or product liability claims of substantial nature

Details of any joint venture or


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INFORMATION TO BE PLACED BEFORETHE BOARD OF DIRECTORS

Significant labour problems and theirproposed solutions

Sale of material nature , of investment subsidiaries assets whichis not in normal course of business

Quarterly details of foreign exchangeexposures

Non compliance of any regulatory,statutory nature or listingre uirements and share holders


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Mintzbergs 5Ps Strategy

Plan : Consciously intended course of action. Twoessential

characteristics first made in advancesecond developed

consciously .Ploy : A maneuver to out-wit the other .

Pattern: This is a resulting behavior. Consistent

at times it can beindependent of plan the pattern may

appear without

preconception.

Position: Locating an organization in an


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ompre ens veStrategic Management

Model


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THE FIRMS EXTERNALENVIRONMENT

The FirmOperatingEnvironment.Competitors.Creditors.Customers.Labour.Suppliers

Industry

.EntryBarriers.SupplierPower.BuyerPower.Substitute Availability

RemoteEnvironment.Economic.Social.Political.Technological.Ecological


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The Process Of Performing AnExternal Audit

Involve as many managers andemployees as possible.

Gather competitive intelligenceand information abouteconomic , social , cultural ,demographic , environmental ,political , governmental , legal ,and technological trends.

Should be assimilated andevaluated .


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KEY EXTERNAL FACTORSv Important to achieve in long

term and annual objectives .v Measurable .v Applicable to all competitive

firms .

v Hierarchical in the sense thatsome will pertain to the overallcompany and others will be morenarrowly focused on functionalor divisional areas.


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Economic forces Import / export factors Demand shifts for different

categories of goods and services

Income differences by region andconsumer groups Price fluctuations

Export of labor and capital Monetary policies Fiscal policies


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Example of Economicchanges

Green Revolution in Agriculture Industrial setup in rural and

backward regions Opening up of new markets for

the marketing and supply of goods and services

Opening of new market forforeign investment


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Social , Cultural , Demographic , andEnvironmental Forces

Population Age groups

Literacy Joint or nuclear family Eating habits Caste system Population movement

Reaction to terrorism


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Social , Cultural , Demographic , andEnvironmental Forces

Childbearing

rates Number of special- interestgroups

Attitude toward

retirement Attitude towardleisure time

Attitude toward


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S o c i a l , C u l t u r a l , D e m o g r a p h i c , a n d

Lifestyle Traffic congestion

Inner city environments Average disposal income Trust in government Attitude toward work Buying habits

Ethical concerns

Attitudes toward authorities Population changes by city ,

country , state , and region Value placed on lager time Regional changes in taste and

preferences Number of women and minority

workers Number of high school and


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Political , Governmental , andLegal , Forces

Government regulations orderegulations

Change in tax law Special tariffs Political action committees Voter participation rates Number ,severity , and location

of government protests

Sino-American relationships Russian - American relationships

European Americanrelationships African - American relationships Import export regulation Government fiscal and monetary

policy change.

COMPETITIVE INTELLIGENCE


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COMPETITIVE INTELLIGENCEPROGRAMS

q To provide a generalunderstanding of an industry

q To indentify areas in whichcompetitors are vulnerable

q To identify potential moves thata competitor might make thatwould endanger a firms positionin the market


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ORGANISATIONENVIRONMENT

The environment of businessis the aggregate of conditions,events and influences thatsurround and affect it. Sincethe organization is a part of abroader social system, it has towork within the framework provided by the society and its

innumerable constituents


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ENVIRONMENT FORCES

CLASSIFIED AS External Environment

Internal Environment


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EXTERNALENVIRONMENT

Everything outside anorganization that might affect itis external environment

It is much more difficult tounderstand than internalenvironment because theexternal forces are large innumber, difficult to assess andpredict


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EXTERNAL

ENVIRONMENT Economic Environment

Social and CulturalEnvironment Political Environment

Legal Environment Technological Environment Natural Environment

International Environment


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ECONOMICALENVIRONMENT

The economic state and the businesscycle of the organization at present

GDP rate and per capita income

Savings and investment rates Payment balances and changes in

foreign exchanges reserves

Money supply and inflation rate Industrial and agricultural production

trend Differences in the distribution of the

income and wealth


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POLITICALENVIRONMENT

Government instability

Interference of internationalpower Internal conflict with in the

ruling party Strength of parliamentary

opposition party Political principles


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LEGAL ENVIRONMENT

Market condition in India is muchmore inclined towards the central,state and local governments. Thegovernment rules and policiesmust to be followed for existing inthe market


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LEGAL ENVIRONMENTINCLUDES

Antitrust regulation Protection Laws

Environment Laws Tax Laws Foreign trade regulations

Price control Wage fixation Managerial remuneration


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LEGAL ENVIRONMENTINCLUDES .

Location of plants Entry of multinationals

Safety and health at work


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TECHNOLGICALENVIRONMENT

It determine the development of an organization by increasing theefficiency, production, andcompetitiveness

THE ADAPTATION TO NEW


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THE ADAPTATION TO NEWTECHNOLOGY CAN BE IN

THREE WAYS Inventing or creating a new

product Introducing the products and

processes in use

Diffusing the technology thatcannot be used first

TECHNOLOGICAL ENVIRONMENT THAT


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TECHNOLOGICAL ENVIRONMENT THATHAVE IMPACT IN AN ORGANIZATION

INCLUDE

Effectiveness of infrastructure(roads, ports, airport, rollingstock, hospitals, education,healthcare and communication)

Productivity of the organization New manufacturing processes

TECHNOLOGICAL ENVIRONMENT


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TECHNOLOGICAL ENVIRONMENTTHAT HAVE IMPACT IN ANORGANIZATION INCLUDE

New technology that couldimpact the company

New products and services of supply chain partners

Cost and accessibility of resources such as electricalpower, water supply, fuel etc

E l F


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External FactorEvaluation

List key external factors( 10 to20)

Include opportunities andthreats that affect the firm

Opportunities first then threats.Be specific( quantify)

Assign weight to each factor( 0.0 to 1.0). This indicatesrelative importance of this factorfor the firm for bein successful

E l F


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External FactorEvaluation( Contd)

Assign a rating between 1 to 4 toeach key external factor toindicate how effectively thefirms current strategiesrespond to the factor .

Multiply each factors weight by

its rating to determine weightedscore

Sum the weighted scores for

each variable to determine the

E l F


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External FactorEvaluation(Contd)

A total less than 2.5 indicatesthat the organization is notresponding to the existingopportunities and threats of theexternal environment

The assessment may not be very

accurate since some of the datais subjective.

EFE MATRIX H ldi i


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EFE MATRIX- Haldiram inNew Delhi

Key External Factor Wt Rating WeightedScore

GDP Growth Rate more than 7% .26 3 .78

Population growth in the area 10% .25 4 .75

Major restaurants in the area closingdown

.25 3 .75

Demand for vegetarian food on theincrease12%

.06 3 .18

Increase in the disposable income in thecity 15%

.05 3 .15

Preference for ordering food at home onthe increase

.03 4 .12

People avoiding eating out on weak days .02 3 .06


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Click to edit Master subtitle style

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COMPETITIVE PROFILE

MATRIXIN RELATION TO MAJOR COMPETITORS

COMPETITIVE PROFILE


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COMPETITIVE PROFILEMATRIX

CriticalSuccessFactor

Wt Rating Score

Advertising .20 1 .20

Quality.10 4 .40

Price .10 3 .30

Management .10 4 .40

FinancialPosition

.15 4 .60

Cust Loyalty .10 4 .40

Market Share .05 4 .20


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,MODEL

Determinant Of BuyerPower

Concentration (Buyer /Firms)

Volume Switching Costs

Information Ability To Backward

Integrate Substitute Product

Pull Through


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ENVIRONMENTAL

APPRAISALINTERNAL ENVIRONMENT


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APPRAISAL PROCESS Gather, assimilate and evaluate

information on firms operations . Identify Critical Success Factors . Prioritize Critical Success Factors List 10 to 20 factors in order of

priority . Involve Maximum members-

shared view .

Coordinate for inter department


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BASIC QUESTIONS How well the current

strategy working?

What use made of ourresources?

Are all departmentsworking to optimumlevels?

Are all activities TECHNIQUES OF


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TECHNIQUES OFINTERNAL APPRAISAL

SWOT Analysis. Resource based view . Value chain analysis

Organizationalanalysis


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SWOT Analysis Quick Overview of a companys

strategic situation. Internal strengthsand weaknesses with externalopportunities and threats.

Strength a resource or capability-advantage relative to thecompetitors in meeting customersneeds

Weaknesses. Limitations.. Opportunities. Favorable situation in

firms environment


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CONDUCTING SWOT

ANALYSIS Formulate SWOT

framework Generate shared view Workout strategies


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Opportunities

Threats

Weaknesses

Strengths

Cell 1:AggressiveStrategy

Cell 2.

DiversificationStrategy

Cell 4.DefensiveStrategy

Cell 3. Turnaround Strategy

Strategic Options after


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Strategic Options afterSWOT Analysis

Aggressive. Growthorientation .

Diversification. Redeploy forlong term objectives . Turnaround. Eliminate

internal weaknesses. Defensive. Reduce resources

in areas identified by SWOT.

LIMITATIONS OF SWOT


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LIMITATIONS OF SWOTANALYSIS

Can over emphasize internalstrengths and downplayexternal threats

Can be static, ignore changeswith time.

Can over emphasize singlestrength or element of strategy


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VALUE CHAIN ANALYSIS Business is seen as a chain of

activities, departmentaldemarcations are ignored

The chain of activitiestransforms input in to out putthat customers value.

The customer value is derivedfrom:-

Product differentiation


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VCA Divide companys activities in to

specific business processes . Group these in to primary and

support activities . The primary activities include:-

Inbound logistics Operations Outbound logistics Marketing and sales Services


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PRIMARY ACTVITIES Inbound logistics . Fuel, energy,

raw materials,parts/components, merchandise

and consumable items from thevendors. Receiving , storing anddisseminating inputs from

suppliers, inspection andinventory management Operations. Converting input in

to final products- production,


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PRIMARY ACTVITIES Outbound logistics. Distributing,

warehousing, order processing,order picking, packing shipping

delivery vehicle operation. Marketing and sales. Sales force

effort, advertising and

promotion, market research andplanning, dealer distributorsupport

Service. Assistance to


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SUPPORT ACTIVITIES General Administration.

Accounting and finance, legaland regulatory affairs, safety

and security, MIS and otheroverhead functions HRM. Development of knowledge

based skills, recruitment,compensation management,training and development

Research, technology and


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ALLOCATE COSTS Activity based cost

accountancy(purchasedepartment) would include

Evaluate suppliers capabilities Process purchase orders Expedite suppliers delivery Expedite internal processing Check quality of items purchased

Resolve problems

DIFFICULTY IN


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DIFFICULTY INALLOCATING COSTS

The existing financialmanagement and accountingsystems in most firms is not

geared to provide activity basedcosts . This can also create redundant

work Financial reporting requirements

do not match with the activity

based costs accounting

IDENTIFY ACTIVITIES THAT


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IDENTIFY ACTIVITIES THATDIFFERENTIATE THE FIRM

Examining the vale chain bringsout several sources of differentiation advantage

relative to competitors . The firm can concentrate on

these sources of differentiation

advantages to gain competitiveadvantages. Alternatively the firm can

analyse the entire value chain .

EXAMINING THE VALUE


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EXAMINING THE VALUECHAIN

Identify activities that arecritical to customer satisfactionand market success

Basic Mission Nature of value chain and the

relative importance of activities

within them vary by industry. Relative importance of value

activities vary by companysposition in broader value systemthat include the value chain of its

ORGANIZATIONAL


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ORGANIZATIONALAPPRAISAL

The strategic advantage in terms of organizational capabilities dependson a number of organization related

factors. Organizational resources . Organizational Behavior These create strengths and

weaknesses Synergy Com etencies


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Competencies

Synergy

Strengthsand

weaknesses

BehaviorOrganizational Resources

StrategicAdvantages

Capabilities

FACTORS OF ORGANIZATIONAL


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FACTORS OF ORGANIZATIONALSTRATEGIC ADVANTAGE

Resources Behavior

Strengths and weaknesses Synergy Competencies Capability Strategic and Competitive

advantage

STRENGTHS THAT SUPPORT FINANCIAL


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STRENGTHS THAT SUPPORT FINANCIALCAPABILITIES

Ability to raise short-termcapital.

Ability to raise long term capital;debt-equity

Corporate-level resources(multibusiness firm)

Cost of capital relative to that of Industry and competitors

Tax considerations


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SUPPORT MARKETING

CAPABILITIES Internet Usage Product-service image, reputation and

quality Imaginativeness, efficiency, and

effectiveness of sales promotion andadvertisements.

Pricing strategy and pricing flexibility Procedures for digesting market feedback

and developing new products, services, ormarket


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SUPPORT OPERATIONS

CAPABILITIES Raw materials cost andavailability, supplierrelationships .

Inventory control systems;inventory turnover

Location of facilities, layout andutilization of facilities

Economies of scale

Technical efficiency of facilities


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SUPPORT PERSONNEL


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SUPPORT PERSONNEL

CAPABILITIES Management personnel Employees skill and morale

Labor relations costs comparedwith those of industry andcompetitors

Efficiency and effectiveness of personnel policies . Effectiveness of incentives used

to motivates performance STRENGTHS THAT SUPPORT


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INFORMATION MANAGEMNETCAPABILITIES

Timeliness and accuracy of information about sales,operations , cash, and suppliers

Relevance of information fortactical decisions

Information to manage qualityissues: customer service

Ability of people to use theinformation that is provided.

SUPPORT GENERAL


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SUPPORT GENERALMANAGEMENTCAPABILITIES Organizational structure

Firms image and prestige

Firms record in achievingobjectives Organization of communication

systems Overall organizational control

system(effectiveness and

utilization)

Li idi R i


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Liquidity Ratios Current Ratio The extent to

which a firm can meet its short-term obligations

Quick Ratio- The extent to whicha firm can meet its short-termobligations without relying uponthe sale of its inventories


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A i i R i


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Activity Ratios Inventory Turnover- Whether a

firm holds excessive stocks of inventories and whether a firm is

slowly selling its inventoriescompared to the industryaverage.

Fixed Assets Turnover- Salesproductivity and plant andequipment utilization

Total Assets Turnover- Whether a

P fit bilit R ti


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Profitability Ratios Gross Profit Margin- The total

margin available to coveroperating expenses and yield a

profit Operating Profit Margin-

Profitability without concern for

taxes and interest. Net Profit Margin- After-tax

profits per euro of sales


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G th R ti


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Growth Ratios Sales- Firms growth rate in

sales

Net Income- Firms growthrate in profits Earnings per share- Firms

growth rate in EPS Dividends Per Share- Firms

growth rate in dividends per

NON FINANCIAL QUANTITATIVE


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METHODSAspects such as employeesturnover, absenteeism, marketranking, rate of advertisingrecall, total cycle time of production, inventory unitsused per period, service callrate, number of patents,registered per period are someof the examples. These non-financial aspects at times

GROWTH OF A FIRM


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GROWTH OF A FIRM

Survival, Growth and profitabilityare primary concerns of a firm Growth orientation needs to be

over long term The profits that are generated

from operations are ultimate

source of funds for growth Growth is multidimensional:

profitability, number of markets

served variety of products and

NATURE OF GROWTH


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NATURE OF GROWTH Growth can be through

concentration ( vertical andhorizontal integration) or

through diversification( concentric or conglomeratediversification)

Related diversifications areconsidered to be better optionsthan pure concentrationstrategies


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NATURE OF GROWTH


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NATURE OF GROWTH A combination of internal and

external growth can be adopted.While considering external

growth through acquisitions asuitable candidate for take over:- Must be relatively small

Must be comparable inorganizational culture

Must be physically close to one of the affiliates

Types of Benchmarking


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Types of Benchmarking Performance Benchmarking Process Benchmarking

Strategic Benchmarking Internal Benchmarking :-

Competitive Benchmarking Fun ction al Benchmark ing Generic Benchmarking


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BCG MATRIX

R l ti M k t Sh


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DogsRetrenchmentDivestiture,

Liquidation

Question MarksMarket PenetrationMarket,product development

Divestiture

Stars.B,F,HIntegrationMarketPenetrationMarket,productdevelopmentDivestiture

Cash CowsProductDevelopmentDiversificationRetrenchmentDivestiture

Relative Market Share

IndustrySalesGrowthRate

BCG MATRIX


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BCG MATRIX Question marks. Low market

share, competing in high growthindustries. Pump heavy investmentor sell off

Stars. High relative market shareand high industry growth. Increaseinvestment.

Cash Cows. High relative marketshare, low industry growth.Maintain position, re investment

cash else where

THE GRAND STRATEGY


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THE GRAND STRATEGY

This matrix is based on twoevaluative dimension.These include competitiveposition and market growth. With competitive position

on the X Axis and markedgrowth on the Y axis fourquadrants emerge.

GRAND STRATEGY MATRIX


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GRAND STRATEGY MATRIX

Quadrant 2Market DevelopmentMarket PenetrationProduct DevelopmentHorizontal integrationsDivestiture

Liquidation

Quadrant 1Market DevelopmentMarket PenetrationProduct DevelopmentAll integrationsRelated Diversification

Quadrant 3RetrenchmentRelated DiversificationUn related diversificationDivestitureLiquidation

Quadrant 4RelatedDiversificationUn relateddiversification

Joint venture

Slow Market Growth

Rapid MarketGrowth

Weak CompetitivePosition

StrongCompetitivePosition

QUARDRANT 1


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QUARDRANT-1 Rapid growth, strong

competitive advantage . When in possession of excessive

resources should go forbackward, forward andhorizontal integration.

If too heavily committed tosingle product thendiversification should be the

strategy

QUARDRANT 2


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QUARDRANT-2 Rapid growth weak competitive

advantage . Must concentrate on finding

reasons as to why the firm lacksthe competitive advantage.

Prefer horizontal integration. As a last resort divestiture or

liquidation should be considered. Funds so acquired can be used to

QUARDRANT 3


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QUARDRANT-3 Slow Market growth, weak

competitive position . Must make some drastic changes

quickly to avoid further decline andpossible liquidation. Pursue extentive cost and asset

reduction . Diversify Liquidate, divestiture.

QUARDRANT 4


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QUARDRANT-4 Slow market growth,

strong competitiveadvantage .

Since there is high cash flowlevel can launch diversified

products . Can pursue joint venture .

The Quantitative Strategy PlanningMatrix(QSPM)


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Matrix(QSPM)

This forms the strange 3 of thestrategy formulation analyticalframe work. It objectively indicateswhich alternative strategies arethe best.The QSPM uses results from stage1 and stage-2 of strategy

formulation and matches these toobtain the information for thestage-3 i.e. the QSPM. This

technique requires good intuitive


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CORPORATE LEVEL


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STRATEGIES

Directional- Growth , stabilityand retrenchment

Stability- pause/ proceed withcaution, no change, profit .

Retrenchment- Turnaround,captive company, sell outdivestment, bankruptcyliquidation

DIRECTIONAL


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STRATEGIES- GROWTH

Concentration Vertical growth- forward, backward,

transaction cost economy, fullintegration, taper integration, quasiintegration, long term contracts

Horizontal growth- horizontalintegration, international entry

Diversification Concentric(related), conglomerate

( unrelated) diversification .


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STRATEGIES FOR COMPETING IN THEGLOBAL MARKETS


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GLOBAL MARKETS

Customize to suit local market orStandardized product

Employ same competitivestrategy in all countries ormodify strategy country bycountry.

Where to locate production,distribution and customerservices.

Transfer of resource stren th

WHY ENTER THE


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FOREIGN MARKET

Expand in Foreign Market Access to new customers Achieve lower cost Capitalize on core

competency

Spread business risk.


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Concentrated Growth


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Resistant to technology Changes (Industry) Product not sa-------- Distinctive Inputs stable in price and

quantity Stable markets Efficient production &

Market Development


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Additional geographicmarkets

Attracting Other market

segments GRAND STRATEGIES

(EXPLAINATIONS)


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(EXPLAINATIONS)

Product DevelopmentSubstantially modified productto the same market (Brand,

enhance product life cycle ) Innovation Reap premium

margin associated with

creation of a customeracceptance service Horizontal Integration Growth

through acquisition of similar


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Slides Strat Managemnt Till First Internal Test

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