Strategy

The determination of the basic long-term goals and objectives of an enterprise, with the adoption of courses of action and the allocation of scarce resources by acquiring and using them in order to achieve their international objectives.

International Corporate Level Strategy

International Strategy
International Business Level Strategy

A strategy through which the firm sells its goods or services outside its domestic market Reasons for having an international strategy:
International New

markets yield potential new opportunities.

market expansion extends product life cycle

Greater
Launch

potential product demand

of the product in more than one market can help the firm to survive if the product fails in one market.

Increase market share

Domestic market may lack the size to support efficient scale manufacturing facilities

Return on investment

Large investment projects may require global markets to justify the capital outlays

Weak patent protection in some countries implies that firms should expand overseas rapidly in order to preempt imitators

Economies of scale or learning

Expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R&D or distribution Can spread costs over a larger sales base Can increase profit per unit

Competitive advantage through:

location labour Technology Availability of resources

Focuses on the scope of operations:

Product diversification Geographic diversification Multiple industries, and Multiple countries or regions But business or country-level managers can have substantial strategic input

Required when the firm operates in:

Headquarters unit guides the strategy

There are 3 types of int. corporate level strategies:

Multi-domestic strategy Global strategy Transnational strategy

Strategy and operating decisions are decentralized to strategic business units (SBU) in each country
Products and services are tailored to local markets

Business units in one country are independent of

each other
Assumes markets differ by country or regions

Focus on competition in each market

Prominent strategy among European firms due to

broad variety of cultures and markets in Europe

Products are standardized across national markets

Decisions regarding business-level strategies are centralized in the home office

Strategic business units (SBU) are assumed to be

interdependent

Emphasizes economies of scale Often lacks responsiveness to local markets Requires resource sharing and coordination across borders (hard to manage)

Seeks to achieve both global efficiency and local

responsiveness

Difficult to achieve because of simultaneous requirements:

Strong central control and coordination to achieve efficiency Decentralization to achieve local market responsiveness Must pursue organizational learning to achieve competitive advantage

Long Term divisional goal that will allow the division to meet corporate goal Divisions business level and structure to achieve divisional goal Outline the specific methods a division, business unit or organization will use to compete effectively against its rivals in an industry

Cost Leadership strategies:

Analysis based on Porters Five Forces MODEL Rivalry Competitors are likely to avoid a price war Customers When the firm will sell the product at lower cost then powerful buyers will loss their bargaining power Suppliers Cost leaders are able to absorb greater price increases before it must raise price to customers. Entrants Low cost leaders create barriers to market entry through its continuous focus on efficiency and reducing costs. Substitutes Low cost leaders are more likely to lower costs to entice customers to stay with their product, invest to develop substitutes, purchase patents.

Porters Five Forces Analysis

Rivalry Brand loyalty means that customers will be less sensitive to price increases, as long as the firm can satisfy the needs of its customers Suppliers Because differentiators charge a premium price they can more afford to absorb higher costs and customers are willing to pay extra too. Entrants Loyalty provides a difficult barrier to overcome.

Differentiation Strategies:

Unique features and characteristics High quality High customer service Rapid product innovation Advanced technological features e.g. Rolex, Intel

Focused Low Cost:

Organizations not only compete on price, but also select a small segment of the market to provide goods and services to. For example a company that sells only to the U.S. government, Selling of Gypsy to Indian Military

Focused Differentiation :

Unique Product to the Focused Market Organizations not only compete based on differentiation, but also select a small segment of the market to provide goods and services

Risks of Using Focused Strategies: Maybe out focused by competitors Segment may become of interest to broad market firm

Integrated Low- Cost, Differentiation Strategy:

Difficult to reach at this level Becoming more popular due to global competition increasing Help in Adaptability to environmental changes. Learn new skills and technologies More effectively leverage core competencies across business units Thus the customer realizes value based both on product features and a low price Southwest airlines is one example of a company that does uses this strategy.

Type of Entry
Exporting

Characteristics
High cost, low control

Licensing
Strategic alliances Acquisition

Low cost, low risk, little control, low returns

Shared costs, shared resources, shared risks, problems of integration Quick access to new market, high cost, complex negotiations, problems of merging with domestic operations Complex, often costly, time consuming, high risk, maximum control, potential aboveaverage returns

New wholly owned subsidiary

Made By:
Somu Kapoor Sumeet Saxena Tanmay Midha Urvashi Yadav