INTERNATIONAL

BUSINESS STRATEGIES
STRATEGIC
MANAGEMENT
is concerned with
the process of
formulation,
implementation,
and evaluation of
strategies to
achieve a firms
objective
Firms strategy is the
action taken by the
management to attain
the long term goals of
the firm.
The fundamental
purpose of any firm is
to make profit. Profits
can be made by
VALUE ADDITION
COST REDUCTION
PROFITING FROM
GLOBAL
EXPANSION
• Earn greater returns from
core competencies
• Realise locational
economies
• Realise learning curve
economies
• Acquisitions. Technology,
skills and business
• Diversified advantages
 I n t e r n a t io n a l S t r e t e g ic M a n a g e m e n t P r o c e s s

E n v ir o n m e n t a l S tra te g y I m p le m e n t a t io n E v a lu a t io n a n d
S cannubg F o r m a t io n C o n tro l

C o n t r y A n a ly s is W o r lid w id e L o c a t io n
E x te rn a l I n t e g r a t io n

V a k u e C h a in A n a ly s is N a t io n a l O w n e r s h ip
In te rn a l R e s p o n s iv e n e s s

R e g io n a l F u n c t io n a l
R e s p o n s iv e n e s s S t r a t e g ie s

M u lt ifo c a l
E m p h a s is
 STRATEGY
FORMULATION
Firms use four basic strategies
to enter and compete in the
international environment.
The strategy used will
depend on the product, the
pricing and the policy of the
company. It will also
depend on the country of
origin and destination. The
risk bearing capability of the
company is also very
important
INTERNATIONAL STRATEGY :
Creation of value by transferring
valuable skills and products to
foreign markets. The
indigenous companies lack
such skills or products
Product development is centralised
at home
Manufacturing and marketing is
done in major markets
Customisation of products is
limited
Head Office has tight control over
marketing and product
strategy.
INTERNATIONAL
STRATEGY
MAKES SENSE
WHEN
• The firm has valuable
core competencies
• There is relatively
low pressures of local
responsiveness
• Economies of scale
give rise to cost
reduction
2. MULTIDOMESTIC
STRATEGY –
The firms follow the policy of
maximum local
responsiveness
They transfer skills and product
developed at home to foreign
markets
Products are extensively
customised to suit the needs of
the foreign customer
Strategies for marketing are also
customised keeping in mind
the customer and country
New R &D may be set up for the
new market
Control on cost is not possible
This strategy is adapted when
pressures of social
responsiveness are high and
pressures on cost control are
not high
Biggest weakness of this
strategy is that different
subsidiaries develop into
different federations, thus
functioning in an
autonomous manner, which
may not be in the interest of
the business
3. GLOBAL STRATEGY –
This strategy focuses on
increasing profitability thru –
• Low cost strategies
• Concentration of production
and R&D activities in a few
select centers
• No or very little
customization of products
• Standardisation of product
and production
• Aggressive pricing
4. TRANSNATIONAL STRATEGY
Sumantra Ghoshal - Business
environment is highly competitive
therefore-
• Exploit experience based
economies
• Locational economies
• Core or distinctive competencies
should be transferred within the
firm
• Local responsiveness is important
• Flow of goods and services in
competition can be from foreign
subsidiaries to home country and
important hubs to all centers