NEHA AGGARWAL(133)

PRAVLEEN KAUR(136)

KAMAKSHI GUPTA|(137)

AASTHA CHHATWAL(142)

INTRODUCTIONINTRODUCTION

Globalization-a market situation where political Globalization-a market situation where political borders are irrelevant, economic interdependencies are borders are irrelevant, economic interdependencies are heightened and national differences resulting from heightened and national differences resulting from societal cultures are the central issues of businesssocietal cultures are the central issues of business

There is need for managers to become global There is need for managers to become global managers with a global mindset that is appropriately managers with a global mindset that is appropriately supported by relevant skills and knowledgesupported by relevant skills and knowledge

GLOBAL CORPORATIONSGLOBAL CORPORATIONS

• Global Corporations evolve from domestic to multinational Global Corporations evolve from domestic to multinational and to global.and to global.

• The management control systems change along the way to The management control systems change along the way to reflect the dramatic changes in the definitions of the strategic reflect the dramatic changes in the definitions of the strategic business unit. business unit.

• A multinational corporation operates in each country with A multinational corporation operates in each country with locally defined strategies and organizational structures. The locally defined strategies and organizational structures. The global corporation operates with coordinated strategy that global corporation operates with coordinated strategy that includes all the countries in which it operatesincludes all the countries in which it operates

GLOBAL MINDSETGLOBAL MINDSET

• A global manager must have a global mindset. There are four A global manager must have a global mindset. There are four types of mindsets; the defender, explorer, controller and types of mindsets; the defender, explorer, controller and integrator. The defender is a mindset that is internally focused integrator. The defender is a mindset that is internally focused and is mainly for domestic market only. The explorer focuses and is mainly for domestic market only. The explorer focuses on foreign markets to help increase sales and its business on foreign markets to help increase sales and its business though it is internally focused like the defender. The though it is internally focused like the defender. The controller tries to dominate the overseas market using well-controller tries to dominate the overseas market using well-developed systems that worked in its domestic marketdeveloped systems that worked in its domestic market

GLOBAL STRATEGIC GLOBAL STRATEGIC MANAGEMENTMANAGEMENT

• Management is identifying and responding to opportunities Management is identifying and responding to opportunities and threats in the environment and threats in the environment

• A global firm is organized and managed to take advantage of A global firm is organized and managed to take advantage of the opportunities across various country markets. The global the opportunities across various country markets. The global firm has one global strategy, produces and or markets its firm has one global strategy, produces and or markets its products in many countries, offers standardized products in all products in many countries, offers standardized products in all country markets. It manufactures at any site, uses any plant country markets. It manufactures at any site, uses any plant sizes that minimizes delivery cost of products across its sizes that minimizes delivery cost of products across its markets. It organizes itself in a way that facilitates efficient markets. It organizes itself in a way that facilitates efficient manufacture, marketing and distribution of its products. manufacture, marketing and distribution of its products.

WHY STRATEGIC MANAGEMENT? WHY STRATEGIC MANAGEMENT?

• Determining the organization’s mission, philosophy and goalsDetermining the organization’s mission, philosophy and goals• Internal analysis of strengths and weaknessesInternal analysis of strengths and weaknesses• External analysis of opportunities and threatsExternal analysis of opportunities and threats• Identifying the present and desired situationsIdentifying the present and desired situations• Identifying and defining the problemIdentifying and defining the problem• Identifying alternative strategies Identifying alternative strategies • Strategic choice of the best alternative strategyStrategic choice of the best alternative strategy• Implementation of the best strategy andImplementation of the best strategy and• Review of the evaluation of the success of the process as basis Review of the evaluation of the success of the process as basis

of control and future decision making. of control and future decision making.

DIMENSIONS OF STRATEGIC DIMENSIONS OF STRATEGIC DECISIONSDECISIONS

• Require top management decisionsRequire top management decisions

• Involve allocation of large amounts of resourcesInvolve allocation of large amounts of resources

• Have significant impact on long-term prosperity of the Have significant impact on long-term prosperity of the organizationorganization

• Future orientedFuture oriented

• Have major multi-functional consequences on the Have major multi-functional consequences on the organization’s strategic business units (sbus)organization’s strategic business units (sbus)

• Impact and are impacted by the organization’s external Impact and are impacted by the organization’s external environmentenvironment

FORCES IN THE DESIGN OF FORCES IN THE DESIGN OF STRATEGIC MANAGEMENT SYSTEMSSTRATEGIC MANAGEMENT SYSTEMS

• Organization – small or large firms. Organization – small or large firms. • Management styles – democratic, authoritarian, policy maker, Management styles – democratic, authoritarian, policy maker,

intuitive thinker, experienced in planning. intuitive thinker, experienced in planning. • Complexity of environment – stable, severe competition, Complexity of environment – stable, severe competition,

many markets and customers. many markets and customers. • Complexity of production processes – capital intensive, labor-Complexity of production processes – capital intensive, labor-

intensive, high technology, long production lead time. intensive, high technology, long production lead time. • Nature of problems – new, complex tough problems. Nature of problems – new, complex tough problems. • Purpose of planning system – coordinate division activities, Purpose of planning system – coordinate division activities,

and train managers. (Pearce and Robinson, 1985).and train managers. (Pearce and Robinson, 1985).

BENEFITS OF STRATEGIC BENEFITS OF STRATEGIC MANAGEMENTMANAGEMENT

• Enhances problem prevention capabilities of a Enhances problem prevention capabilities of a firm.firm.

• Improves employee motivation and Improves employee motivation and participation participation

• Clarification of role differentiation Clarification of role differentiation

• Reduces resistance to changeReduces resistance to change

TYPES OF INTERNATIONAL TYPES OF INTERNATIONAL STRATEGY: MULTI-DOMESTIC VS. STRATEGY: MULTI-DOMESTIC VS.

GLOBALGLOBAL Multi-domestic StrategyMulti-domestic Strategy• Product customized for each marketProduct customized for each market• Decentralized control - local decision makingDecentralized control - local decision making• Effective when large differences exist between countriesEffective when large differences exist between countries• Advantages: product differentiation, local responsiveness, Advantages: product differentiation, local responsiveness,

minimized political risk, minimized exchange rate riskminimized political risk, minimized exchange rate risk

Global StrategyGlobal Strategy• Product is the same in all countries.Product is the same in all countries.• Centralized control - little decision-making authority on the Centralized control - little decision-making authority on the

local levellocal level• Effective when differences between countries are smallEffective when differences between countries are small• Advantages: cost, coordinated activities, faster product Advantages: cost, coordinated activities, faster product

developmentdevelopment

GLOBAL PLANNINGGLOBAL PLANNING

• Firms that engage in global operations are usually involved in Firms that engage in global operations are usually involved in two types of planning: two types of planning:

– Strategic PlanningStrategic Planning

• Long-term planning (3 to 7 years)Long-term planning (3 to 7 years)

• Establishes future directionsEstablishes future directions

– Operational PlanningOperational Planning

• Tactical planningTactical planning

• Plans for day to day operationsPlans for day to day operations

• Decision making for 1 to 2 yearsDecision making for 1 to 2 years

STRATEGIC PLANNING MODELSTRATEGIC PLANNING MODEL

• Defining the businessDefining the business

• Analyzing SWOTAnalyzing SWOT

• Objectives with strategies Objectives with strategies

• Evaluation of strategiesEvaluation of strategies

• Select the bestSelect the best

• Action plans Action plans

• ImplementationImplementation

COMPLEXITY OF STRATEGIC COMPLEXITY OF STRATEGIC PLANNING IN MNCSPLANNING IN MNCS

• Factors that contribute to this complexity in a global operation Factors that contribute to this complexity in a global operation includeinclude : :

– International strategic alliancesInternational strategic alliances

– Coordination and control of international marketingCoordination and control of international marketing

– CommunicationCommunication

– Choice of global strategyChoice of global strategy

Balancing economic and political imperativeBalancing economic and political imperative

Focus on cost leadership, differentiation and

segmentation

Attention to R&D, manufacturing and distribution

Strategy worldwide strategy that doesn’t change from country to country

Economic Imperative

Economic Imperative

Focus on being country responsive, country centered

Success depends on marketing, sales and service

Strategy protect local market niche

Political Imperative

Political Imperative

APPROACHES TO STRATERGIC MANAGEMENT

GLOBALIZATION DRIVERSGLOBALIZATION DRIVERS • COST DRIVERSCOST DRIVERS

– Location of strategic resourcesLocation of strategic resources– Differences in country costsDifferences in country costs– Transportation costs Transportation costs

• CUSTOMER DRIVERSCUSTOMER DRIVERS– Common customer needs favor globalizationCommon customer needs favor globalization– Global customersGlobal customers– Global channels require a globally coordinated marketing programGlobal channels require a globally coordinated marketing program– Transferable marketingTransferable marketing

• COMPETITIVE DRIVERSCOMPETITIVE DRIVERS– Global competitorsGlobal competitors

• GOVERNMENT DRIVERSGOVERNMENT DRIVERS– Trade policiesTrade policies– Technical standardsTechnical standards– RegulationsRegulations

SUCCESS IN THE GLOBAL SUCCESS IN THE GLOBAL MARKETMARKET

• Story of 3 kingsStory of 3 kings

ResultsResults

• Interdependent collaboration, participative management, Interdependent collaboration, participative management, communication and consensuscommunication and consensus

• Managers, as leaders, must understand where they belong, set Managers, as leaders, must understand where they belong, set direction and align strategydirection and align strategy

• Encourage change through adaptabilityEncourage change through adaptability

PORTER'S FIVE FORCESPORTER'S FIVE FORCES

THREAT OF

SUBSTITUTES 

BUYER

POWER 

DEGREE

OF

RIVALRY 

SUPPLIER

POWER 

BARRIERS

TO ENTRY 

RIVALRY

BUYER POWERBUYER POWER  Bargaining leverageBargaining leverage

  Buyer volumeBuyer volume

Buyer information Buyer information 

Brand identity Brand identity 

Price sensitivity Price sensitivity 

Threat of backward integration Threat of backward integration 

Product differentiation Product differentiation 

Buyer concentration vs. industry Buyer concentration vs. industry 

Substitutes available Substitutes available 

Buyers' incentives Buyers' incentives

DEGREE OF RIVALRY DEGREE OF RIVALRY 

Exit barriers Exit barriers 

Industry concentration Industry concentration 

Fixed costs/Value added Fixed costs/Value added 

industry growth industry growth 

Intermittent overcapacity Intermittent overcapacity 

Product differences Product differences 

Switching costs Switching costs 

Brand identity Brand identity 

Diversity of rivals Diversity of rivals 

Corporate stakesCorporate stakes

THREAT OFTHREAT OF

SUBSTITUTES  SUBSTITUTES 

Switching costs Switching costs 

Buyer inclination to substitute Buyer inclination to substitute 

Price-performancePrice-performance

  trade-off of substitutes trade-off of substitutes

BARRIERS TO ENTRY BARRIERS TO ENTRY 

Absolute cost advantagesAbsolute cost advantages

Proprietary learning curve Proprietary learning curve 

Access to inputs Access to inputs 

Government policy Government policy 

Economies of scale Economies of scale 

Capital requirementsCapital requirements

  Brand identity  Brand identity 

SUPPLIER POWERSUPPLIER POWER Supplier concentration Supplier concentration 

Importance of volume to supplierImportance of volume to supplier

   Differentiation of inputs Differentiation of inputs 

Impact of inputs on cost or differentiation Impact of inputs on cost or differentiation 

Switching costs of firms in the industry Switching costs of firms in the industry 

Presence of substitute inputs Presence of substitute inputs 

Threat of forward integration Threat of forward integration 

Cost relative to total purchases in industryCost relative to total purchases in industry

THANK YOUTHANK YOU