BUSINESS STRATEGY VIII CORP LEVEL by SmritiKushwaha

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									PORTER’S COMPETITIVE
ADVANTAGE OF NATIONS
• Firm Strategy, Structure & Rivalry
• Factor Conditions
• Demand Conditions
• Role of Government
• Related & Supporting Industries
• Serendipity
• This has been called the National Diamond
CONTEXT FOR
INTERNATIONALISATION
• Since World War II international tradehas grown
    dramatically
•   Technological developments have eased
    transportation
•   Improvement in Communications Technology
•   Falling of Tariff Rates
•   Globalisation of markets, trade, finance,
    technology, communications & labour(Partially)
SOME EXAMPLES FROM INDIA
• Indian IT industries got a boost from
  availability of IT labour at lower costs
• They looked for foreign customers to
  outsource
• Semi-conductor industries for computer
  hardware
• City clusters of IT companies
• Global market led to economies of scale
TYPES OF INTERNATIONAL
STRATEGIES
• Cost Pressures impel companies to look for
    economies of scale and locational advantage- a
    globally standardised product being produced in
    a single location with a world-wide market
•   Pressures for local responsiveness- catering to
    the local market with its preferences, Govt.
    policies etc.,
•   That seem to be against each other but the
    latter provides a cushion against global fluxes
    and upheavals
SOME EXAMPLES FROM INDIA
• Indian Pharma industries benefited from
  the protectionist policies through 70s &
  80s
• Upstream Supplier industries
• Large population- large market for
  medicines
• Large & small companies in the organised
  and unorganised sectors
FOUR TYPES OF INTERNATIONAL
STRATEGIES
• “International” Strategy- transfer products
  & services, tight control, standardised
  products across with little or no
  differentiation
• Multidomestic Strategy- have autonomous
  or semi-autonomous companies in
  different countries with each having its
  own supply chain within that country
FOUR TYPES OF INTERNATIONAL
STRATEGIES
• Global Strategy- emphasis on low costs, locating
    its various operations in optimum locations
    irrespective of political borders and operating as
    if the whole world was one unit
•   Transnational Strategies- a combination of low
    costs and high local responsiveness- the flow of
    expertise from developed countries to
    developing companies both ways- global
    learning
INTERNATIONAL ENTRY MODES

• Direct & Indirect Export Mode
• Contractual Entry Modes- non-equity
 associations between the company and
 an international partner with some legal
 standing like licensing, franchising,
 technical agreements, service contracts,
 contract manufacturing, turn-key projects,
 BOT arrangements
INTERNATIONAL ENTRY MODES

• Investment Entry Modes: joint ventures,
    strategic alliances, independent ventures or
    wholly owned subsidiaries
•   There is a gradation of risks in al these modes
    and a company has to weigh the options
    accordingly- export and licensing are low risk,
    strategic alliances are medium risk, stronger but
    higher risk is joint ventures and wholly owned
    subsidiaries
BORN GLOBAL
• A new phenomenon- from its inception
  this kind of a company assumes the whole
  world as its stage
• Many non profit organisations have this
  characteristic, the NGOs etc.
• Thousands of Indian IT professionals in
  the Silicon Valley have formed IT services
  companies which are born global
STRATEGIC DECISIONS
• Which international markets to enter?- weigh
    the benefits, costs & risks
•   Timing of the entry- are you the first mover?-
    helps you to build your brand name, build
    demand, generate sales revenue, get market
    share, create entry barriers
•   Early Entry or First Mover entails higher risks
    and incurring pioneering costs
•   Scale of entry- small scale entry helps in testing
    the waters and a large scale entry has big
    impact
ADVANTAGES OF EXPANSION
THROUGH THIS ROUTE
• Gains economies of scale
• Realises economies of scope- domestically developed
    competencies get stretched and generates additional
    competencies of operating globally- scope of the
    competencies get magnified yielding economies
•   Market expansion and extension, realising location
    economies- the comparative advantage f some countries
    becomes the competitive advantage of the company
    which has internationalised, access to resources abroad-
    natural, financial and human
DISADVANTAGES OF EXPANSION
THROUGH THIS ROUTE
• Higher risks stemming from political, cultural
    and economic uncertainties of the new country
•   Difficulty in managing cultural diversity
•   Higher bureaucratic costs for linking home office
    and overseas operations
•   Higher Distribution Costs- differences between
    the distribution channels abroad and those at
    home
•   Trae Barrier- despite liberalisation there are still
    written and unwritten trade barriers

								
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