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STRATEGIC MGMT

PROCESS

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Strategic mgmt process involves

Strategic thinking MgmtLeadership

Strategic analysis Envt, intent,

missionCreating competitive

AdvantageBusiness levelstgy,(competitive rivarly),

Corporate level stgy ( acquistion &restructuring)Monitoringcreating entrepreneurial

opportunities, corporate governance.

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Opportunities & outcomes of

International strategy

Identifyinternationalopportunities

Increased Mktshare

Return oninvestment

Economies of scale& learning

Advantage inlocation

Exploreresources&capabilities

Int bus level stgy

Multi domesticstgy

Global stgy Transactional

stgy

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Modes of Entry

Exporting - high cost, low control Licensing low cost, low risk, little

control& low returns

Strategic alliances- sharedcost,resources,

risk & problems Acquistions quick access to new mkts,

high cost, complexnegotiations

problems of merging

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Contd

Establishments of newsubsidiaries- complex, costly, timeconsuming, high risk, maximum

control & potential

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Use of Core Competence

Modes of EntryBetter performance

Innovation

Problems

Risk

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International Business level Stgy

Factors of prodn

Firm strategy

structure

& rivalry

Demand conds

Related & supporting

Industries

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International corporate level

Global Trans

national

Multi

domestic

L H

L

H

Need for local Responsiveness

Needfo

rGlobalintegr

ation

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Multidomestic stgy

Strategy & operating decisions aredecentralized to strategic business units ineach country

Products and services are tailored to localmarkets

Business units in one country areindependent of each other

Assume mkts differ by country or regions

Focus is on competition in each mkt

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Global strategy

Pdts are standardized

Decisions regarding bus-level stgy arecentralized

SBUs are assumed to be interdependent Emphasizes on economies of scale

Often lacks responsiveness to local mkts

Requires resource sharing & co-ordinationacross borders

Outsource some primary or supportactivities to the worlds best providers

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Transnational strategy

Seeks to achieve both globalefficiency and local responsiveness

Strong central control andcordination to achieve efficiency

Decentralization to achieve local mktresponsiveness

Organisational learning a must

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PROBLEMS

ENVIRONMENTAL TRENDS

(liability of foreignness)

Security risksTighter immigration policies

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contd

REGIONALIZATION

Location can affect value creation

May wish to narrow focus to aparticular region of the world

Enter regional markets sequentially,

beginning with the most familiar mkt

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RISKS

POLITICAL RISK

Instability in Nation, govt, war

Nationalization of Firms resources

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contd

ECONOMIC RISKS

Differences and fluctuations in valueof different currencies

Prevailing wage rates may differ

Different property rights

unemployment

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LIMITATIONS

Cost of co-ordination across diversegeographical business units

Institutinal and cultural barriers

Understanding strategic intent ofcompetitors

Overall complexity of comprtition

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Value creation outcomes and

returns

Expands sales of its goods/servicesinto different geographic locations

Increase firms returns

Achieve positive stock returns

Achieve economies ofscale,experience and increase

market size Increase returns on innovation

Generate resources for innovation

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