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STRATEGIC MANAGEMENT

AND BUSINESS POLICY


THIRD EDITION
Chapter 6
Corporate-level strategies:
Internationalisation,
Cooperation and
Digitalisation
AZHAR KAZMI
(c) Dr. Azhar Kazmi 2008 2
Learning objectives - 1
Explain the context for internationalisation strategies
Describe and exemplify four types of international
strategies
Explain the various modes of entry to international
markets
Enumerate the advantages and disadvantages of
internationalisation
Discuss the growing importance of regionalisation
strategies, strategies for the bottom-of-the-pyramid,
and local companies competing with global companies
(c) Dr. Azhar Kazmi 2008 3
Learning objectives -2
Discuss the motives for international strategies of
Indian organisations and the phenomenon of the
Indian MNC
Describe the types, conditions of use, benefits and
drawbacks of three cooperative strategies: mergers
and acquisitions, joint ventures, and strategic
alliances
Explain the principles underlying digitalisation
strategies
Describe the role of digitalisation in value chain and
value system
Explain the digitalisation strategies
Discuss digitalisation strategies in Indian
organisations

(c) Dr. Azhar Kazmi 2008 4
Internationalisation strategies
International strategies are a type of
expansion strategies that require
organisations to market their
products or services beyond the
domestic or national market.
(c) Dr. Azhar Kazmi 2008 5
Context for internationalisation
strategies
Lowering of trade and investment
barriers between nations
Easing of regulations governing trade
and investment
(c) Dr. Azhar Kazmi 2008 6
Porters diamond for competitive
advantage of nations
Factor conditions
Firm strategy,
structure, and
rivalry
Related and
supporting
industries
Demand
conditions
Government
Serendipity
Adapted from M.E. Porter: The Competitive Advantage of Nations Harvard Business
Review, March- April 1990, p. 77.
(c) Dr. Azhar Kazmi 2008 7
Factors determining
internationalisation strategies
Cost pressures denote the demand on a firm to
minimise its unit costs. By doing so, the firm tries to
derive full benefits from economies of scale and
location economies. Ideally, the firm seeks a single
low-cost location, producing globally standardised
products and marketing it widely around the world to
achieve economies of scale.
Pressures for local responsiveness makes a firm tailor
its strategies to respond to national-level differences
in terms of variables like customer preferences and
tastes, government policies, or business practices. In
doing so, the firm customises its products and
services to the requirements of the individual country-
market it is serving.
(c) Dr. Azhar Kazmi 2008 8
Four types of internationalisation
strategies

Global
strategy

International
strategy

Transnational
strategy

Multidomestic
strategy
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Pressures for local responsiveness
Based on C.A. Bartlett & S. Ghoshal: Managing Across Borders (Boston, M.A.: Harvard Business
School Press, 1989)
(c) Dr. Azhar Kazmi 2008 9
International entry modes
Export entry modes
Direct exports
Indirect exports
Contractual entry modes
Licensing
Franchising
Other forms
Investment entry modes
Joint ventures and strategic alliances
Independent ventures or wholly-owned subsidiaries
(c) Dr. Azhar Kazmi 2008 10
Born-global firms
Born-global firms are business
organisation that, from or near their
founding, seek superior international
performance from the application of
knowledge-based resources to the
sale of outputs in multiple countries.

G. A. Knight and S. T. Cavusgil: Innovation, organizational capabilities, and the
born-global firm Journal of International Business Studies (2004) 35, 124-141.
(c) Dr. Azhar Kazmi 2008 11
Strategic decisions in internationalisation
Which international markets to enter?
Timing of entry into international
markets
Scale of entry into international
markets
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Regionalisation strategies
Home base strategies
Portfolio strategies
Hub strategies
Platform strategies
Mandate strategies
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Strategies for bottom-of-the-
pyramid
Asking for easy payments in
instalments
Dramatic cost-cutting
Offering products in small packages
Charging prices by pay-by-use
Direct distribution by avoiding costly
marketing intermediaries

(c) Dr. Azhar Kazmi 2008 14
Strategy Options for Local Companies in
Competing against Global Companies
Dodge rivals by
shifting to a new
business model or
market niche
Contend on a
global scale
Defend by using
home-field
advantages
Transfer company
expertise to
cross-border
markets
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Resources and competitive capabilities
High
Low
Tailored for home
market
Transferable to
other countries
Adapted from N. Dawar & T. Frost, Competing with Giants: Survival strategies for Local Companies
in Emerging Markets Harvard Business Review, 77:1, (Mar-Apr 1999), p. 122.
(c) Dr. Azhar Kazmi 2008 15
Cooperative strategies
Mergers and acquisitions (or
takeovers)
Joint ventures
Strategic alliances
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Types of mergers and acquisitions
Horizontal mergers
Vertical mergers
Concentric mergers
Conglomerate mergers
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Important issues in mergers and
acquisitions
Strategic issues
Financial issues
Managerial issues
Legal issues
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Types of joint ventures
Between two Indian organisations in one
industry
Between two Indian organisations across
different industries
Between an Indian organisation and a
foreign organisation in India
Between an Indian organisation and a
foreign organisation in that foreign country
Between an Indian organisation and a
foreign organisation in a third country
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Types of strategic alliances
Procompetitive alliances
Non-competitive alliances
Competitive alliances
Precompetitive alliances

(c) Dr. Azhar Kazmi 2008 20
Digitalisation strategies
Terms used in the context of
digitalisation
Computerisation
Electronisation
Digitisation

(c) Dr. Azhar Kazmi 2008 21
Comparison of digital with
traditional strategy
Type of strategy Digital strategy Traditional strategy
Method Experiment and respond Predict and plan
Timeframe Monthly, revised
continuously
Three-to-five year,
revised annually
Owner Everyone in organization CEO, strategists
Competitive threat New forces of digitalization,
globalization,
and deregulation
Michael Porters five forces
Role of information
technology
Disrupter Enabler
Output Killer apps Plan
Adapted from L. Downes & C. Mui: The end of strategy Strategy & Leadership. Nov/Dec 1998, Vol.
26, Issue 5.
(c) Dr. Azhar Kazmi 2008 22
Digitalisation transforms the value
chain and value system
Deconstruction
Disintermediation
Re-intermediation
Industry morphing
Cannibalisation
Techno-intensification
Re-chanelling
(c) Dr. Azhar Kazmi 2008 23
E-business patterns
E-channel pattern
Click-and-brick pattern
E-portal pattern
E-market maker or net-market
pattern
Pure e-digital pattern