7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 1/23

STRATEGIC MANAGEMENT

AND BUSINESS POLICYTHIRD EDITION

Chapter 6Corporate-level strategies:Internationalisation,

Cooperation andDigitalisation

AZHAR KAZMI

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 2/23

(c) Dr. Azhar Kazmi 2008 2

Learning objectives - 1

Explain the context for internationalisation strategies

Describe and exemplify four types of internationalstrategies

Explain the various modes of entry to international

markets Enumerate the advantages and disadvantages of 

internationalisation

Discuss the growing importance of regionalisationstrategies, strategies for the bottom-of-the-pyramid,

and local companies competing with global companies

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 3/23

(c) Dr. Azhar Kazmi 2008 3

Learning objectives -2

Discuss the motives for international strategies of Indian organisations and the phenomenon of theIndian MNC

Describe the types, conditions of use, benefits anddrawbacks of three cooperative strategies: mergers

and acquisitions, joint ventures, and strategicalliances

Explain the principles underlying digitalisationstrategies

Describe the role of digitalisation in value chain andvalue system

Explain the digitalisation strategies Discuss digitalisation strategies in Indian

organisations

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 4/23

(c) Dr. Azhar Kazmi 2008 4

Internationalisation strategies

International strategies are a type of expansion strategies that requireorganisations to market theirproducts or services beyond thedomestic or national market.

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 5/23

(c) Dr. Azhar Kazmi 2008 5

Context for internationalisationstrategies

Lowering of trade and investmentbarriers between nations

Easing of regulations governing tradeand investment

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 6/23

(c) Dr. Azhar Kazmi 2008 6

Porter’s diamond for competitiveadvantage 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 BusinessReview , March- April 1990, p. 77.

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 7/23

(c) Dr. Azhar Kazmi 2008 7

Factors determininginternationalisation strategies

Cost pressures denote the demand on a firm tominimise its unit costs. By doing so, the firm tries toderive full benefits from economies of scale andlocation economies. Ideally, the firm seeks a single

low-cost location, producing globally standardisedproducts and marketing it widely around the world toachieve economies of scale.

Pressures for local responsiveness makes a firm tailorits strategies to respond to national-level differencesin terms of variables like customer preferences and

tastes, government policies, or business practices. Indoing so, the firm customises its products andservices to the requirements of the individual country-market it is serving.

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 8/23

(c) Dr. Azhar Kazmi 2008 8

Four types of internationalisationstrategies

Global

strategy 

International

strategy 

Transnational

strategy 

Multidomestic

strategy 

P r  e  s  s  ur 

 e  s f   or  c  o s  t  r  e  d  u c  t  i   on

Pressures for local responsiveness 

Based on C.A. Bartlett & S. Ghoshal: Managing Across Borders (Boston, M.A.: Harvard BusinessSchool Press, 1989)

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 9/23

(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

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 10/23

(c) Dr. Azhar Kazmi 2008 10

Born-global firms

Born-global firms are “businessorganisation that, from or near theirfounding, seek superior internationalperformance from the application of knowledge-based resources to thesale of outputs in multiple countries.”  

G. A. Knight and S. T. Cavusgil: “Innovation, organizational capabilities, and theborn-global firm”  Journal of International Business Studies (2004) 35, 124-141.

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 11/23

(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

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 12/23

(c) Dr. Azhar Kazmi 2008 12

Regionalisation strategies

Home base strategies

Portfolio strategies

Hub strategies Platform strategies

Mandate strategies

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 13/23

(c) Dr. Azhar Kazmi 2008 13

Strategies for bottom-of-the-pyramid

Asking for easy payments ininstalments

Dramatic cost-cutting

Offering products in small packages

Charging prices by pay-by-use

Direct distribution by avoiding costlymarketing intermediaries

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 14/23

(c) Dr. Azhar Kazmi 2008 14

Strategy Options for Local Companies inCompeting against Global Companies

Dodge rivals byshifting to a newbusiness model ormarket niche

Contend on aglobal scale

Defend by usinghome-fieldadvantages

Transfer companyexpertise tocross-bordermarkets

   I  n   d  u  s  t  r  y 

  p  r  e

  s  s  u  r  e  s

  t  o 

  g   l  o   b  a   l   i  s  e 

Resources and competitive capabilities

High

Low

Tailored for homemarket

Transferable toother countries

Adapted from N. Dawar & T. Frost, “Competing with Giants: Survival strategies for Local Companiesin Emerging Markets” Harvard Business Review , 77:1, (Mar-Apr 1999), p. 122.

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 15/23

(c) Dr. Azhar Kazmi 2008 15

Cooperative strategies

Mergers and acquisitions (ortakeovers)

Joint ventures Strategic alliances

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 16/23

(c) Dr. Azhar Kazmi 2008 16

Types of mergers and acquisitions

Horizontal mergers

Vertical mergers

Concentric mergers Conglomerate mergers

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 17/23

(c) Dr. Azhar Kazmi 2008 17

Important issues in mergers andacquisitions

Strategic issues

Financial issues

Managerial issues Legal issues

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 18/23

(c) Dr. Azhar Kazmi 2008 18

Types of joint ventures

Between two Indian organisations in oneindustry

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

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 19/23

(c) Dr. Azhar Kazmi 2008 19

Types of strategic alliances

Procompetitive alliances

Non-competitive alliances

Competitive alliances Precompetitive alliances

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 20/23

(c) Dr. Azhar Kazmi 2008 20

Digitalisation strategies

Terms used in the context of digitalisation

Computerisation Electronisation

Digitisation

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 21/23

(c) Dr. Azhar Kazmi 2008 21

Comparison of digital withtraditional 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 Porter’s 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.

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 22/23

(c) Dr. Azhar Kazmi 2008 22

Digitalisation transforms the valuechain and value system

Deconstruction

Disintermediation

Re-intermediation Industry morphing

Cannibalisation

Techno-intensification Re-chanelling

7/27/2019 Chap6_SMBP_Kazmi

http://slidepdf.com/reader/full/chap6smbpkazmi 23/23

(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