Discuss Asian Paints internationalization strategy.

What are your recommendations to sustain their strategy in the present New Normal Economy? Asian Paints Limited (APL) internationalization approach encompasses several dimensions of well-known frameworks to ensure its success in the foreign markets. The major features of APLs internationalization strategy as applied to Dunnings OLI model and the Global Integration-Local Responsiveness Grid are as follows. APL had chosen an FDI approach when it comes to expansion into the foreign markets. It reflects the firms confidence that it has advantages in all three aspects of the model. Even its Joint Ventures had to meet a strict template and APL holds a majority stake in them (Exhibit 6). Targeting developing markets also ensures that APL can capitalize on the location advantages due to its technical expertise and experience in the home market. Also, an FDI entry ensures that APL has full ownership control to protect its brand and coordinate the global strategy of the firm. Nevertheless, APLs IB also does encourage exports from its subsidiaries where the cost of freight doesnt overcome its competitiveness. There are also several licensing arrangements earning royalty based income for APL. APL also adopts a transnational strategy when it comes to its IB operations. APL adopting a threepronged structure supports this. Firstly, a global structure that ensures the parent company can utilize its expertise in branding, material sourcing, product development and others. Secondly, a regional structure,

comprising five markets, so as to obtain a level of synergy in the areas of technology, manufacturing, HR, logistics and others. Lastly, a local level structure so as to decentralize decision-making pertaining to execution so that local needs are met. Other strengths of APL in their internationalization includes a de-risking approach, choosing to consolidate their leadership in the domestic market, lowering costs, increase sales and reduce working capital so as to raise the required liquidity to fund its global strategy. Also APL targeted developing markets as opposed to developed ones for three main reasons. It can apply its core competencies to these markets, obtain a leading player at a cheaper price, fund internally joint ventures without impacting the balance sheet significantly and establish a presence across all emerging markets. Furthermore, APL prefers localized manufacturing so as to calibrate its product to cater to local consumer needs. Theres also an emphasis on growth through JVs due to its ready made platform for distribution, brands and plant capacity which is cheaper than greenfield investments in most countries. APL also practiced market segmentation. In the leadership market, APLs focus is on efficiencies as well as market expansion. In the growth markets, the focus is on expansion and penetration. In the turnaround market, the focus is on profitability rather than growth. In the New Normal Economy, APLs current strategy puts it in good stead. Where other firms might be struggling, APL can use its strong reserve position (as of 2005) and embark on new joint ventures or market acquisitions. However, the emphasis for this new normal would be the ability to innovate, increase productivity and emphasis on capital investments as opposed to labour. APL can use its strong management talent to embark on a review of its supply chain models to reduce inefficiencies and to streamline production costs. A stronger global strategy, where integrating the different operations into a single database might lead to greater information sharing and exchange in ideas that can lead to cost savings. In summary, APL can take cost cutting measures, without compromising on operations, to increase productivity in a slow growing economy. Also, it can take a risk, by capitalizing on the downturn and its strong reserves to penetrate into markets, which are deemed to be unprofitable before by acquiring struggling companies.