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Global Strategic Management

Oddities of Global Strategic Management


Concerned with flow of goods & services across countries Formulated by analyzing the global environment Is an vital part of corporate policy It present the impact of present decision on future. Action oriented Dynamic in nature It scan the environment of all countries

Process
1. Analyzing of existing mission & goals
To become market leader in the Indian pharma industry To achieve global leadership in protecting the health of masses

2. Organizational analysis of a global business firm Organizational Structure Export division Transnational company Marketing Mix Production- labor, raw material, inventory, plant layout Finance- Earning per capita, working capital, IFC 3. Analysis of international environment- PEST 4. Formulation of alternate corporate level strategies- stability, Growth, retrenchment, combination

5. Formulation of alternate unit level strategies Low cost leadership- Global Co. Focus- Transnational Co. Differentiation Other Offensive & Defensive strategies 6. Selection of best alternative strategies 7. Implementation

8. Evaluation & control


Establish std. Measure performance of the process at every stage Compare performance with std. Observe deviations Take corrective actions

Ethics in Global Business


Derived from Greek word ethos It refers to morals & rules of behavior Definition - Business managers integrity so far as his conduct is concerned with all fields of business as well as towards society and all stakeholders.

Strategic choices
Four basic strategies to enter and compete in the international environment:
International strategy Multi domestic strategy Global strategy Transnational strategy

International strategy
Create value by transferring valuable core competencies to foreign markets that indigenous competitors lack Centralize product development functions at home Establish manufacturing and marketing functions in local country but head office exercises tight control over it Limit customization of product offering and market strategy
Strategy effective if firm faces weak pressures for local responsive and cost reductions

Multi-domestic strategy
Main aim is maximum local responsiveness Customize product offering, market strategy including production, and R&D according to national conditions Generally unable to realize value from experience curve effects and location economies Possess high cost structure

Global strategy
Focus is on achieving a low cost strategy by reaping cost reductions that come from experience curve effects and location economies Production, marketing, and R&D concentrated in few favorable functions Market standardized product to keep costs low Effective where strong pressures for cost reductions and low demand for local responsiveness
Semiconductor industry

Transnational strategy
To meet competition firms aim to reduce costs, transfer core competencies while paying attention to pressures for local responsiveness Global learning
Valuable skills can develop in any of the firms world wide operations Transfer of knowledge from foreign subsidiary to home country, to other foreign subsidiaries

Transnational strategy difficult task due to contradictory demands placed on the organization
Example : Caterpillar

Cost pressures and pressures for local responsiveness facing Caterpillar

Advantages and disadvantages of the four strategies

Pressures for cost reduction and local responsiveness

Ethical Values in Global Business


Utilization of the natural resources of the host country and in optimum way Utilization of natural resources for the production of goods for consumption in the domestic country. If these goods are exported, the benefits of foreign exchange should be provided to the host country.

Enter through JV with the co. of host country Transfer of technology Develop the managers & HR Develop the basic facilities for the general public Avoid outdated & spoiled products Avoid the marketing of the products which may harm the health

Employ the local people to the great extent Treat the foreign employee & local employee equally Non involvement in political affairs of the host country Help the Govt. during the periods of natural disasters. Avoid the bribing & corrupting the officials

Pay tax accurately Maintain accounts ethically Maintain the sound business relations with business partners.