International strategic management
- 1. INTERNATIONAL STRATEGIC MANAGEMENT By, Prayash Neupane
- 2. INTRODUCTION The extended form of management that manages international business through strategic planning & decision making, organizing, leading and controlling function in the global context. It focus on achieving organizational goals so that all concern parties or stake holders are satisfied. It concern on marketing, Human resource, Financial and Operational & production management etc in global context. The strategies are formulated and implemented by considering the long term vision & goals based on the analysis of the external environmental factors.
- 3. TYPES OF STRATEGIC MANAGEMENT Global Strategy Trans-national Strategy International Strategy Multi-Domestic Strategy Pressures for local responsiveness Cost reduction Pressures High High Low Low
- 4. INTERNATIONAL STRATEGY It try to create value by transferring valuable skills and products to foreign markets where local indigenous competitors lack those skills and products. In reality, the most international firms have created value by transferring different products & offerings developed at home to new overseas market. They tend to centralize product development at home and establish only local manufacturing and marketing units at the overseas market. Examples are McDonalds, IBM, Wal-Mart, Microsoft etc.
- 5. ADVANTAGES Ability to exploit transfer core competencies to foreign market. Ability to economize global supplies. DISADVANTAGES Lack of local responsiveness. Inability to realize location economies. Inability to exploit experience curve effects.
- 6. MULTI-DOMESTIC STRATEGY This strategy is to customize the firm’s product & offering, management strategy and business strategy to the conditions of the foreign countries where it is operating. This strategy is based on an English adage “when you are at rome, live in the roman style; when you are elsewhere, live as they live elsewhere.” Most desirable when there are high pressures for local responsiveness and low pressures for cost reductions.
- 7. ADVANTAGES Ability to customize product offerings and marketing in accordance with local responsiveness. Ability to make quicker response to policy changes, market changes and opportunities at the local market. DISADVANTAGES Inability to realize location economies. Inability to exploit experience curve effects. Failure to transfer core competencies to foreign market Possibility of decrease in profit
- 8. GLOBAL STRATEGY A global strategy is focus on pursuing loe-cost tactics. This strategy is not to customize the firm’s product offering and marketing strategy to local conditions of the foreign countries because customization rises cost. Under this strategy firm concentrates its production, marketing and R&D activities only in a few favorable locations.
- 9. ADVANTAGES Ability to exploit experience curve effects. Ability to exploit location economies. DISVANTAGES Lack of local responsiveness. Difficulty in handling the resistance from subsidiary employees over production system and marketing techniques.
- 10. TRANS-NATIONAL STRATEGY This strategy involves simultaneous focus on reducing costs, transferring skills & products, and boosting local responsiveness in foreign market. It is balanced combination of all other strategy. Recommended when a firm faces high pressures for both cost reductions and local responsiveness and when there are significant opportunities for leveraging valuable skills within the firm’s global network of operation. Example, Samsung
- 11. ADVANTAGES Ability to exploit experience curve effects. Inability to realize location economies. Ability to customize product offerings and marketing in accordance with local responsiveness. Ability to reap benefits of global learning. Well balanced mechanism on authority-responsibility sharing. DISADVANTAGES Difficulties in implementation High cost of exercising flexibility from headquarter. High cost for controlling & monitoring of subsidiaries.