Presented to:-

Chitwan Mam

(Faculty member)

Presented by:-

Rampal

Gautam Dhanda

Ankit Paul

 Organization's strategic guide to globalization.

A sound global strategy should address these questions:

o what must be (versus what is) the extent of market presence in the world's major markets?

o How to build the necessary global presence?

o How to run global presence into global competitive advantage? 

Global strategy:-

It is appropriate in industries where firms are faced with strong pressures for cost reduction.

Global strategies require firms to tightly coordinate their product and pricing strategies across international markets and locations.

Firms that pursue a global strategy are typically highly centralized.

Contd..

Why globalize?

Expand global market share Restructure value chain on a global scale. Ultimate goal. Diversification. Expansion.

•

Types of global

strategies:

Global strategy Multi-domestic strategy Transnational strategy

Multi-domestic Strategy

Product customized for each market Decentralized control - local decision making Effective when large differences exist between countries Advantages: product differentiation, minimized political risk, minimized exchange rate.

Global Strategy Product is the same in all countries. Centralized control - little decision-making authority on the local level Effective when differences between countries are small Advantages: cost, coordinated activities, faster product development

Multi-domestic vs. Global Strategy:-

Philips followed multidomestic strategy:-

Innovation from local R&D Entrepreneurial spirit Products tailored to individual countries High quality due to backward integration

Matsushita followed a global strategy :- Strong global distribution network Financial control More applied R&D Ability to get to market quickly

Sources of Competitive Advantage from a Global Strategy

Efficiency Economies of scale from access to more customers and markets Exploit another country's resources - labor, raw materials Extend the product life cycle- Operational flexibility - shift production as costs, exchange rates, Strategic

First mover advantage and only provider of a product to a market Cross subsidization between countries Transfer price

Risk Diversify macroeconomic risks (business cycles not perfectly correlated among countries) Diversify operational risks (labor problems, earthquakes, wars)

LearningBroaden learning opportunities due to diversity of operating environments

Reputation Crossover customers between markets - reputation and brand identification

Contd…

Globalization & Global Strategy —Globalization & Global Strategy —

• GLOBALIZATION ? --Something to do with increasing interdependence between countries.

• GLOBALIZATION ? --Something to do with increasing interdependence between countries.

• GLOBAL STRATEGY

--At simplest level: Treating the world as a single market E.g. Japanese companies during the 1970s & 1980s, (YKK, Honda) standard products, developed & manufactured within Japan.

--At more sophisticated level: Strategy that recognizes and exploits linkages between countries (e.g. exploits global scale, national resource differences, strategic competition)

• GLOBAL STRATEGY

--At simplest level: Treating the world as a single market E.g. Japanese companies during the 1970s & 1980s, (YKK, Honda) standard products, developed & manufactured within Japan.

--At more sophisticated level: Strategy that recognizes and exploits linkages between countries (e.g. exploits global scale, national resource differences, strategic competition)

World assingle mkt.

World as inter-related mkts.

World asseparate national mkts.

multidomestic strategy

global strategy

Strategic Objectives

Sources of Competitive Advantage

National Differences

Scale Economies Scope Economies

Efficiency inOperations

Exploit factor costdifferences

Scale in eachactivity

Sharinginvestments andcosts

FlexibilityMarket or policyinduced changes

Balancing scalewith strategic &operational risks

Portfoliodiversification

Innovation andLearning

Societaldifferences inmanagement andorganization

Experience – costreduction andinnovation

Shared learningacross activities

Sumantra Ghoshal of INSEAD proposed a framework comprising three categories of strategic objectives and three sources of advantage that can be used to achieve them.

Four basic avenues that companies can take to market their products or services globally: Foreign Direct Investment

Joint ventures

Contractual agreements.

Licensing (includes franchising)

GLOBAL STRATEGIES

Moscow, June 8, 2011 – Ford Motor Company and Sollers OJSC have signed agreements to establish a 50-50-owned joint venture in Russia. The new business, named Ford Sollers, is scheduled to start operations later this year. 

Joint venture :--

New technology used :-

Basically it replaces the very expensive batteries with much smaller and inexpensive ones. This affords to position a car at much lower price. In any case it is a new product.

It would help ford to increase the sales and production to regain the no.1 position in U.S or other markets.

BENEFITS FROM JOINT VENTURE :--

In 1999, Global Crossing acquired Frontier Corporation, the former Rochester Telephone Corporation

Renamed the company Global Crossing North America, Inc. 

It sold the local telephone operations it owned, including the Frontier name, to Citizens Communications in 2001, which renamed itself Frontier Communications in 2008.

Mergers and Acquisitions:-