Year : II Semester : IV

INTERNATIONAL
BUSINESS MANAGEMENT
UNIT 3:
INTERNATIONAL
STRATEGIC MANAGEMENT

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 Strategic Compulsions – Standardization vs.
Differentiation
 Strategic Options
 Global Portfolio Management
 Global Entry Strategy
 Different Forms of International Business – Advantages
 Organizational Issues of International Business
 Organizational Structures
 Controlling of International Business – Approaches
to Control
 Performance of Global Business
 Performance Evaluation System. 2
Nature of international strategic
management
 Strategic management is concerned with
the process of formulating, implementing
and
evaluating strategies to achieve a firm’s
objectives
Geographic differences, cultural and national
differences and variations in business
practices and different norms makes it
difficult 3
Framework for international
strategic management
Five phase of planning and analysis
1. Recognizing antecedents
2. External and internal analysis
3. Strategic analysis and choice
4. Leveraging competitive advantage and
process
5. Implementation and integration
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International strategic planning
International strategic planning is a
process of evaluating the internal and
external environment by multinational
organizations, through which they set their
long term and short term goals and then
they implement a specific plan of action in
order to achieve those objectives
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Area of strategic compulsions
Orientation of globalization
Emerging e-commerce and culture
Cut throat competition
Diversification

Active pressure group

Motive for CSR Corporate social
responsibility and ethics
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 International strategic
management process
Four dispositions of strategic management
process in international business
Ethnocentric orientation
Polycentric orientation
Regio centric predisposition
Geocentric

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Steps in Strategic management
process

Scanning of global environment

Formulation of strategies
Implementation of strategies
Measure and evaluate performance

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 Environmental scanning
External environment
1. SBU assessment
2. Regional evaluation
 Internal environment
1. Mission statement
2. Physical resources and personnel
competencies
3. Value chain analysis
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 Strategy formulation

Major strategic options

Worldwide integration
National responsiveness
Regional responsiveness
Multifocal emphasis

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Strategy implementation
 Location
 Ownership
Functional strategies
Evaluation and control
 Return on
investment
 Return on equity
 Profit margin
 Market share
 Debt to equity
 Earnings per share
 Sales growth
 Assets growth 11
Standardization Vs Differentiation
According to Levitt, represents local
marketing Vs global marketing and focus on
the central question of whether a
standardized (global) or a differentiated
(local), country specific marketing approach
1. Regional perspective
2. Marketing process perspective
3. Marketing components/marketing mix
perspective
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 Strategic Options
Global strategy
International strategy
Trans-national strategy
Multi-domestic strategy

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Factors affecting strategic options
 External constraints
 Intra-organizational forces and managerial power-
relations
 Values and preferences and managerial attitudes
risk
 Impact of past strategy
 Time constraints in choice of strategy
 Information constraints
 Competitors’ reaction
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Global portfolio investment
Global portfolio investment means the
purchase of stocks, bonds and money market
instrument by foreigners for the purpose of
realizing financial return which does not result
in foreign management, ownership or control
Portfolio investment is part of the capital
account on the balance of payment statistics

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Factors affecting Global portfolio
investment

Tax rates on interest and dividends

Interest rates
Exchange rates

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Problems of Global portfolio
investment
Unfavorable exchange rate movement
Frictions in international financial market
Manipulation of security prices
Unequal access to information

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 Global entry strategies
Level of 6. Contract
involvement Manufacture
: 7. Licensing
1. Wholly owned 8. Direct
subsidiary marketing
2. Company 9. Distribution and
acquisitions agents
3. Assembly 10. Sales force
operations 11.Trading
4. Joint companies
venture 12.Export
management
5. Strategic companies 18
Global Entry Strategies
 Exporting as an entry strategies
1. Indirect exporting
2. Direct exporting
Manufacturing strategies without FDI
1.Licensing
2. Franchising
3. Contract manufacture
4. Turnkey projects
5. Management contracts
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Contd…
Manufacturing strategies with FDI
1. Joint ventures
2. Strategic alliances
3. Merger
4. Acquisition
5. Wholly owned subsidiary
6. Assembly operations
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 Factors affecting the entry mode
External factors
1. Market size
2. Market growth
3. Government regulations
4. Level of competition
5. Level of risk
 Internal factors
1. Company objectives
2. Availability of company resources
3. Level of commitment
4. International experience
5. Flexibility
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 Organizational structure

An organizational structure defines how

activities such as task allocation, co-
ordination and supervision are directed
towards the achievement of organizational
aims.

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 Designing organization
structure
Includes the analysis of following aspects:
1. External environment
2. Overall aims and purpose of the enterprise
3. Objectives
4. Activities
5. Decisions
6. Relationships
7. Organization structure
8. Job structure
9. Organization climate
10. Management style
11. Human resource
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Types of organization structure
International division’s structure
Functional division’s structure
Product division structure
Geographic (Area) structure
Matrix division structure
Mixed structure

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Methods of control system
Personal controls
Bureaucratic controls
Output controls
Cultural controls
Approaches tocontrol
Market approach
Rules approach
Corporate culture approach

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 Process of performance
measurement
Establishing standards of performance
Measure actual performance
Analyze performance and compare it with
standards
Construct and implement an action plan
Review and revise standards

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Performance evaluation system
Defined as “Periodic review of operations to
ensure that the objectives of the enterprises
are being accomplished”
Various performance indicators:
1. Financial measures
a, Return on investment (ROI)
b, Budget as a success indicator
2. Non Financial measures
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Types of performance evaluation
system

Budget programming
Management Audit
PERT (Program evaluation review
technique)
Management information system

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 Organization design
 Organizational design is a step-by-step methodology which
identifies dysfunctional aspects of work flow, procedures,
structures and systems, realigns them to fit current
business realities/goals.
The following can be achieved:
 Excellent customer service Increased profitability
 Reduced operating costs
 Improved efficiency and cycle time
 A culture of committed and engaged employees
 A clear strategy for managing and growing your business
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Five Approaches to Organizational
Design
Five common approaches –
1. Functional approaches
2. Divisional approaches
3. Matrix approaches
4. Team approaches
5. Networking approaches

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CONTROLLING OF INTERNATIONAL
BUSINESS
These three key levels of control are as
follows:
Strategic control
Organizational control
Operational control

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 Organizational control
Three types of organizational control
systems are:
1. Responsibility Centre Control
2. Generic Organizational
Control
3. Planning Process Control

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Establishing International Control
Systems
Control systems in
international business are
established through four
basic steps:

1. Set Control standards for performance

2. Measure actual performance
3. Compare performance against standards
4. Respond to deviations
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 Essential Controlling Techniques
Some of controlling techniques as below:
1. Accounting systems
2. Procedures
3. Performance ratios

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 Quality dimensions
 Quality consist of eight dimensions:
1. Performance
2. Features
3. Reliability
4. Conformance
5. Durability
6. Serviceability
7. Aesthetics
8. Perceived quality
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 PERFORMANCE OF GLOBAL
BUSINESS
 Global Business Performance is a flexible, web based
solution that provides the key components to support
global decision making.
 It offers the integration and management of
multiple, cross-country data sources including POS,
retailer direct, syndicated and consumer data.
 Global Business Performance identifies trends and
opportunities and delivers sales and performance
insights across regions, countries and categories, only
days after data is available.
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The End

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