This document discusses various corporate-level strategies related to internationalization, cooperation, and digitalization. It covers four types of internationalization strategies (global, international, transnational, multinational), modes of international market entry, and factors influencing internationalization strategies. Cooperative strategies like mergers & acquisitions, joint ventures, and strategic alliances are described. Digitalization strategies are examined, including how digitalization transforms the value chain and value systems. Different e-business patterns are also outlined.
This document discusses various corporate-level strategies related to internationalization, cooperation, and digitalization. It covers four types of internationalization strategies (global, international, transnational, multinational), modes of international market entry, and factors influencing internationalization strategies. Cooperative strategies like mergers & acquisitions, joint ventures, and strategic alliances are described. Digitalization strategies are examined, including how digitalization transforms the value chain and value systems. Different e-business patterns are also outlined.
This document discusses various corporate-level strategies related to internationalization, cooperation, and digitalization. It covers four types of internationalization strategies (global, international, transnational, multinational), modes of international market entry, and factors influencing internationalization strategies. Cooperative strategies like mergers & acquisitions, joint ventures, and strategic alliances are described. Digitalization strategies are examined, including how digitalization transforms the value chain and value systems. Different e-business patterns are also outlined.
THIRD EDITION Chapter 6 Corporate-level strategies: Internationalisation, Cooperation and Digitalisation AZHAR KAZMI (c) Dr. Azhar Kazmi 2008 2 Learning objectives - 1 Explain the context for internationalisation strategies Describe and exemplify four types of international strategies Explain the various modes of entry to international markets Enumerate the advantages and disadvantages of internationalisation Discuss the growing importance of regionalisation strategies, strategies for the bottom-of-the-pyramid, and local companies competing with global companies (c) Dr. Azhar Kazmi 2008 3 Learning objectives -2 Discuss the motives for international strategies of Indian organisations and the phenomenon of the Indian MNC Describe the types, conditions of use, benefits and drawbacks of three cooperative strategies: mergers and acquisitions, joint ventures, and strategic alliances Explain the principles underlying digitalisation strategies Describe the role of digitalisation in value chain and value system Explain the digitalisation strategies Discuss digitalisation strategies in Indian organisations
(c) Dr. Azhar Kazmi 2008 4 Internationalisation strategies International strategies are a type of expansion strategies that require organisations to market their products or services beyond the domestic or national market. (c) Dr. Azhar Kazmi 2008 5 Context for internationalisation strategies Lowering of trade and investment barriers between nations Easing of regulations governing trade and investment (c) Dr. Azhar Kazmi 2008 6 Porters diamond for competitive advantage of nations Factor conditions Firm strategy, structure, and rivalry Related and supporting industries Demand conditions Government Serendipity Adapted from M.E. Porter: The Competitive Advantage of Nations Harvard Business Review, March- April 1990, p. 77. (c) Dr. Azhar Kazmi 2008 7 Factors determining internationalisation strategies Cost pressures denote the demand on a firm to minimise its unit costs. By doing so, the firm tries to derive full benefits from economies of scale and location economies. Ideally, the firm seeks a single low-cost location, producing globally standardised products and marketing it widely around the world to achieve economies of scale. Pressures for local responsiveness makes a firm tailor its strategies to respond to national-level differences in terms of variables like customer preferences and tastes, government policies, or business practices. In doing so, the firm customises its products and services to the requirements of the individual country- market it is serving. (c) Dr. Azhar Kazmi 2008 8 Four types of internationalisation strategies
Global strategy
International strategy
Transnational strategy
Multidomestic strategy P r e s s u r e s
f o r
c o s t
r e d u c t i o n
Pressures for local responsiveness Based on C.A. Bartlett & S. Ghoshal: Managing Across Borders (Boston, M.A.: Harvard Business School Press, 1989) (c) Dr. Azhar Kazmi 2008 9 International entry modes Export entry modes Direct exports Indirect exports Contractual entry modes Licensing Franchising Other forms Investment entry modes Joint ventures and strategic alliances Independent ventures or wholly-owned subsidiaries (c) Dr. Azhar Kazmi 2008 10 Born-global firms Born-global firms are business organisation that, from or near their founding, seek superior international performance from the application of knowledge-based resources to the sale of outputs in multiple countries.
G. A. Knight and S. T. Cavusgil: Innovation, organizational capabilities, and the born-global firm Journal of International Business Studies (2004) 35, 124-141. (c) Dr. Azhar Kazmi 2008 11 Strategic decisions in internationalisation Which international markets to enter? Timing of entry into international markets Scale of entry into international markets (c) Dr. Azhar Kazmi 2008 12 Regionalisation strategies Home base strategies Portfolio strategies Hub strategies Platform strategies Mandate strategies (c) Dr. Azhar Kazmi 2008 13 Strategies for bottom-of-the- pyramid Asking for easy payments in instalments Dramatic cost-cutting Offering products in small packages Charging prices by pay-by-use Direct distribution by avoiding costly marketing intermediaries
(c) Dr. Azhar Kazmi 2008 14 Strategy Options for Local Companies in Competing against Global Companies Dodge rivals by shifting to a new business model or market niche Contend on a global scale Defend by using home-field advantages Transfer company expertise to cross-border markets I n d u s t r y
p r e s s u r e s
t o
g l o b a l i s e
Resources and competitive capabilities High Low Tailored for home market Transferable to other countries Adapted from N. Dawar & T. Frost, Competing with Giants: Survival strategies for Local Companies in Emerging Markets Harvard Business Review, 77:1, (Mar-Apr 1999), p. 122. (c) Dr. Azhar Kazmi 2008 15 Cooperative strategies Mergers and acquisitions (or takeovers) Joint ventures Strategic alliances (c) Dr. Azhar Kazmi 2008 16 Types of mergers and acquisitions Horizontal mergers Vertical mergers Concentric mergers Conglomerate mergers (c) Dr. Azhar Kazmi 2008 17 Important issues in mergers and acquisitions Strategic issues Financial issues Managerial issues Legal issues (c) Dr. Azhar Kazmi 2008 18 Types of joint ventures Between two Indian organisations in one industry Between two Indian organisations across different industries Between an Indian organisation and a foreign organisation in India Between an Indian organisation and a foreign organisation in that foreign country Between an Indian organisation and a foreign organisation in a third country (c) Dr. Azhar Kazmi 2008 19 Types of strategic alliances Procompetitive alliances Non-competitive alliances Competitive alliances Precompetitive alliances
(c) Dr. Azhar Kazmi 2008 20 Digitalisation strategies Terms used in the context of digitalisation Computerisation Electronisation Digitisation
(c) Dr. Azhar Kazmi 2008 21 Comparison of digital with traditional strategy Type of strategy Digital strategy Traditional strategy Method Experiment and respond Predict and plan Timeframe Monthly, revised continuously Three-to-five year, revised annually Owner Everyone in organization CEO, strategists Competitive threat New forces of digitalization, globalization, and deregulation Michael Porters five forces Role of information technology Disrupter Enabler Output Killer apps Plan Adapted from L. Downes & C. Mui: The end of strategy Strategy & Leadership. Nov/Dec 1998, Vol. 26, Issue 5. (c) Dr. Azhar Kazmi 2008 22 Digitalisation transforms the value chain and value system Deconstruction Disintermediation Re-intermediation Industry morphing Cannibalisation Techno-intensification Re-chanelling (c) Dr. Azhar Kazmi 2008 23 E-business patterns E-channel pattern Click-and-brick pattern E-portal pattern E-market maker or net-market pattern Pure e-digital pattern