Shashank. M. Hiremathshashankmh2000@yahoo.co.in

References

International Business, 5thEdition. K Aswathappa

International Business,Competing in the GlobalMarketplace. Charles W L Hill

Shashank M Hiremath

Nature of International Strategic Management Strategic management is concerned with the

process of formulating, implementing, andevaluating strategies to achieve a firm’sobjectives.

Acquiring and Developing brands. Reaping experience curve benefits. Realising location economies. Core competencies.

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International Strategic Management Process (EPRG Model) Ethnocentric orientation.

Polycentric disposition.

Regiocentricism (Ethnocentric & Polycentric).

Geocentric approach.

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Strategic Management Process

Four (4) major steps:

1) Scanning of global environment.2) Formulation of strategies.3) Implementation of strategies.4) Evaluation and control.

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(Contd...)

Scanning of Global Environment

External environment. Strategic Business Units (SBUs) assessment. Regional evaluation – Market Size & Growth. Internal environment – Mission Statement,

Physical Resources & Personnel Competencies. Physical resources and personal competencies. Value chain analysis

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(Contd...)

Formulation of Strategies Major strategic options:

1) Worldwide integration strategy.2) National responsiveness strategy.3) Regional responsiveness.4) Multi-focal emphasis.

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(Contd...)

Formulation of Strategies Goal setting and strategy formulation

Whatever may be the focus, strategy formulationshould be preceded by goal setting.

Common Areas of Formulation of MNC goals: Profitability. Marketing. Production. Finance. Personnel / HR.

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(Contd...)

Formulation of Strategies Different Strategies: Intended Strategies, Deliberate

Strategies, Unrealized Strategies, Emergent Strategies,Imposed Strategies, and Realized Strategies.

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Formulation of Strategies The above strategies are formulated at 3

levels; Corporate Level, Business Leveland Functional Level.

Corporate level strategies: Growth Strategy:○ Organic Growth Strategy.○ Inorganic Growth Strategy.

Retrenchment Strategy. Stability Strategy. Combination Strategy.

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(Contd...)

Formulation of Strategies Business level strategies:

Low-Cost leadership strategy. Differentiation strategy. Focus strategies.

Functional level strategies: All functional areas of business.

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Implementation of Strategies

Location.

Ownership.

Functional strategies.

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(Contd...)

Evaluation and Control Financial ratios Return on investment Return on equity Profit margin Market share Debt to equity Earnings per share Sales growth Assets growth

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Shashank M Hiremath

Nature of International Organizational Design An appropriate organizational structure is

needed for MNC’s to implement strategies.

Organizational structure is also calledorganizational design.

Allocate resources, assign tasks, transmitinformation, instruct employees, etc maybe done through organizational design.

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Factors influencing organizational structure Two most significant & contingent factors affect the

organizational structure: Environment:

Internal:○ Management orientation- Ethnocentric, Polycentric, Geocentric.○ Organization size.○ Employee strength.

External:○ Environmental Uncertainty – Mechanist and Organic Structure.○ Differentiation and integration.○ Globalization Vs Local responsiveness.

Technology dimensions: Routine technology. Non-routine technology.

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Basic Organizational Structures / Designs International Division Structure Worldwide Functional Structure Geographic Area Structure Product Organization Mixed Structure Matrix Structure Networked Structure

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International Division Structure

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Worldwide Functional Structure

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Geographic Area Structure

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Product Organization

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Mixed Structure

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Matrix Structure

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Networked Structure

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Choosing a Structure Present and future competitive strategy Historical background of the company Business and product strategy Management traits and philosophy Experienced management personnel Adjust to major organizational changes Degree of centralization

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Issues in global organizational design Centralization Vs Decentralization Use of Subsidiary Board of Directors Non-traditional organizational arrangements Role of information technology in organizing Need for integrating mechanisms Control systems Managing culture in international business Managing change in international business

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Thank You!!!Thank You!!!

Shashank M Hiremath