Hanno Bötel & Christian W. Kretzmann Boston University - Metropolitan College International Business Management (MG 520) Professor Jung-Wan Lee 9 December 2009
TATA MOTORS & BMW
INTERNATIONAL BUSINESS MANAGEMENT
Introduction to the Background of Research International Strategic Management is the planning taken by a company to compete effectively in international markets and achieve its international objectives. Developing a strategy for global companies is far more complex than developing a domestic strategy. International companies must deal with multiple governments, multiple currencies, multiple accounting systems, multiple political and legal systems and a variety of cultures with different languages, different behaviour, and different values. International companies need to implement a strategic management which can be seen as a comprehensive framework for achieving the company’s fundamental goals in this complex environment. Strategy means the theory about how to gain competitive advantage in markets. The strategic management process includes a company’s mission, an external and internal analysis, a strategic choice, strategic objectives and an implementation of the strategy. Every step of this process is aimed at one goal: competitive advantage. Competitive advantage can be defined as conditions which enable a company to operate in a more efficient or otherwise higher-quality manner –than its competitors and which result in benefits for the company because it can create more economic value than the competition. This process is not undertaken a single time; instead it is a constant, comprehensive and repeating process of analyzing the environment, the company and adjusting the strategy to the conditions. The mission statement clarifies the purpose of doing business. Moreover, it defines the values and the direction of the business. According to Caravantes, Panno, & Kloeckner (2005) it should define three basis questions: Who are we? Why do we exist? Which is our reason of being? The mission statement is used as a way of communicating with internal and external stakeholders about the strategic direction of the company. It may specify aspects such as the firm’s products, the target customers, the markets where to compete, the core technologies used, concerns for survival, plans for growth and profitability, philosophy of doing business and corporate social responsibility. Multinational corporations (MNCs) may have several mission statement, one for the holding company and one for each subsidiary or business unit. The next step of the strategic management process is a SWOT analysis. SWOT is an acronym for the internal strengths and weaknesses of a company and the environmental opportunities and threats facing that firm. It is technique through which strategic managers can create a quick overview of a company’s strategic situation. In the external environment the company obtains data about economic, financial, political, legal, social, cultural and competitive changes in the various markets the company is engaged or might want to serve. In the firm’s internal analysis the strategic manager assess the organizational strengths and weaknesses of the company in comparison to major competitors. Potential strengths might include a strong financial position, a great competence in process engineering, a cutting-edge technology or an abundance of managerial talent. Weaknesses reflect deficiencies in skills, resources or other factors that impede the firm’s competitiveness such as a lack of skilled employees, high capital costs or a negative public image. With the SWOT analysis and the mission statement as context, companies undertake strategic choices: how do we want to interact successfully in our business environment and generate competitive advantage? At the corporate level companies decide whether they...