Corporate Levels of Strategy
K.M. AGRAWAL COLLEGE
University of Mumbai
2012 - 2013
I, Mr. VISHAL V. UTEKAR of K.M. AGRAWAL COLLEGE of M.COM
(PART-I) (MANAGEMENT) hereby declare that I have completed my project, titled “Corporate Levels Strategy” in the Academic Year 2012-2013. The
Information submitted herein is true and original to the best of my knowledge.
________________________ Signature of Student VISHAL V.UTEKAR (ROLL NO.31)
First of all I would like to take this opportunity to thank the Mumbai University for having projects as a part of the M.COM (PART-I) curriculum.
I express my grateful Thanks to Prof. VISHALI PATIL for the guidance and help rendered at every stage of the project work.
I express my sincere Thanks to Principal ” MRS. ANITA MANNA” who has given valuable moral support, Motivational Inspiration and Educational Atmosphere in the project work.
I also wish to express my Regards to the Librarian for her Co-operation in providing me the necessary reference materials.
I also Express my thanks to all faculty members friends and for co-operation & help given in Completing this project.
Mr. VISHAL V. UTEKAR
1) To study strategic management
2) To study impact of globalization
3) to study global challenges in strategy implementation
Sr. No. | Topic | Page no. | 1 | INTRODUCTION | | 2 | DEFINITIONS OF GLOBALIZATION | | 3 | IMPACT OF GLOBALIZATION | | 4 | STAGES OF INTERNATIONAL DEVELOPMENT | | 5 | FACTORS AFFECTING GLOBALISATION? | | 6 | STRATEGIC CHOICES FOR COMPETING IN FOREIGN MARKETS | | 7 | GUIDELINES FOR A GLOBAL COMPETITOR | | 8 | CONCLUSION | | 9 | BIBLIOGRAPHY | |
Globalization is the process of linking a nation’s economy with the global economy. The policy initiated by the Government of India in the form of structural reforms through liberalization, privatization and globalization will enable the country to become an active participant in the global market. The business community particularly the large business houses concerned with exporting, how to understand the message of globalization in the right perspective.
Strategic management analyzes the major initiatives taken by a company 's top management on behalf of owners, involving resources and performance in external environments. It entails specifying the organization 's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders.
DEFINITIONS OF GLOBALIZATION
1. Rhodes (1996) “Globalization is the functional integration of national economies within the circuits of industrial and financial capital”.
2. Walters (1995) “Globalization as a social process in which the constraints of geography on social and cultural arrangements precede and in which people become increasingly aware that they are”.
3. McGrew and Lewis “Globalization as a set of processes which embrace most of the globe or which operate world wide; the concept therefore has a special connotation……….. On the other hand it also implies intensification in the levels of interaction, interconnectedness or interdependence between the state and societies which constitute the world community”.
IMPACT OF GLOBALIZATION
Today, everything has changed. Globalization, the internationalization of markets and corporations, has changed the way modern corporations do business. To reach the economies of scale necessary to achieve the low costs, and thus the low prices, needed to be competitive, companies are now thinking of a global (worldwide) market instead of a national market.
Nike and Reebok, for example, manufacture their athletic shoes in various countries throughout Asia for sale on every continent. Instead of using one international division to manage everything outside the home country, large corporations are now using matrix structures in which product units are interwoven with country or regional units. International assignments are now considered key for anyone interested in reaching top management. As more industries become global, strategic management is becoming an increasingly important way to keep track of international developments and position the company for long-term competitive advantage. For example, Maytag Corporation purchased Hoover not so much for its vacuum cleaner business, but for its European laundry, cooking, and refrigeration business. Maytag 's management realized that a company without a manufacturing presence in the European Union (EU) would be at a competitive disadvantage in the changing major home appliance industry. See the Global Issue feature to learn how regional trade associations are changing how international business is conducted. Similar international considerations have led to the strategic alliance between Air India and Lufthansa and to the merger between Daimler-Benz and Chrysler Corporation.
GLOBAL CHALLENGES IN STRATEGY IMPLEMENTATION
An international company is one that engages in any combination of activities, from exporting/ importing to full-scale manufacturing, in foreign countries. The multinational corporation (MNC), in contrast, is a highly developed international company with a deep involvement throughout the world, plus a worldwide perspective in its management and decision making. For a Multinational corporation to be considered global, it must manage its worldwide operations as if they were totally interconnected. This approach works best when the industry has moved from being multi domestic (each country 's industry is essentially separate from the same industry in other countries; an example is retailing) to global (each country is a part of one worldwide industry; an example is consumer electronics).Strategic alliances, such as joint ventures and licensing agreements, between a multinational company (MNC) and a local partner in a host country are becoming increasingly popular as a means by which a corporation can gain entry into other countries, especially less developed countries. The key to the successful implementation of these strategies is the selection of the local partner. Each party needs to assess not only the strategic fit of each company 's project strategy, but also the fit of each company 's respective resources. A successful joint venture may require as much as two years of prior contacts between both parties.The design of an organization 's structure is strongly affected by the company 's stage of development in international activities and the types of industries in which the company is involved. The issue of centralization versus decentralization becomes especially important for a multinational corporation operating in both multi domestic and global industries Regional Trade Associations replace National Trade BarriersPreviously known as the Common Market and the European Community, the European Union (EU) is the most significant trade association in the world. The goal of the EU is the complete economic integration of its 15 member countries-Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom-so that goods made in one part of Western Europe can move freely without ever stopping for a customs inspection. One currency, the euro, is being used throughout the region as members integrate their monetary systems. The steady elimination of barriers to free trade is providing the impetus for a series of mergers, acquisitions, and joint ventures among business corporations. The requirement of at least 60% local content to avoid tariffs has forced many American and Asian companies to abandon exporting in favor of a strong local presence in Europe. The EU has agreed to expand its membership to include the Czech Republic, Hungary, Estonia, Poland, Malta, Cyprus, and Slovenia by 2004; Latvia, Lithuania, and Slovakia by 2006; and Bulgaria and Romania by 2010. Turkey is being considered for admission in 2011.Canada, the United States, and Mexico are affiliated economically under the North American Free Trade Agreement (NAPTA). The goal of NAFTA is improved trade among the three member countries rather than complete economic integration. Launched in 1994, the agreement requires all three members to remove all tariffs among themselves over 15 years, but they are allowed to have their own tariff arrangements with nonmember countries. Cars and trucks must have 62.5% North American content to qualify for duty-free status. Transportation restrictions and other regulations are being significantly reduced. Some Asian and European corporations are locating operations in one of the countries to obtain access to the entire North American region. Vicente Fox, President of Mexico, is proposing that NATTA become more like the European Union in that both people and goods would have unlimited access across borders from Mexico to Canada. In addition, there have been some
Discussions of extending NAFTA southward to include Chile, but thus far nothing formal has been proposed.South American countries are also working to harmonize their trading relationships with each other and to form trade associations. The establishment of the Marcos (Mercosul inPortuguese) free-trade area among Argentina, Brazil, Uruguay, and Paraguay means that a manufacturing presence within these countries is becoming essential to avoid tariffs for nonmember countries. Claiming to be NAFTAs southern counterpart, Mercosur has extended free-trade agreements to Bolivia and Venezuela. With Chile and Argentina cooperating to build a tunnel through the Andes to connect both countries, it is likely that Chile may soon form some economic relationship with Mercosur.Asia has yet no comparable regional trade association to match the potential economic power of either NAFTA or the EU. Japan, South Korea, China, and India generally operate as independent economic powers. Nevertheless, the Association of South East Asian Nations (ASEAN)-composed of Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietriam-is attempting to link its members into a borderless economic zone. Increasingly referred to as ASEAN+3, it is already including China, Japan, and South Korea in its annual summit meetings. The ASEAN nations are negotiating the linkage of the ASEAN Free Trade Area (AFTA) with the existing FTA of Australia and New Zealand. With the EU extending eastward and NAFTA extending southward to someday connect with Mercosur, pressure is already building on the independent Asian nations to soon form an expanded version of ASEAN.
IMPACT OF ELECTRONIC COMMERCE
Electronic commerce refers to the use of the Internet to conduct business transactions. A 1999 survey conducted by Booz-Allen & Hamilton and the Economist Intelligence Unit of more than 525 top executives from a wide range of industries revealed that the Internet is reshaping the global marketplace and that it will continue to do so for many years. More than.90% of the executives believed that the Internet would transform or have a major impact on their corporate strategy within two years. According to Matthew Barrett, Chairman and CEO of the Bank of Montreal, "We are only standing at the threshold of a New World. It is as if we had just invented printing or the steam engine. Not only is the Internet changing the way customers, suppliers, and companies interact, it is changing the way companies work internally. In just the few years since its introduction, it has profoundly affected the basis of competition in many industries. Instead of the traditional focus on product features and costs, the Internet is shifting the basis for competition to a more strategic level in which the traditional value chain of an industry is drastically altered. A 1999 report by AMR Research indicated that industry leaders are in the process of moving 60 to 100% of their business to business (B2B) transactions to the Internet. The net B213 marketplace includes (a) Trading Exchange Platforms like Vertical Net and i2 Technologies’ TradeMatrix, which support trading communities in multiple markets; (b) Industry Sponsored Exchanges, such as the one being built by major automakers; and (c) Net Market Makers, like e-Steel, NECX, and BuildPoint, which focus on a specific industry 's value chain or business processes to mediate multiple transactions among businesses. The Garner Group predicts that the worldwide B2B market will grow from $145 billion in 1999 to $7.29 trillion in 2004, at which time it will represent 7% of the total global sales transactions.
The above mentioned survey of top executives identified the following seven trends, due at least in part, to the rise of the Internet:
1) The Internet is forcing companies to transform themselves. The concept of electronically networking customers, suppliers, and partners is now a reality.
2) New channels are changing market access and branding, causing the disintermediation (breaking down) of traditional distribution channels. By working directly with the customers, companies are able to avoid the usual distributors, thus forming closer relationships with the end users, improving service, and reducing costs.
3) The balance of power is shifting to the consumer. Now having unlimited access to information on the Internet, customers are much more demanding than their "nonwired" predecessors.
4) Competition is changing. New technology- driven firms plus older traditional competitors are exploiting the Internet to become more innovative and efficient.
5) The pace of business is increasing drastically. Planning horizons, information needs, and customer/supplier expectations are reflecting the immediacy of the Internet. Because of this turbulent environment, time is compressed into "dog years" in which one year feels like seven years.
6) The Internet is pushing corporations out of their traditional boundaries. The traditional separation between suppliers, manufacturers, and customers is becoming blurred with the development and expansion of extranets, in which cooperating firms have access to each other 's internal operating plans and processes. For example, Bharat Petroleum Corporation Limited (BPCL), the Indian PSU oil major has networked with satellite unlinking through KU band. The technology can be further used to network the retail outlets for better market response and monitoring. Various interesting alternative uses of this technology are feasible which are being studied and would be deployed suitably.
7) Knowledge is becoming a key asset and a source of competitive advantage. For example, physical assets accounted for 62.8% of the total market value of U.S. manufacturing firms in 1980 but only 37.9% in 1991. The remainder of the market value is composed of intangible assets, primarily intellectual capital.
STAGES OF INTERNATIONAL DEVELOPMENT
Corporations operating internationally tend to evolve through five common stages, both in their relationships with widely dispersed geographic Markets and in the manner in which they structure their operations and programs. These stages of international development are: * Stage I (Domestic Company): The primarily domestic company exports some of its products through local dealers and distributors in the foreign countries. The impact on the organization 's structure is minimal because an export department at corporate headquarters handles everything. * Stage 2 (Domestic Company with Export Division): Success in Stage I leads the company to establish its own sales company with offices in other countries to eliminate the middlemen and to better control marketing. Because exports have now become more important, the company establishes an export division to oversee foreign sales offices. * Stage 3 (Primarily Domestic Company with International Division): Success in earlier stages leads the company to establish manufacturing facilities in addition to sales and service offices in key countries. The company now adds an international division with responsibilities for most of the business functions conducted in other countries. * Stage 4 (Multinational Corporation with Multidomestic Emphasis): Now a full-fledged multinational corporation, the company increases its investments in other countries. The company establishes a local operating division or company in the host country, such as HLL of Unilevers, to better serve the market. The product line is expanded, and local manufacturing capacity is established. Managerial functions (product development, finance, marketing, and so on) are organized locally. Over time, the parent company acquires other related businesses, broadening the base of the local operating division. As the subsidiary in the host country successfully develops a strong regional presence, it achieves greater autonomy and self-sufficiency. The operations in each country are, nevertheless, managed separately as if each is a domestic company. * Stage 5 (Multinational Corporation with Global Emphasis): The most successful multinational corporations move into a fifth stage in which they have worldwide personnel, R&D, and financing strategies. Typically operating in a global industry, the MNC denationalizes its operations and plans product design, manufacturing, and marketing around worldwide considerations. Global considerations now dominate organizational design. The global MNC structures itself in a matrix form around some combination of geographic areas, product lines, and functions. All managers are nowresponsible for dealing with international as well as domestic issues.
Research provides some support for the stages of international development concept, but it does not necessarily support the preceding sequence of stages. For example, a company may initiate production and sales in multiple countries without having gone through the steps of exporting or having local sales subsidiaries. In addition, any one corporation can be at different stages simultaneously with different products in different markets at different levels. Firms may also leapfrog across stages to a global emphasis. Developments in information technology are changing the way business is being done internationally. See the Global Issue feature to see how FedEx is using its expertise in information technology to help customers sidestep the building of a costly logistical infrastructure to take advantage of global markets.
Nevertheless the stages concept provides a useful way to illustrate some of the structural changes corporations undergo when they increase their involvement in international activities.
FACTORS AFFECTING GLOBALISATION?
1. Technological change, especially in communications technology. For example, UK businesses and data by satellite to India (taking advantage of the difference in time zones) where skilled but cheaper data handlers input the data and return it by satellite for the start of the UK working day.
2. Transport is much cheaper and faster. This is not just aircraft, but also ships. The development of containerization in the 1950s was a major breakthrough in goods handling, and there have been continuing improvements to shipping technology since then.
3. Deregulation. From the 1980s onwards (starting in the UK) many rules and regulations in business were removed, especially rules regarding foreign ownership. Privatization also took place, and large areas of business were now open to purchase and/or take-over. This allowed businesses in one country to buy those in another. For example, many UK utilities, once government businesses, are owned by French and US businesses.
4. Removal of capital exchange controls. The movement of money from one country to another was also controlled, and these controls were lifted over the same period. This allowed businesses to move money from one country to another in a search for better business returns; if investment in one 's own country looked unattractive, a business could buy businesses in another country. During the 1990s huge sums of money, mainly from the US, have come into the UK economy.
5. Free Trade. Many barriers to trade have been removed. Some of this has been done by regional groupings of countries such as the EU. Most of it has been done by the WTO. This makes trade cheaper and therefore more attractive to business.
6. Consumer tastes have changed, and consumers are more willing to try foreign products. The arrival of global satellite television, for example, has exposed consumers to global advertising. Consumers are more aware of what is available in other countries, and are keen to give it a try.
7. Emerging markets in developing countries, especially the 'Tigers ' of SE Asia e.g. Thailand. There has been high growth of incomes in these countries, which makes large consumer markets with money to spend. Indonesia, for example, whilst still not particularly rich, has some 350 myn consumers. Both India and China are very poor countries, but there are small middle classes who are doing very well and have money to spend. Although these groups are small in the context of the country, the overall populations are so huge (over 1 byn) that a small middle class adds up to many millions of consumers.
STRATEGIC CHOICES FOR COMPETING IN FOREIGN MARKETS
Strategic options for a company entering and competing in foreign market that decides to expand outside its domestic market and compete internationally or globally. Important strategic options for a company competing in international market are listed below: * Export strategies * Licensing strategies * Franchising strategies * A multi-country strategy vs. global strategy * Pursuing competitive advantage by competing in a multinational * Strategic alliances and joint ventures
1. Export Strategy
Company is manufacturing products and service for exporting to foreign markets. It is an excellent Initial strategy for pursuing international sales. It minimizes both the risk and capital requirements. With an export strategy, a manufacturer can limit its involvement in foreign markets by contracting with foreign wholesalers who are experienced in importing to handle the entire distribution and marketing of outputs and marketing function in their countries regions of the world. If it has more advantages to Company and has to domination to the control over these functions. In this case, a manufactures can establish its own distribution and sales organization in some or all of the target foreign markets. Either Way, a firm minimizes its direct investments in foreign countries because of its home-based production and export strategy.
Whether an export strategy can be pursued successfully over the long run depends on the relative Cost competitiveness of a home country production base. In some countries, firms gain additional sale economies and firm centralizing production on several giant plants whose output capability exceeds demand in any country market. An export strategy is open for firms when the manufacturing costs in the home country are substantially higher than in foreign countries where rivals have plants or when it has relatively high-shipping costs. Unless an exporter can keep its production and shipping costs competitive with rivals having low-costs plants in location close to end user markets, its success will be limited. 2. Licensing Strategy
Licensing foreign companies to use the company’s technology or giving permission to produce and distribute the company’s products and service, Licensing mode carries low financial risk to the licensor. Licensing presents considerable economic uncertainty and is politically volatile. By licensing the technology or the production rights to foreign-based firm, the firm does not have to bear any risk. The licensee is freed from the risk of product failure and at the same time is able to generate income from royalties.
Advantages of Licensing Strategy
Licensing mode carries low financial risk to the licensor.
Licenser can investigate the foreign market without many efforts on his part.
Licenser gets all the benefits with minimal investment on R and D.
Licensee is free from the risk of product failure.
Disadvantages of Licensing Strategy
Licensing agreements reduce the market opportunities for both the licenser and licensee.
Both parties have responsibility of maintaining the product quality and also in promoting the product. Therefore, one party 's actions can affect the other.
Costly and tedious litigation may crop up and hurt both the parties and the market.
There is scope for misunderstanding between the parties despite the effectiveness of the agreement.
There is a problem of leakage of the trade secrets of the licensor.
The licensee may develop his reputation.
The licensee could sell the product outside the agreed market territory and/or after the expiry of contract. 3. Franchising Strategies
Franchising strategies is better suited to the firm that entered to global business and expanded its products and service to international market. Franchising is a form of licensing. The franchising can exercise more control over the franchised compared to licensing. In franchising, a separate organization called the franchisee operates the business with the name of another company called the franchiser. Under this agreement, the franchisee pays fees to the franchiser. The franchiser provides the following service to the franchisee:
Continuous support systems like advertisement, Human-Resource development, reservation services and quality assurance programmes.
The franchising agreement should contain important items as listed below:
Franchisee has to pay a fixed amount and royalty based on the sales to the franchiser. Franchisee should agree to adhere to follow the franchiser’s requirements like appearance, financial reporting and operation procedures and customer services etc.
Franchiser helps the franchisee in establishing the manufacturing facilities, service facilities, provide expertise, advertising and corporate image etc.
Franchiser allows the franchisee some degree of flexibility in order to meet the local tastes and preference.
For example, in India NIIT have the franchised computer training centres in entire India.
Advantages of Franchising
Franchiser can enter global markets with low investment and low risks.
Franchiser can get free knowledge regarding markets, different cultural aspects of the new market and the environment in general of the host city or nation.
Franchiser learns more lessons from the experiences of the franchisees, which he could not experience from the home country’s market.
Franchisee can early start a business with low risk as he selects an established and proven product and operating system.
Franchisee gets the benefits of Research & Development at a low cost.
Franchisee is free from the risk of product failure.
Disadvantages of Franchising
International franchising can become more complicated than domestic franchising.
It is difficult to have full control over an international franchisee.
Franchising agents reduce the market opportunities for both the franchiser and franchisee.
Both parties have equal responsibility of maintaining the quality of the product and also in promotion of the product.
There is scope for misunderstanding between the parties. There can be leakage of trade techniques and other secrets.
4. MULTICOUNTY STRATEGY V/S GLOBAL STRATEGY
Multicounty strategy is that strategy which is designed as per the market situation in a particular country. A firm adopts differential strategy depending upon the differences in the markets. The differences strategy may be in respect of social, cultural economic, political and competitive conditions in different markets. A firm that caters to various markets or countries need to adopt this strategy. Variations in marketing- mix are made depending upon the competition and customer requirement s. the main objective is to gain competitive advantage in the overseas markets. The firm may make variations in respect of many or any of the following elements of marketing mix: 1) Product features 2) Packaging 3) Design or colour combination 4) Sales promotion 5) After-sales- service 6) Pricing 7) Advertising 8) Warranty, etc. The more the country-to-country variations, the more a company’s overall international strategy becomes a combination of its individual country strategies. However, country-to- country variation still allows room to connect or co-ordinate. The strategies in different countries by making an attempt to transfer ideas, technologies, competencies and capabilities that work successfully in one country markets. In other words, the success factors of the strategy in one country may be used in another strategy wherever possible. For instance, a particular shape or size is well accepted in one market, and then such positive aspect can be experimented in another market as well. A Multicountry strategy is suitable for global firms when Multicountry competition dominates and local responsiveness or adjustment is essential. However, a global strategy works well for global firms in markets that are globally competitive or beginning to globalize. A global strategy is more or less the same strategy in all the global markets. Minor differences are incorporated in country strategy depending upon the local competitive environment, or market situation. However, the main theme of the strategy remains the same. For instance, a firm may adopt low-cost strategy in all the markets with slight modification in shape, or size or colour combination or some other aspect that would make minor or not cost difference. A global strategy involves: * Integrating and coordinating the firm’s strategic moves worldwide * Selling in several markets where there is significant demand.
5. A multicounty strategy is preferred over global strategy when: 1) There are significant country- to- country differences in customers’ needs and buying habits. For instance, Nestle- the world’s largest blender of coffee products 200 types of instant coffee, from lighter blends for the USA markets to dark expressos for Latin American markets. To keep its instant coffee matched to customer tastes in different countries, Nestle operates four coffee research labs, to experiment with new blends in aroma, flavour and colour. 2) The multicounty strategy is also preferred when buyers in a particular country insist on specialized or highly customized product. 3) The host governments introduce regulations requiring that products sold locally meet strict manufacturing specifications or performance standards. 4) When trade restrictions of host governments are so diverse and complicated that do not permit a uniform worldwide global strategy.
Global strategy has a big advantage over Multicountry strategy: * It enables a firm to concentrate on building the resources strengths to secure a sustainable low-cost or differentiation- based competitive advantage over both domestic rivals and global rivals.
GUIDELINES FOR A GLOBAL COMPETITOR
There is no sure formula to attain success in overseas markets. However, a business intending to enter in global markets, or an existing player in the overseas markets need to follow certain guidelines to be successful: 1) Products: A firm catering to overseas needs to design products as per needs, expectations and desires of the buyers. Normally, there are three options: * Product innovation –introducing a new product * Product adaptation- modifying the existing product * Product standardization- same product The design of the product depends on several factors such as: * Needs and expectations of customer * Substitutes available to customers. * Design of competitors products, etc. 2) Markets: a firm should enter the right markets at the right time. Normally, a firm should avoid over-crowded(heavy competition) markets. It is advisable to enter those markets where there is less competition is very difficult. Therefore, one should do a good research work to judge degree of competition. 3) Managerial system: a firm competing in global markets needs to install the appropriate managerial system. One should ensure that managers in foreign markets understand the nuances of culture and language in different parts of the insight into the culture and language in the host countries. This is because of the culture and language in different parts of the globe. Therefore, it would be advisable to train managers to gain insight into the culture and language in the host country. now-a-days, there is increasing trend to select managers especially at operational level from the host country itself as they are well versed with the local culture and language. 4) Merger/ joint Ventures: Joint Venture is also called as joint deal or consortium. In joint venture, two companies form two countries come together and conduct some new business activity for mutual benefit. Joint ventures is a popular method of entering into the global market. Besides sharing ownership and control, companies may share technology or other specialized inputs. Two or more companies each can provide specialized technology to one project, in a situation where no one company, has access to all of the technologies required for a project. 5) Globalize strategic decision: a global player should make strategic decision in respect of products, capital and research at the headquarters. The tactical decisions relating to packaging, pricing, promotion and distribution should be left to the local units. In other words, there should be centralization of strategic global decisions and decentralization in respect of tactical decision. 6) Investments: a global firm should give priority for investments in those areas that would give a competitive advantage. Special focus should be on training the employees on regular basis, not only to impart knowledge and to develop skills but also to develop the right attitude. Another priority area should be research and development, especially in the case of consumer durables, office equipment and machinery. Wherever possible, R & D efforts should be made to reduce costs, and to improve quality. 7) Alternative sourcing: a firm may consider alternative sourcing. It may locate manufacturing facilities in low labour cost areas of the world. For instance, American firms may locate their production facilities in low labour cost areas of Asia, where there is good availability of skilled work force at low labour cost. 8) Promotion: a global firm should adopt the right promotion mix. emphasis must be placed not just on advertising, but also on other elements of promotion, especially, publicity and participation in trade fairs and exhibitions. Publicity is more believable and convincing than advertising, and therefore, there is a need to maintain good relations with media owners to get effective publicity. There is also a need to participate in trade fairs and exhibition as it enables to demonstrate the product and convince the prospective buyers. Therefore there is a need to have good information about the trade and exhibitions with respect to formalities relating to booking of space, participation fees, etc. 9) Pricing:there is a need to fix right prices in the overseas markets. The prices must be fixed taking into consideration certain factors such as: * Costs of production and marketing * Demand for the product * Competition in the market * Nature of customers 10) Packaging: packaging plays an important role not only in domestic markets, but more so in overseas markets. The global manufacturer must undertake suitable packaging depending upon certain factors such as: * Nature of the product * Mode of transport * Buyers requirements, etc. Packaging serves important purpose such as protection to goods, preservation of quality, and promotion of goods.
Globalization is the functional integration of national economies within the circuits of industrial and financial capital. It entails specifying the organization 's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives.
REFERENCE BOOK: 1) Strategic Management- Michael Vaz
1) www.scribd.com 2) Wikipedia 3) www.google.com
Bibliography: REFERENCE BOOK: 1) Strategic Management- Michael Vaz Website: 1) www.scribd.com 2) Wikipedia 3) www.google.com