2 marks ism

International strategic management
2 Marks (2009 & 2010) Page 1
1. Core Competence
The main strengths or strategic advantages of a business. Core competencies are the
combination of pooled knowledge and technical capacities that allow a business to be competitive
in the marketplace. Theoretically, a core competency should allow a company to expand into new
end markets as well as provide a significant benefit to customers. It should also be hard for
competitors to replicate.
2. Transnational companies
Commercialenterprise that operatessubstantialfacilities, does business in more than one
country and does not consider any particular country its national home. One of the
significantadvantages of a transnational company is that they are able to maintain a greater degree
of responsiveness to the local markets where they maintain facilities.
Example: Audi, AXA,Bacardi, Dell, Google
Substantial: - Having substance; largesignificant.
3. Mergers and Acquisitions
A general term used to refer to the consolidation of companies. A merger is a combination
of two companies to form a new company, while an acquisition is the purchase of one company by
another in which no new company is formed.
How It Works/Example:
A merger is the combination of two similarly sized companies combined to form a new
company. An acquisition occurs when one company clearly purchases another and becomes the
new owner. A merger or an acquisition usually starts out with a series of informal discussions
between the boards of the companies, followed by formal negotiation, a letter of intent, due
diligence, a purchase or merger agreement, and finally, the execution of the deal and the transfer of
payment.

2 Marks (2009 & 2010) Page 2
4. VAT (Value-Added Tax)
A type of consumption tax that is placed on a product whenever value is added at a stage of
production and at final sale. Value-Added Tax (VAT) is most often used in the European Union. The
amount of value-added tax that the user pays is the cost of the product, less any of the costs of
materials used in the product that have already been taxed. For example when a television is built
by a company in Europe the manufacturer is charged a value-added tax on all of the supplies they
purchase for producing the television. Once the television reaches the shelf, the consumer who
purchases it must pay the value-added tax that applies to him or her.
5. Foreign Direct Investment (FDI)
Foreign direct investment (FDI) is a direct investment into production or business in a country
by a company in another country, either by buying a company in the target country or by expanding
operations of an existing business in that country. E.G:- As for an example, a Chinese company
building a factory and a supply chain in the US in order to tap into the American market would be
an example of Chinese foreign direct investment into America.
6. Strategic Planning for Expansion
Strategic planning is an organization's process of defining its strategy, or direction, and making
decisions on allocating its resources to pursue this strategy. In order to determine the direction of
the organization, it is necessary to understand its current position and the possible avenues through
which it can pursue a particular course of action. Generally, strategic planning deals with at least
one of three key questions:[1]
1. "What do we do?"
2. "For whom do we do it?"
3. "How do we excel?"
In many organizations, this is viewed as a process for determining where an organization is going
over the next year or—more typically—3 to 5 years (long term), although some extend their vision
to 20 years.

2 Marks (2009 & 2010) Page 3
7. Oligopoly
A situation in which a particular market is controlled by a small group of firms. An oligopoly is
much like a monopoly, in which only one company exerts control over most of a market. In an
oligopoly, there are at least two firms controlling the market. For e.g. The retail gas market is a
good example of an oligopoly because a small number of firms control a large majority of the
market.
8. Shared Learning
At the end of each quarter, after each student rereads his journal, the class sits in a circle and each
student shares one thing he has learned about himself so far this year, it is the basic meaning of
shared learning so according to this meaning shared learning in strategic management means
after ending of any project in organization all the employees may be shared their views and
learning from the project and according to that they may understand what mistakes they have
done, what they have to improved etc.
9. “‘THE TRAID”
A group of three, especially of three closely related persons or things.
10. BPO (Business Process outsourcing)
Business Process outsourcing (BPO) is the act of giving a third-party the responsibility of running
what would otherwise be an internal system or service. For instance, an insurance company might
outsource their claims processing program or a bank might outsource their loan processing
system. Other common examples of BPO are call centers and payroll outsourcing.
Typically, companies that are looking at business process outsourcing are hoping to achieve cost
savings by handing the work to a third-party that can take advantage of economies of scale by
doing the same work for many companies. Or perhaps the cost savings can be achieved because
labor costs are lower due to different costs of living in different countries.

2 Marks (2009 & 2010) Page 4
11. Merits of International Joint Ventures
Many of the benefits associated with International Joint Ventures are that they provide companies
with the opportunity to obtain new capacity and expertise and they allow companies to enter into
related business or new geographic markets or obtain new technological knowledge.[1]
Furthermore, International Joint Ventures are in most cases have a short life span, allowing
companies to make short term commitments rather than long term commitments.[1]
Through
International Joint Ventures, companies are given opportunities to increase profit margins,
accelerate their revenue growth, produce new products, expand to new domestic markets, gain
financial support, and share scientists or other professionals that have unique skills that will
benefit the companies.
12. State types of MNCs:
I. Transnational Corp.: ‐ Incorporated or Unincorporated enterprises comprising parent
enterprises and their foreign affiliates.
II. Parent Enterprise: ‐ controls assets of other entities in countries other than its home
country, usually by owning a certain equity capital state (usually 10% or more).
III. Foreign Affiliate: ‐ Is an incorporated or unincorporated enterprise in which an investor,
who is resident in another economy, owns a stake that permits a lasting
interest in the management of that enterprise, A subsidiary, associate, and branches
are all referred to as foreign affiliates.
IV. Subsidiary: ‐ Is an incorporated enterprise in the host country in which another
entity directly owns more than half of the shareholding voting power and has the
right to
appoint or remove a majority of the members of the administrative, management,
or supervisory body.
V. Associate: ‐ Is enterprise in the host country in which an investor owns at least 10%but not
more than half of the shareholders voting power.
VI. Branch:‐ Is a wholly or jointly owned unincorporated enterprise in the host country.

2 Marks (2009 & 2010) Page 5
13. Difference of strategy and tactics
Breakdown: The Difference between Strategy and Tactics
Strategy Tactics
Purpose
To identify clear broader goals that advance
the overall organization and organize
resources.
To utilize specific resources to
achieve sub-goals that supports
the defined mission.
Roles
Individuals who influence resources in the
organization. They understand how a set of
tactics work together to achieve goals.
Specific domain experts
that maneuver limited resources
into actions to achieve a set of
goals.
Accountability
Held accountable to overall health
of organization.
Held accountable to specific
resources assigned.
Scope
All the resources within the organizations, as
well as broader market conditions including
competitors, customers, and economy. Yet
don’t over think it, to paraphrase my business
partner Charlene Li, “Strategy is often what you
don’t do”.
A subset of resources used in a
plan or process. Tactics are often
specific tactics with limited
resources to achieve broader
goals.
Duration Long Term, changes infrequently.
Shorter Term, flexible to specific
market conditions.
Methods
Uses experience, research, analysis, thinking,
then communication.
Uses experiences, best practices,
plans, processes, and teams.
Outputs Produces clear organizational goals, plans,
maps, guideposts, and key performance
Produces clear deliverables and
outputs using people, tools,

2 Marks (2009 & 2010) Page 6
measurements. time.
14. Different levels of strategy
I. Corporate Level Strategy
Corporate level strategy occupies the highest level of strategic decision-making and covers actions
dealing with the objective of the firm, acquisition and allocation of resources and coordination of
strategies of various SBUs for optimal performance. Top management of the organization makes
such decisions. The nature of strategic decisions tends to be value-oriented, conceptual and less
concrete than decisions at the business or functional level.
II. Business-Level Strategy
Business-level strategy is – applicable in those organizations, which have different businesses-and
each business is treated as strategic business unit (SBU). The fundamental concept in SBU is to
identify the discrete independent product/market segments served by an organization. Since each
product/market segment has a distinct environment, a SBU is created for each such segment. For
example, Reliance Industries Limited operates in textile fabrics, yarns, fibers, and a variety of
petrochemical products. For each product group, the nature of market in terms of
III. Functional-Level Strategy
Functional strategy, as is suggested by the title, relates to a single functional operation and the
activities involved therein. Decisions at this level within the organization are often described as
tactical. Such decisions are guided and constrained by some overall strategic considerations.
Functional strategy deals with relatively restricted plan providing objectives for specific function,
allocation of resources among different operations within that functional area and coordi-nation
between them for optimal contribution to the achievement of the SBU(strategic business)
strategy.
IV. Marketing Strategy
The primary focus of marketing strategy is to effectively allocate and coordinate marketing

2 Marks (2009 & 2010) Page 7
resources and activities to accomplish the firm’s objectives within a specific product-market.
Therefore, the critical issue concerning the scope of a marketing strategy is specifying the target
market(s) for a particular product or product line. Next, firms seek competitive advantage and
synergy through a well-integrated programme of marketing mix elements (the 4 Ps of product,
price, place, promotion) tailored to the needs and wants of potential customers in that target
market.
15. Define Strategic Intent
Strategic intent refers to the purposes the organization strives for. These may be expressed in
terms of a hierarchy of strategic intent. The framework within which firms operate, adopt a
predetermined direction and attempt to achieve their goal is provided by a strategic intent.
The hierarchy of strategic intent covers the vision, mission, business definition, business model
and the goals and objectives.
16. Environmental Scanning
The second component of environmental analysis is to develop information about the
environment. Information has two primary strategic roles - in objective setting and in strategy
formulation. As managers scan the environment, they interpret environmental influence in the
light of their own perceptions, expectations, and values.
Environmental scanning is the process of gathering information about events and their
relationships within an organization's internal and external environments. The basic purpose of
environmental scanning is to help management determine the future direction of the
organization. The most widely accepted method for categorizing different forms of scanning
divides into the following three types:
I. Irregular Scanning Systems:These consist largely of ad hoc environmental studies.
II. Regular Scanning Systems: These systems revolve around a regular review of the
environment or significant environmental components. This review is often made annually.
III. Continuous Scanning Systems: These systems constantly monitor components of the
organizational environment.

2 Marks (2009 & 2010) Page 8
17. Social Responsibility
It refers to the obligation of businessmen to pursue those policies, to make those decisions, or to
follow those lines of action which are desirable in terms of objectives and values of our
society.Archie Carroll observed that "The social responsibility of business encompasses the
economic, legal, ethical, and discretionary expectations that society has of organizations at a given
point in time."
18. Strategic Alliance
A legal agreement between two distinct organizations that provides for sharing resources
collaboratively in pursuit of a mutually beneficial goal ex. The 2009 strategic alliance agreement
between Monsanto and GrassRoots Biotechnology is a recent example of an alliance between a
large company and small research-focused organization. Monsanto is a globally recognized
agriculture company. GrassRoots Biotechnology is a small, research-oriented agricultural
biotechnology company.
19. Generic Strategies:
Basic approaches to strategic planning that can be adopted by any firm in any market or
industry to improve its competitiveperformance. The three fundamentalmarketing strategies
(which, though different, are not mutually exclusive) are: differentiation strategy, focus strategy,
and low cost strategy.
20. Distinguish between Expansion and Diversification.
Diversification:It is a corporate strategy to increase sales volume from new products and new
markets. Diversification can be expanding into a new segment of an industry that the business is
already in, or investing in a promising business outside of the scope of the existing business.
Expansion: The process of offering a product or service to a wider section of an existing market or

2 Marks (2009 & 2010) Page 9
into a new demographic, psychographic or geographic market.
21. Competitive advantage
An advantage that a firm has over its competitors, allowing it to generate greater sales or margins
and/or retain more customers than its competition. There can be many types of competitive
advantages including the firm's cost structure, product offerings, distribution network and
customer support.
There are two main types of competitive advantages: comparative advantage and differential
advantage. Comparative advantage, or cost advantage, is a firm's ability to produce a good or
service at a lower cost than its competitors, which gives the firm the ability sell its goods or
services at a lower price than its competition or to generate a larger margin on sales. A
differential advantage is created when a firm's products or services differ from its competitors
and are seen as better than a competitor's products by customers.
22. Transnational Strategy:
An international businessstructure where a company'sglobalbusiness activities are coordinated
viacooperation and interdependence between its head office, operational divisions and
internationally located subsidiaries or retail outlets. A transnational strategy offers the
centralizationbenefits provided by a global strategy along with the local responsiveness
characteristic of domesticstrategies.
23. Strategic Management:
Strategic management analyzes the major initiatives taken by a company's top management on
behalf of owners, involving resources and performance in internal and external environments.[1]
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.

2 Marks (2009 & 2010) Page 10
24. Mission Statement:
A short sentence or paragraph used by a company to explain, in simple and concise terms, its
purposes for being. These statements serve a dual purpose by helping employees to remain
focused on the tasks at hand, as well as encouraging them to find innovative ways of moving
towards an increasingly productive achievement of company goals. It is not uncommon for the
largest companies to spend many years and millions of dollars developing and refining their
mission statement, with many of these mission statements eventually becoming household
phrases.
25. Internal Analysis:
As you conduct an Internal Analysis of your organization, you may want toexamine your
organization'sstrengths and weaknesses in the following areas:
Management Capabilities
Organizational structure
Planning
Staffing
Supervision
Training
ManagementInformationSystem
Quality
Financing Capabilities
26. Define SBU strategic Business Unit:
An autonomous division or organizational unit, small enough to be flexible and large enough to
exercise control over most of the factors affecting its long-termperformance.
Because strategic business units are more agile (and usually have independentmissions and
objectives), they allow the owningconglomerate to respond quickly to changing economic or
market situations.
27. Competitive Analysis-

2 Marks (2009 & 2010) Page 11
Identifying your competitors and evaluating their strategies to determine their strengths and
weaknesses relative to those of your own product or service
A competitive analysis is a critical part of your company marketing plan. With this evaluation, you
can establish what makes your product or service unique--and therefore what attributes you play
up in order to attract your target market.
28. Strategic Choice:
Strategic choices involve the options for strategy in terms of both the directions in which strategy
might move and the methods by which strategy might be pursued. For instance, an organization
might have to choose between alternative diversification moves, for example entering into new
products and markets. As it diversifies, it has different methods available to it, for example
developing a new product itself or acquiring an organization already active in the area.
29. Merger:
The combining of two or more companies, generally by offering the stockholders of one company
securities in the acquiring company in exchange for the surrender of their stock.
30. Define Strategic Implementation:
The activity performed according to a plan in order to achieve an overall goal. For example,
strategic implementation within a businesscontext might involve developing and then executing a
new marketing plan to help increase sales of the company'sproducts to consumers.
31. What are objectives?
The goal intended to be attained (and which is believed to be attainable).

2 Marks (2009 & 2010) Page 12
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