Presentation1.pptx
- 2. THE FOUR STRATEGIES EMERGING FROM INTEGRATION RESPONSIVENESS FRAMEWORK ARE • International Strategy (also known as Home Replication Strategy) • Multi-Domestic Strategy. • Global Strategy. • Transnational Strategy.
- 3. INTERNATIONAL STRATEGY Home replication strategy is the international replication of home based competencies such as production scales, distribution and brand power. The company centralizes product development functions in its home country After product differentiations are finished in home country, innovations will be transferred to apply in local market in order to capture and extend additional value. Changes in these products are mostly neglected and distracted due to the variations of the products. When a firm pursues a home replication strategy, it simply duplicates competencies that it enjoys in the home-country in its expansion into foreign markets.
- 4. EXAMPLE OF HOME REPLICATION STRATEGY Mercedes-Benz is a multinational division of the German manufacturer. The brand is used for automobiles, buses, coaches, and trucks Some companies directly transfer their main competitive advantages from their home market to a foreign market Mercedes-Benz is a perfect example of taking an entirely different approach to how the brand is promoted Mercedes-Benz relies on its well-known brand name and its reputation for building for well-engineered, luxurious cars capable of traveling safely at very high speeds
- 5. MULTI-DOMESTIC STRATEGY The multi-domestic strategy is an action plan that the firm develops to produce and sell unique products in different markets Multi-domestic strategy is an extension of the home replication strategy. This strategy focuses on a number of foreign countries/ regions, each of which is regarded as a stand alone domestic market worthy of significant attention and adaptation.
- 6. . EXAMPLE OF MULTI-DOMESTIC STRATEGY • Starbucks • Starbucks Corporation is an international coffee company and coffeehouse chain based in Seattle, Washington • To expand market, the company has adopted a multi-domestic strategy as its global strategy • It is multi-domestic because the company tailors its products and services to the needs of the market • Culture is a significant factor in their marketing strategy as well • Starbucks also did not rely on traditional marketing strategies to promote their products to consumers
- 7. MODES OF ENTRY • There are some basic decisions that the firm must take before foreign expansion like: which markets to enter, when to enter those markets, and on what scale. • Which foreign markets? • The choice based on nation’s long run profit potential. • Look in detail at economic and political factors which influence foreign markets. • Long run benefits of doing business in a country depends on following factors: Size of market (in terms of demographics)
- 8. MODES OF ENTRY • 1. Exporting • 2. Licensing • 3. Franchising • 4. Turnkey Project • 5. Mergers & Acquisitions: • 6. Joint Venture • 7. Acquisitions & Mergers • 8. Wholly Owned Subsidiary
- 9. 1.EXPORTING • It means the sale abroad of an item produced ,stored or processed in the • supplying firm’s home country • Advantages Of Exporting • Need for limited finance
- 10. LICENSING : • In this mode of entry ,the domestic manufacturer leases the right to use • its intellectual property (ie) technology , copy rights ,brand name etc to • a manufacturer in a foreign country for a fee. • Advantages; • 1. Low investment on the part of licensor. • 2. Low financial risk to the licensor • 3. Licensor can investigate the foreign market without much efforts on • his part. • Disadvantages: • 1. It reduces market opportunities for both
- 11. FRANCHISING • Under franchising an independent organization called the franchisee operates the business under the name of another company called the franchisor under this agreement to the franchisee pays a fee to the franchisor • The franchisor provides the following services to the franchisee. Trade marks, Operating System, Product reputation Continuous support system like advertising , employee training etc • Advantages: • Low investment and low risk • Franchisee get the benefits of R& D with low cost. • Disadvantages : • 1. It may be more complicating than domestic franchising. • 2. It is difficult to control the international franchisee.
- 12. TURNKEY PROJECT • A turnkey project is a contract under which a firm agrees to fully • design , construct and equip a manufacturing/ business/services facility • and turn the project over to the purchase when it is ready for operation for • a remuneration like a fixed price , payment on cost plus basis
- 13. MERGERS & ACQUISTIONS: • A domestic company selects a foreign company and merger itself with company in order to enter international business • Alternatively the domestic company may purchase the foreign company and acquires its ownership and control international business • Advantages : • 1. The company immediately gets the ownership and control over the • acquired firm’s factories, employee, technology ,brand name and • distribution networks. • 2. The company can formulate international strategy and generate more • revenues. • Disadvantages • . This strategy adds no capacity to the industry • . Labour problem of the host country’s companies are also transferred to • the acquired company
- 14. JOINT VENTURE • Two or more firm join together to create a new business entity that is • legally separate and distinct from its parents • . It involves shared ownership. • Various environmental factors like social , technological economic and • political encourage the formation of joint ventures • Advantages: • 1. Joint venture provide large capital funds suitable for major projects. • 2. It spread the risk between or among partners. • Disadvantages: • 1. Conflict may arise • 2. Partner delay the decision making once the dispute arises. Then the • operations become unresponsive and inefficient
- 15. ACQUISITIONS & MERGERS • A mergers is a voluntary and permanent combination of business whereby one or more firms integrate their operations and identities with those of another and henceforth work under a common name and in the interests of the newly formed amalgamations. • Motives for acquisitions: • Removal of competitor • Reduction of the Co failure through spreading risk over a widerrange of activities. • The desire to acquire business already trading in certain markets & possessing certain specialist employees &equipments. • Expert use of resources.
- 16. WHOLLY OWNED SUBSIDIARY • Subsidiary means individual body under parent body • This Subsidiary or individual body as per their own generates revenue. • They give their own rent, salary to employees, etc. • But policies and trademark will be implemented from the Parent body. • There are no branches here. • Only the certain percentage of the profit will be given to the parent body