2. Introduction
• Globalization
• Changing trends
• Expansion & Growth objective
• Markets are growing
• Varied demand hence market for all
• Global demands to be scatted
• Divides risk
• Technology Growing
Hence …Strategic approach need Of the Hour
3. For going Global..
Strategies To
Go Global
Internal
Intensification
/ intensive
Diversification
External
Collaboration
Mergers
Acquisition
5. Intensification/Intensive Strategy involves the internal growth of the concern within its existing corporate structure. It is also known as growth
through aggregation. The management of a firm may decide to grow through expansion of scale of operations in order to attain optimum size. The
firm will achieve many economies in purchasing, production, financing, marketing and management.
Market
penetration
This strategy aims to seek
increased sales of the present
products in the present
markets through more
aggressive promotion and
distribution. The firms tries to
penetrate deeper into the
market to increase its market
share. More money is spent
on advertising and sale
promotion to increase sale
volume.
Eg: Dairy Milk Shots
Market
Development
This strategy aims to increase
sales volume by selling the
present products into new
markets.. The existing product
is pushed into new markets by
changing its packaging, or band
name, etc.
Eg: Pepsi Cola has
achieved growth by
capturing foreign
markets
Product
Development
Under this strategy, a business
seeks to grow by developing
improved products for the
present markets. The current
product may be replaced or the
new products or may be
introduced in addition to the
existing products.
Eg: The introduction
of "Colgate-gel" by
Colgate-Palmolive
(India) Ltd.
6. Diversification
• Why Firms Diversify
– To grow
– To more fully utilize existing resources and capabilities.
– To escape from undesirable or unattractive industry environments.
– To make use of surplus cash flows.
Expansion is different from diversification it expansion of a firm through the
expansion of its product line
According to Calori and Harvatopoulos (1988), there are two dimensions of
rationale for diversification. The first one relates to the nature of the strategic
objective: Diversification may be defensive or offensive.
– Defensive reasons may be spreading the risk of market contraction, or being forced to
diversify when current product or current market orientation seems to provide no further
opportunities for growth.
– Offensive reasons may be conquering new positions, taking opportunities that promise
greater profitability than expansion opportunities, or using retained cash that exceeds total
expansion needs.
7. Types of Diversification
Horizontal or related
diversification
•Strategy of adding related or
similar product/service lines to
existing core business, either
through acquisition of
competitors or through internal
development of new
products/services
•acquiring or developing new
products or offering new
services that could appeal to
the company´s current
customer groups. In this case
the company relies on sales and
technological relations to the
existing product lines..
•Eg: HUL SOAPS-Hamam, Lirel,
Dove ,
•Tooth Paste : Colgate, Close up,
•Shampoos: Sunsilk, Clinic Plus.
•END USE THE SAME BUT
CATERS TO VARIED CHOICES?
DEMANDS
Conglomerate or lateral or
unrelated diversification
•is moving to new products or
services that have no
technological or commercial
relation with current
products, equipment, distributio
n channels, but which may
appeal to new groups of
customers. The major motive
behind this kind of
diversification is the high return
on investments in the new
industry.
•lead to additional opportunities
indirectly related to further
developing the main company
business - access to new
technologies, opportunities for
strategic partnerships, etc.
•Eg Reliance
trends, fresh, telecom
, digital, Gold , Cinema
Vertical
•occurs when the company goes
back to previous stages of its
production cycle or moves
forward to subsequent stages
of the same cycle - production
of raw materials or distribution
of the final product.
•Eg: Hiranandani Residential
Constructions –Hospitals,
school, malls, Food courts.etc.
•Constructs Entire Township
amenities needed for
settlement.
Concentric
•enlarging the production
portfolio by adding new
products with the aim of fully
utilising the potential of the
existing technologies and
marketing system.
• The concentric diversification
can be a lot more financially
efficient as a strategy, since the
business may benefit from
some synergies in this
diversification model.
• It may enforce some
investments related to
modernizing or upgrading the
existing processes or systems.
•Eg Monginies Cakes Introduced
Pasties , Breads, Biscuts-cookies
etc along with Cream Cakes
8. External Growth Strategies
Foreign
Collaboration
• Cooperation for
Specific Purpose
• Types:
• Technical : Provides Technical
know-hows
• Financial: Supply of finance ,
inflow of Foreign capital
• Marketing : to promote Exports &
local sales
• Consultancy : Provides
managerial Expertise
Mergers /
Amalgamation
• Mergers: Two CO.s
come together and
only one survival
• Amalgamation:
Mixed to form new
•
Takeover/
Acquisition
• Purchase of co.
or only control of
co.
• Takeover is forces
acquisition
whereas
acquisition is
willing to merger
• Eg FAME taken
by INOX
9. What are MNCs?
• “Corporation which have their home in one
country but operates and live under the laws
and Customs of other countries”
• Holding H/O in one country and business
operation spread in many other countries
including origin,
• Eg: P&G, Coca-Cola, Pepsi, Microsoft etc
10. Features of MNCs
• MNCs have managerial headquarters in home countries, while they carry out operations in a
number of other (host) countries.
• A large part of capital assets of the parent company is owned by the citizens of the company's
home country.
• The absolute majority of the members of the Board of Directors are citizens of the home country.
• Decisions on new investment and the local objectives are taken by the parent company.
• MNCs are predominantly large-sized and exercise a great degree of economic dominance.
• MNCs control production activity with large foreign direct investment in more than one developed
and developing countries.
• MNCs sustained by modern technologies, management skill, product differentiation and enormous
advertising.
• MNCs are not just participants in export trade without foreign investments.
• Varied operations & activities undertaken
• Invest in countries like LDC, DC
• Dominate Economy as need for growth
• Functioning Based on local laws
• Different investment methods applied-JV, TECHNi,
• Supports Host Countries growth-Welfare, need satis
11. MNCs
Advantages
• Promote foreign investment
• Transfer of technology
• Accelerates industrial growth
• Professionalism
Disadvantages
• Provide out-dated technology
• Local industries affected
• Charge heavy fees
• Recklessly use natural
resources
• Interfere in economic &
political system
• Invest in profitable sectors
• Focus on Profit more than
local welfare
12. TNCs
• Company that does research in one country
,production in one country, assembling in
third country, and marketing in another
country is Knw as TNCs
• Different between MNCs & TNCs
Structure & function different
MNC Act as Holding Co. whereas TNC act as
one strong biz group
13. Features of TNCs
• Large Company with global operations
• Decentralized Activities
• TNC is a MNC in which both membership &
control is dispersed at global level
• Integrates world economy
14. How MNCs / TNCs expand business activities?
(Growth strategies of MNCs & TNCs)
• FDI- Foreign Direct Investment
• Transfer of Technical Know-Hows
• Licensing
• Turnkey Projects
• Global Marketing
• Merger & Acquisition
• Estb Public utilities
• Through Subsidiaries
