International & Transnational Strategies

International & Transnational strategies Presented by, Kirthiga Sekar 08AA19

Question •

•

Explain about ‘internationalization’ & ‘transnationalisation’ as strategic orientations for firms to compete in the international arena. On what basis does each of these differ from the other? Explain the international strategic business model of an Indian firm.

Strategic choices: Pressures for cost reduction

Managing Dual Pressures High

Low Low

High

Pressures for Local Responsiveness

Strategic choices: Pressures for cost reduction

Managing Dual Pressures High

Low

international Strategy Low

High

Pressures for Local Responsiveness

International Strategy Germany U.S. Mexico

Malaysia

Examples IBM ✦ Microsoft – headquartered at Redmond, Washington , where it develops the core architecture ✦ Yahoo! – centralized operations at San Jose, California ✦ Kellogg ✦ Procter & Gamble ✦

Barbie: The “All-American” Girl Goes Overseas ✦ ✦ ✦

✦

Barbie is 41 years old Sold in 130 countries National adaptations: – Physical features – Costumes – Activity sets Standardized physique: – Scaled to 6’2”, 110 lbs. – 38-18-28

Strategic choices: Pressures for cost reduction

Managing Dual Pressures High

Low

Transnational Strategy

International Strategy Low

High

Pressures for Local Responsiveness

Transnational Strategy Germany U.S.

Engines

Steel

Mexico

Final Assembly

Malaysia

Trim, seats, glass

Examples Caterpillar – Japan Coca-Cola’s ✦ Unilever “transnational polar bears” ✦

Factors

International

Transnational

Foreign acquisitions by Indian firms,2000-6 Source : Federation of Indian Chambers of Commerce and Industry (FICCI) 2006

BHARAT FORGE LIMITED • •

• ✦

Company of the US$ 1.5 billion Kalyani Group Largest exporter of auto components from India and one of the leading chassis component manufacturers in the world. Entered export market in early 80’s Initial exports were to Soviet Union and the company soon started exporting to European and Japanese markets.

FY09E

FY08E

FY07E

FY06E

FY05E

FY04

FY03

FY02

FY01

FY00

FY99

FY98

FY97

3 Auto component exports (US$bn)

2

1

0

BFL’s contribution in making ‘Made in India’ global

✦ ✦ ✦

✦

Exports comprise nearly 40 per cent of sales Leading supplier of engine and chassis components to global customers Strong relationship with 36 global customers like Toyota, GM, Honda, Mitsubishi, Ford, Daimler Chrysler, Mercedes Benz, Caterpillar, Audi, Renault, Cummins, Dana etc Made several acquisitions to achieve growth – CDP Aluminiumtechnik (a forging company in Germany), Federal Forge (manufacturer of complex forged steel components in the US) and Imatra Forging Group (having forging companies in Sweden and Scotland)

Demonstration of dual pressures ✦

Global rise in the prices of steel. BFL has been able to pass on the same to its customers. – low pressure for cost reduction

✦

Acquisitions strengthened its position as a major supplier to the global passenger car industry. – low pressure for customisation

total income 12000

Rs. million

10000

9880 8631

8000 6103

6000 4312

4000

3120

2000 0 1

2

3 year

4

5

revenue from exports

Rs. million

5000

4590

4000

3560

3000 2478

2000

1592

1000

986

0 1

2

3 year

4

5

Factors fuelling Bharat Forge’s global initiatives

Creating global level capacity: creating capacities which can cater to the global customers requirements. ✦ Global Centre of Excellence: This centre focuses on research & development ✦ Dual shore manufacturing model: Core components in India and minor customisations in a location closer to customer. ✦

References International business - Hill and Jain ✦ International business – Daniels, Radebaugh, Sullivan ✦ Trade and globalization – Deepak Nayyar ✦ www.bharatforge.com ✦

THANK YOU