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:Managing Dual Pressures

Pre

ssur

es f

or c

ost r

educ

tion

Pressures for Local Responsiveness

High

Low

HighLow

Strategic choices:Managing Dual Pressures

Pre

ssur

es f

or c

ost r

educ

tion

Pressures for Local Responsiveness

High

Low

HighLow

internationalStrategy

International Strategy

U.S.

Germany

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:Managing Dual Pressures

Pre

ssur

es f

or c

ost r

educ

tion

Pressures for Local Responsiveness

High

Low

HighLow

InternationalStrategy

TransnationalStrategy

Transnational Strategy

U.S.Germany

Mexico

Malaysia

Engines

Final Assembly

Trim, seats,glass

Steel

Examples

Caterpillar – Japan Unilever

Coca-Cola’s “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.

0

1

2

3

FY9

7

FY9

8

FY9

9

FY0

0

FY0

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FY0

2

FY0

3

FY0

4

FY0

5E

FY0

6E

FY0

7E

FY0

8E

FY0

9E

Auto component exports (US$bn)

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

31204312

6103

86319880

0

2000

4000

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10000

12000

1 2 3 4 5

year

Rs.

mil

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revenue from exports

9861592

2478

3560

4590

0

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2000

3000

4000

5000

1 2 3 4 5

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Rs.

mil

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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