introduction 130407092142 phpapp01

8/13/2019 Introduction 130407092142 Phpapp01

1/69

SERIAL No. TITLE PAGE No.

CHAPTER-1 6-7

1 RATIONAL STUDY

CHAPTER-2 8-9

2.1 PROJECT TITLE

2.2 OBJECTIVE OF STUDY

2.3 SCOPE OF THE STUDY

CHAPTER-3 10-21

3 WHAT IS STRATEGIC MANAGEMENT?

CHAPTER-4 22-37

4. COMPANY PROFILE

CHAPTER-5 38-56

5. MARKETING STRATEGIES AND PROGREMMESADOPTED BY MNCS IN INDIA ACCORDING TO

INDIAN CULTURE

CHAPTER-6 57-62

6. LITERATURE REVIEW

CHAPTER-7 63-66

7. RESEARCH METHODOLOGY/FINDINGS ANDDISCUSSIONS

CHAPTER-8 67-68

8. CONCLUSION& RECOMMENDATIONS

9. SUMMARY OF IDEAL TYPE MNCS 69-70

10. BIBLIOGRAPHY 71-72


2/69

LIST OF TABLES figures

FIGURE 1.1 THE STRATEGIC MANAGEMENT PROCESS 15

FIGURE 1.2 PRODUCT, MISSION AND MARKET

CHOICES.

18

FIGURE 1.3 RETAILING PRODUCTMARKET STRATEGY

OPTIONS.

19

FIGURE 1.4 SUMSUNG COMPANYS VALUES 27

FIGURE 1.5 VISION OF THE COMPANY 28

FIGURE 1.6 SAMSUNG COMPANY PROFILE OF SALES &

OTHER

29

FIGURE 1.7 PORTERS GENERIC STRATEGIES 60

TABLE 1.1 FINANCIAL HIGHLIGHTS 30

TABLE 1.2 STRATEGIES ADOPTED BY MNCS FOR

COMPETITION IN INDIA

65

TABLE 1.3 OWNERSHIP AND STRATEGIES ADOPTEDBY MNCS IN INDIA

66


3/69

CHAPTER -1Rationale for the Study


4/69

India is one of the worlds most promising and fastest-growing economies. Many MNCs

entered to cash in on the exciting opportunities there. But overall, they have had a mixed

performance. Many, who were remarkably successful elsewhere, have failed or are yet to

succeed. Indian market poses special challenges due to its heterogeneity, in terms ofeconomic development, income, religion, cultural mix and tastes. On top is the heating

competition among local players as well as the leading MNCs. Not all companies have

been struggling to understand Indian consumer behaviour. Doing business in India is at a

turning point; market entry strategies, for example, that clicked once do not promise

success every time. Success in India will not happen overnight; companies need to have

an open mind. This requires commitment, management drive and focus on long-term

objectives, and proper business models too. They have to invest substantial financial and

managerial resources to understand customers needs and come up with suitable products.

OPPI Global Sourcing Committee chairperson Alok Sonig said In the Indian context,

working successfully with global sourcing players involves deeper understanding of India

around three broad areas - capability, capacity and culture"

UN Secretory Kofi Annan said We must ensure that the global market is embedded in

broadly shared values and practices that reflect global social needs, and that all the

worlds people share the benefits of globalization

As more Indian companies push ahead with their aggressive global growth strategies,

many middle and senior management personnel in these organizations are faced with

significant challenges. They have to go global and take charge in a very short time, and

learn how to manage complex businesses on a global scale. They need to acquire the

managerial skills needed to deal with varied customer needs and diverse competitive

forces; learn to work with team members from different cultural backgrounds; and also

learn how to manage the companies that have been acquired through the M&A (i.e.

mergers and acquisitions) route.For the company to compete with established global

brands, it requires a deep understanding of local customers needs in different markets,

and significant investments in brand building over long periods of time.


5/69

CHAPTER -2Objective of the Study


6/69

2.1 Project Title:

STRATEGIES ADOPTED BY MNCS TO COPE WITH INDIAN BRANDS2.2 Objective of project:

Primary objective

MNC need to meet the challenges of global efficiency MNC need to meet the challenges of multinational flexibility MNC need to meet the challenges of world-wide learning Macro-economic factors such as wars interest wage rates exchange rates

Secondary objectives

Can be enhanced both by increasing revenues by lowering costs Scope Economies. The ability of a company to manage the risks exploit the opportunities that arise

from the diversity volatility of the global environment

Responses of competitors in the host market Resources including natural financial HR

2.3 Scopes:

Very presence of MNCs in diverse national environments creates opportunities forworldwide learning

Global integration of activities allows firms to realize Economies of Scale (EoS)scope hence leads to lower cost

Multinational flexibility Policy actions of national governments such as expropriation changes in exchange


7/69

1

CHAPTER -3

WHAT IS STRATEGIC MANAGEMENT


8/69

1

INTRODUCTION to STRATEGIC MANAGEMENTWhat is Strategy?

The term strategy proliferates in discussions of business. Scholars and consultants have

provided myriad models and frameworks for analysing strategic choice (Hambrick and

Fredrickson, 2001). For us, the key issue that should unite all discussion of strategy is a

clear sense of an organizations objectives and a sense of how it will achieve these

objectives. It is also important that the organization has a clear sense of its

distinctiveness. For the leading strategy guru, Michael Porter (1996), strategy is about

achieving competitive advantage through being differentdelivering a unique value

added to the customer, having a clear and enact able view of how to position yourself

uniquely in your industry, for example, in the ways in which Southwest Airlines positions

itself in the airline industry and IKEA in furniture retailing, in the way that Marks &

Spencer used to. To enact a successful strategy requires that there is fit among a

companys activities, that they complement each other and that they deliver value to the

firm and its customers. The three companies we have just mentioned illustrate that

industries are fluid and that success is not guaranteed. Two of the firms came to

prominence by taking on industry incumbents and developing new value propositions.

The third was extremely successful and lost this position. While there is much debate on

substance, there is agreement that strategy is concerned with the match between

companies Capability and its external environment. Analysts disagree on how this may

be done. John Kay (2000) argues that strategy is no longer about planning or visioning

because we are deluded if we think we can predict or, worse, control the futureit is

about using careful analysis to understand and influence a companys position in the

market place. Another leading strategy guru, Gary Hamel (2000), argues that the best

strategy is geared towards radical change and creating a new vision of the future in which

you are a leader rather than a follower of trends set by others. According to Hamel,

winning strategy = foresight + vision.


9/69

1

Two Approaches to Strategy

The idea of strategy has received increasing attention in the management literature. The

literature on strategy is now voluminous and strategic management texts grow ever larger

to include all the relevant material. In this book our aim is not to cover the whole area of

strategythat would require yet another mammoth tomebut to present a clear, logical

and succinct approach to the subject that will be of use to the practising manager. We do

not attempt a summary of the field; rather we present what we see as a useful framework

for analysing strategic problems based on our own experience of teaching the subject on a

variety of courses and to a variety of audiences over the years. Our premise is that a firm

needs a well defined sense of its mission, its unique place in its environment and scope

and direction of growth. Such a sense of mission defines the firms strategy. A firm also

needs an approach to management itself that will harness the internal energies of the

organization to the realization of its mission. Historically, views of strategy fall into two

camps. There are those who equate strategy with planning. According to this perspective,

information is gathered, sifted and analysed, forecasts are made, and senior managers

reflect upon the work of the planning department and decide what the best course for the

organization is. This is a top-down approach to strategy. Others have a less structured

view of strategy as being more about the process of management. According to this

second perspective, the key strategic issue is to put in place a system of management that

will facilitate the capability of the organization to respond to an environment that is

essentially unknowable, unpredictable and, therefore, not amenable to a planning

approach. We will consider both these views in this text

Elements of Strategy

Definitions of strategy have their roots in military strategy, which defines itself in terms

of drafting the plan of war, shaping individual campaigns and, within these,deciding on

individual engagements (battles/skirmishes) with the enemy. Strategy in this military

sense is the art of war, or, more precisely, the art of the generalthe key decision maker.


10/69

1

The analogy with business is that business too is on a war footing as competition

becomes more and more fierce and survival more problematic. Companies and armies

have much in common. They both, for example, pursue strategies of deterrence, offence,

defence and alliance. One can think of a well developed business strategy in terms ofprobing opponents weaknesses; withdrawing to consider how to act, given the

knowledge of the opposition generated by such probing; forcing opponents to stretch

their resources; concentrating ones own resources to attack an opponents exposed

position; overwhelming selected markets or market segments; establishing a leadership

position of dominance in certain markets; then regrouping ones resources, deciding

where to make the next thrust; then expanding from the base thus created to dominate a

broader area. Strategic thinking has been much influenced by military thinking about the

strategy hierarchy of goals, policies and programmes. Strategy itself sets the agenda for

future action, strategic goals state what is to be achieved and when (but not how), policies

set the guidelines and limits for permissible action in pursuit of the strategic goals, and

programmes specify the step-by-step sequence of actions necessary to achieve major

objectives and the timetable against which progress can be measured. A well defined

strategy integrates an organizations major plans, objectives, policies and programmes

and commitments into a cohesive whole. It marshals and allocates limited resources in

the best way, which is defined by an analysis of a firmsunique strengths and weaknesses

and of opportunities and threats in the environment. It considers how to deal with the

potential actions of intelligent opponents. Management is defined both in terms of its

function as those activities that serve to ensure that the basic objectives of the enterprise,

as set by the strategy, are achieved, and as a group of senior employees responsible for

performing this function. Our working definition of strategic management is as follows:

all that is necessary to position the firm a way that will assure its long-term survival in a

competitive environment. A strategy is an organizations way of saying how it creates

unique value and thus attracts the custom that is its lifeblood.


11/69

1

Our Model of Strategy

Our working model of the strategic management process is set out in figure 1.1. This is a

model that works for us in terms of organizing our thinking about strategy and our

attempts to understand the strategic issues facing particular firms. We do not suggest that

it is the only model that is useful or that this is the best. (We just think it is!) Hopefully,

in the course of your reading of this book, and other work on the subject, you will be

critically analysing the various models suggested and the concepts upon which they rest.

You may come to this text with your own model, developed out of your own experience.

We suggest that you try working with our model and examine the extent to which it

complements or contradicts your own and others. The result of such a critical appraisal

will be a model with which you are comfortable and find useful in practice. If you feel

that the model you develop is far superior to our own, please tell us about it! Remember,

there is no one a best answer in strategic management. If a firm chooses a particular

strategic direction and it works in the way that very successful firms like IBM or, on a

smaller scale, Body Shop have, the fact that it is successful does not mean that the choice

of strategy was optimal, that it was the best. Another strategic decision might have led to

even greater success. Conversely, if a firm makes a choice that leads to disaster, this does

not necessarily mean that it could have made a better choice (though, with better decision

making, it hopefully could have done). The environmental conditions in its industry

might have been such that this was the best choice, but that no choice, given its size or

history, or the power of its competitors, could have changed its fate. We will now explain

our model, which provides the basis of subsequent chapters. Current strategy (italics

indicate terms in the model) has its roots in the strategic history of a firm and its

management and employees. We mention both management and employees here because,though in many cases senior management is the source of strategic decisions, it is the

employees at the point of production or delivery of a product or service who are

responsible for the actual implementation of a strategy. They can take this decision in two

ways. In a proactive sense they can scan their environment and the potential for change


12/69

1

within their own organization and decide that to carry on doing what they are doing and

what they are good at is the best way to face the future. In a less active, and far less

satisfactory, way they can proceed on the basis of traditionThis is the way we have

always done it. It has worked so far. Thats good enough for us or inertia. Ormanagement may decide that change is necessary. Again this can come about in a variety

of ways. They may scan their environment and decide that there are major changes

occurring in their business world to which they have to adapt. Or they might decide,

through internal analysis, that they have the ability to develop a new way of doing

business that will redefine the nature of the business they are in. Another stimulus to

change can be the new manager appointed to a senior position that wants to leave his or

her mark on the company and changes strategy primarily for this self-centred reason.

Figure 1.1 The strategic management process


13/69

1

If change is the order of the day, then two issues need to be addressed: environmental

(external) analysis and organizational (internal) analysis. (Remember, this is the ideal

way of proceeding. In practice, managers may adopt only a partial solution and analyse

only external or internal factors.) For a change of strategy to work there must bealignment between internal capability and external opportunity. This is described as

strategic fit. The ideal situation is where there is a fit between the environments, a

business need arising out of that environment that is strongly felt by a firm that has the

sense of purpose (mission) and a management system that enables it to respond to this

need with a coherent and practicable strategy. The potential to act in this way depends

upon managerial judgement, managerial skill to exploit windows of opportunity and

management ability to motivate other employees to support and commit themselves to the

firms new strategic objectives. The analysis of the environment can be segmented into

four interactive elements. There is the issue of the firms general environment, the broad

environment comprising a mix of general factors such as social and political issues. Then

there is the firms operating environment, its more specificindustry/business

environment. What kind of industry is the firm competing in? What forces make up its

industry structure? Having examined its businessenvironment, the issue then arises:

how is the firm to compete in its industry? What is to be the unique source of its

competitive positioning that will give it an edge over its competitors? Will it go for a

broad market position, competing on a variety of fronts, or will it look for niches? Will it

compete on the basis of cost or on the basis of added value, differentiating its products

and charging a premium? What the range is of options that managers have to choose

from? How are they to prioritize between these options? Does the company have strategic

vision, a strong sense of mission, and a reason for being that distinguishes it from

others? If change is necessary, what is to be the firms direction for development? Having

identified the major forces affecting its environment how is the firm to approach the

future? Organizational analysis can also be thought of as fourfold. How is the firm

organized? What is the structure of the organization, who reports to whom, how are the

tasks defined, divided and integrated? How do the management systems work, the


14/69

1

processes that determine how the organization gets things done from day to dayfor

example, information systems, capital budgeting systems, performance measurement

systems, quality systems? What do organizational members believe in, what are they

trying to achieve, what motivates them, what do they value? What is the culture of theorganization? What are the basic beliefs of organizational members? Do they have a

shared set of beliefs about how to proceed, about where they are going, about how they

should behave? We know, thanks to Peters and Watermans In Search of Excellence that

the basic values, assumptions and ideologies (systems of belief) which guide and fashion

behaviour in organizations have a crucial role to play in business success (or failure).

What resources does the organization have at its disposalfor example, capital,

technology, and people? Managements role is to try to fit the analysis of externalities

and internalities, to balance the organizations strengths and weaknesses in the light of

environmental opportunities and threats. A concept that bridges internal and external

analyses is that of stakeholders, the key groups whose legitimate interests have to be

borne in mind when taking strategic decisions.

The Growth VectorStrategic management involves decisions concerning what a company might do, given

the opportunities in its environment; what it can do, given the resources at its disposal;

what it wants to do, given the personal values and aspirations of key decision makers; and

what it should do, given the ethical and legal context in which it is operating. A firm

needs a well defined sense of where it is going in the future and a firm concept of the

business it is in. We can think of these in terms of the firms productmarket scope and

growth vector. This specifies the particularproducts or services of the firm and the

market(s) it is seeking to serve. A firmsgrowth vector defines the direction in which

the firm is moving with respect to its current productmarket scope. The key components

of the growth vector areset out in figure 1.2. One qualification is necessary here. The

use of the growth


15/69

1

Figure 1.2 Product, mission and market choices.

Source: adapted from Ansoff (1965) vector assumes that the firm is indeed growing. This

is obviously not always the case, and strategic decision making may therefore involve

downsizing and withdrawal from some areas of business The growth vector illustrates

the key decisions concerning the directions in which a firm may choose to develop.

Market penetration comes about when the firm chooses as its strategy to increase its

market share for its present product markets. If the firm pursues product development it

sets out to develop new products to complement or replace its current offerings while

staying in the same markets. It retains its current mission in the sense of continuing to

attempt to satisfy the same or related consumer needs In market development the firm

searches for new markets with its existing products. If a strategy of diversification is

chosen, the firm has decided that its product range and market scope are no longer

adequate, and it actively seeks to develop new kinds of products for new kinds of

markets. Let us illustrate the growth vector with an example concerning productmarket


16/69

1

strategy options in retailing. A retailing firm might decide to consolidate its position in its

current markets by going for increased market share, perhaps through increased

advertising. It might choose to develop new markets, perhaps expanding geographically

into other areas, or even overseas, but retaining its current product range. It might chooseto develop new retail products but stay in the same line of businessfor example,

increase its product range in clothing. It might choose to redefine the nature of these

products. For example, the running shoe market was radically altered and expanded by

redefining running shoes as leisure items, not merely as sports equipment. Finally, the

firm might choose to move intototally different areas of business, for example, into

financial services, as Marks & Spencer has done.

Figure 1.3 Retailing productmarket strategy options. By Knee and

Walters (1985)

The range of productmarket strategy options in retailing is illustrated in figure

1.3.Governing the choice between strategic options should be the notion of competitive


17/69

2

advantage. The firm has to identify unique opportunities for itself in its chosen area(s). It

has to identify particular characteristics within its approach to individual productmarkets

which will give it a strong competitive position. It might go for a large market share that

would enable it to dominate particular markets and define the conditions of competitionin them, for instance, as regards pricing policy. It might pursue technological dominance,

looking for breakthrough products or a new manufacturing technology that would give it

a technological edge over the competition, as Pilkington did, for example, with its

development of the process for manufacturing float glass, which formed the foundation

of the companys subsequent success. It might go for a better quality of product and

service. In the automobile industry, Japanese manufacturers have rewritten the rules of

the game regarding the quality of products and thus revolutionized consumer

expectations. In the process they have made major inroads into Western markets

historically dominated by Western firms. Or the firm might choose to combine some of

these, as Sainsburys has done withits good food that costs less, an approach

combining a low-cost advantage with a quality position in the world of supermarkets.

Mission Statements

The concept of mission has become increasingly fashionable in discussions ofstrategy.

Indeed, some analysts go as far as asserting that a good mission statementcan provide

an actual worthwhile alternative to the whole task of corporate planning.The definition

of a firms strategic mission encapsulated in the missionstatement can be thought of as

the first stage of the strategy process A firms mission should be clear and conciseand

distinguish it from any other firm. The mission statement has to be backedup with

specific objectives and strategies, but these objectives and strategies are farmore likely to

be acted upon when there is a clear sense of mission informing action.A good mission

statement will contain the following:

The purpose of the organization a statement of the principal activities of a business or

organization;


18/69

2

Its principal business aimsits mission as regards the position it aims to achieve in its

chosen business;

The key beliefs and values of the company;

Definitions of who are the major stakeholders in the business;

The guiding principles that define the code of conduct that tells employees howto

behave.

Drucker illustrates the importance of a sense of mission with his story of threepeople

working on a building site. All three were doing the same job but whenasked what their

job was gave very different answers. One answered, Breaking rocks,another answered,Earning a living, the third answered. Helping to build a cathedral.There is a similar

story told about three climbers. When asked what they weredoing, one answered,

Pitching camp, the second answered, Collecting materialfor a film, the third

answered, Climbing Everest. There are no prizes for decidingwho was most committed

to his/her task and who would be most motivated toperform to the best of his/her ability.

There are four approaches to setting a mission (Collins and Porras, 1991):

Targeting. Setting a clear, definable target for the organization to aim at, such as the

moon (the NASA moon mission statement!), financial/growth targets or standards of

excellence in product markets.

Focusingon a common enemy. Defeat of the common enemy guides strategic choice,

e.g. Pepsis Beat Coke, Hondas Crush, squash, slaughter Yamaha, Nikes attack on

Adidas. Honda was so successful in its mission that Yamaha actually made a public

apology for its claim that it would defeat Honda.

Internal transformation. Used by older organizations faced with the need for radical

change. This kind of mission has as its starting point the admission that its current

mission is out of tune with the new realities it is facing.


19/69

2

CHAPTER -4comp nys profile


20/69

2

Samsung History -Unlike other electronic companies Samsung origins were not involving electronics but

other products.In 1938 the Samsung's founder Byung- Chull Lee set up a trade export

company in Korea, selling fish, vegetables, and fruit to China. Within a decade Samsung

had flour mills and confectionary machines and became a co-operation in 1951.

From 1958 onwards Samsung began to expand into other industries such as financial,

media, chemicals and ship building throughout the 1970's. In 1969, Samsung Electronics

was established producing what Samsung is most famous for, Televisions, Mobile

Phones (throughout 90's), Radio's, Computer components and other electronics devices.

1987 founder and chairman, Byung-Chull Lee passed away and Kun-Hee Lee took over

as chairman. In the 1990's Samsung began to expand globally building factories in the

US, Britain, Germany, Thailand, Mexico, Spain and China until 1997.

In 1997 nearly all Korean businesses shrunk in size and Samsung was no exception. They

sold businesses to relieve debt and cut employees down lowering personnel by 50,000.

But thanks to the electronic industry they managed to curb this and continue to grow.The

history of Samsung and mobile phones stretches back to over 10 years. In 1993 Samsung

developed the 'lightest' mobile phone of its era. The SCH-800 and it was available on

CDMA networks.


21/69

2

Then they developed smart phones and a phone combined mp3 player towards the end of

the 20th century. To this date Samsung are dedicated to the 3G industry. Making video,

camera phones at a speed to keep up with consumer demand. Samsung has made steady

growth in the mobile industry and are currently second but competitor Nokia is aheadwith more than 100% increase in shares.

Introduction of SamsungSamsung is known globally for its electronic products and it is one of the successful

brands in the electronic industry. It is an established company almost all around the

world.Samsung Electronics is a South Korean multinational electronics and information

technology company headquartered in Samsung Town, Seoul.

It is the flagship subsidiary

of the Samsung Group. With assembly plants and sales networks in 61 countries across

the world, Samsung has approximately 160,000 employees.


22/69

2

In 2009, the company took the position of the worlds biggest IT maker by surpassing the

previous leader Hewlett-Packard. Its sales revenue in the areas of LCD and LED displays

and memory chips is number one in the world.In the TV segment, Samsungs market

position is dominant. For the five years since 2006, the company has been in the top spotin terms of the number of TVs sold, which is expected to continue in 2010 and beyond. In

the global LCD panel market, the company has kept the leading position for eight years

in a row.

With the Galaxy S model mobile phone, Samsungs Smartphone line-up has retained the

second-best slot in the world market for some time.In competition to Apple's ipad tablet,

Samsung released the Android powered Samsung Galaxy Tablet.

The Samsung Philosophy -

At Samsung, we follow a simple business philosophy: to devote our talent and

technology to creating superior products and services that contribute to a better global

society.

Every day, our people bring this philosophy to life. Our leaders search for the brightesttalent from around the world, and give them the resources they need to be the best at what

they do. The result is that all of our productsfrom memory chips that help businesses

store vital knowledge to mobile phones that connect people across continentshave the

power to enrich lives. And thats what making a better global society all is about.


23/69

2

Companys Values -

We believe that living by strong values is the key to good business. At Samsung, a

rigorous code of conduct and these core values are at the heart of every decision we

make.

People

Quite simply, a company is its people. At Samsung, were dedicated to giving our people

a wealth of opportunities to reach their full potential.

Excellence

Everything we do at Samsung is driven by an unyielding passion for excellenceand an

unfaltering commitment to develop the best products and services on the market.

Change

In todays fast-paced global economy, change is constant and innovation is critical to a

companys survival. As we have done for 70 years, we set our sights on the future,

anticipating market needs and demands so we can steer our company toward long-term

success.


24/69

2

Integrity

Operating in an ethical way is the foundation of our business. Everything we do is guided

by a moral compass that ensures fairness, respect for all stakeholders and complete

transparency.

Co-prosperity

A business cannot be successful unless it creates prosperity and opportunity for others.

Samsung is dedicated to being a socially and environmentally responsible corporate

citizen in every community where we operate around the globe.

Figure 1.4 Samsung Companys Values


25/69

2

Vision 2020 -

As stated in its new motto, Samsung Electronics' vision for the new decade is, "Inspire

the World, Create the Future."This new vision reflects Samsung Electronics

commitment to inspiring its communities by leveraging Samsung's three key strengths:

New Technology, Innovative Products, and Creative Solutions. -- And to

promoting new value for Samsung's core networks -- Industry, Partners, and Employees.

Through these efforts, Samsung hopes to contribute to a better world and a richer

experience for all.

As part of this vision, Samsung has mapped out a specific plan of reaching $400 billion

in revenue and becoming one of the worlds top five brands by 2020. To this end,

Samsung has also established three strategic approaches in its management: Creativity,

Partnership, and Talent.

Figure 1.5 vision of the company


26/69

2

Samsung is excited about the future. As we build on our previous accomplishments, we

look forward to exploring new territories, including health, medicine, and biotechnology.

Samsung is committed to being a creative leader in new markets and becoming a truly

No. 1 business going forward.

Samsung Profile 2011 -

At Samsung our gaze is cast forward, beyond the next quarter or the next year, ahead into

areas unknown. By charting a course toward new businesses and new challenges, we are

sowing seeds for future success.

Figure 1.6 Samsung Profile


27/69

3

2011 Financial Highlights - [Amounts in billions]*AMOUNTS IN BILLIONS WON DOLLARS EUROS

Net Sales* 254,561.5 220.1 165.9

Total Assets 391,391.9 343.7 258.7

Total Liabilities 230,688.5 202.6 152.5

Total Stockholder's Equity 160,693.5 141.1 106.2

Net Income* 24,497.9 21.2 16.0

Table 1.1 Financial Highlights

SWOT Analysis of Samsung

Strengths: New bogus appurtenances abstraction to rollout in 5 months.

Communicable the beating of the buyer, present acceptable designs & accepting

emotions.

Heavy asset in technology, artefact architecture and staff.

Weaknesses: Lack in artefact separation.

Different models at assorted amount points.

Centermost on accumulation bazaar instead of alcove markets.

Not actual user affable design.

Opportunities: Differentiate its account from competitors.

Offer artefact variation

crave for corpuscle phones apprenticed by the account provider or carriers.

Affordability by 43%.

Threats:


28/69

3

Motorola's baby minding in the U.S market, Nokia's acceptance in the Pakistani market,

artful added than bisected of the apple market.

Agitated competitor, including Sony Ericsson and Siemens bistro into its share.

Not befitting clue of the new trend in the market. Not an appearance accent and appearance statement

Strategies of Samsung -Product Innovation -Samsung's product range in India included CTVs, audio and video products, information

technology products, mobile phones and home appliances. Its product range covered all

the categories in the consumer electronics and home appliances. Analysts felt that the

wide product range of Samsung was one of main reasons for its success in the Indian

market. Samsung positioned itself on the technology platform.

Pricing -Pricing also seemed to have played a significant role in Samsung's success.

Distribution -Along with the launch of new products, Samsung also consolidated its distribution

system. Samsung had 18 state-level distribution offices and a direct dealer interface. The

direct dealer interface helped the company get quick feedback from dealers, and enabled

it to launch products according to consumer needs.

Advertising and Sales Promotion -In 1995, when Samsung entered India, it realized that Indian consumers were not familiar

with the company. So, in order to establish itself in the Indian consumers mind,

Samsung launched corporate advertisements highlighting its technologically superior

goods.

The Making of a Global Brand -In 1993, as a first step in its globalization drive, Samsung acquired a new corporate

identity. It changed its logo and that of the group. In the new logo, the words Samsung

Electronics were written in white color on blue color background to represent stability,


29/69

3

reliability and warmth. The words Samsung Electronics were written in English so that

they would be easy to read and remember worldwide. The logo was shaped elliptical

representing a moving world - symbolizing advancement and change.

Advertising and Promotional Strategies -

In 1997, Samsung launched its first corporate advertising campaign - Nobel Prize Series.

This ad was aired in nine languages across Europe, the Middle East, South America and

CIS countries. The advertisement showed a man (representing a Nobel Prize Laureate)

passing from one scene to another. As the man passes through different scenes, Samsung

products transform into more advanced models. According to company sources, the idea was

to convey the message that Samsung uses Nobel Prize Laureates' ideas for making its products.

Samsung Electronics: Innovation and Design Strategy -

In January 2008, Samsung Electronics won 32 innovation and design engineering awards

at the Consumer Electronics Show. This is a management strategy case that explores

product design, innovation strategies and strategic planning in a changing competitive

landscape. While investment in R&D and product design has rewarded Samsung

Electronics with its dominant market position and premium brand perception, such

dominance may not be sustainable in the long run, especially now that competitors are

achieving higher profitability with lower investments in R&D per product. The case also

discusses such issues as product design philosophies, innovation strategies, localization

of products, product design outsourcing for consumer electronics products.

Design strategy

Design strategy is a discipline which helps firms determine what to make and do, why do

it and how to innovate contextually, both immediately and over the long term. This

process involves the interplay between design and business strategy, forming a systematic

approach integrating holistic-thinking, research methods used to inform business strategy

and strategic planning which provides a context for design. While not always required,

design strategy often uses social research methods to help ground the results and mitigate


30/69

3

the risk of any course of action. The approach has proved useful for companies in a

variety of strategic scenarios.

Samsung's Plan to Strengthen Its Weaknesses -

The global cell phone business has been in a funk lately, with handset sales off 11% this

yeara serious downshift from the double-digit expansion of recent times. Samsung

Electronics, though, has bucked the trend, boosting sales 7% in 2009 without denting its

10% profit margins. That has helped the Korean giant increase its worldwide market

share to 19% and cement its position as the No. 2 player globally, behind Nokia, with

38%. Samsung's reaction to the good news? "We have a long way to go," says J.K. Shin,

the company's new handset business chief.

Sure, there's a big dose of traditional Korean modesty in Shin's fretting. But while

Samsung is the top brand in the U.S., Shin is worried that the company remains a laggard

in two key segments: high-end smart phones and ultra cheap models for developing

countries. In smart phones, Samsung has just 3.5% of a world market that's likely to grow

31% this year, according to researcher Strategy Analytics. At the low end, Samsung still

trails Nokia badly. In India, its share is less than 10%, vs. Nokia's 58%. And of the 150 or

so new models Samsung will introduce this year, only a half-dozen cost less than $100.

Samsung's Marketing Strategy in India -Samsung entered India in December 1995 as a 51:49 joint venture with Reasonable

Computer Solutions Pvt Ltd (RCSPL), owned by Venugopal Dhoot of the Videocon

group. In 1998, RCSPL diluted its stake in Samsung to 26% and in November 2002, the

FIPB cleared Samsung's proposal to buy RCSPL's remaining (23%) stake.

In 2002, Samsung established manufacturing facilities for colour televisions, microwave

ovens, washing machines and air conditioners at Noida, Uttar Pradesh. It also had a


31/69

3

presence in consumer electronics, information technology products, mobile phones and

home appliances. Samsung's flagship businesses were consumer electronics and home

appliances, which contributed more than 60% of its revenues.

In 2002, Samsung reported sales of Rs.170 million with 26% growth over the previous

year. Its consumer electronics business grew by 29% and contributed 60% to the total

sales, and its home appliances division grew by 21%, contributing 40 % of the total sales.

Energy Management Strategy -

Samsung Electronics has adopted various measures such as high-efficiency facilities,

energy management systems and training programs for employees to reduce energy

consumption across all operations. We also plan to introduce an energy certification

program for new facilities and buildings from 2010.

The company established a working group for energy management which meets every

two months to share best practices for energy saving and management throughout all

business divisions. These activities encourage facilities to set up highly energy efficient

equipment and technologies; low-power vacuum pump technology, energy efficient water

humidification systems, and energy efficient process optimization, etc. We are also

committed to enhancing employees' awareness through diverse training, promotions and

incentive programs to facilitate energy saving activities at workplaces.


32/69

3

Compliance Management Strategy -

Samsung Electronics has established a new compliance system to prevent and minimize

business risks associated with issues such as collusion and violation of intellectual

property rights. We have instituted a compliance program that includes preemptive and

year-round training, control and supervision in order to ensure adherence to pertinent

laws by the company and all employees and mitigate risks related to violation of laws and

regulations. Our compliance activities are broadly classified into prevention, monitoring

and follow-up processes. Prevention activities include employee education, distribution

of manuals on compliance, system-based self-inspections, and operation of a help desk to

respond to questions on compliance matters. We also keep up to date with the

introduction and revision of various laws and regulations. There is a separate team

dedicated to monitoring activities. After dealing with a compliance issue, we analyze the

related process and outcome to find the fundamental cause and pursue improvement

measures. Real life examples are used in training programs as a way of preventing

recurrence of any compliance problems that arise.

Climate Strategy -

Samsung Electronics has been establishing corporate-level strategies to address its direct

and indirect impact on climate change. Through this, Samsung strives to reduce direct

and indirect emissions of greenhouse gases and prevent potential risks by carrying out

initiatives in voluntary GHG reduction and the development of an inventory.

Samsung's strategy pressures competitors

Samsung Electronics Co. Ltd is piling on the pressure in the second quarter with a floodof investments approximately Rs.28,226.70 crore (7.3 trillion Korean won or $7

billion)migrating into advanced geometries to further reduce costs and proposing a

hefty 100 per cent jump in DRAM bit shipment and 130 per cent for NAND memory

components.Despite this, Samsung executives speak little about boosting depressed
http://www.eetindia.co.in/SEARCH/ART/NAND.HTMhttp://www.eetindia.co.in/SEARCH/ART/NAND.HTM


33/69

3

DRAM average selling price. That goal, which they admit will benefit the entire memory

component market and is critical to profitability in the embattled sector, will come later.

"We plan to make massive investments and try to expand our market share through

implementation of aggressive investment plans and migration into advanced geometry,"

said Yeongho Kang, vice president of the semiconductor business at Samsung, in a

presentation to the investment community following the release of the company's first

quarter results.

"We will accelerate our efforts to strengthen our competitive edge and continue to widen

the gap with our competitors to achieve further growth and profitability," added Kang.

Blue Ocean Strategy (BOS) Samsung Electronics 2006-2010 -

Value Innovation, first component of Blue Ocean Strategy is Samsungs primary tool for

product development. Value Innovation Program centre was started in 1998 and by 2004

the centre wasplaying a very key role in rapid growth of Samsung to become the worlds

top consumer electronics company. Many cross-functional Blue Ocean project teams

were at work, and had ingrained the approach in the corporate culture with an annual

conference presided over by their entire top management. One of the key successes of

VIP centre was, within five years of entering the mobile phone market, in 2003 Samsung

has become the No2 player in the mobile phones market.

Samsung BOS strategy has also helped it to maintain top position in TV market (since

2006-2010), Global; LCD panel market since 2002. BOS is still at the core of the

Samsung product strategy and company has been able to make the necessary adaptations

according to the business environment and changing consumer preferences. In 2006

Samsung launched Market Driven Change (MDC) where its focus was on the consumer

insights and how to develop better and new products using consumer insights. One of the

successful results of the MDC was Flat panel LCD TV Bordeaux. This TV has played a

crucial role in Samsung overtaking Sony in the LCD market. In 2007 Samsung keeping


34/69

3

focus of teenager customers has launched a store in the Second Life Site. The virtual

space will be used to showcase range of mobile handsets to teenagers the future consumer

group, in a competition-less way.

2008 has been a tough year for Samsung as the Chairman of the group was indicted and

forced to resign on tax evasion charges. Samsung also failed to acquire SanDisk, the flash

memory giant. Fall in sales of microchips and TVs has hit the company badly due to

recession. Early 2009 Samsung merged its LCD (liquid crystal display) and

semiconductor business into one business unit called Device Solution Business. It is also

merged its digital media and its telecommunications business into one business unit,

called Digital Media & Communications Business. Samsung launched green management

initiative that is intendedto make Samsung a leading eco-friendly company by 2013. The

'Eco-Management 2013' plan seeks to reduce greenhouse gas emissions from

manufacturing facilities by 50 percent, and to reduce indirect greenhouse gas emissions

from all products by 84 million tons over five years.

2009 also saw Samsung enter into Mobile OS market with launch of its own open mobile

operating system, called "bada," which can be used to develop applications for Samsung

phones. Samsung launched mobile phones Wave based on Bada platform along with its

first smart phone on Googles Android platform Samsung Galaxy. The company plans

to bring down smart phone prices significantly. Samsung launched 3D LED TVs and at a

premium pricing and changing the home entertainment experience from 2-D to 3D.

2010 saw Samsung launching a a new tablet PC named Galaxy Tab as the latest device

meant to rival Apple Inc.'s popular iPad. Samsung is still innovating in a big way and it

still relies on a basic assessment: products competitiveness is everything, and it must be

kept away from price wars.


35/69

3

CHAPTER -5Marketing Strategies and Progremmes

dopted by mncs in indi ccording toIndian Culture


36/69

3

Introduction of MNCAbout Multinational Companies

As the name suggests, any company is referred to as a multinational company orcorporation (M. N. C.) when that company manages its operation or production or service

delivery from more than a single country.Such a company is even known as international

company or corporation. As defined by I. L. O. or the International Labor Organization, a

M. N. C. is one, which has its operational headquarters based in one country with several

other operating branches in different other countries. The country where the head quarter

is located is called the home country whereas; the other countries with operational

branches are called the host countries. Apart from playing an important role in

globalization and international relations, these multinational companies even have

notable influence in a country's economy as well as the world economy. The budget of

some of the M. N. C.s are so high that at times they even exceed the G. D. P. (Gross

Domestic Product) of a nation.

These are not the sole prior causes of the Nokia, Vodafone, Fiat, Ford Motors and as the

list moves on- to flourish in India. As the basic economic data suggest that after the

liberalization in 1991, it has brought in hosts of foreign companies in India and the share

of U.S shows the highest. They account about 37% of the turnover from top 20

companies that function in India.

Why are Multinational Companies in India?

There are a number of reasons why the multinational companies are coming down to

India. India has got a huge market. It has also got one of the fastest growing economies in

the world. Besides, the policy of the government towards FDI has also played a major

role in attracting the multinational companies in India.For quite a long time, India had a

restrictive policy in terms of foreign direct investment. As a result, there was lesser


37/69

4

number of companies that showed interest in investing in Indian market. However, the

scenario changed during the financial liberalization of the country, especially after 1991.

Government, nowadays, makes continuous efforts to attract foreign investments by

relaxing many of its policies. As a result, a number of multinational companies haveshown interest in Indian market.

Profit of MNCs in India

It is too specify that the companies come and settle in India to earn profit. A company

enlarges its jurisdiction of work beyond its native place when they get a wide scope to

earn a profit and such is the case of the MNCs that have flourished here. More over India

has wide market for different and new goods and services due to the ever increasing

population and the varying consumer taste. The government FDI policies have somehow

benefited them and drawn their attention too. The restrictive policies that stopped the

company's inflow are however withdrawn and the country has shown much interest to

bring in foreign investment here. Besides the foreign directive policies the labour

competitive market, market competition and the macro-economic stability are some of

the key factors that magnetize the foreign MNCs here.

Following are the reasons why multinational companies consider India as a preferred

destination for business:

* Huge market potential of the country

* FDI attractiveness

* Labor competitiveness

* Macro-economic stability


38/69

4

Advantages of the growing MNCs to India

There are certain advantages that the underdeveloped countries like and the developing

countries like India derive from the foreign MNCs that establishes. They are as under:* Initiating a higher level of investment.

* Reducing the technological gap

* The natural resources are utilized in true sense.

* The foreign exchange gap is reduced

* Boosts up the basic economic structure.

Disadvantages of MNCs

A rose does not come without thrones. Disadvantages of having MNCs in a developing

country like India are as under-

# Competition to SMSI

# Pollution and Environmental hazards

# Some MNCs come only for tax benefits only

# Exploitation of natural resources

# Lack of employment opportunities

# Diffusion of profits and Forex Imbalance

# Working environment and conditions

# Slows down decision making

# Economical distress


39/69

4

Top MNCs in IndiaThe country has got many M. N. C.s operating here. Following are names of some of the

most famous multinational companies, who have their headquarters of operational

branches based in the nation:

IBM: IBM India Private Limited, a part of IBM has been operating from this country

since the year 1992. This global company is known for invention and integration of

software, hardware as well as services, which assist forward thinking institutions,

enterprises and people, who build a smart planet. The net income of this company post

completion of the financial year end of 2010 was $14.8 billion with a net profit margin of

14.9 %. With innovative technology and solutions, this company is making a constant

progress in India. Present in more than 200 cities, this company is making constant

progress in global markets to maintain its leading position.

Microsoft: A subsidiary, named as Microsoft Corporation India Private Limited, of the U.

S. (United States) based Microsoft Corporation, one of the software giantshas got their

headquarter in New Delhi. Starting its operation in the country from 1990, this company

has got the following business units:

* Microsoft Corporation India (Pvt.) Limited (Marketing Division)

* Microsoft Global Services India

* Microsoft Global Technical Support Centre

* Microsoft India Development Center

* Microsoft IT

* Microsoft Research India

The net income of Microsoft Corporation grew from $ 14, 569 million in 2009 to $ 18,

760 million in 2010. Working in close association with all the stakeholders including the


40/69

4

Government of India, the company is committed towards the development of the Indian

software as well as I. T. (Information Technology) industry.

Nokia Corporation:Nokia Corporation was started in the year 1865. Being one of the

leading mobile companies in India, their stylish product range includes the following:

* Normal mobile handsets

* Smartphone

* Touch screen phones

* Dual sim phones

* Business phone

The net sales of the company increased by 4 % in the last financial year with sales of

EUR 42.4 billion as compared to 2009's EUR 41 billion. Over the past few years, this

company in India has been acquiring companies, which have got new and interesting

competencies and technologies so as to enhance their ability of creating the mobile world.

Besides new developments to fight against mineral conflicts, they are even to set up

Bridge Centers in the country for supporting re-employment. Their first onsite for the

installation of renewable power generation are already in place.

PepsiCo:PepsiCo. Inc. entered the Indian market with the name of PepsiCo India from

the year 1989. Within a short time span of 20 years, this company has emerged as one of

the fast growing as well as largest beverage and food manufacturer. As per the annual

report of the company in the last business year, the net revenue of PepsiCo grew by 33 %.

By the year 2020, this food manufacturing company intends to triple their portfolio ofenjoyable and wholesome offerings. The expansion of their Good-For-You portfolio is

believed to be assisting the company in attaining the competitive advantage of the

growing packaged nutrition market in the world, which is presently valued at $ 500

billion.


41/69


42/69

4

Tata Consultancy Services:Commonly known as T. C. S., this multinational company

is a famous name in the field of I. T. (Information Technology) services, Business

Process Outsourcing (B. P. O.) as well as business solutions. This company is a

subsidiary of the Tata Group. The first center for software researching was established inthe country in 1981 in the city of Pune. Tata Consultancy earned a growth of 8.9 %

during the latest quarter of this financial year, which ended on 30th September, 2011.

This renowned company is presently looking forward to the 10 big deals that they have

received besides the Credit Union Australia's contract as well as Government of

Karnataka's INR. 94crore deal for a total period of 6 years. In this current business year,

they are about to employ 60, 000 people to meet their business requirement.

Vodafone:Vodafone Group Plc is an international telecommunication company, which

has got it's headquarter based in London in the United Kingdom (U. K.). Earlier known

as Vodafone Essar and Hutchison Essar, Vodafone India is among the largest operators of

mobile networking in the country. The parent company Hutchison started its business in

the year 1992 along with the Max Group, which was its business partner in India. Much

later in 2011, Vodafone Group Plc decided to buy out mobile operating business of Essar

Group, its partner. The turnover of the Vodafone Group Plc after the completion of the

last financial year grew to 44, 472 m from 41, 017 m that was the turnover of the

business year 2009.

Tata Motors Limited:The biggest automobile company in India, Tata Motors Limited,

is among the leading commercial vehicles manufacturer in the country. They are one of

the top 3 passenger vehicle manufacturers. Established in the year 1945, this company, a

part of the famous Tata Group, has got its manufacturing units located in different parts

of the nation. Some of their well known products of the company are categorized in the

following heads:

* Commercial Vehicles

* Defence Security Vehicles


43/69

4

* Homeland Security Vehicles

* Passenger Vehicles

India is one of the worlds most promising and fastest-growing economies. Many MNCs

entered to cash in on the exciting opportunities there. But overall, they have had a mixed

performance. Many, who were remarkably successful elsewhere, have failed or are yet to

succeed. Indian market poses special challenges due to its heterogeneity, in terms of

economic development, income, religion, cultural mix and tastes. On top is the heating

competition among local players as well as the leading MNCs. Not all companies have

been struggling to understand Indian consumer behaviour. Doing business in India is at a

turning point; market entry strategies, for example, that clicked once do not promisesuccess every time. Success in India will not happen overnight; companies need to have

an open mind. This requires commitment, management drive and focus on long-term

objectives, and proper business models too. They have to invest substantial financial and

managerial resources to understand customers needs and come up with suitable products.

As more Indian companies push ahead with their aggressive global growth strategies,

many middle and senior management personnel in these organizations are faced with

significant challenges. They have to go global and take charge in a very short time, and

learn how to manage complex businesses on a global scale. They need to acquire the

managerial skills needed to deal with varied customer needs and diverse competitive

forces; learn to work with team members from different cultural backgrounds; and also

learn how to manage the companies that have been acquired through the M&A (i.e.

mergers and acquisitions) route.


44/69

4

STRATEGY AND STRUCTURE OF MNC

Differences between Domestic Multi-National Firms

Multiculturalism geographic dispersion 2 factors that were considered to be of primary importance in differentiating

between domestic multinational firms

Multiculturalism (MC) defined as the presence of people from two or morecultural backgrounds within an organization.

Geographic dispersion (GD) defined as the location of various subunits of theparent firm in different countries.

International business studies have focused on the consequences of GD tended togive little attention to the consequences of MC whereas most comparative

management studies reversed the emphasis but both perspectives are equally

important

Here in our discussion MC will occupy only a modest role

Four Strategic Approaches

Multi-domestic Strategy International Strategy Global Strategy Transnational Strategy Multi-domestic takes care of regional specifics. McDonalds for example do not sell beef hamburgers in India because they take

care of the regional culture and customers. Global applies one approach to

everyone - like iPod - using ipod in Tanzania is the same as using ipod in Sweden


45/69

4

Multi-domestic Strategy

Companies that follow a MULTI-DOMESTIC STRATEGY will give prime importance

to one of the MEANS national differences to achieve the different strategic objectives

(ENDS).Global efficiency is realized mainly by increasing revenues (1a) which these

companies achieve through differentiating their products services to respond to

differences in consumers tastes preferences govt. regulations (1c) Through this

responsiveness to national differences (2a) they also realize the opportunities associated

with multinational flexibility. Although Companies following this strategy do learn (3)

from local differences most of this learning remains within country borders subsidiaries

identify local needs but also use their own local resources to meet these needs (local-for-

local innovation)

International Strategy

Companies that follow an INTERNATIONAL STRATEGY focus primarily on one of

the ENDS worldwide learning use the different MEANS available to achieve this end

.However most Companies following this approach limited it primarily to exploitation

transfer of technologies developed at home to less-advanced overseas markets. Drawback

although it is very efficient at transferring knowledge across borders it does not do a very

good job in achieving either global efficiency or flexibility as its ENDS. Different

activities in the value chain typically have different optimal locations RD and assembly

may be better conducted to 2 locations. Eg. NIKE which design their shoes in US and

manufacture in China and Thailand. The international strategy fails to take advantage of

this benefits as it has tendency to concentrate most of its activities in one location

company is too closely identified with a single country (currency conversion risk)Thisstrategy is based on diffusion and adaptation of the parent companys knowledge and

expertise to foreign markets. Country units are allowed to make some minor

adaptations to products and ideas coming from the head office but they have far less

independence and autonomy compared to multi-domestic companies. For most of its


46/69

4

history Ericsson a Swedish telecommunications firm has followed this strategy because

its home market (Sweden) was too small to support the RD effort necessary in the

industry Ericsson built its strategy on its ability to transfer and adapt its innovative

products and process technologies to international markets and this helped it to competesuccessfully against NEC which followed a global strategy and ITT which followed a

multi-domestic strategy. Kellogg is also another example of firms following such

strategy.

Global Strategy

For Companies that follow a GLOBAL STRATEGY meeting the objective of global

efficiency takes pride of place all means are used to achieve this objective. With regard to

the means of national differences however global Companies focus on exploiting

differences in factor costs by locating production in low cost countries. This contrasts

with multi-domestic Companies who focus on differences in national preferences. Siebel

Systems We have one brand one image one set of corporate colors and one set of

messages across every place on the planet. An organization needs central quality control

to avoid surprises. The concentration centralization of production RD activities

associated with a global strategy limits flexibility leaves companies following this

strategy vulnerable to political currency risks limits their ability to learn from foreign

markets.

Transnational Strategy

Companies that follow a TRANSNATIONAL STRATEGY acknowledge that all of these

different combinations of means ends have their own merits might be very suitable in

specific industries. The firm following this strategy strives to optimize the trade off

associated with efficiency local adaptation and learning. However they realize that in

todayscompetitive environment in many industries it might be necessary to achieve all 3

strategic objectives at the same time. And in contrast to companies following a multi-


47/69

5

domestic strategy Companies following this strategy use all means available to achieve

this end. NESTLE We believe that there is not a so-called global consumer at least not

when it comes to food and beverages as people have local tastes based on their unique

cultures and traditions a good candy bar in Brazil is not the same as a good candy bar inChina. Therefore decision making needs to be pushed down as low as possible in the

organization out close to the markets. That said decentralization has its limits. If you are

too decentralized you can become too complicated and therefore you need to balance it.

What leading MNCs do tap into the Indian consumer market?

Look at how the second best global brands have executed their India strategy.

While global market leaders have proven to be flat-footed and bookish, brands like

Reebok, LG, Hyundai and Lee have stolen a march over their arch-rivals by burning the

book and thinking on their feet. Most MNC companies are run by a global manual, but

those succeeded in India have shredded this manual and taken the when in India, go

local approach and developed on local consumer insight to chart their strategy, reasons

marketing consultant Harish Bijoor, CEO, Harish Bijoor Consults. Consider Lee. When it

entered India in 1995, there was a very nascent market for branded apparel, much less

premium jeans wear. Premium brands like Levis chose to play it safe by using the multi-

brand outlet route, but Lee chose to go it alone and set up exclusive showrooms.

According to market watchers, Levis suffered from a brand perception problem because

it was clubbed with non-premium brands.

When Reebok came to India in 1995, it forged alliances with health clubs and fitness

centres to create brand awareness. When the retail market matured, Reebok changed

focus. Says Subhinder Sing Prem, MD, Reebok India, On the retail front, we went about

opening up new markets beginning with metros and large cities, we swiftly moved into

tier II and III towns. To further establish its brand, Reebok signed up Indian cricketers,

while Nike continued showing its international advertisements in Indian media. Today,

Reebok has an exclusive retail presence through 400 plus outlets, second only to Bata,

while Nike lags behind.


48/69


49/69


50/69

5

include other organisations), has postulated four cultural dimensions, with a fifth

dimensionlong term orientationgetting added to the model at a later stage:

Power Distance Index (PDI): This dimension deals with the degree to which less

powerful members of a society or a group accept, and indeed expect, unequal distribution

of power, e.g., Thats the way it is.

Individualism vs. collectivism: Is the individual a lone person, who is expected to look

after his interests by his own efforts? Or is he a member of a collective group which

looks after its members, in return for loyalty shown to the group?

Masculinity vs. feminity:This refers to the distribution of roles between the genders.

In masculine cultures, there is a significant difference in the values exhibited by men

and women, with men being seen as assertive and dominant and the women, modest and

caring; in feminine cultures, this difference is less stark, with men also showing caring

traits.

Uncertainty Avoidance Index (UAI): This pertains to tolerance for uncertainty and

ambiguity; the degree to which a culture programs its members to feel either

uncomfortable or comfortable in unstructured situations.

Long-term orientation vs. short-term orientation:This dimension deals with values

that people exhibit. Values associated with long-term orientation are thrift and

perseverance, whereas those associated with short-term orientation are respect for

tradition, fulfilling social obligations, and protecting ones face.

Approach #2: The Cultural Or ientations Model fr om Walker, Walker

and Schmi tz

Walker, Walker and Schmitz, in their book (2004), Doing Business Internationally, have

postulated a Cultural Orientations Model (COM), which is a framework for

understanding cultural differences between people fromdifferent countries and cultures.

This model consists of ten cultural dimensions along which the beliefs and actions of


51/69

5

different people or culturescan be mapped. Here is a brief description of eachof these

ten dimensions:

Environment: This dimension deals with how the person relates to the environment in

which he operates. Does the person believe that he has reasonable control over the future,or is it all written decided by a higher force? Is harmony important? Is the

environment seen to be full of constraints? And so on.

Time: Is time seen as something fixed, to be measured and tracked? Is being on time

of paramount importance? Or is time something fluid, something secondary to higher

priorities like taking care of your relationships?

Action: Is the emphasis more on action that leads to measurable results? Or is it on

building relationships and caring for one another?

Communication: Does the meaning of words depend on the context? Does yes mean

yes? Does silence mean something? Are conflicts dealt with through open

communication? Or in an indirect fashion?

Space: Is space (physical and psychological) seen as public or private? Is the office

designed on an open plan, or is it full of cabins and cubicles? Do people stand close to

each other while talking? Or at a distance?

Power: Is power driven by hierarchy, or is it more decentralized and equal? How are

decisions made? By consensus, or by the boss?

Individualism: Is a persons identity determined by individual achievements? Or does

the groups identity over-ride that of the individual? Is loyalty to the group important?

Competitiveness: Is the individual encouraged to take aggressive action on his own? Or

is it a co-operative working style that is valued? Is the reward structure designed to

emphasise individual achievements?

Structure: What is the degree of comfort with change, risk, ambiguity, and uncertainty?

Does the culture value predictability and order? Or does it permit some degree of

flexibility and chaos?


52/69

5

Thinking: What is perceived to be more important. The abstract, and the principle? Or

large volumes of hard data? Is the approach holistic, or is it tuned to breaking the issue

down to small manageable chunks?

Strategies for Going Global: Some Cur rent I ndian Examples

While in-depth research output on specific strategies adopted by Indian MNCs is still not

available, there are sufficient examples, at company level, to show that Indian companies

are fully capable of drawing up and executing strategies that are sensitive to customer

needs, culture, brand equity, and teamwork. The Tata Groups approach to its

acquisitionsin terms of cultural integration, branding, and customer focus has been

based on very pragmatic considerations. The top management teams at Corus, Jaguar,

and Land Rover have been pretty much left intact, with the Tata headquarters getting

involved primarily in long-term direction- setting and large investment decisions. The

global brands that have been acquired are getting careful nourishment for the long run.

There have been no abrupt attempts at implementing drastic changes. Overall, as seen

from the outside, the philosophy seems to be one of encouraging continuity and growth,

while ensuring adherence to the Tata groups core values. In the case of Sundra m

Fasteners, a trend-setter in the auto component industry in India, the approach has been

similar. The UK and German companies that have been acquired in recent years have

been allowed to retain and strengthen their brands and identities. Fresh investments in

equipment have been made where merited, thereby overturning conventional wisdom that

such acquisitions are always followed by loss of jobs and hollowing out of

manufacturing assets. There is continuity in senior management staff. Global customers

whose needs can be met from Sundram Fasteners multiple manufacturing units in

India, Germany, UK, and China are being managed as single accounts globally,through coordinated marketing and sales efforts. Best practices in operational excellence

are being transferred from one unit to the other through horizontal deployment, without

implications of superiority or inferiority between countries, companies, and cultures.

Bharat Forge, with its headquarters in Pune, is another aggressive player in the


53/69

5

engineering industry, with the goal of becoming one of the top players in the global

automotive forging industry. The company has made a series of acquisitions in Germany,

USA, Sweden, and Scotland, and has also formed a JV in China. The company follows a

strategy of dual-shoring where its global customers needs can be met from at least twoof its plants worldwide.

Impact of Cul tur e at Operational LevelWhile the above instances are examples of clear thinking, planning, and execution at the

strategic level, it is important to recognise that individual managers need to be sensitive

to each others cultural expectations, when working at the operating level on a daily

basis. While this might seem like stating the obvious, real-life experience shows that this

is not something that comes naturally to operating managers. Since globalisation has been

a relatively recent phenomenon in India, most managers have not had the opportunity to

get in-depth exposure to different cultures. Correspondingly, the manager from the other

culture (say, from Europe or the US or elsewhere) also has had no opportunity to observe

and understand how the Indian mind works. This results in a gap, which needs conscious

effort from both sides to bridge. The following caselet will make this point clear.


54/69

5

CHAPTER -6LITERATURE REVIEW


55/69

5

LITERATURE REVIEW

Competitive Strategies

Competitive strategy specifies the distinctive approach which the firm intends to use inorder to succeed in each of the strategic business areas. Competitive strategy gives a

company an advantage over its rivals in attracting customers and defending against

competitive forces (Ansoff, 1985). There are many roots to competitive advantage, but

the most basic is to provide buyers with what they perceive to be of superior value a good

or service at a low price, a superior service that is worth paying more for, or a best value

offering that represents an attractive combination of prices, features, quality, service, and

other attributes that buyers find attractive (Thompson and Strickland, 2003).Competitive

strategy is thus the search for a favorable competitive position, in an industry, the

fundamental arena in which competition occurs. Competitive strategy aims to establish a

profitable and sustainable position against the forces that determine industry competition

(Porter, 1998). Firms pursue competitive strategies when they seek to improve or

maintain their performance through independent actions in a specific market or industry.

There are two major types of competitive business strategies: cost leadership and product

differentiation (porter, 1980).Firms pursuing cost leadership strategies attempt to gain

advantages by lowering their costs below those of competing firms. Firms pursuing

product differentiation strategies attempt to gain advantages by increasing the perceived

value of the products or services they provide to customers. Competitive business

strategies are important strategic alternatives for many firms, but they are not the only

business strategic alternatives (Barney, 1997). Competitive strategy needs to focus on

unique activities (Porter, 1996). Competitive strategies should lead to competitive

dominance, which in other words of Tang and Bauer (1995) is about sustained leadership

and levels of undisputed excellence. They contend that competitive dominance is an

attitude that begins with the realization that leadership is no guarantee for long term

success, especially in the global market place. Firms also develop competitive strategies

to enable them seize strategic initiatives and maintain a competitive edge in the market


56/69

5

(porter, 1998).The competitive aim is to do a significantly better job of providing what

buyers are looking for, thereby enabling the company to earn a competitive advantage

and out compete rivals in the market place. Competitive strategies provide a frame work

for the firm to respond to the various changes within the firms operating environment.Firms also develop competitive strategies that enable them develop strategic initiatives

and maintain competitive edge in the market (Grant, 1998, Macmillan, 1998). Ansoff and

Mc Donnell (1990) define competitive strategy as the distinctive approach which a firm

uses or intends to use to succeed in the market. In examining the concept of competitive

strategies, different authors have done it differently, however major studies in this area

have been done by Michael Porter. He defines competitive strategy as the art of relating a

company to the economic environment within which it exists. Porter (1998) states that the

goals of a competitive strategy for a business unit in an industry is to find a position the

industry where the company can best defend itself against the five forces which are

rivalry, threat of substitutes, buyer power, supplier power and the threat of new entry.

These five forces constitute the industry structure and it is from this industry analysis that

a firm determines its competitive strategy. Porter unveiled four generic competitive

strategies that can be viable in the long term business environment. They are cost

leadership strategy, differentiation strategy, cost focus strategy and differentiation focus

strategy. Pierce and Robinson (1997), states knowledge of this underlying source of

competitive pressure provides the groundwork for strategic agenda of action. The

highlight of the critical strengths and weaknesses of the company animate the positioning

of the company in its industry, clarify the areas of strategic changes and may yield

benefits. The differentiation and cost leadership strategies seek competitive advantage in

broad ran market or industry segments while in contrast, the differentiation focus and cost

focus strategies adopted in a narrow market or industry .

This is represented in the diagram below:-


57/69


58/69

6

low price, but have the brand and marketing skills to use a premium pricing policy. A low

cost leaders basis for competitive advantage is lower overall costs than competitors. The

need to manage cost is nothing new, yet surprising number of organizations struggles to

successfully control their operating expenses overtime (Bertone, Clark, West & Groves,2009). Successful low cost leaders are exceptionally good at finding ways to drive costs

out of their business.

Differentiation Strategy

Differentiated goods and services satisfy the needs of customers through a sustainable

competitive advantage. This allows companies to desensitize prices and focus on value

that generates a comparatively higher price and a better margin. The benefits ofdifferentiation require producers to segment markets in order to target goods and services

at specific segments, generating a higher than average price. For example, British

Airways differentiates its service. The differentiating organization will incur additional

costs in creating their competitive advantage (Porter, 1996).These costs must be offset by

the increase in revenue generated by sales. Cost s must be recovered. There is also the

chance that any differentiation could be copied by competitors. Therefore there is always

an incentive to innovated and continuously improve. Targeting smaller market segments

to provide special customer needs is a strategy widely used in the corporate scene. It

involves identification of the needs of the customers in the market and designing products

that can fit their needs. Companies can pursue differentiation from many angles. Varian

(2003, p.454) notes that firms may find it profitable to enter an industry and produce a

similar but distinctive product.

Cost Focus Strategy

Lower cost advantages to a section of the market segments with basic services offered to

a higher priced market leader is a strategy acceptable in the corporate world. It results to

similar products to much higher priced products that can also be acceptable to sufficient

customers in the market. A focused strategy based on low cost aims at securing a


59/69

6

competitive advantage by serving buyers in the target market niche at a lower price than

rival competitors. This strategy has considerable attraction when a firm can lower costs

significantly by limiting its customer base to a well defined buyer segment. Focused low

cost strategies are fairly common (Porter, 1996).

Differentiation Focus Strategy

A business aim

introduction 130407092142 phpapp01

Documents