chapter 7: STRATEGiES FOR iNTERNATiONAL MARKET

bismillah.....allahumma yassir wala tu'assir :)

Assalamualaikum wbt.

first of all, we have to know the reasons why companies decide to enter the foreign markets. some of the reasons are:

1. to gain access to new customers.
2. to further exploit core competencies.
3. to spread business risk across a wider market base.
4. to achieve lower costs through economies of scale, experience and increased purchasing power.
5. to gain access to resources and capabilities located in foreign markets.

POLITICAL RISKS stem from instability or weaknesses in national governments and hostility to foreign business. ECONOMIC RISKS stem from the stability of a country's monetary system, economic and regulatory policies, the lack of property rights protections.

EFFECT OF EXCHANGE RATE SHIFTS:

- exporters experience a rising demand for their goods whenever their currency grows weaker relative to the importing country's currency.

exporters experience a falling demand for their goods whenever their currency grows stronger relative to the importing country's currency.

COLLABORATIVE STRATEGIES involving alliances or joint ventures with foreign partners are a popular way for companies to edge their way into the markets of foreign countries.

CROSS-BORDER ALLIANCE enable a growth-minded company to widen its geographic coverage and strengthen its competitiveness in foreign markets: at the same time, they offer flexibility and allow the company to retain some degree of autonomy and operating control.

strategic approaches in competing internationally:

1) MULTIDOMESTIC STRATEGY: is one in which a firm varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer and preferences and market conditions.it is a think-local, act-local type of international strategy, facilitated by decision making decentralized to the local level.

2) GLOBAL STRATEGY: is one in which a company employs the same basic competitive approach in all countries where its operates, sells much the same products everywhere, strives to build global brands and coordinates its actions worldwide with strong headquarters control. it represents a think-global, act-global approach.

3) INTERNATIONAL STRATEGY: is a strategy for competing in two or more countries simultaneously.

4) TRANSNATIONAL STRATEGY: is a think-global, act-local approach that incorporates elements of both multidomestic and global strategies.

PROFIT SANCTUARIES are country markets that provide a firm with substantial profits because of a strong or protected market position. CROSS-MARKET SUBSIDIZATION supporting competitive offensives in one market with resources and profit diverted from operations in another market- can be a powerful competitive weapon.

always pray that all Muslim in all around the world is being protected from any harm. day-to-day, the new about flash flood appear in newspaper. so,it is our responsibility to pray for the safety our relatives. i hope my family will be fine and strong to face the test from Him. ameenn.

when we face the problem, we always thought that we are the only one who has the biggest problem. you are wrong.keep calm and look people around you..you will noticed that everyone has their problems and what make it difference is you are the chosen one to handle the problem which prove that you are strong enough to face it. congratulations and say ALHAMDULILLAH :) 

OSHIMA RESTAURANT

alhamdulillah..thanks to Allah for giving me the chance to breath and live until this day.
for this entry, i would like to write about the OSHIMA RESTAURANT.  the founder of OSHIMA RESTAURANT, Puan Asnidar Hanim Yusuf, came to our lecture to give her talk and share about her restaurant. i'm proud of her as she be the one of  successful Muslim Enterpreneur :)

the word of 'OSHIMA' is taken from the name of a big island in Japan. this restaurant was set up on 2009 which this restaurant provides HALAL JAPANESE FOOD. being positive and never give up make her keep sustain in the business field. i want to share here what i got from the sharing moment last day. the strategies that applied by the owner of the restaurant are very impressed me like; as a entrepreneur we should  have our own niche but in understand needs, have a good location of the business, increase brand awareness, full use of social media and website, retain current customer and increase the new one and last but not least is promotion.she also highlighted that the most important in business is our customer satisfaction. The phrase "customer always right" is not totally accepted in her business. she said that customer also has to respect towards the product or service provider. As Muslim, she remind us to do the business as the part of ibadah and not only focusing on profit. 

the success that achieved by the founder of Oshima Restaurant give me inspiration to have my own business and to bring along the name as Muslim entrepreneur all around the world.

FAILURE MAKE YOU A BETTER PERSON :D 

never give up and keep fighting in what we dream about.don't let the failure bring down our dream along but take it as stairs where we have to climb it first to arrive what we want to be there. 

DO NOT ASK FOR MONEY. IKHLAS FOR ALLAH AND MONEY WILL COME.

chapter 6: strengthening a company's competitive position: STRATEGIC MOVES, TIMING AND SCOPE OF OPERATIONS.

       

bismillahirrahmanirrahim...SALAM ALAYK!
let's us move on to the next chapter :)

OFFENSIVE

STRATEGIC OFFENSIVE PRINCIPLES

• focus on relentlessly building competitive advantage and then converting it into sustainable advantage.
• apply resources where rivals are least able to defend themselves.
• employ the element of surprise as opposed to doing what rivals expect and are prepared for.
• display the strong bias for swift, decisive and overwhelming actions to overpower rivals.

the best company's strategic option is to SEIZE THE ATTACK, GO ON ATTACK and LAUNCH A STRATEGIC OFFENSIVE to improve its market position.

basis for COMPETITIVE ATTACK:

- avoid directly challenging a targeted competitor where it is strongest.

- use the firm's strongest strategic assets to attack a competitor's weaknesses.

- the offensive may not yield immediate results if market rivals are strong competitors.

- be prepared for the threatened competitor's counter-response.

the best offensives use a company's most powerful resources and capabilities to ATTACK RIVALS in the areas where they are weakest.

best targets for OFFENSIVE ATTACK

• market leaders that are in vulnerable competitive positions.
• runner-up firms with weaknesses in areas where the challenger is strong.
• struggling enterprises on the verge or going under.
• small local and regional firms with limited capabilities.

BLUE OCEAN STRATEGY (OFFENSIVE)

                                          

A BLUE OCEAN market space, where the industry has not yet taken shape, with no rivals and wide-open long-term growth and profit potential for a firm that can create demand for new types of products.

It offers growth in revenue and profits by discovering or inventing new industry segments that create altogether new demand.

 example: im4u, starbucks, ebay, FedEx,etc.

DEFENSIVE

Purposes of Defensive Strategies:

- lower the firm's risk of being attacked.

- weaken the impact of an attack that does occur.

- influence challengers to aim their efforts at the other rivals.

Blocking the avenues open to challengers:

• adopt alternative technologies as a hedge against rivals attacking with a new or better technology.
• introduce new features and models
• maintain economy-pricing
• discourage buyers from trying competitor's brands.
• make early announcement about new products price changes to induce buyers to postpone switching.
• challenge quality and safety of competitor's products.
• grant discounts or better terms to intermediaries.

*TIMING'S IMPORTANCE TO MAKE OFFENSIVE AND DEFENSIVE STRATEGIC

- knowing when to make a strategic move is as crucial as knowing what move to make.

- moving first is not guarantee of success or competitive advantage.

- the risks of moving first to stake out a monopoly position must be carefully weighed.

HORIZONTAL and VERTICAL

Horizontal scope is the range of product and service segments that a firm serves within its focal market. Meanwhile, vertical scope is the extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system.

HORIZONTAL

1) MERGER: is the combining of two or more firms into a single corporate entity that often takes on a new name.

2) ACQUISITION: is a combination in which one firm, the acquirer purchases and absorbs the operations of another firm, the acquired.

VERTICAL

a vertically integrated firm is one of that performs value chain activities along more than one stage of an industry's value chain system.

1) VERTICALLY INTEGRATED FIRM: is one of that participates in multiple segments or stages of an industry's overall value chain.

2) VERTICAL INTEGRATION STRATEGY: can expand the firm's range of activities backward into its sources of supply and/or forward toward ed users its products.

TYPES OF VERTICAL INTEGRATION STRATEGIES

1)Full Integration: a firm participates in all stages of the vertical activity chain.

2) Partial Integration: a firm builds positions only in selected stages of the vertical chain.

3) Tapered Integration: involves a  mix of n-house and outsourced activity in any stage of vertical chain.

ADVANTAGES

1) add materially to a firm's technological capabilities.

2) strengthen the firm's competitive position.

3) boost the firm's profitability.

FORWARD and BACKWARD 
BACKWARD INTEGRATION involves entry into activities previously performed by suppliers or other enterprises positioned along earlier stages of the industry value chain system.
FORWARD INTEGRATION involves entry into value chain system activities closer to the end user.



OUTSOURCING involves contracting out certain value chain activities to outside vendors.

STRATEGIC ALLIANCES is a formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective.
JOINT VENTURE is a partnership involving the establishment of an independent corporate entity that the  partners own and control jointly, sharing in its revenues and expenses.




Don't despair and never lose hope,cause Allah always by our side.
nothing is easy in life. remind in mind that success will be very meaningful if we have to go through all the obstacles which  not everyone can face it..Allah will not burden us out of our capabilities. ALHAMDULILLAH :D

chapter 5 : GENERiC STRATEGiES

assalamualaikum w.b.t :D
long time no post.hehe..i'm so sorry for the late entry for this chapter.

5 generic strategies are consist of:

1)LOW-COST PROVIDER 

2)BROAD DIFFERENTIATION

3)FOCUSED LOW-COST 

4)FOCUSED DIFFERENTIATION 

5)BEST-COST PROVIDER 

LOW-COST PROVIDER

- striving to achieve lower overall costs than rivals on product that attract a broad spectrum of buyers.

Low-cost leader can be said as successful when he/she has the lowest industry costs, good at finding ways to drive costs out of his/her business and still provide a product that buyers find acceptable.

how to gain it??

1) perform value chain activities more cost-effectively than rivals.

2) revamp the firm's overall value chain to eliminate or bypass cost-producing activities.

COST DRIVER is a factor with a string influence on a firm's costs and it can be asset or activity-based.

the ways to secure a cost advantage:

• use lower-cost inputs and hold minimal assets.
• offer only "essential" product features or services.
• offer only limited product lines.
• use low-cost distribution channels.
• use the most economical delivery methods.

the keys to being a successful low-cost provider:

• spending aggressively on resources and capabilities that promise to drive costs out of the business.
• carefully estimating the cost savings of new technologies before investing in them.
• constantly reviewing cost-saving resources to ensure they remain competitively superior.

when a low-cost provider strategy works best:

• price competition among rival sellers is vigorous.
• identical products are available from many sellers.
• there are few ways to differentiate industry products.
• most buyers use the product in the same ways.
• buyers incur low costs in switching among sellers.

example:

BROAD DIFFERENTIATION 

 - differentiating the firm's product offering from rivals' with attributes that appeal to a broad spectrum of buyers. It will enhances profitability whenever a company's product can command a sufficiently higher price or produce sufficiently greater unit sales to more than cover the added cost of achieving the differentiation. This strategy is to offer unique product attributes that a wide range of buyers find appealing and worth paying for.

Effective approaches:

• carefully study buyer needs and behaviors,values and willingness to pay for a unique product or service.
• incorporate features that both appeal to buyers and create a sustainably distinctive product offering.
• use higher prices to recoup differentiation costs.

Advantages:

• command premium prices for the firm's products.
• increased unit sales due to attractive differentiation.
• brand loyalty that bonds buyers to the firm's products.

"offering customers something that rivals cannot"
(delivering superior value)

1. incorporate product attributes and user features that lower the buyer's overall costs of using the firm's product.
2. incorporate tangible features (e.g;styling) that increase customer satisfaction with the product.
3. incorporate intangible features (e.g;buyer image) that enhance buyer satisfaction in noneconomic ways.
4. signal the value of the firm's product (e.g; price, packaging,advertisement) offering to buyers.

successful approaches to sustainable differentiation:

difficult for rivals to duplicate or imitate:

• company reputation
• long-standing relationships with buyers.
• unique product or service image.

creates switching costs that lock in buyers:

• patent-protected product innovation.
• relationship-based customer service

example:

FOCUS(NICHE)  STRATEGY

1. FOCUSED LOW-COST - concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced product.
2. FOCUSED DIFFERENTIATION - concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members.

These strategies are attractive when:

• the target niche is big enough to be profitable and offers good growth potential.
• industry leaders chose not to compete in the niche- focusers avoid competing against strong competitors.
• the industry has many different niches and segments.
• rivals have little or no interest in the target segment.

The risks:

• competitors will find ways to match the focused firm's capabilities in serving the target niche.
• the specialized preferences and needs of niche members to shift over time toward the product attributes desired by the majority of buyers.
• as attractiveness of the segment increases, it draws in more competitors, intensifying rivalry and splintering segment profits.

example:

BEST-COST PROVIDER

- giving customers more value for the money by offering upscale product attributes at a lower cost than rivals.This strategy also is a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality/ features/ performance/ service attributes while beating rivals on price.

This strategy works best when:

• product differentiation is the market norm.
• there are a large number of value-conscious buyers who prefer midrange products.
• there is competitive space near the middle of the market for a competitor with either a medium-quality product at a below-average price or high-quality product at an average or slightly higher price.
• economic conditions have caused more buyers to become value-conscious.

summary:

1. positions the firm differently in its market.
2. establishes a central theme for how the firm intends to outcompete rivals.
3. creates boundaries or guidelines for strategic change as market circumstances unfold.
4. entails different ways and means of maintaining the basic strategy.

"if you cannot get it easily because you find it difficult,

then use the difficult way to find out how to make it easy for you to get it"

see you for the next entry. salam and smile for you:)

evaluating company's RESOURCES, CAPABILITIES n COMPETITIVENESS

assalamualaikum..and start our day with Bismillah :)

Before Ms Ummi teach us about this topic, we watched the video about the hamburgers business by McDonald which are owned by Richard McDonald. McDonald is one of the very successful food business compared the others. Although McDonald is operated by non-muslim, it is not wrong if we make it as example and  follow the strategies,management and how the business is manage as long it does not violate with Syariah principles.

Best indicators of a well-conceived, well-executed strategy:

- The firm is achieving its stated financial and strategic objectives.

- the firm is an above-average industry performer.

COMPETITIVE ASSETS:

- are the firm's resources and capabilities.

- are the determinants of its competitiveness and ability to succeed in the marketplace.

- are what a firm's strategy depends on to develop sustainable competitive advantage over it's rival.

RESOURCE is a productive input or competitive asset that is owned or controlled by a firm.

               e.g: a fleet of oil tankers.

CAPABILITY is the capacity of a firm to perform some activity proficiently.

               e.g: superior skills in marketing.

SOCIAL COMPLEXITY is company culture, interpersonal relationships among managers or R&D teams, trust-based relations with customers and suppliers, while CAUSAL AMBIGUITY are two factors that inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities.

DYNAMIC CAPABILITY is the ongoing capacity of a firm to modify its existing resources and capabilities or create new ones by:

- improving existing resources and capabilities incrementally

- adding new resources and capabilities to the firm,s competitive asset portfolio.

SWOT analysis is a powerful tool for sizing up a firm's:

- internal strengths (the basis for strategy) 

- internal weaknesses (deficient capabilities) 

- market opportunities (strategic objectives)

- external threats (strategic defenses)

A COMPANY'S INTERNAL STRENGTHS:

1) a COMPETENCE is an activity that a firm has learned to perform with proficiency- a capability.

2) a CORE COMPETENCE  is a proficiently performed internal activity that is central to a firm's strategy and competitiveness.

3) a DISTINCTIVE COMPETENCE is a competitively valuable activity that a firm performs better that its rival.

BENCHMARKING is a potent tool for improving a company's own internal activities that is based on learning how other companies perform them and borrowing their "best practices".

" coming together is a beginning;

keeping together is progress;

working together is success"!

last but not least....reminder to you all my friends n also to myself..always keep in mind, everything we do..it is because of ALLAH. may ALLAH bless us in everything we do.in sha ALLAH :D wasalam.....

EXTERNAL ENViRONMENT ANALYSiS

This entry is about the chapter 3 for Strategic Management subject:)  

What the DEFINITION of macro-environment? MICRO-ENVIRONMENT encompasses the broad environmental context in which a company's industry is situated that includes strategically relevant components over which the firm has no direct control.

FIVE COMPETITIVE FORCES

1) competition from rivals seller

2) competition from potential new entrant

3) competition from producers of substitute products

4) supplier bargaining power

5) customer bargaining power

DRIVING FORCE ANALYSIS

step 1: identifying what the driving forces are.

step 2: assessing whether the driving forces are, on the whole acting to make the industry more or less attractive.

step 3: determining what the strategy changes are needed to prepare for the impact of the driving forces.

then...

the meaning of STRATEGIC GROUP and STRATEGIC GROUP MAPPING

 

strategic group means a cluster of industry rivals that have similar competitive approaches and market positions.

strategic group mapping is a technique for displaying the different market or competitive positions that rival firms occupy in the industry.

KEY SUCCESS FACTORS means the strategy elements, product and service attributes, operational approaches, resources and competitive capabilities that are essential to surviving and thriving in the industry.

i hope this summary can make me understand more about this chapter..huhu.i think that's all from me..

see u soon..XOXO! :D

TUTORIAL ANSWER!

For the chapter 5, we are given by Ms. Ummi a task about the generic strategies. so..this is my answer!
please kindly check my answer:)thank you!

1) Broad cost-leadership:
Tesco- that empower the low price strategy with the goal which is "EVERY LITTLE HELPS"

2) Focused cost-leadership:
IKEA- IKEA as the global furniture retailer, provide customers with "affordable solutions for better living" where the company offers home furnishings that combine good design, function and quality with low prices.

3) Broad Differentiation:
McDonalds- McDonalds customers are of all classes, but largely working and middle classes, and people of all ages. It is strove to meet a customer wait time at no more than one minute in line and 30 seconds at the counter. They've taken competing on price right out of the picture. "They bring you quality, service, convenience, and value...."

4) Focused Differentiation:
Porsche- which is compete in the tiny super car category with prices starting at $150,000 and running as high as $600,000. These cars are more than just transportation.

For me, as i can see, McDonalds have the common features with IKEA where the both are competing on the best services, quality, value at the lower price.
             

                                                             DONE!alhamdulillah :)

i will post the entry for chapter 5 as soon as possible. so sorry Ms. Ummi.hehe

ViSiON and MiSSiON

Bismillahirrahmanirrahim...
my update today is continuing from the previous post on Chapter 2..everyone must have their vision and mission in their life..as do as me:)

               VISION: within 5 years, I became a successful entrepreneur who owns my own clothes’ boutique                                 where I am the one who made the design for my clothes.

MISION:    -graduate excellently from USIM 

-get deeper knowledge and understanding about the business management and be able to apply it

                 -get involve with any business activities as much as I can.

In Sha Allah... :D

let's take a look a summary that i have made for this topic!

         a VISION STATEMENT should answer the basic question, “What do we want to become?” it also should be short, preferably one sentence, and as many managers as possible should have input into developing the statement.

a MISSION STATEMENT:

-a declaration of an organization’s “reason for being.”

-answers the pivotal question “What is our business?”

-essential for effectively establishing objectives and formulating strategies

-reveals what an organization wants to be and whom it wants to serve

Also called a creed statement, a statement of purpose, a statement of philosophy, a statement of beliefs, and a statement of business principles.

The Importance of Vision and Mission Statement

1.To ensure unanimity of purpose within the organization

2.To provide a basis, or standard, for allocating organizational resources

3.To establish a general tone or organizational climate

4.To serve as a focal point for individuals to identify with the organization’s purpose and direction

5.To facilitate the translation of objectives into a work structure

6.To specify organizational purposes

Mission Statement Components

-CUSTOMERS- PRODUCTS or SERVICES- MARKETS- TECHNOLOGY- CONCERNS FOR SURVIVAL, GROWTH and PROFITABILITY- PHILOSOPHY- SELF CONCEPT- CONCERN FOR PUBLIC IMAGES- CONCERN FOR EMPLOYEES-

that's all from me..enjoy this note k!

let's move on!

    Salam Alaykum! We meet again! This entry about the second week that I have learnt on Strategic Management Subject. Honestly, during that time..i felt so sleepy. haha..luckily, Ms Ummi didn't noticed what i've done in her lecture. Please forgive me, Ms Ummi :D
  What i have learnt for this week? Continuing from previous lesson, we learnt about the definition of the STRATEGIC MANAGEMENT. But this time, we weren't play the game.This time is serious ok! :)

Strategic Management brings the same meaning with strategic meaning. And it is refers to:

the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Sometimes the term strategic management is used to refer to strategy formulation, implementation, and evaluation, with strategic planning referring only to strategy formulation.

a STRATEGIC PLAN is a company’s game plan.

   A strategic plan results from tough managerial choices among numerous good alternatives, and it signals commitment to specific markets, policies, procedures, and operations.

From the definition, I take out the important words which are FORMULATING, IMPLEMENTING and EVALUATING, where all these three words explain about the STAGES OF STRATEGIC MANAGEMENT.
I think that's all from me. #have a look for this words and try to think about it :D

" How can the sun of Islam rise again while the sons of Islam are asleep at sunrise...."

wake up guys!! ALLAHUAKBAR!

the first week in STRATEGIC MANAGEMENT'S lecture :D

For the 1st week...
 On September10, 2013; in the very cold lecture hall.. I guess, I started my lesson for Strategic Management. In front of me, I can see a young lady and I can assume that she is my new lecturer for this subject. Miss Ummi was introduced herself and I'm quiet impress by her with the way she talk, dressing and the first thought coming in my mind,...SHE WILL BE A GREAT TEACHER TO ME!..hopefully:)
For the introduction for this subject, she explained to us(students) about the course outline and already give us an assignment..awesome!hehe.
Then, she come out with the attractive task for that day. Ms Ummi asked us what the meaning of strategic n management??just a second...I'm blank!!yes, I knew the words and always heard about it in other classes but to explain what the real definition is...i cant.:( Fortunately, with the task given by Ms Ummi during the lecture give me a whole meaning for the both words.My friends and I have to build the highest tower by using the newspaper only. We are given only 10 minutes to complete it. At the end of the class, Ms Ummi asked us what the conclusion that we all got from the task. As for me, I think to build something, we have to plan well at the beginning, make it strategically and complete it perfectly. For example, I need to plan strategically in order to build the tower which has to make it using the newspaper. First of all, we need to build a stable base of the tower to prevent the tower falls down. We have to think how to manage time given and in the same time, we have to build the newspapers' tower completely.
ok..last but not least...I enjoyed and have fun in this class. But when the assignment appears in my mind, I feel uneasy about it..Don't worry dear Yana,you just have to wake up,change now and work harder!. The important thing,,bear in mind,anything we want, we have to work for it. Enjoy this life and remember that Allah is always with us:))! lots of love from me <3 <3