Strategies for competing in international markets

GLOBALIZATION IS FORCING COMPANIES TO DO THINGS IN NEW WAYS-Bill Gates

In this entry, I would like and love to focus on one subtopic only. :)

Before all conglomerate become rich, and richer,

they must think about ONE.

which is the statement of 'WHY'

WHY THEY MUST ENTER FOREIGN MARKET?

i'm focusing on this! :)

According to Arthur A. Thompson, there are five reasons why they should enter foreign market. The main reason is to gain access to new customers. Expanding into foreign markets offers potential for increased revenues, profits and long term growth for the product. As an example, Petronas widen their business to other country such as Indonesia. Because of what? Because to access new customer there. Instead of having linear sales every month, they can increase up the volume of sales by entering foreign market.

Another reason is to achieve lower costs through economies of scale, experience, and increased purchasing power. This reason also related to Petronas. We may look this reason at different angle, first, think about going to low cost country such as Indonesia, Kembodia, India. By doing this, companies may have low cost to their company through economy of scale and their currency value is low.

The third reason is to further exploit its core competencies and to gain access to resources and capabilities located in foreign market. aren't these two reasons attractive enough to enter new market? it supposed to be yes! and, lastly, to spread its business risk across a wider market base. A company spreads business risk by operating in many different countries rather than depending entirely on operations in its domestic market.

so, these are the reasons why businessman always grab the chance just to market their product outside countries.!! :)

enjoy reading,

thank you :)

Strengthening a company's competitive position

Don't form an alliance to correct a weaknesses. The only result from a marriage of weaknesses is the creation of even more weaknesses.-Michel Robert

What does that mean? As for me, every organization has its own weaknesses, and the weaknesses cannot be disappeared  just by making new organization. By that activity (build new organization), more weaknesses will come out.

Related to this chapter, an organization should strengthen their strength and discover the weaknesses by the strength. In this chapter, there are five strategies in order to strengthen a company's competitive position:
1) Blue ocean strategy
2) Horizontal merger and acquisition
3) Strategic alliance
4) Joint venture
5) Vertical integration strategy

BLUE OCEAN STRATEGY

Meaning: 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.

Example: Air Asia already applied this strategy in fuel purchases. How? Air Asia buy fuel earlier from they need and they in large quantity. This situation had never been done by other companies. This is why Air Asia always can provide low price to their customers.

HORIZONTAL MERGER AND ACQUISITION

Meaning : Merger : Is the combining of two or more firms into a single corporate entity that often takes on a new name. Merger also is the establishment of a new company wile the two or more names of those involved in the merger will not exist anymore.

Meaning : Acquisition: Is the combination in which one firm, the acquirer, purchases and absorbs the operations of another firm, the acquired.

Example : Merger : Bank Bumiputera + Commercial Bank = Bumiputera Commerce + Southern Bank = CIMB

Example : Acquisition : F&N -> Red Sena Bhd

STRATEGIC ALLIANCES

Meaning: Formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective.

Example: I think about this simple example! :)
University doing MOA with other institutions .


JOINT VENTURE

Meaning: partnership involving the establishment of an independent corporate entity that the partners own and control jointly, sharing in its revenues and expenses.

Example: Mazda and Bermaz make a joint venture in Malaysia.
check this link out! http://www.mazda.com/publicity/release/2012/201209/120911a.html :D


VERTICAL INTEGRATION STRATEGY

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- Involve a mix of in-house and outsourced activity in any stage of the vertical chain.

Generic Strategies

Air Asia  was named the World’s Best Low Cost Airline in the annual World Airline Survey by Skytrax for five consecutive years in 2009, 2010, 2011, 2012 and 2013 and has been ranked Top 5 among the most recognised and admired airlines in the Asia Pacific Top 1000 Brands 2008. Air Asia is set to take low-cost flying to an all new high with belief, "Now Everyone Can Fly". 

This example already explain about the topic that I had learnt today. Air Asia company is included in one of the Generic Competitive Strategies. So, the topic today is Generic Competitive Strategies. There are five strategies which are :

1) Low cost provider

2) Broad differentiation

3) Focused low-cost

4) Focused differentiation

5) Best-cost provider.

LOW COST PROVIDER

The company is striving to achieve the lowest cost compared to their rivals or competitors. In order to be a low-cost provider, the company must pursue cost saving and avoid reducing product quality to unacceptable levels. Successful low-cost leaders, who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable.

When a low cost provider strategy works best, :

1. Price competition among rival sellers is vigorous.
2. Identical products are available from many sellers.
3. There are few ways to differentiate industry products.
4. Most buyers use the product in the same ways.
5. Buyers incur low costs in switching among sellers.
6. The majority of industry sales are made to a few, large volume buyers.
7. New entrants can use introductory low prices to attract buyers and build a customer base.

  nb

      

             Regarding to the task that had been given in GOALS, here are the answers.and i am using The Five Generic Competitive Strategies as stated in the textbook.
             
              AIR ASIA

          -Low cost Provider

Low cost provider means striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers. This situation can be seen clearly at Air Asia tagline 'Now Everyone Can Fly'. Air Asia can be provide the lowest price due to they are regional airline serving Malaysia and south-east asian destinations. Provides flight, planes, corporate information and online booking. They just provide the things that is NEED for consumers but still customers need to pay if they want some add-on.

     

               PROTON
       
         - Low cost Provider

            Compared to other company, Proton provide affordable price especially for all Malaysian due to the level of life. As an example, just take a look on the picture below,

Proton Saga

           
AIR     Saga is is sedan typical, but yet they can provide low cost price for Malaysian and without taking so much care about what consumer social class is. It is for all and right, for a broad spectrum of buyers.

           
              TESCO
       
         - Low cost provider

 The tagline of 'Because we care' was really in Malaysian hearts and their Principe is ''The way we work is how we deliver Every Little Helps to make Tesco a better place to shop and work in. We use simple processes so that shopping is BETTER for customers, work is SIMPLER for staff and things are CHEAPER in Tesco.'' Moreover they also produce or package their own  product. So, this is the main clue how they want to cut their cost to give the best price for consumers. Extra benefit at Tesco is the provide delivery service and also Tesco club point. This is their way to have a loyal customers. 

p/s; I also have a Tesco club point :)

  MYDIN

- Low cost provider

MYDIN business activity is in retailing and wholesaling. While their vision is MYDIN is the world's leading distributor of competitive "Halal" goods and services. They can sell their product at a very low price because they sell they things in large quantity. Large quantity cheaper price! :) Mydin also have link with government.

GIANT

-Low cost provider

In Malaysia, Giant is synonymous with everyday low prices, big variety and great value and recognised for offering the most vibrant, comfortable and complete shopping environment. Moreover, for the consumer, Giant has thrown its weight fully behind the Malaysian Government's programme to create smart consumers of Malaysians through continuous marketing innovations, which help them seek out the best value deals. In the past few months, Giant collaborated with the Government to launch numerous campaigns that effectively brought prices of daily essentials and consumables to even lower levels, including a Price subsidy campaign for Fresh Produce. As the leading hypermarket chain in Malaysia, this campaign was a first of its kind in the industry. Therefore, this situation has already prove Giant is the low cost provider.

DIGI

-Low cost provider

          Digi is one of the telco company that compete with other company and provide low cost and high value for customers. for example, take a look at their rate, dont you think they have a very lowest fare for the customers?! moreover, they also provide '1 pakej komuniti with belia'. this the way they want to attract new customers by co-operate with goverment.

Promotion to attract consumers

          KAMDAR

         -Low cost provider
        
        Kamdar is one of the company that sell silk  and  specialize in textile fabric, furnishing fabric, in-house designed garments for ladies, men and children’s clothes, Indian clothing and school uniforms. Kamdar sell their product at reasonable price with high quality and friendly customer service at their shop. For example, 

week 4 of the lecture! :)

Today's lesson is about Evaluating a Company's Resources, Capabilities, and Competitiveness. In this chapter we discuss about techniques for evaluating a company's internal situation, including its collection of resources and capabilities and the activities it perform along the value chain. This is the summary.

So, what is the best indicator to see how well the company's strategy is working? The some of the answers are :

1) whether the company is acquiring new customers at an attractive rate as well as retaining existing customers.

2) whether the firm's image and reputation with its customer is growing stronger or weaker

3) whether the company's overall financial strength and credit rating are improving or declining.

Move to the other part that Dr Ummi highlight, the meaning of resources is a productive input or competitive asset that is owned or control by the firm. this can be tangible and intangible assets in the company. Plus, competitive advantage is also important. Competitive Advantage means the uniqueness of the product that your company alone had.

Moreover, by using SWOT analysis, it can help to determine whether the company able to seize market opportunities and nullify external threats. SWOT analysis is a powerful tool for sizing up a firms :

1) Internal strength

2) Internal weaknesses

3) Market opportunities

4) External threats

The concept is just same like Muslims doing 'muhasabah' on her/his self. Even, Dr Ummi also doing that 'muhasabah' in the lecture. I also take part on that activity. So, here is my strength and weaknesses.

This is Wahibah

Try to change muhasabah for oneself for the company. SWOT analysis will match its strategy to its internal strengths and to market opportunities. Plus, SWOT analysis will correct important weaknesses and defend it against external threats.

There is one other thing that is primary in this chapter that is VALUE CHAIN. The value chain identifies the primary internal activities that create and deliver customer value and the requisite related support activities.

Thank you for reading. :)

week 3

EVALUATING A COMPANY’S EXTERNAL ENVIRONMENT

For today lecture, Dr Ummi teach us on chapter three. In brief, this chapter is about 'thinking strategically about a firm's external environment'.

There are two core concept in this chapter which are  macro-environment and PESTEL. Macro-environment means encompasses the broad environmental context. Moreover, there is no direct control to Micro-environment.

If, the question ask, what are the strategically relevant factors in the macro-environment? then the answer should be PESTEL! then you might wanna ask, what is PESTEL? PESTEL is

P                    = Political factors

E                   = Economic conditions

S                    = Sociocultural forces    

T                   =Technological factors

E                   =Environmental factors

L                   = Legal conditions

Another subtopic is 'how strong are the industry's competitive forces?'. The answer could be never the same from one industry to another. This can be known by using FIVE COMPETITIVE FORCES. 

Those competitive forces are :

a) Competition from rival sellers

b) Competition from potential new entrants

c) Competition from producers of substitute product
d) Supplier bargaining power
e) Customer bargaining power

Check out this video, and you will understand deeper. :)
http://www.youtube.com/watch?v=xOCt3knEdRs

vision and mission!

The class is moving forward to Chapter Two which the title is Vision & Mission. In this chapter a have been exposed by the lecturer about the meaning of vision and mission itself. Then it goes to narrower scope vision and mission for the company.

As an important thing in life!

So, the meaning of vision according to Dr Ummi is answer the question 'what we want to be' while mission means answer the question of 'how to achieve the vision'. Dr Ummi give an example of Dell company vision and mission. Dell vision is Its the way we do business. It's the way we interact with the community. It's the way we interpret the world around us-- our customers needs, the future of technology, and the global business climate. Whatever changes the future may bring our vision -- Dell Vision -- will be our guiding force.  The other meaning of vision and mission can be explore here!-http://en.wikipedia.org/wiki/Strategic_planning

One more thing that I would like to highlight is the term of Synergy. According to Dr Ummi, Synergy means 1 + 1 = 3. Do you know what is that mean? It means when one side ask the others help, they will try to give as same as 3 person doing that work.  But, according to Wikis, Synergy means  the ability of a group to outperform even its best individual member. 

Therefore, by just learning this topic, I can actually draft what is my vision and mission is. So, what is yours?! :D

Nature of Strategic Management

The crucial part in this chapter is that to know about the NATURE of Strategic Management. There is 3 elements in this part which are :

                                                                          a) Formulation

                                                                          b) Implementation

                                                                          c) Evaluation

All these 3 elements are needed in order to make and walk a plan. I might want to use a simple sentence to show this meaning. Let's say, one day one of the student want to join a drawing competition. He plan how he can win that competition. The process to create the plan is call  FORMULATION. Then, he apply what he had planned in his drawing in order to win the competition. This process is call IMPLEMENTATION. But, he lost in that competition. He try to find where is the mistake and he learn from that. this process is call EVALUATION.

Another thing to ponder is about decision making using intuition. Let meme share about this story.She is known as the Iron Lady of Malaysia, Datuk Maznah Hamid is a very well known entrepreneur, business woman as well as a famous motivational author and speaker. Long, long time ago, in a galaxy far far away, Datuk Maznah decided to buy an almost bankrupt, unknown security company and turned into a multi-million, respectable empire. She was using her intuition to make a decision!

　

During the early days, she employed a few guards, with herself being jack of all trades in the small outfit - clerk, secretary, manager and sometimes the guard herself! And in order to expand the business, she and the husband sold their own house and moved to a new, smaller place which come without proper amenities.

　

With only a few thousands capital of their own, her company has to compete with hundreds of other licensed security companies in Malaysia, with many of them were established with up to millions of capital. And against all competition, the company survived and triumphed.

　

The company, Securiforce now is one of the biggest security companies in Malaysia, having more than 30 branches across Malaysia and employing more than 4000 employees. And all of this is achieved without financial help or capital from financial institutions.

　

Alongside with other prominent Malaysian business icons, Datuk Maznah become one of the entrepreneurs who build and grow companies and play important roles as a leader, strategist, while contributing to the overall growth and improvement of the society's life in Malaysia.  

　

Datuk Maznah has also established Maznah Motivational Centre, MMC, which conducts seminar on business and human development. Her book "Motivasi Memburu Kejayaan" is a best seller and has become the source of guidance to the aspiring entrepreneurs who can learn from her own experience, principles and secrets in her quest to achieve success and excellence.-from SKORCAREER.

                                                             Datuk Maznah Hamid

As a conclusion, one person can be that someone just by his good planning! think about it. Thanks for reading :)