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Thursday, December 13, 2007

Paper on International Strategy in Current context

During the last half of the twentieth century, many barriers to international trade fell and a wave of firms began pursuing international strategies to gain a competitive advantage. Strategies are the means by which long-term objectives will be achieved. Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint venture.
Strategic management enables organizations to recognize and adapt to change more readily; successfully adapting to change is the key to survival and prosperity. Strategic-management concepts provide an objective basis for allocating resources and for reducing internal conflicts that can arise when subjectivity alone is the basis for major decisions.
In the current context there can be two broad kind of international strategies:
1. A global strategy: Treat the world as a single market. It is applied where forces for global integration are strong and force for national responsiveness is weak. For example this is true of consumer electronics market.
2. A multinational strategy
It treats the world as a portfolio of national opportunities. It is applied where forces for global integration are weak and force for national responsiveness is strong. For example this is true of branded packaged goods business for example strategy pursued by Unilever.
Global Strategy
Marketing defines it as:
“A strategy that seeks competitive advantage with strategic moves that are highly interdependent across countries. These moves include most or all of the following: a standardized core product that exploits or creates homogenous tastes or performance requirements, significant participation in all major country markets to build volume, a concentration of value-creating activities such as R&D and manufacturing in a few countries, and a coherent competitive strategy that pits the worldwide capabilities of the business against the competition.”
Multinational or multidomestic strategy
It treats the world as a portfolio of national opportunities. It is applied where forces for global integration are weak and force for national responsiveness is strong.

Critical factors determining strategy are:
Global Strategy Multi Domestic
Industry Structure WorldWide Uniform Huge Differences
Competition Globally Regional
Economies of Scale requirement High Low
Nature of Cost Curve Flat Relatively less flat
Customer needs Homogeneous Heterogeneous
Nature of Customer Global Size Small sized
Regional Culture Little Impact High Impact
Local Responsiveness Low High

Thus Multi-domestic Strategy is suitable for:
* Product customized for each market
* Decentralized control - local decision making
* Effective when large differences exist between countries
* Advantages: product differentiation, local responsiveness, minimized political risk, minimized exchange rate risk
Global Strategy is suitable for:
* Product is the same in all countries.
* Centralized control - little decision-making authority on the local level
* Effective when differences between countries are small
* Advantages: cost, coordinated activities, faster product development

Case of McDonalds
McDonalds is a good example of a company that followed a multidomestic strategy. This strategy resulted in:
1. Local need is taken utmost care. Here the customer of each nation will get according to their needs.
2. More autonomy to the subsidiary
It enables individual subsidiaries of a multinational firm to compete independently in different domestic markets.
3. Act as SBU
Each subsidiary behaves like a strategic business unit that is expected to contribute earnings and growth proportionate to the market opportunity.
4. Innovation from local R&D
For Example McDonald's put in eight years in India before its first restaurant came up in 1996. At that point, the odds were heavily loaded against it. For, it had already decided not to launch its beef-based core product - the hamburger - in India so that it didn't hurt religious sentiments of the Hindus. The company knew that the key to its survival here lay in acceptance by the government and the customer. It meant figuring out the right menu -- substituting mutton for beef, something it has never done in any other market, choosing names like McAloo or Maharaja Mac, adding variations and dishes that don't appear in any other McDonald's chain anywhere in the world. Finally, it meant getting the pricing just right. The Maharaja Mac ensured that McDonald's main offering was competitively priced. No wonder "McDonald's has established itself as the family's favorite quick-service restaurant.
Finally, it meant getting the pricing just right. The Maharaja Mac ensured that McDonald's main offering was competitively priced.
No wonder "McDonald's has established itself as the family's favorite quick-service restaurant," beams Amit Jatia, managing director of Hardcastle Restaurants, the Mumbai Franchisee of McDonald's.

The KFC experience couldn't have been more different. It paid enough attention to its main raw material supplies -- by working with Venkateshwara Hatcheries for the right chicken. It also got its cold chain in place. But then it slipped up by not paying enough attention to the cultural context in which Indians consume food. It offered too few choices -- with less than a dozen items on the menu to start with compared with 35 at McDonald's. Larger proportions of Indians are vegetarians, which meant a smaller market. A smaller menu simply cut out a lot of potential consumers.

(Written By Rahul Jain)


1. WebLink:

2. Attachment: Win India
WebLink: (Think India to win India, Kohli Vanita)
With reports from Pallavi Bhattacharjee & Shuchi Bansal

3. See Annexure- I Overview of Globalization strategy of McDonald
4. R. Kerin, S.Hartley, E.Berkowitz, W. Rudelius: Marketing, eighth edition, McGraw-Hill 2006
5. Kotler, Philip: Marketing Management: nineth edition, Prentice Hall India
6. Schermehorn, J. R. (2005). Organizational Behavior (9th ed.). Hoboken, NJ: Judy Joseph.
7. Pearce, J. and Robinson, R. (2004). Strategic Management: Formulation, Implementation and Control. New York: The McGraw-Hill Companies.

Monday, December 10, 2007


(This essay is contributed by Ms. Nidhi Puri)

Different people perceive quality differently. Some relate it to the cost of the product, some to its brand. Quality in other terms is the way the value of a product would be perceived by the end user, depending on how well the product performs as per ones scale of expectation.
Quality is like a foundation for any company; be it in the manufacturing industry or any other. It’s rightly said by someone that a building can tolerate all adverse conditions if its foundation is strong. In an ideal situation, higher quality would mean zero percentage of defects in any product. But in day to day scenario it can be related to least defects and rejections. It might not sound cost effective to maintain quality standards at each stage in the process of procurement of raw material to the end product, but it does reduce costs. By maintaining quality standards we reduce the rework or alteration that would be required .This would automatically save our direct material, labor and energy costs. Improving quality at each step would help increase the productivity and also efficiency. There are probable chances that this would lead to cost reductions due to decrease in the number of rejections and the discounts that one has to give buyer for short deliveries and defected products.
The wastage of material and energy would also be reduced. There would be less scrap generation, which again adds on to the cost. Therefore it is quite justifiable to say that higher quality goes a long way in reducing costs on a daily basis. Though the reduction in cost at each step might seem trivial, but in totality it increases the efficiency of the firm and helps reduce the expenses.


Sunday, August 26, 2007

Consistent Performers

Right Mutual Funds to Invest in:

I will suggest the following funds for investment which are consistently top performing through out the years:

1) Reliance Growth Fund
2) Reliance Equity Fund
3) HDFC Equity Fund
4) SBI Magnum Global Fund
5) Reliance Diversified Power sector Fund

You can also read the following links:



For further queries contact me.




According to the value research:

In the 5-year return slot, Reliance Growth (No. 1), Magnum Contra (No. 2) and Magnum Global (No. 3) have consistently held on to the top three rankings. The worst performer has been LICMF Equity.

Return per annum
Reliance Growth: 60.04%
Magnum Contra: 58.22%
Magnum Global: 57.07%
LICMF Equity: 29.43%

Saturday, August 11, 2007

What not to do with money

I want to share this excellent article from

There are individuals who have some money and others who have more money. And then there are financial planners, investment advisors and agents offering advice on what one should do with his money.

Investment avenues like equities, mutual funds and insurance products like ULIPs (Unit-linked Insurance Plans) and endowment plans among others vie for a share of the money available.

It would be safe to say that we are spoilt for choices, thanks to the varied avenues available. Furthermore, we are in a situation wherein there is a sort of an information overload, in terms of what one should be doing with his money.

We thought it would be interesting to switchover and consider this discussion from a different perspective. In this article, we highlight 5 things that you must 'not do' with your money.

1. Don't hoard your money in a savings bank account

The savings bank account often ends up becoming a default option for storing one's money. This isn't surprising considering that most of us receive our incomes i.e. salaries and fees through cheques. But the trouble with this arrangement is that the funds are squandered earning a measly return of 3.50% (or thereabouts).

The same money can be better utilised by gainfully investing it in an appropriate investment avenue. Sure, liquidity is important. So you should set aside a sufficient sum to meet your day-to-day expenses and to provide for contingencies as well.

But the balance should be invested in avenues like fixed deposits (FDs), mutual funds in line with the investor's risk profile and needs. Considering that even an AAA rated FD yields an annual return of 7.50%, the savings bank account should come across as an unattractive "investment" option to most.

2. Don't invest your money based on hearsay

Never make investments based on hearsay. Your relatives, friends and neighbours need not be appropriate sources for availing investment advice. In any case, what's right for them need not be right for you. The right way to invest is by engaging the services of a qualified and competent investment advisor.

Steer clear of agents and advisors, whose 'core competence' is offering rebates against investment made. Similarly, don't associate with an advisor who only approaches you when an NFO (new fund offer) is launched. Instead, what you need is an advisor, whose mainstay is his expertise and prompt service.

3. Don't manage your money without a plan

No game can be won without a proper strategy; likewise investing without having predetermined objectives like planning for retirement or providing for children's education, among others could spell disaster. It's a bit like setting off on a journey without knowing what the destination is.

In fact, setting objectives should be the starting point of any investment activity. Having done that, the next step would be to draw out a proper plan. The investment advisor has an important role to play at this stage. Rigidly adhering to the plan at all times, should also be treated as vital.

4. Don't invest all your money in the same avenue

Investors would do well not to disregard the importance of diversification and avoid investing all their money in the same avenue.

The investment portfolio should be comprised of instruments and schemes from across asset categories. Over longer time frames, such portfolios are best equipped to deal with changing market conditions and deliver on the returns front.

For example, market-linked investment avenues like equities and mutual funds are likely to occupy a lion's share in a risk-taking investor's portfolio. However, assured return schemes like FDs and bonds should also feature in the portfolio (from a diversification perspective) since they can impart a degree of stability to the portfolio.

5. Don't lose track of your money

Investors should never lose track of their finances. Whether the money is in a savings bank account or available in liquid form, it pays to be aware of how the finances are placed. By doing so, the investor is placed to make well-informed financial decisions.

Similarly, it would also help to keep track of the investment portfolio. Changing market conditions, interest rate fluctuations and other factors could necessitate the need to make modifications to the portfolio.

Saturday, August 4, 2007

Inspiration from Dhirubhai

As A G Krishnamurthy, founder of Mudra Communications, writes in his book, Dhirubhaism, about some of the Reliance founder's doctrines:

* Roll up your sleeves and help. You and your team share the same DNA.

* Be a safety net for your team.

* Always be the silent benefactor. Don't tom-tom about how you helped someone.

* Dream big, but dream with your eyes open.

* Leave the professional alone!

* Change your orbit, constantly!

* Money is not a product by itself, it is a by-product, so don't chase it.

Thursday, July 26, 2007

Warren Buffet...Something to think about....

Nice knowledge to share:

Something to think about....

There was a one hour interview on CNBC with Warren Buffet, the second richest man who has donated $31 billion to charity Here are some very
interesting aspects of his life:

1. He bought his first share at age 11 and he now regrets that he started too late!
2. He bought a small farm at age 14 with savings from delivering newspapers.
3. He still lives in the same small 3-bedroom house in mid-town Omaha, that he bought after he got married 50 years ago. He says that he has everything he
needs in that house. His house does not have a wall or a fence.
4. He drives his own car everywhere and does not have a driver or security people around him.
5. He n ever travels by private jet, although he owns the world's largest private jet company.
6. His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year.
He never holds meetings or calls them on a regular basis. He has given his CEO's only two rules. Rule number 1: do not lose any of your share holder's money.
Rule number 2: Do not forget rule number 1.
7. He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch
8. Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had
scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates
became a devotee of Warren Buffet.
9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.

His advice to young people
: "Stay away from credit cards and invest in yourself and

A. Money doesn't create man but it is the man who created money.
B. Live your life as simple as you are.
c. Don't go on brand
name; just wear those things in which u feel comfortable.
d. Don't waste your money on unnecessary things; just spend on them who really in need rather.


Thursday, June 28, 2007

How to start investing

“The investment options before one are many. Pick the right investment tool based on the risk profile, circumstance, time zone available etc. If one feel market volatility is something which you can live with then buy stocks. If one do not want to risk the volatility and simply desire some income, then you should consider fixed income securities. However, remember that risk and returns are directly proportional to each other. Higher the risk, higher the returns.

I will give you brief overview of various options: Equities: Investment in shares of companies is investing in equities. There are two streams of revenue generation from this form of investment. 1. Dividend: Periodic payments made out of the company's profits are termed as dividends. 2. Growth: The price of a stock appreciates commensurate to the growth posted by the company resulting in capital appreciation. On an average an investment in equities in has a given higher return with higher risks attached to it.

Bonds: It is a fixed income (debt) instrument issued for a period of more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with fixed rate of interest on a specified date, called as the maturity date. Other fixed income instruments include bank fixed deposits, debentures, preference shares etc.

Certificate of Deposits: These are short - to-medium-term interest bearing, debt instruments offered by banks. These are low-risk, low-return instruments. There is usually an early withdrawal penalty. Savings account, fixed deposits, recurring deposits etc are some of them.

Mutual Fund: These are open and close ended funds operated by an investment company which raises money from the public and invests in a group of assets, in accordance with a stated set of objectives. It’s a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. Benefits include diversification and professional money management. Shares are issued and redeemed on demand, based on the fund's net asset value, which is determined at the end of each trading session. The average rate of return as a combination of all mutual funds put together is not fixed but is generally more than what earn in fixed deposits.

Cash Equivalents: These are highly liquid and safe instruments which can be easily converted into cash, treasury bills and money market funds are a couple of examples for cash equivalents.

Others: There are also other saving and investment vehicles such as gold, real estate, commodities, art and crafts, antiques, foreign currency etc. However, holding assets in foreign currency are considered more of a hedging tool (risk management) rather than an investment.

After you zero in on your investments its time to decide on how much money you want to invest. Setting investment goals and checking out on allocable monetary resources go hand in hand. It is necessary to fix your monetary considerations as soon as you decide on the basic investment framework.”

Monday, May 28, 2007

Investing in Mutual Funds

Investing in Mutual Funds: Introduction of the mutual fund

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

Ø Professional Management
Ø Diversification
Ø Convenient Administration
Ø Return Potential
Ø Low Costs
Ø Liquidity
Ø Transparency
Ø Flexibility
Ø Choice of schemes
Ø Tax benefits
Ø Well regulated

Tuesday, May 1, 2007

Relevance of resource based view of strategy

"In the emerging economy, a firm's only advantage is its ability to leverage and utilize its knowledge."

...Larry Prusak, Executive Director - The Institute for Knowledge Management

A successful organization constantly redefines their methods of creativity and problem solving.

For any high performance organization, knowledge management is the central pillar in its strategic plans. It remains to be seen if they will bounce back from their fall. Therefore resource-based view is essential in this global environment.

Strategic management is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team.

It provides overall direction to the whole enterprise. An organization’s strategy must be appropriate for its resources, circumstances, and objectives. The process involves matching the companies' strategic advantages to the business environment the organization faces. One objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently. A good corporate strategy should integrate an organization’s goals, policies, and action sequences (tactics) into a cohesive whole.

Resource view based on Porter’s Model

Various management consultants and thinkers have defined the process of strategy in various ways. Porter’s model focused on defining a firm’s strategy in terms of it’s product/ market positioning. Building on Porter’s notion of competitive advantage, the resource based view of strategy argues that the resources and capabilities of an organization can be a source of competitive advantage if they processes certain characteristics of being rare, durable and difficult to imitate, flexible and durable.

If firms have resources with these characteristics, they can position themselves strategically on the basis of these resources and capabilities. Most of the tangible resources may not have these characteristics and hence organisations have to focus on intangible assets to be a source of competitive advantage. Many authors have stressed on the strategic importance of intangible assets for firms to achieve competitive. Thus the resource view is based on knowledge, which emphasizes building, and sustaining competitive advantage on the basis of the knowledge resources and capabilities of a firm has gained currency due to the following reasons:

• Market is in a state of flux and going through a string of realignments

• Resources and capabilities are easily replicable

• The unprecedented growth of information superhighway has accelerated the spread of explicit knowledge and consequently the speed of replicability

• Tacit knowledge gained through years of experience is not easily replicable.

Reasons for emphasis on Resources Based view:

The need to focus on managing knowledge within the enterprise results from

• Economic and market-driven requirements created by customer demands and international competition

• Increase in customer demands for products and services that fulfill their particular needs more precisely and to a greater advantage

• Loss of knowledge to the organization due to increased personnel turnover

• It helps organizations to be able to repeat the processes followed in past successful projects.

• Effective knowledge management practices helps organisations avoid repeating mistakes of past projects, thereby reducing the time span required for completing current projects.




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