strategy adopted by mnc to cope wid indian brand,cultural dimension n culture difference and limitations and advantage of mnc

1. 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 PROGREMMES
ADOPTED BY MNC‘S IN INDIA ACCORDING TO
INDIAN CULTURE
CHAPTER-6 57-62
6. LITERATURE REVIEW
CHAPTER-7 63-66
7. RESEARCH METHODOLOGY/FINDINGS AND
DISCUSSIONS
CHAPTER-8 67-68
8. CONCLUSION& RECOMMENDATIONS
9. SUMMARY OF IDEAL TYPE MNCS 69-70
10. BIBLIOGRAPHY 71-72
4

2. LIST OF TABLES & figures
FIGURE 1.1 THE STRATEGIC MANAGEMENT PROCESS 15
FIGURE 1.2 PRODUCT, MISSION AND MARKET 18
CHOICES.
FIGURE 1.3 RETAILING PRODUCT–MARKET STRATEGY 19
OPTIONS.
FIGURE 1.4 SUMSUNG COMPANY’S VALUES 27
FIGURE 1.5 VISION OF THE COMPANY 28
FIGURE 1.6 SAMSUNG COMPANY PROFILE OF SALES & 29
OTHER
FIGURE 1.7 PORTER’S GENERIC STRATEGIES 60
TABLE 1.1 FINANCIAL HIGHLIGHTS 30
TABLE 1.2 STRATEGIES ADOPTED BY MNCS FOR 65
COMPETITION IN INDIA
TABLE 1.3 OWNERSHIP AND STRATEGIES ADOPTED 66
BY MNCS IN INDIA
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3. CHAPTER -1
Rationale for the Study
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4. India is one of the world‘s 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 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 customer‘s 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
world‘s 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.
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5. CHAPTER -2
Objective of the Study
8

6. 2.1 Project Title:
STRATEGIES ADOPTED BY MNC’S TO COPE WITH INDIAN BRANDS
2.2 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 for
worldwide 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
9

7. CHAPTER -3
WHAT IS STRATEGIC MANAGEMENT?
10

8. INTRODUCTION to STRATEGIC MANAGEMENT
What 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 organization‘s 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 different – delivering 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
company‘s 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 future – it is
about using careful analysis to understand and influence a company‘s 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.
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9. 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
strategy – that would require yet another mammoth tome – but 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 firm‘s 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 general – the key decision maker.
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10. 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 of
probing 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 one‘s own resources to attack an opponent‘s exposed
position; overwhelming selected markets or market segments; establishing a leadership
position of dominance in certain markets; then regrouping one‘s 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 organization‘s 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 firm‘s unique 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 organization‘s way of saying how it creates
unique value and thus attracts the custom that is its lifeblood.
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11. 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
14

12. 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 tradition – ‗This is the way we have
always done it. It has worked so far. That‘s good enough for us‘ – or inertia. Or
management 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
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13. 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 be
alignment 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
firm‘s new strategic objectives. The analysis of the environment can be segmented into
four interactive elements. There is the issue of the firm‘s general environment, the broad
environment comprising a mix of general factors such as social and political issues. Then
there is the firm‘s operating environment, its more specific industry/business
environment. What kind of industry is the firm competing in? What ‗forces‘ make up its
‗industry structure‘? Having examined its business environment, 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 firm‘s 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
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14. processes that determine how the organization gets things done from day to day – for
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 the
organization? 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 Waterman‘s 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 disposal – for example, capital,
technology, and people? Management‘s role is to try to ‗fit‘ the analysis of externalities
and internalities, to balance the organization‘s 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 Vector
Strategic 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 firm‘s ‗product–market scope‘ and
‗growth vector‘. This specifies the particular products or services of the firm and the
market(s) it is seeking to serve. A firm‘s ‗growth vector‘ defines the direction in which
the firm is moving with respect to its current product–market scope. The key components
of the ‗growth vector‘ are set out in figure 1.2. One qualification is necessary here. The
use of the growth
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15. 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 product–market
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16. 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 choose
to develop new retail products but stay in the same line of business – for 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 into totally different areas of business, for example, into
financial services, as Marks & Spencer has done.
Figure 1.3 Retailing product–market strategy options. By Knee and
Walters (1985)
The range of product–market strategy options in retailing is illustrated in figure
1.3.Governing the choice between strategic options should be the notion of competitive
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17. 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 product–markets
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 competition
in 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 company‘s 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 Sainsbury‘s has done with its ‗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 of strategy.
Indeed, some analysts go as far as asserting that a good ‗mission statement‘ can provide
an actual worthwhile alternative to the whole task of corporate planning. The definition
of a firm‘s strategic mission encapsulated in the mission statement can be thought of as
the first stage of the strategy process A firm‘s mission should be clear and concise and
distinguish it from any other firm. The mission statement has to be backed up with
specific objectives and strategies, but these objectives and strategies are far more 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;
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18. • Its principal business aims – its 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 how to
behave.
Drucker illustrates the importance of a sense of mission with his story of three people
working on a building site. All three were doing the same job but when asked 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 were doing, one answered,
‗Pitching camp,‘ the second answered, ‗Collecting material for a film,‘ the third
answered, ‗Climbing Everest.‘ There are no prizes for deciding who was most committed
to his/her task and who would be most motivated to perform 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.
• Focusing on a common enemy. Defeat of the common enemy guides strategic choice,
e.g. Pepsi‘s ‗Beat Coke‘, Honda‘s ‗Crush, squash, slaughter‘ Yamaha, Nike‘s 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.
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19. CHAPTER -4
company‘s profile
22

20. 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.
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21. 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 ahead
with more than 100% increase in shares.
Introduction of Samsung –
Samsung 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.
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22. In 2009, the company took the position of the world‘s 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, Samsung‘s market
position is dominant. For the five years since 2006, the company has been in the top spot
in 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, Samsung‘s 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 brightest
talent 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 products—from memory chips that help businesses
store vital knowledge to mobile phones that connect people across continents— have the
power to enrich lives. And that‘s what making a better global society all is about.
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23. Company’s 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, we‘re 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 excellence—and an
unfaltering commitment to develop the best products and services on the market.
Change
In today‘s fast-paced global economy, change is constant and innovation is critical to a
company‘s 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.
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24. 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 Company’s Values
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25. 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 world‘s 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
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26. 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
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27. 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:
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28. • 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,
31

29. 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
32

30. 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
year—a 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
33

31. 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.
34

32. 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 flood
of 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
35

33. 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 Samsung‘s primary tool for
product development. Value Innovation Program centre was started in 1998 and by 2004
the centre was playing a very key role in rapid growth of Samsung to become the world‘s
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
36

34. 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 intended to 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 Google‘s 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: product‘s competitiveness is everything, and it must be
kept away from price wars.
37

35. CHAPTER -5
Marketing Strategies and Progremmes
adopted by mnc’s in india according to
Indian Culture
38

36. Introduction of MNC
About Multinational Companies
As the name suggests, any company is referred to as a multinational company or
corporation (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
39

37. 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 have
shown 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
40

38. 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
41

39. Top MNCs in India
The 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 giant‘s has 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
42

40. 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 of
enjoyable 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.
43

41. Ranbaxy Laboratories Limited: Ranbaxy Laboratories Limited, one of the biggest
pharmaceutical companies in India, started their business in the country from the year
1961. The company made its public appearance in 1973 though. Headquartered in this
nation, this international, research based, integrated pharmaceutical company is the
producer of a huge range of affordable cum quality medicines that are trusted by both
patients and healthcare professionals all over the world. In the business year 2010, the
registered global sales of the company was US $ 1, 868 Mn. Successful development of
business forms the key component of their trading strategy. Apart from overseas
acquisitions, this company is making a continuous endeavor to enter the new global
markets, which have got high potential. For this, they are offering value adding products
as well.
Reebok International Limited: This global brand is a famous name in the field of sports
as well as lifestyle products. Reebok International Limited, a subsidiary of Adidas AG, is
based in U. S. A. (United States of America) started its operation in 1890s. During the
last financial year, Adidas's currency neutralized group sales increased by 9 %. Apart
from their alliance with CrossFit that is among the largest contemporary fitness
movements, in the current year, Reebok's announcement of its partnership with artist,
designer and producer Swizz Beatz reflects its long term future growth.
Sony: Sony India is a part of the renowned brand name Sony Corporation, which started
their business operation in the year 1946 in Japan. Established in India in November
1994, this company has captured one of the leading positions in the field of consumer
electronics goods. By the end of the business year 2010 on 31st March, 2011, the
company showed a remarkable increase in the share related to numerous categories. Sony
India is planning to invest around INR. 150 crore for the marketing of the activities
related to ATL and BTL. As far as Bravia TVs are concerned, they are looking forward to
hold their market share of 30 %. In between the last and the current financial year, the
number of their outlets in the country increased by 1, 000.
44

42. 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 in
the 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
45

43. * Homeland Security Vehicles
* Passenger Vehicles
India is one of the world‘s 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 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 customer‘s 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.
46

44. 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 more
cultural backgrounds within an organization.
Geographic dispersion (GD) defined as the location of various subunits of the
parent firm in different countries.
International business studies have focused on the consequences of GD tended to
give 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
47

45. 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)This
strategy is based on diffusion and adaptation of the parent company‘s 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
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46. 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 compete
successfully 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
today‘s competitive 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-
49

47. 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 in
China. 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 Levi‘s 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, Levi‘s 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.
50

48. LG‘s is the proverbial ‗third time lucky‘ story. After two failed joint ventures, it made a
re-entry into the Indian market in 1998 all by itself. The other chaebols were on their way
here, too, while Phillips and Sony were already well-established. LG began with a rapid
national roll-out, mass customisation and products adapted specifically for Indian
markets. It also kept its dealers happy with a wide portfolio and allowed them to cut
sweet deals. ―Our success in India can be attributed to our ability to focus on empowering
people, profit-driven market presence and being an open organisation, with just about all
employees having access to the company‘s finances,‖ says LG India‘s MD, KR Kim.
Today, with over Rs 7,500 crore in sales, LG leads in almost all the categories in
consumer durables.
Cultural Differences and Integration
Global business brings people from different cultures together. The managers need to
overcome cultural differences and collaborate with each other, in order to succeed.
Another aspect is to understand Cultural sensitivity that means to understand the
behaviour and attitudes of personnel from different parts of the world, and develop an
operating culture for the team which builds ―bridges‖ across the cultural differences that
will inevitably surface. While it is unrealistic to expect that every manager entering the
global arena will exhibit all of the above elements of a global mindset, it is important for
the manager to recognize that these requirements do exist, and make efforts to develop
and strengthen areas where he is relatively weak.
The failure of the Daimler-Chrysler ―merger of equals‖ tells us that cultural integration is
a key pre-requisite for global managers to be effective and successful. While there could
be several exceptions to the rule, most Indian managers, especially those employed in the
brick and mortar industries exhibit some common cultural traits. Here are some
examples:
• He is very comfortable with clear, well-defined organization structures, where reporting
relationships are explicit, and there is no ambiguity as to who the manager‘s ―boss‖ is.
The organization is the classic pyramid.
51

49. • Compared to simpler organization structures in Indian firms, large global corporations
routinely resort to complex matrix organizations to drive their global business strategies.
The Indian manager is relatively less effective in (and less comfortable with) matrix
organizations, where vertical and horizontal ―relationship‖ lines cut across functions,
businesses, and geographies. The resultant ambiguity is something that he finds difficult
to manage.
• In spite of the introduction of holistic performance evaluation systems and processes,
the average Indian manager is still more comfortable with the traditional concept of
―seniority.‖ Grey hair still matters, in spite of many organizations pushing ahead with
meritbased decisions when filling senior positions. This contrasts with the US practice,
for example, where age is not allowed to be used even as a criterion in such situations.
• In India, public ―face‖ (i.e., the person‘s standing and image among colleagues) is
crucial at individual level. Feedback of the negative kind – even when couched in the
most objective terms – is best given behind closed doors, and not in a group meeting. The
West is less cognizant of such sensitivities.
Understanding and Managing Cultural Differences: Models and Tools
When asked to deal with a fuzzy, hard-to-define concept called ―culture,‖ it is natural that
the practising manager from India would say, ―All this is fine. I am prepared to be
culturally sensitive, and adapt my ways in the interests of team-work. But how do I start
getting a handle on this vague subject? How do I measure the cultural differences?‖
Fortunately, considerable research has already been conducted in this area, resulting in
the formulation of models and tools to assist the manager. In this article, we will
highlight three approaches which share a large degree of commonality in the way they
look at cultural differences, organizations, and teamwork.
Approach #1: Geert-Hofstede Cultural Dimensions
Prof. GeertHofstede (2001)of Maastricht University, based on his research across
different countries and organisations (starting with IBM, and extended subsequently to
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50. include other organisations), has postulated four cultural dimensions, with a fifth
dimension – long term orientation – getting 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., ―That‘s 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 one‘s ‗face.‘
Approach #2: The Cultural Orientations Model from Walker, Walker
and Schmitz
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 from different countries and cultures.
This model consists of ten cultural dimensions along which the beliefs and actions of
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51. different people or cultures can be mapped. Here is a brief description of each of 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 person‘s identity determined by individual achievements? Or does
the group‘s 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?
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52. • 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 Current Indian 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 Group‘s approach to its
acquisitions—in 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 group‘s core values. In the case of Sundram
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
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53. 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 two
of its plants worldwide.
Impact of Culture at Operational Level
While 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 other‘s 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.
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54. CHAPTER -6
LITERATURE REVIEW
57

55. LITERATURE REVIEW
Competitive Strategies
Competitive strategy specifies the distinctive approach which the firm intends to use in
order 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
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56. (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:-
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57. Figure 1.7 Porter’s Generic strategies BY Porter M.E (1988) Generic
Strategies.
Cost Leadership Strategy
A firm producing at the lowest cost in the industry enjoys the best profits. Producing at
lower cost is a strategy that can be used by various firms so as to have a significant cost
advantage over the competition in the market. This in effect leads to growth in the market
share. This strategy is mostly associated with large businesses offering standard products
that are clearly different from competitors who may target a broader group of customers.
The low cost leader in any market gains competitive advantage from being able to many
to produce at the lowest cost. Factories are built and maintained; labor is recruited and
trained to deliver the lowest possible costs of production. Cost advantage is the focus.
Costs are shaved off every element of the value chain. Products tend to be 'no frills.'
However, low cost does not always lead to low price. Producers could price at
competitive parity, exploiting the benefits of a bigger margin than competitors. Some
organizations, such as Toyota, are very good not only at producing high quality autos at a
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58. low price, but have the brand and marketing skills to use a premium pricing policy. A low
cost leader‘s 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 of
differentiation 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
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59. 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 aims to differentiate within one or a number of target market segments. The
special customer needs of the segment means that there are opportunities to provide
products that are clearly different from competitors who may be targeting a broader
group of customers. This demands that the customer‘s different needs and wants be
recognized. Porter (1980) reiterates that only if a company makes a strong and
unwavering commitment to one of the generic competitive strategies does it stand much
chance of achieving sustainable competitive advantage that such strategies can deliver if
properly executed. Many scholars have questioned this; in particular, Miller (1992)
questions the notion of being ―caught in the middle‖. He claims that there is a viable
middle ground between strategies. Many companies for example, have entered a market
as a niche player and gradually expanded. Hill (1988) claimed that Porter‘s model was
flawed because differentiation can be a means for firms to achieve low cost. He proposed
that a combination of differentiation and low cost might be necessary for firms to achieve
a sustainable competitive advantage.
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60. CHAPTER-7
Research Methodology/Findings
and Discussions
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61. Research Methodology
The study employed a descriptive survey to identify competitive strategies adopted by
multinational corporations to cope with competition in India. A survey was deemed
appropriate as it enables one to make comparisons based on differences in demographics
because the study aimed at going beyond identifying and detailing the strategies by
comparing MNCs based on the country of origin, ownership structure and year of
incorporation. This required a broad range of data which is possible through a survey.
The target population was all MNCs operating in India. According to India Bureau of
Statistics Economic survey 2007 there are 213 Multinational Corporations in India.
Multinational corporations were stratified according to the country of origin. A sample
size of 40 was drawn using disproportionate stratified sampling technique since some
categories were too small to be proportioned. The research used primary data and semi
structured questionnaires .Data collected was cleaned, validated edited and then coded.
Descriptive statistics was used to analyze the data. These included percentages, frequency
distribution tables and other descriptive statistics such as mean and standard deviation.
The Statistical Package for Social Sciences (SPSS) was used for this analysis. Interviews
were conducted on heads of departments and other senior export managers who are in
management since they understand the strategies being employed. A drop and pick later
method was used in administering the questionnaires.
Findings and Discussions
Regarding the key objective of the study which was to establish the strategies adopted by
multinational corporations to cope with competition in India .The results are shown in the
table below:-
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