global strategy (mncs in china, russia , uk, srilanka)

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Production and Operations Management

Course Instructor: Prof. SameeUllah

NATIONAL UNIVERSITY OF MODERN LANGUAGES

BBA-7

Group Members

• Tahmeena Batool• Mehak Athar • Waqar Ahmad Minhas• H. M. Nouman Riaz

Discussion Circle

MNC, TNC, international and

Multi domestic org

Why companies go global?

MNC’s of China,

Russia, UK & Sri lanka

Global Strategy

Conclusion

Going Global

Globalization Globalization is the tendency of businesses, technologies, or philosophies to spread throughout the world.

This process is powered by interconnected market place.

Global Strategy

Global strategy as defined in business terms is an organization's strategic guide to globalization.

A sound global strategy should address these questions:

What will be the extent of market presence in the world?

How to build the necessary global presence?

General terms definition Reasons for going global

Waqar Ahmad Minhas

According to ILO (International Labor Organization):

“MNC is any corporation that has its

management head quarters in one country i.e.

(Home Country)

&

operates in several other countries i.e.

(Host Countries).”

Difference in Terms : Definitions

International companies Importers and exporters, they have no investment outside of their home country.

Global companies They have invested and are present in many countries. Just like MNC’s.

Transnational companies They are much more complex organizations. They have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market

Multinational Organizations, Transnational Organizations, InternationalOrganizations and Multi-Domestic Organizations are engaged in same activity.

A slight difference of Multi-Domestic organizations from all others is:

The product features or service designs of Multi-Domestic organization define locality.

Common Characteristic

MNC MNE TNC iO Mdc

“Multi-National “ Multi-National “Transnational “International “Multi-Domestic

Corporation” Enterprise” Corporation” Organization” Company”

International Business

Why Organizations Go Global?User’s perspective:

Every country does not have all resources, so

there is a need of international business in order to

export resources,

That are abundant in our country and to import

resources that are not available in our country.

Why Organizations Go Global? Cont.… Company’s perspective:

Increase Market Share

Secure cheaper premises & labor

Avoid Tax & Trade barriers

Enhance profitability

Diversification against Risk

Less competition

MNC from Russia MNC’s in Russia

Opportunities, challenges and strategies

Tahmeena Batool

Challenges

•Construction Permits

•Registering Property

•Getting Electricity

•Government Interference

•Protectionism

McDonalds vs Communism

• McDonald was compared in Russia as communist dictatorship

• It took 12 years of negotiation and stressed efforts to establish it in Russia

• McDonalds entered in soviet union on Jan 31, 1991.

• After opening, 30,000 consumers came to McDonalds.

• Now Pushkin Square’s McDonalds is most busiest McDonalds restaurant.

McDonald’s Strategy in Russia

• Offered signature items (local individual identity)

• Local food preferences

• Offered breakfast for early leavers (people who left home early morning for work)

McDonald’s Strategy in Russia cont.….

• Introduced a concept of side café named as “McCafe” without formal dining area

•Pricing strategy was structured in compatibility with Russian budget

•Competed Starbucks on the bases of price

Coca cola’s strategies in Russia

• Introduction of new products i.e. citrus flavored energy drinks

• Packaging for home dining • Below market prices• Filled all advertisement spaces

by allocating more budget.

Starbucks in Russia

• In Sep, 2007 Starbucks entered in Russian Market

• Customization of Interior and furnishing• Social meetings and personal works got

separate places • Incorporated culture and traditions• I.e. “Lubok” art of Russia is engraved on walls

CSRKeeping corporate social responsibilityin view Starbucks

• Prohibited alcoholic beverages• SmokingEven it causes

• Loss of those Russian’s customers who Smoke• Space for those competitorswho sell alcohol.

MNC’s in China

Reasons for expansion

Mehak Athar

Introduction

• Collapsible tube, first introduced by Colgate, in 1896.• Catered audience in Singapore, Nepal and India• In 1992, Colgate established domestic production

units• Colgate products are marketed in China using the

transcription • As of 2002, Colgate occupied 20% of the market share

for toothpastes in China (prediction became fact)

Reason for ExpansionLocal suppliers can close the cost gap (cost reduction): Colgate became China’s top oral care company, in large part by cutting production costs and passing those savings on to consumers

The result: The price of a 65-gram tube of toothpaste dropped almost 63% from 4.8 renminbi in 1996 to 1.8 renminbi in 2003 (or from about 59 cents to 22 cents). The price differential between Colgate and local brands fell even more dramatically—from 270% to just 44%.

Introduction

• World's second largest restaurant chain

• 18,875 outlets in 118 countries (2014)

• KFC is a subsidiary of Yum! Brands, a restaurant company.

“The sky is the limit”Sam Su, head of operations in china for Yum!

Why went globe?• 3900 stores in china (Enhanced profitability)

• In 2006, KFC profits in China, Thailand, and Taiwan jumped by 37%, while domestic profits here in America only increased by 3%.

• Due to China’s crave for the Colonel’s chicken and the fact that China’s population is much greater than that of the US.

(Scope and cheap resources i.e. labor)

McDonalds in Sri lankaReason and Strategy Waqar Ahmad Minhas

Reason for expansion

•As part of Asia pacific , Srilanka got importance.

•Population of Asia was trying to maintain living standards in late 19th

• Increased spending (Enhanced Profitability)

•Cheap labor (cost cutting)

Strategy to Enter• Franchising

• Segmentation (household, lower class, upper class)

But McDonalds, in Sri lanka, does not go for sales promotion, because there it differentiates itself through

Promotional Price

Different Menu

MNC from United KingdomePeek Freans goes global Nouman Riaz

• A former biscuit making

• 1861 to 1931 company constantly innovated its products

• Global reach of company starts from Common Wealth countries

Peek Freans

Going Global• Global popularity of Tea and Coffee (increased market share)

• Independent production units (Reduced Transportation Costs)

• Variety Demand (Diversification)