Value chain The value chain is a concept from business management that was first described and popularized

by Michael Porter A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain.It is a powernful tool for strategic planning. It is an idea that a company has to transform input in to outpur for the enhancement of customer value. The value-chain concept has been extended beyond individual firms. It can apply to whole supply chains and distribution networks. The delivery of a mix of products and services to the end customer will mobilize different economic factors, each managing its own value chain. The industry wide synchronized interactions of those local value chains create an extended value chain, sometimes global in extent.
Strategy may operate at different levels of an organization -corporate level, business level, and f

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Types of strategies Corporate Level Strategy Corporate level strategy occupies the highest level of strategic decision-making and covers actions dealing with the objective of the firm, acquisition and allocation of resources and coordination of strategies of various SBUs for optimal performance. Top management of the organization makes such decisions. Business-Level Strategy. Business-level strategy is applicable in those organizations, which have different businessesand each business is treated as strategic business unit (SBU). The fundamental concept in SBU is to identify the discrete independent product/market segments served by an organization. Since each product/market segment has a distinct environment, a SBU is created for each such segment. For example, Reliance Industries Limited operates in textile fabrics, yarns, fibers, and a variety of petrochemical products. For each product group, the nature of market in terms of customers, competition, and marketing channel differs. Functional-Level Strategy. Functional strategy, as is suggested by the title, relates to a single functional operation and the activities involved therein. Decisions at this level within the organization are often described as tactical. Such decisions are guided and constrained by some overall strategic considerations. Functional strategy deals with relatively restricted plan providing objectives for specific function, allocation of resources among different operations within that functional area and coordi-nation between them for optimal contribution to the achievement of the SBU and corporate-level objectives.

1. Briefly explain these market entry strategies: exporting, licensing, joint venture, manufacturing, assembly operations, management contract, turnkey operations, and acquisition. Exporting is a strategy in which a company, without any marketing or production organization overseas, exports a product from its home base.

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Licensing is an agreement that permits a foreign company to use industrial property (i.e., patents, trademarks, and copyrights), technical knowhow and skills, architectural and engineering designs, or any combination of these in a foreign market. A joint venture is a partnership at corporate level formed for a specific business purpose by two or more investors (from more than one country) sharing ownership and control. Manufacturing is a strategy which involves all or some manufacturing in a foreign country. An assembly operation involves producing parts or components in various countries in order to gain each country's comparative advantage and the subsequent assembly of these parts into a finished product. Management contract is a strategy used by a company with management experience with the idea of managing the business or investment of a foreign owner/government for a fee. A turnkey operation is an agreement by a seller to supply a buyer with a facility fully equipped and ready to be operated by the buyer's personnel, who will be trained by the seller. An acquisition is a direct investment in a foreign country through the purchase of a local company. What is an FTZ? What are its benefits? An FTZ (free trade zone) is a secured domestic area in international commerce, considered to be legally outside a country's customs territory. It is an area designated by a government for the duty-free entry of goods. The benefits of FTZ use are numerous. One benefit is job retention and creation. The use of an FTZ improves the cash flow for a company, and it provides a means to circumvent import restrictions. Furthermore, FTZs provide a means to facilitate imports and exports. Finally, FTZs lower production costs, duties, and freight charges.

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3. What are the factors that should be considered in choosing a country for direct investment? In choosing a country for direct investment, a number of factors must be considered. Some of these factors are product image, competition, local resources (raw materials, manpower, 1infrastructure, etc.), labor costs, type of product, taxation, foreign exchange and investment climate.

Ethics standards or moral values that dictate what is right and wrong culturally based formed upon societys expectations vary by person, and by situation Ethical behaviour conforms to individual beliefs and social norms Behaviour toward employees Firing, hiring, wages, privacy, etc. Some decisions not illegal, but still unethical Behaviour toward the organization Conflict of interest, confidentiality, honesty Behaviour toward other economic agents Customers, competitors, shareholders, suppliers, unions Social responsibility A businesss collective code of ethics towards its stakeholders the environment its customers

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 its employees its investors its suppliers its community

Since strategic management covers the entire functional areas and also consider the importance of each of these stakeholders in business ethics and social responsibility is directly related to the strategic planning and its implementation. National competitive advantage Michael Porter introduced a model that allows analyzing why some nations are more competitive than others are, and why some industries within nations are more competitive than others are, in his book The Competitive Advantage of Nations. This model of determining factors of national advantage has become known as Porters Diamond. It suggests that the national home base of an organization plays an important role in shaping the extent to which it is likely to achieve advantage on a global scale. This home base provides basic factors, which

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support or hinder organizations from building advantages in global competition. Porter distinguishes four determinants: Factor Conditions The situation in a country regarding production factors, like skilled labor, infrastructure, etc., which are relevant for competition in particular industries. These factors can be grouped into human resources (qualification level, cost of labor, commitment etc.), material resources (natural resources, vegetation, space etc.), knowledge resources, capital resources, and infrastructure. Home Demand Conditions Describes the state of home demand for products and services produced in a country. Home demand conditions influence the shaping of particular factor conditions. They have impact on the pace and direction of innovation and product development. According to Porter, home demand is determined by three major characteristics: their mixture (the mix of customers needs and wants), their scope and growth rate, and the mechanisms that transmit domestic preferences to foreign markets. Related and Supporting Industries The existence or non-existence of internationally competitive supplying industries and supporting industries. One internationally successful industry may lead to advantages in other related or supporting industries. Competitive supplying industries will reinforce innovation and internationalization in industries at later stages in the value system. Besides suppliers, related industries are of importance. Firm Strategy, Structure, and Rivalry The conditions in a country that determine how companies are established, are organized and are managed, and that determine the characteristics of domestic competition Here, cultural aspects play an important role. In different nations, factors like management structures, working morale, or interactions between companies are shaped differently. This will provide advantages and disadvantages for particular industries.

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