Global Strategy Mike W. Peng c h ap t e r I I Copyright © 2009 Cengage. PowerPoint Presentation by...

Global StrategyGlobal StrategyMike W. PengMike W. Peng

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Copyright © 2009 Cengage. PowerPoint Presentation by John Bowen, Columbus State Community CollegeAll rights reserved. Copyright © 2009 Cengage. PowerPoint Presentation by John Bowen, Columbus State Community CollegeAll rights reserved.

Strategizing Around the Globe

Strategizing Around the Globe

Part I: Foundations of Global Strategy

Global StrategyGlobal StrategyGek Sintha Mas Jasmin Wika, S.E., M.Sc.Gek Sintha Mas Jasmin Wika, S.E., M.Sc.

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Case Study

Copyright © 2009 Cengage. All rights reserved. 1–2

HEARTBRAND ADVERTISING


SO, WHAT’S THE DIFFERNCES???


HEARTBRAND


Answer

Firms have both intended and emergent strategies

One firm’s strategies may not work in all situations

Past success does not guarantee future success

It is often difficult to change strategy

1–8GLOBAL STANDARIZATION STRATEGY

LOCALIZATION STRATEGY

Pharmaceutical Company


Direct-to-consumer pharmaceutical advertising

LIPITOR• Pharmaceutical company

to promote its prescription products directly to patients

• The U.S. and New Zealand



Fundamental Questions in Strategy

• Why do firms differ? Cultural differences between Western firms and Japanese

companies

Networks of relationships have powerful effect - keiretsu, guanxi, chaebol, blat

• How do firms behave? Industry-based view - focus on competitive forces within an

industry that impact all firms

Resource-based (capabilities) view - focus on internal strengths and weaknesses, firm specific resources and capabilities

Institution-based view - focus on government and societal forces


Outline

• A global global-strategy book

• Why study global strategy?

• What is strategy?

• Fundamental questions in strategy

• What is global strategy?

• What is globalization?

• Global strategy and globalization at a crossroads


A Global Global-Strategy Book

• Text departs from traditional view of global strategy

• Important to respond to local needs

• Traditional view of global strategy is incomplete and unbalancedSacrifices local responsiveness and global

learning Ignores how domestic firms compete with each

other and with foreign entrantsTraditional global strategy is only appropriate for

large MNEs in developed countries It is dangerous to ignore less developed

economies


Why Study Global Strategy?

• Job and career aspiration opportunities

• Awareness of what is going on in the world

• Avoid downside risks of globalization


What is Strategy?

• Origin-Greek word (strategos)-art of the general Sun Tzu, Chinese military strategist in 500 B.C.

Modern-day application to business and competition dates to the 1960s

• Plan versus Action - strategy is “explicit, rigorous formal planning” versus “a set of flexible, goal-oriented actions”

• Strategy as Theory-how to compete successfully Firms have both intended and emergent strategies

One firm’s strategies may not work in all situations

Past success does not guarantee future success

It is often difficult to change strategy


What is Strategy? Cont’d

Strategy should give coherence to decisions and actions

Managers must exert effective strategic leadership


Strategy

STRATEGY AS PLAN

“Concerned with drafting the plan of war and shaping the individual campaigns and, within these, deciding on the individual engagements” (Von Clausewitz, 1976)1

“A set of concrete plans to help the organization accomplish its goal” (Oster, 1994)2

STRATEGY AS ACTION

“The art of distributing and applying military means to fulfill the ends of policy” (Liddel Hart, 1967)3

“A pattern in a stream of actions or decisions” (Mintzberg, 1978)4

“The creation of a unique and valuable position, involving a different set of activities ... making trade-offs in competing ...creating fit among a company’s activities” (Porter, 1996)5


Strategy, Cont’d.

STRATEGY AS INTEGRATION

“The determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (Chandler, 1962)6

“An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage” (Hitt, Ireland, and Hoskisson, 2003)7

Sources: Based on (1) K. Von Clausewitz, 1976, On War, vol. 1 (p. 177), London: Kegan Paul; (2) S. Oster, 1994, Modern Competitive Analysis, 2nd ed. (p. 4), New York: Oxford University Press; (3) B. Liddell Hart, 1967, Strategy, 2nd rev. ed. (p. 321), New York: Meridian; (4) H. Mintzberg, 1978, Patterns in strategy formulation (p. 934), Management Science, 24: 934–948; (5) M. Porter, 1996, What is strategy? (pp. 68, 70, and 75), Harvard Business Review, 74(6): 61–78; (6) A. Chandler, 1962, Strategy and Structure (p. 13), Cambridge, MA: MIT Press; (7) M. Hitt, D. Ireland, & R. Hoskisson, 2003, Strategic Management, 5th ed. (p. 9), Cincinnati: Thomson South-Western


The Essence of Strategy

Figure 1.2


Our definition: Strategy as theory

• Integrating both planning and action schools

• Leveraging the concept of “theory” A theory serves two purposes: Explanation and

prediction

• Requiring replications and experimentationsTo establish the temporal (time-related) and

geographic limits of an existing theory

• Understanding the difficulty of strategic change


Fundamental Questions in Strategy

• Why do firms differ? Cultural differences between Western firms and Japanese

companies

Networks of relationships have powerful effect - keiretsu, guanxi, chaebol, blat

• How do firms behave? Industry-based view - focus on competitive forces within an

industry that impact all firms

Resource-based (capabilities) view - focus on internal strengths and weaknesses, firm specific resources and capabilities

Institution-based view - focus on government and societal forces


Fundamental Questions in Strategy cont’d

• What determines the scope of the firm?

• What determines the international success or failure of firms? Industry-based view - degree of

competitiveness in the industry

Resource-based view - firm specific differences in capabilities

Institution-based view - institutional forces, such as economic reforms and government policy


The “Strategy Tripod”Three Leading Perspectives on Strategy

Figure 1.3


What Is Global Strategy?

• Provide standardized products and/or services on a worldwide basis (i.e., traditional view)

• Any strategy outside one’s home country

• Our definition of global strategy:Strategies of firms around the globe

Both international and non-international (domestic)Both developed and emerging economies


What is Globalization?

• A new phenomenon since the late 20th century?

• A part of long-run human history?

• A pendulum view: Transportation and communication revolutions + breakdown of artificial barriers in trade and investment

A process similar to the swing of a pendulum: Postwar history

Semiglobalization?


Global Strategy and Globalization at a Crossroads

• Three Defining Events - have brought corporate social responsibility, ethics, and governance to the forefront of strategic decisions

Anti-globalization protests - lost jobs, downward pressure on wages for unskilled labor, environmental destruction

Terrorist attacks

Corporate governance crisis (Asian financial crisis, U.S. scandals)


Global Strategy and Globalization at a Crossroads, Cont’d.

•Know Yourself, Know Your Opponents

Understand strengths AND limitations

Recognize the social, political, and environmental costs associated with globalization

Current business school students exhibit values and beliefs different from the general public

Be aware of bias and strategic blind spots

Do not ignore non-government organizations (NGOs)-view them as partners


Organization of the book• Part I: Foundations of global strategy

Chapter 1: Strategizing around the globe Chapter 2: Managing industry competition Chapter 3: Leveraging resources and capabilities Chapter 4: Emphasizing institutions, cultures, and ethics

• Part II: Business-level strategies Chapter 5: Growing and internationalizing the entrepreneurial firm Chapter 6: Entering foreign markets Chapter 7: Making strategic alliances and networks work Chapter 8: Managing global competitive dynamics

• Part III: Corporate-level strategies Chapter 9: Diversifying, acquiring, and restructuring Chapter 10: Strategizing, structuring, and learning around the

globe Chapter 11: Governing the corporation around the globe Chapter 12: Strategizing with corporate social responsibility

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