Global Corporate Strategy.ppt

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1、Global Corporate StrategyLecture 1An Introduction to Global Strategy1Session ObjectivesIntroduction to The ModuleTo Explore Different Conceptions of StrategyThe Explore Why Global Strategy Is Particularly ComplexTo Introduce Key Issues In Global StrategyTo Introduce Key Frameworks In Global Strategy

2、2Module Learning OutcomesBy the end of the module,students will be able to:Explain resource-based and institutional approaches to international strategy Explain generic forms of growth and diversification Explain the principal forms of internal organisation and governance of multinational enterprise

3、s Explain the main forms of international entry and growth and when each is likely to be the preferred approach Explain how the nature of global production,logistics and distribution have changed and why and how firms can evaluate their preferred configuration Explain how competition evolves in inte

4、rnational business and how multinational enterprises can maintain and upgrade their competitive strengths Explain the nature and form of strategic alliances and when these will be preferred to international mergers and acquisitions Explain the key ethical issues facing international businesses and a

5、pply appropriate frameworks for framing ethical behaviour3Lecture ProgrammeIntroduction To Global StrategyResources and CapabilitiesInstitutions,Cultures and EthicsEntry StrategiesGlobal Competitive DynamicsMultinational Strategies,Structure and LearningManaging External RelationshipsCorporate Socia

6、l ResponsibilityTutorials Start Week 2 and Run One Week Behind LecturesMain Text:Peng,M.(2009)Global Strategic Management.Second Edition.4Assessment50%CourseworkBased on“Business Abroad”Simulation GameDecision Deadlines 5pm MondayFirst Round Proper Week 2Five Further Rounds -Last Round 12 MarchGroup

7、 Report Assessing Your Strategy and Competitors Strategies Max 4000 WordsHigh Marks In Coursework Depend On Quality of Your Analysis,Not How Well You Did In Game50%Exam 2 Essays From 55Schedule for Business Abroad Management Game6What Is Strategy?Thinking Influenced By Military StrategyStrategy As P

8、lanHow To Get From Where We Are Now To Where We Want To BeStrategy As ActionMintzberg Strategies“Emerge”From Many Decisions Taken At The“Front Line”Strategy As Integration/TheoryMidway Point:Plans Structure Action But Dont Get Carried Out ExactlyPrinciples Should Be UnderstandableRepeated Trial And

9、Error Refines UnderstandingExplains Why Strategy Can Be Hard To Change7A General Framework for Thinking About StrategyBasic Assumption Firms Are Pursuing ProfitProfit=Total Revenue Total CostTwo Routes To Making More ProfitRaise MarginIncrease Value,Hence PriceLower CostsGrow Profit By Expanding Sal

10、es VolumeNew MarketsNew ProductsPorter Has Focused On The Value Chain As The Source of Advantage:Primary Activities:R&D;Production;Marketing&Sales,Customer ServiceSupport Activities:Information Systems;Logistics;Human Resources8What Is Different About Global Strategy?Tallman&Yip(2009,p308)“Our answe

11、r is that international strategy,while still business strategy,brings forward and explicit consideration for the effects of locational differences and institutional contexts that requires adaptations in the application of classic strategic analysis techniques and adoption of additional analytical fr

12、ameworks.”Once National Boundaries Are Crossed,Strategy Becomes An Order of Magnitude More DifficultThe Use of“Global”Has Been Over-BlownRadical Shift Has Been Taking Place In MNE StrategiesFocus Shifting Away From Expansion of MarketsEmphasis On Operating Integrated Networks of Activities9Dunnings

13、Eclectic ParadigmNot Devised As A Strategic Tool,But Has Power In Thinking About StrategyOwnership AdvantagesFirms Need Sources of Competitive Advantage To Succeed In International CompetitionMultinationality Itself Builds AdvantageLocational AdvantagesWhere Is The Best Place To Produce?Seek Resourc

14、esSeek MarketsSeek EfficiencyEmphasis Now On Seeking Strategic AssetsInternalisation AdvantagesIs There Any Advantage In Doing A Thing Yourself Rather Than Buy Good/Service In Market?10An Overview Of The Eclectic Paradigm and Strategy11Why Do Firms Differ/How Do Firms Behave?Fundamental Perspective

15、On Why Firms Pursue Particular StrategiesPengs Strategy TripodIndustry Characteristics:Key Framework Porters“Five-Forces”ModelResource-Based View:Firms Differ In Resources and CapabilitiesPlay To Strengths and Improve/Protect WeaknessesInstitutional PerspectiveHow You Play Depends On Your Understand

16、ing Of The“Rules of the Game”Different Countries Have Different Cultures and Business SystemsMajor Issue In International MergersCan You Copy Successful Strategies of Overseas Rivals?12What Determines The Scope Of The Firm?Three Important Dimensions:Geographic ScopeProduct ScopeWhat Is Done In-House

17、,What By Third PartiesFirms Increasingly“Fine-Slicing”Their ActivitiesDo Only Certain Ones In HousePick The Best Location For Each ActivityLeads to Highly Complex Global Production NetworksWide Array Of Coordination Devices Both Within and Between FirmsResource-Based View:Firms Focussing More On Act

18、ivities Where They Have Key AdvantagesSize and Scope Bring Many Potential Advantages:Scale and Scope EconomiesLearning EconomiesBuyer/Supplier PowerLarge Internal Resources13Balancing Global Integration with Local ResponsivenessTrade-Off Between Efficiency and EffectivenessFactors Promoting Global I

19、ntegrationPolitical:Freer Trade and InvestmentTechnological:ICT and TransportationSocial:Convergence of Consumer TastesCompetition:Responding To Threats from Overseas MNEsFactors Favouring Local AdaptationCultural FactorsDemand SideSupply SideCommercial Factors:Distribution;Customisation;Responsiven

20、essTechnical Factors:Standards;Spatial Presence;LanguagesLegal Factors:Regulation;Local Content Rules14Integration/Responsiveness Grid15Generic Global StrategiesGlobal Standardisation StrategyHighly StandardisedOften Subject To Large Economies of ScaleInternational StrategyReplicate The Same Busines

21、s Model in Several CountriesLocalisation StrategyEmphasis On Tailoring To Local MarketsSubsidiaries Have Relatively Large DiscretionTransnational StrategyComplex As Competing Forces For Integration and Local Responsiveness Are HighThese Strategies May Apply At Both Corporate And Business Unit Level1

22、6What Internal Structure Should A Firm Adopt?Three Key Dimensions:On What Basis Should Tasks Be Sub-Divided?And How,Then,Will They Be Coordinated?How Tall/Shallow Should The Hierarchy Be?To What Extent Should Decision Making Power Be Delegated?Four Key Issues:Promoting Efficient and Effective Inform

23、ation FlowsEstablishing Control Systems To Monitor Performance And Align Behaviour With ObjectivesCreating Incentives for Effort In Line with ObjectivesFostering A Culture Conducive to Cooperation and Harmony with Strategy 17Internal Structure ctd.Unitary/Functional FormBasis Of Internal Organisatio

24、n Business Functions e.g.Marketing;Production;Accounting etc.Functions Each Peak And Are Coordinated At The Top Of The OrganizationChief Executive Takes Strategic OverviewAdvantages:Simple;Efficient;Clear Career DevelopmentDisadvantages:Lack of Lateral Coordination;Overload On CEO;Bureaucracy and Co

25、ntrol LossMulti-Divisional FormBasis of Internal Organization Is To Group Interdependent Activities In Divisions And Give The Autonomy and Incentives18Internal Structure ctd.Williamsons Principles of Optimal DivisionalisationIdentify Separate Activities Within The FirmGive Each Division AutonomyMoni

26、tor Efficiency Performance of Each DivisionAward IncentivesAllocate Cash Flows To High-Yield UsesPerform Strategic PlanningKey Issue for MNEs:Which Takes Priority,Product Line(Global Integration)or Geographic Region(Local Adaptation)?M-form Hypothesis:M-form Should Outperform U-form19Matrix Organiza

27、tionCreates A Product Axis And A Geographic AxisPeople Have Dual Lines of Command and Dual ResponsibilitiesBrings Together Two Crucial Interdependencies In Transnational StrategyComplex,Stressful and Slow In Practice20Balancing Flexibility and RiskHow Should Firms Compete In Emerging Economies/With

28、MNEs From Emerging Economies?Rapidly Gaining Importance In The Global EconomyMost International Business Still Focussed On The Triad of North America,Europe and JapanNeed to Make Strategic and Resource Commitments To Compete EffectivelyValue Also In Maintaining Some Degree of FlexibilityParticularly

29、 in Complex and Uncertain EnvironmentsFour Key Dimensions of FlexibilityProduction ShiftingFinancial ArbitrageInformation ArbitrageLeverage OpportunitiesHoly Grail of Strategy What Determines Superior Performance?Mastery of All Three Elements of The TripodIncreasing Emphasis On Sustainable Performan

30、ce Through Continuous Upgrading 21Industry CompetitionPorters Five Forces Model Still An Important FrameworkGrew Out Of Structure-Conduct-Performance Paradigm Of Industrial EconomicsIndustries Differ In Average Profitability Due to:Number and Size Distribution of FirmsHeight of Barriers To EntryDegr

31、ee of Product DifferentiationPorter Re-Shaped Key Insights To Describe Features of Attractive/Unattractive IndustriesFive Forces:Intensity of RivalryMore Than Just A Few Evenly Matched Firms Competing for The Same CustomersThreat of Potential EntryEconomies of Scale May Make Both Large-Scale and Sma

32、ll-Scale Entry UnattractiveNon-Scale-Related Advantages Cost and Non-Cost-BasedProduct DifferentiationFirst Mover AdvantagesBrand LoyaltyExperience-Based Cost Advantages Standards ContestsNetwork Externalities22Five Forces ctd.Bargaining Power of SuppliersRaise Price,Lower Quality or BothLinked to S

33、ize and Absence of AlternativesBargaining Power of BuyersSimilar IssuesThreat of SubstitutesHere Products of Different Industries Which Can Serve Needs of Your CustomersThree Strategic ImplicationsSome Industries Are More Attractive Than OthersFirms Should Position Themselves Strategically Within A

34、Given IndustryLed To Idea of Generic Strategies23Porters Generic StrategiesCost LeadershipAcceptable Quality At Lowest CostTypically Aim At Mass MarketNeed To Continually Manage Down CostsCutting Too Many Corners May Alienate CustomersDifferentiation Create Perception Of Value And Charge Premium Pri

35、cePrice Premium Should Exceed The Cost of the ExtrasTrade Margin for VolumeCreates A Defence Against Buyer PowerNeed To Continually ImproveMay Not Keep Ahead of RivalsFocusFind A Niche SegmentPursue Cost Focus or Differentiation Focus24Generic Strategies In The Hotel Industry25Critiques Of Porters G

36、eneric StrategiesThreats and OpportunitiesPorter Takes Too Hostile A ViewFirms Cooperate As Well As Compete“Alliance Capitalism”Too Much Focus On Threats,Not Enough On OpportunitiesIs There A Sixth Force?World Class Companies Rely On World Class SuppliersMay Be Place-SpecificIs It Necessarily Bad To

37、 Be“Stuck-In-The-Middle”?Evidence In Support Of This WeakMNEs From Emerging Economies Differentiate In Some Markets,Compete On Price In OthersIntegration Versus OutsourcingPorter Advocates Vertical Integration To Combat Buyer/Supplier PowerCan Be Complex and InefficientDoes Not Sit Well With Trend T

38、o OutsourcingIgnores Firm and Institutional Influences On Performance26The Ansoff Growth MatrixFour Generic StrategiesMarket PenetrationSell More of Existing Product In Existing MarketProduct DevelopmentSell New Products In Existing MarketMarket DevelopmentSell Existing Product In New MarketsDiversificationSell New Products In New Markets27