International Business Strategy MAN3090 PDF

Preview

Summary

��International Business StrategyMANLearning Objectives: To identify and classify different business practices of strategy formulation, implementation and control into relevant theoretical frameworks Apply the relevant theoretical frameworks of strategy formulation, implementation and control in rea...

Description

International Business Strategy MAN3090 Learning Objectives: 1. To identify and classify different business practices of strategy formulation, implementation and control into relevant theoretical frameworks 2. Apply the relevant theoretical frameworks of strategy formulation, implementation and control in real business contexts 3. Analyse the strategy of any given corporation drawing on sources of publicly available information 4. Develop an understanding of a range of business problems that a corporation in any given industry may face 5. Exercise judgment over a range of strategic solutions available in order to overcome such problems

Critical Review assessment 1000w 16/11 50% week 8 Online 24h Open Book Exam 50% week 11

L1 - What is Strategy? Definition of strategy concerns with an orgs basic direction for the future: its purpose, ambitions, resources and how It interacts with the world in which it operates - Richard Lynch 2006 corporate strategy Concerned with:

Competitive advantage Vision - future The world around us Michael Porter's definition of strategy? Strategy is a race to 1 ideal position - it's about competition and making money (a positioning approach to startgy) Strategy is the creation of a unique and valuable position involving a different set of activities - how we get money and remain competitive Strategy requires trade offs in competing and choosing what to do and what not to do - as a consumer we have endless choice which creates a competitive marketplace, scarcity of resources so need to prioritise and make decisions Whittington, R. (2002) definition of strategy - and does it matter? 2 decisions that lead to an activity, see strategy as a spectrum Outcomes - make a decision about what you want your business to achieve Profit-maximising - focused on delivering value shareholders, making as much money for business and grow as much equity as possible Pluralism - stakeholders - customers, communities, environment - what does the business impact not privilege one but find a middle source, try and make as many stakeholders happy Process - how will you put it into to practise and the way of achieving it Prescriptive/deliberate - think 5/10 years ahead, analyse circumstances and plan how they initiate it (actor knows what they are saying and how they say it - follow plan) Emergent - agile, flexible, responsive, happy and wiling to respond change based on external factors, innovate https://surrey.cloud.panopto.eu/Panopto/Pages/Viewer.aspx?id=e0138111e311-43bb-a2b2-ac2c00e7e2df&query=man3090

Richard Lynch (2006) definition of strategy? Concerned with basic direction for future, ambitions, purpose, resources and how it interacts with the world (RL) What 5 things does strategy deliver to organisations? sustainability distinctiveness competitive advantage linkages to the environment vision What are the 5 business Strategies? Cost leadership - costing less than competitors (broad) Differentiation - different form customers (Broad) Focused cost leadership - costing more than niche (narrow)

Focused differentiation leadership - unique in a small market (narrow) Integrated cost/differentiation - low cost product, unique features Summary: strategy is the relationship between the org and its environment concerned with the whole org cohort process rather than one-off a strategist needs to be an inward and outward thinker Disruption - in an age of transition

L2 - Processes and Outcomes Wittington's strategic framework, how do we begin to use it? outcome - what we want to achieve, the kind of business we want to be. Determined by whether they are shareholder focussed profit maximizer, or stakeholder pluralist driven org Processes what's going to happen as we undertake different activities to reach strategy? Classical doesn't change with the environment Evolutionary evolve with world around, strategy and direction based on the environment e.g. covid online Systematic highly volatile markets businesses prioritize customers to satisfy the market

What drives the WM outcomes? profit and pluralist What is Prescriptive (deliberate) strategy (WM)? Creating a script for org, no matter what the org will follow, prescriptive, deliberate Linear approach - definite start and endpoint (Start - define the org objective, end - implemented in org timeline) Neat and organised - steps to take to get to doing it stage e.g. 1. analyse org environment, reviewing objectives, thinking and developing strategic options before implementation Secure, safe less rigid and flexible - if there's lots of environmental change emergent better

What is an Emergent strategy (WM)? responsive, changeable, emerge from circumstances, agile, improvise an illustrative example of what an emergent strategy would look like trial and error with strategy approach

How does culture affect strategy? Environment says ba agile, nimble, flexible Culture e.g. spanned across 50 countries hard to change

What direction should companies take when it customs to stately process? Influenced by org and environmental factors to us (internal / external) Aren't one or another fully One major debate in strategy - how should strategy happen? 1. should it be prescriptive or emergent? - depends on org, environment, and internal vs external relationship

Outcomes of strategy? How Strategy is done influences how objectives of company are met everyone in the org understands the mission What are the 2 opposing perspectives in strategy outcome? Wittington Firm as a profit maximiser - shareholder value, meeting needs of owners of the business (individual or shareholder) 1. Milton Friedman (1982) a business is a business and the fundamental objective is to profit maximize

Firm as a pluralist collection of stakeholders - view org as a collection of stakeholders 1. Adcroft et al (1991) social responsibility is at the heart of a business What do findings say about stakeholders as financial claimants? Williams. K, et al (1995) Stakeholders are those who have a direct or indirect financial claim on org. reconciling between stakeholders requires a process of internal and external factors. Whos most important (priorities) and divvy up financial resources

What are the issues of divving up financial resources to stakeholders? Finite resources and competing claims As recourse are finite and claims are high its difficult to keep all stakeholders happy, key task - managing stakeholders (giving someone more means you need to give others less) Identification and categorisation

Hard to group stakeholders into a category, difficult to make a decision about who gets priority of the distribution of resources. Deciding the outcome of the strategy In practice, firms will be somewhere in the middle to understand the strategy you have to understand the relationship between how and why it's done

L3 - Internal and External Dimensions What are some ethical issues? industry standards environmental standards What is the central argument in organisations and environments?

Relationship between org and environment is a power one, where each element is trying to exert power over the other. How a strategy ends up depends on if the firm can impose itself on the environment or the other way round. Proposition 1 - market based approach to strategy strategy is externally determined, forces in the business environment are powerful so strategist has to identify these through strategic analysis and find a position within these conditions to prosper. Proposition 2 - Resource based view Strategy driven by organisation firms exert influence of their environment if they have the right characteristics. The strategies needs to understand the firm and how there firm can be unique to shape the environment The set of assumptions the underpins porters work - The positioning approach to strategy 1. the purpose of the firm is to profit maximise 2. the ability to generate profit is determined by the level of competition faced 3. competition is a multi dimensional phenomena which happens at different levels in different businesses Porters prescriptive approach to strategy

Summary: Relationship between firm and business environment is crucial to strategy what does the firm to in relation to the world around them? Gateways to understanding strategy: 1. What we want to achieve and how? 2. Relationship of firm and environment The nature of the relationship depends on the levels of power between and within firms and their environments What are the different views of organisations?

Appearance (tangibles) Products, finances, facilities Personality (intangibles) Knowledge, people, experience, culture Where does the resource based view come from? Changes in the business environment Changes in our understanding of organisations changes in how competitive advantage can be gained and sustained constantly surfing the environmental wave repositioning (porter) Prahalad and Hamel's 3 Assumptions on the core competencies of the corporation Start with profit maximisation Importance of knowledge in orgs, building block on which products and processes are built 1. Increasingly dynamic and competitive world, survive al and success depends on uniqueness 2. Only LT sustainable source of uniqueness lies within the personality of the org - particular knowledge

3. Orgs should strive to ensure knowledge is constantly reviewed and updated to keep up to date - role of strategist

Prahalad and Hamel argue core competencies should deliver 3 things to org

What 4 criteria should a firms resources should be assessed on argued by Grant?

Summary: The competence focuses on the org as the key driver of strategy, not the environment sustainable competitive advantage is delivered by personality characteristics not by appearance the key question is what kind of orgs can adopt this type of strategic approach what is the culture of the org? vision embraced into employees, change the culture to satisfy key stakeholders relationships with customers and suppliers visions - resources and capabilities needed (does the business have the capacity to do so?) no change tarnishes brand image and reputation look long term - digital infrastructure, sustainability, green

L4 - Strategic Decision Making Why do things happen in strategy? Ways to interpret a strategy decision. Classical explanation - a way of interpreting a decision

Whittington model - that's the way we do it because that's the way its always happened

Mintzberg - understanding the nature of people and decision making in an org

Looking outside firm and history of organisation

Explaining the behaviour of individuals and firms is a complicated thing different schools of strategy will have different explanations of strategic behaviour How do firms make strategic decisions?

Porter - following one from analysis the 2nd step in the strategy process is strategic choice, strategists have 2 decisions to take: 1. competitive scope (where are you going to compete, which abet will you be in?) products or geography? a. broad b. narrow 2. Competitive advantage (how are we going to compete in these markets? what are unique and value position in the market) a. price b. non-price characteristics

The classical school critiques of generic strategies The classical school

Porter - need to be one thing or another, not good to be 'stuck in the middle' Thompson and Strickland sx- argue in modern competitive markets, companies must compete on price and non-price characteristics and therefore introduce 2 new generic strategies. (middle is the best place to be)

The evolutionary school critiques of generic strategies Henderson argues Porters approach because it assumes orgs can make strategic leaps between different areas on the grid. an org can make small adjustments but the market decides. The systemic school critiques of generic strategies Thurow rejects the choice between price and non-price characteristics and argue its between process and knowledge. the most important influence on decision making is the socio-economic circumstances of the firm i.e. the firm doesn't have a substantial choice of strategy.

The processual school critiques of generic strategies Mintzberg rejects all notions of deliberate strategic choice, he says this because combining the internal and external you are making a series of guesses: Internal: all you know about your firm is its history therefore will always be making decision based on part strengths and weaknesses not future strengths and weaknesses External: classical strategy involves predictions around the future. this is not sensible as all you know is the future will be different from the past. You can never be sure about the nature of the difference Summary: Theories of decision-making are dominated by the classical school and rational processes

L5 - Performance and Competitive Orientation Strategy being a social process/ activity Strategy is not carried out by firms but by people. What are 2 implications of strategy being a social activity? 1. Because people are complex and in perfect so will strategy 2. We are as people will be very influential to how they are as managers. Personality is transferred

3. How is strategy determined? internally and externally determined strategy is a human/social activity: how we are as individuals influences us as strategists - a processual argument Performance and competitive orientation refers to key issues that determine how an individual behaves strategically: Performance - focused on themselves/ org driven Competitive - focused on competitive environment/ environment driven

Performance orientation

Competitive orientation

L6 - Innovation and Optimisation

What does competition look like in a global world? The old argument the right firm with the right management with the right product will be successful Role of strategy is taking the organisation into its environment with confidence. however due to globalisation the power relationships are shifting from management towards the environment. New argument successful firms are those lucky enough to be in the right place at the right time The social settlement concept (Williams, et al,. 1995)

3 key variables of the social settlement concept:

overtime these change as economies go through differrent stages of development As globalisation increases so does trade, goods and services tend to go where social settlement is at its highest foreign direct investment flows tend to go where social settlement is at its lowest competition is based around social settlement

What is innovation and optimisation similar to porters generic strategies (what is the race to the optimal position?): compete by being better than the competition - lower proves better quality. do the same things as others but better (optimisation) compete by being different o the competition, unique products or services. never copy or imitate the competition. (innovation) What is Optimisation?

How to get to an optimal point?

What is innovation?

L7 - The International Context What is driving globalisation? Political Economical Social Technological What are the different elements of globalisation? The lit places an emphasis in 3 areas: 1. Material aspects of globalisation (e.g. flows of capital, trade and people) driven by: a. Physical infrastructure such as transport and banking systems b. normative infrastructure e.g. trade rules c. Symbolic infrastructure e.g. language 2. spatial/ temporal aspects of glob (e.g. increases in the spacial reach of actions) driven by: a. the internet b. round the clock trading 3. cognitive aspect of glob (e.g. purchasing patterns and opportunities) a. Glob is happening bc we perceive it to be

What are the 4 main definitions of globalisation Action at a distance Action in one occasion has increased consequences in other locations Time space compression Comms tech erodes the constraints of distance and time Accelerating interdependance

intensification of enmeshment between national countries and societies Shrinking world The erosion of political and geographic by economic activity Summary:

Porters Diamond Porters general approach is that strategy is fundamentally determined by the environment bracket (e.g. five forces analysis followed by choosing the correct strategy). This is also true in an international sense: the characteristics of the country are the biggest determinant of the strategy chosen. The characteristics can be understood and analysed through the diamond model: Factor conditions Demand conditions Firm structure, strategy and rivalry Related and supporting industries

Look at country conditions - if we go this country will we make profit levels we want. Anlyse coutry opetions and chose country to expand into sell or make. Relationship Strategies decided where we want to go but need to decide How do we get into a country: relationship strategy, rather than do everything ourself work with a partner with other orgs, e.g. mergers, acquisitions and joint ventures. they happen for 3 main reasons: Learning - about the country, culture and resources needed Cost minimisation and risk reduction - e.g. lower labour costs, different regulatory systems Market factors - international access and distraction and customer service. The Swedish Model Johanson and Wiedersheim-paul (1995) Risk - once we make decision to internationalise we are taking a big risk, therefore the best reason to address risk is slow and steady. Argue that international function by phone should be a slow process in order to minimise risks (particularly relating to the commitment of resources). They

argued that it should be a four step process: No regular exports - domestic company only Exports via agents - international relationship strategy Sales subsidiary - integrated international market activity Production in a foreign market - full integration of making and selling

Dunning's eclectic theory John Dunning (1995) underpinning of the theory is that you cannot be prescriptive in how you in internationalise, you have to find your own way and be nimble and responsive. Be emergent 3 different factors to take into account in making a decision on how to internationalise before you decide a country: Locational factors - (links with porters diamond, start with many countries and carry out analysis based on diamond you would come to rational conclusion) Benefits of making or selling in a country Internationalisation factors - How the org plans to implement its strategy and the implications for resources Ownership factors - How ownership and control is affected by the transfer of assets overseas Summary:

L8 - Leadership

is the strategy about continuity or change and how the leader must match the strategic vision. People make strategy so leaders influence them The Forbes formula for great leadership when acting strategically Recognising flaws and know there are ways to sort them:

The Adair Turner formula for great leadership when acting strategically About bringing 5 things to an org:

The Industrial society (now the work foundation) 6 core elements on how leaders need to behave when acting strategically: What it is that leaders to when being strategic comes from:

The Industrial society - staying on top of things

its not their job to know everything in org, its their job to make sure everything connects e.g. big picture The Industrial society - keeping the of responsive and innovative

Dealing with staff The Industrial society - fostering a culture personality characteristic of org, not how it looks to the outside world but how it collectively thinks, behaves and whats important to meet org objectives.

The Industrial society - dealing with company politics Mintzberg - orgs are political creatures who are f...