Tut 5 – Strategy Planning Framework: Corporate & Business Strategies Strategy Formation Mgt Tools Environment Scanning Scenario Planning Game Theory Conceptual Mapping Country Assessment Strategy Planning Corporate Strategy Planning Business Level Planning Strategy Implementation Planning & Execution Internationalisation Process Corporate Level Configuration & Coordination Foreign Market Strategies evaluation & selection Leadership, innovation & governance Organisational Design & Control Country Strategy Dev Here now Last Week

Strategy Development Orientation Emergent Emergent – evolves from continuously improving from the past strategies Deliberate Deliberate – strategically focused & intended

Corporate Strategy Organisational Wide Strategy Business Strategy Organisational Breakdown Strategies by Business Units Strategy Development Orientation HQ International

Corporate Strategy Formation 1.Choosing which international businesses to be in, depends on: Capacity to complete internationally Capacity to manage entry barriers o Forex / currency risks o Target countries’ PEST risks 2.Choosing corporate parenting approach – how HQ manages IB in order to create shareable value add or increase value to HQ Value adding portfolio management: o IB units that creates value o Divest from IB that has no value add to HQ IB value to HQ value to

Corporate Strategy Formation 3.Choosing strategic integration approaches Forward integration – increasing control closer to target customers Backward integration – increasing control of suppliers Horizontal integration – increasing control over competitions  Influences 4.Choosing market entry and development approaches: JV, retrenchment, divestment, liquidation, industry to product/service diversification considerations that would influence the modes of entry or growth expansion in target countries  Influences 5.Choosing product development approaches

War Game Positioning Corporate Strategy Considerations 1.What business to be in? 2.What corporate parenting approach? 3.What control criteria/integration approach? 4.What market entry & development options? 5.What product development options Global & in Country Market Share capture: WAR GAME thinking in developing IB Strategies of MNCs

Business Strategy Corporate Strategy Different BU’s Business Strategies Different BU’s Business Strategies Strategic Business Unit (SBU) Strategy Is deployed by many Is deployed by one Also called competitive strategies How each BU seeks to: compete in its chosen markets sustain international competitive advantage How org coordinates BUs or strategic projects to: compete in its chosen markets sustain international competitive advantage same

Business Strategy Corporate Strategy Different BU’s Business Strategies Different BU’s Business Strategies Strategic Business Unit (SBU) Strategy SAME GAME strategy - understand competition rules to win NEW GAME – changing competition rules to win INSIDE OUT strategy - – using internal strengths in strategies Orientation Cost leadership Differentiation Focus cost leadership Focus differentiation Efficient driven Quality driven Innovation driven Customer Responsive

New Game Strategic Positioning 1.Aim for industry foresight & intellectual leadership Understand the external drivers of new markets & industries Identify the opportunity scenarios of new markets and industry developments 2.Have strategies for exploiting the new markets/industries by developing & using CORE COMPETENCIES (which are strategic services, often technology enabled these days) to dominate in new markets/industries 3.Establish your competitive market position and share targets Hamel and Prahalad say strategy is about “stretch” and “fit” ie stretching resource position but fit in to organisation’s current growth and function. Hamel and Prahalad say strategy is about “stretch” and “fit” ie stretching resource position but fit in to organisation’s current growth and function.

Sustainable Strategic Positioning Strategic Positioning Changing the Competition through Innovation Creating Core competencies (strategic services) that: 1.Provides access to a diverse markets 2.Gives significant value to customers 3.Difficult to imitate by competitors ResourcesResources Capabilities Hamel and Prahalad ‘s “stretch” and “fit” strategy by creating innovative core competencies

Business Strategy Formulation Business Unit Planning Focus: How to compete in chosen regions/countries’ markets Business Strategy Planning Options 1.Same vs New Game 2.Inside out vs Outside in 3.Generic strategies  Porter’s model - broad or specific focus at cost/differentiation Hill & Jones’ model – efficiency (cost), quality, innovation & customer responsiveness

Functional Strategies Corporate Strategy Different BU’s Business Strategies Different BU’s Business Strategies Strategic Business Unit (SBU) Strategy SBU or BU strategies deployment by functions Functional Strategies

Correlation Between the 3 levels of Strategy Planning Corporate Level Business Unit Level Functional Level Org Scope & Corporate parenting structures Product/Market or Market/Product Strategies in Countries/Regions Implementation review at program/project levels Performance Management: Variance (Actual – Planned KPIs) Corrections at the appropriate 3 levels

Diversification Approaches Industry diversification strategy Business lines diversification strategy Breaks down to ID which businesses with each industry of interest Diversification strategies define: 1.What businesses should the firm be in? 2.How can the HQ manage the different business lines? Goal: Create wealth or value-add via: 1.Economies of scale – more for less 2.Economies of scope – reuse 3.Optimisation of capital 4.Marketing power increase 5.etc

Case Dev Assignment & Tutorial Tasks Case Development Tips Task 1 Task 2

Case Development Tips 1.Pick a company planning or already achieved its internationalisation goal/s MAKE SURE there are NO written case studies about your company & internationalisation intent 2.Which internationalisation phase and unit topics/concepts are you orientating your case story writing and Q&As ? a)Make sure the case story contain info that associates with your case Qs – see existing case readings for example of how this can be accomplished b)Follow the unit guide’s guidelines for case development c)Conclude how the answers to your Q would lead to what next step recommendations

Tutorial Task 1 WAR GAME strategic positioning for: 1.Conquering MARKET SHARE of cash flows NOT product sales 2.Using cash flows from one market/country to subsidise market share battles in other markets/countries 3.Attacking competitors when most vulnerable to a cash flow siege 4.Taking aggressive NOT defensive strategies You are executives of one of the following world leading insurance companies (Allianz, AXA, AIG, China Life, ING, Zurich) with different mixes of commercial and personal insurance around the world (some more domestic orientated). Get your team to identify potential war game strategies that might assist them in gaining market share in an existing market of a chosen competitor (from the list above) or in entering into a new market others might also want to enter. Present their strategy and justify it. What are the key lessons and challenges when using this approach?

1.List one example of same game strategy and one potential new game strategy for each of the following organisations going international: Tertiary education provider Insurance company Bank Packaged food company Beverage company (e.g. water, softdrink, coffee, tea etc) Computer software company One more organisation of your choice 2.List potential value propositions (what benefits/how delivered/how benefit measured) for your customers if they follow your proposed new game strategy How might Hamel and Prahalad’s idea of strategy “fit” (match your products/services, systems and processes short term to what you are good at) versus “stretch (strive long term to do something different and better than your competitors) impact on your strategic choice of same game or new game? Tutorial Task 2: Tutorial Task 2: Same Game versus New Game approach