1. Global Strategy Mike W. Peng c h ap t e r I I Copyright © 2009 Cengage. PowerPoint Presentation by John Bowen, Columbus State Community CollegeAll rights reserved. Strategizing Around the Globe Part I: Foundations of Global Strategy Global Strategy Gek Sintha Mas Jasmin Wika, S.E., M.Sc. chapter 1 1

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

3. HEARTBRAND ADVERTISING Copyright © 2009 Cengage. All rights reserved.1–3

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5. SO, WHAT’S THE DIFFERNCES??? Copyright © 2009 Cengage. All rights reserved.1–5

6. HEARTBRAND Copyright © 2009 Cengage. All rights reserved.1–6

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8. 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 1–8 GLOBAL STANDARIZATION STRATEGY LOCALIZATION STRATEGY

9. Pharmaceutical Company Copyright © 2009 Cengage. All rights reserved.1–9

10. Direct-to-consumer pharmaceutical advertising LIPITOR Pharmaceutical company to promote its prescription products directly to patients The U.S. and New Zealand Copyright © 2009 Cengage. All rights reserved.1–10

11. Copyright © 2009 Cengage. All rights reserved.1–11

12. Copyright © 2009 Cengage. All rights reserved.1–12 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

13. Copyright © 2009 Cengage. All rights reserved.1–13

14. Copyright © 2009 Cengage. All rights reserved.1–14 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

15. Copyright © 2009 Cengage. All rights reserved.1–15 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 unbalanced  Sacrifices local responsiveness and global learning  Ignores how domestic firms compete with each other and with foreign entrants  Traditional global strategy is only appropriate for large MNEs in developed countries  It is dangerous to ignore less developed economies

16. Copyright © 2009 Cengage. All rights reserved.1–16 Why Study Global Strategy? Job and career aspiration opportunities Awareness of what is going on in the world Avoid downside risks of globalization

17. Copyright © 2009 Cengage. All rights reserved.1–17 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

18. Copyright © 2009 Cengage. All rights reserved.1–18 What is Strategy? Cont’d  Strategy should give coherence to decisions and actions  Managers must exert effective strategic leadership

19. Copyright © 2009 Cengage. All rights reserved.1–19 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

20. Copyright © 2009 Cengage. All rights reserved.1–20 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

21. Copyright © 2009 Cengage. All rights reserved.1–21 The Essence of Strategy Figure 1.2

22. Copyright © 2009 Cengage. All rights reserved.1–22 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 experimentations  To establish the temporal (time-related) and geographic limits of an existing theory Understanding the difficulty of strategic change

23. Copyright © 2009 Cengage. All rights reserved.1–23 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

24. Copyright © 2009 Cengage. All rights reserved.1–24 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

25. Copyright © 2009 Cengage. All rights reserved.1–25 The “Strategy Tripod” Three Leading Perspectives on Strategy Figure 1.3

26. Copyright © 2009 Cengage. All rights reserved.1–26 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

27. Copyright © 2009 Cengage. All rights reserved.1–27 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?

28. Copyright © 2009 Cengage. All rights reserved.1–28 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)

29. Copyright © 2009 Cengage. All rights reserved.1–29 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

30. Copyright © 2009 Cengage. All rights reserved.1–30 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