2. WHY DO STRATEGIC MANAGEMENT PRACTICES DIFFER? u National context - includes national culture, the country’s available labor and other natural resources

4. SOCIAL INSTITUTIONS u Include the family, educational, economic, and the political and legal systems u Closely linked with national and business culture

5. THREE TYPES OF ISOMORPHISM u Coercive u Mimetic u Normative

6. NATIONAL AND BUSINESS CULTURE Characteristics of national and business culture influence strategic decision making both directly and indirectly

7. THE NATIONAL CONTEXT AND KEY BUSINESS PRACTICES u Explanations for the existence of companies u Capital markets/sources of funds u Government policies/legislation u Labor markets u Top management characteristics

8. EXHIBIT 7-2 WHOSE COMPANY IS IT?

9. RESOURCE POOL The resource pool represents all the human and physical resources available in a country - both from natural and induced factor conditions

10. COMPARATIVE STRATEGY FORMULATION: EXAMPLES FROM AROUND THE WORLD u US model: used as basis for comparison – Represents the attempt of a rational decision making process

11. THE US MODEL OF STRATEGY FORMULATION 1--Define the business 2--Develop a mission statement 3--Define objectives 4--Assess the company's situation: SWOT, competitors' actions 5--Craft strategy content

12. DEFINING THE BUSINESS: US/KOREA COMPARISON u US: Few limitations u Korea: More coercive institutions u Large corporations and national economic policy – A special status to engage in business

13. DEVELOPING MISSION STATEMENTS: DEFINING THE ORGANIZATIONAL DOMAIN u The mission defines the domain of the organization

14. US MISSION STATEMENTS u Often emphasize market issues closely related to key elements of success in their respective industries

16. JAPANESE MISSION STATEMENTS u Japanese managers prefer more abstract mission statements than do their US counterparts

17. FRENCH AND BRITISH MISSION STATEMENTS u British mission statements: focus on strategic issues emphasizing shareholder returns u French mission statements: reflect a national context in a social democracy

18. EX 7.4

19. DEFINING OBJECTIVES u National differences exist mostly in priorities – Financial or strategic

21. EX 7.6 U.S. AND JAPANESE FINANCIAL AND STRATEGIC OBJECTIVES Least ImportantMost Important

22. WHY? THE INSTITUTIONAL ENVIRONMENT u US: purpose of the corporation to maximize shareholder wealth u US stockholders: emphasize short- term transactions and dividends u US: clear link between earnings per share and stock prices

23. u If managers fail to emphasize short term profits and stock prices fall, the managers loose personally u If companies are undervalued on the stock market, they are vulnerable to takeovers

24. JAPANESE SITUATION u Japanese investors: less volatile than US investors u Companies do not pay dividends as a percentage of profits u Japanese managers do not have stock options compensation plans

25. u Consistent dividends reassure the Japanese stockholder of a company's health u Stockholders are not the most important stakeholders u Lack of outside directors to look out for the welfare of the stockholder

26. JAPANESE CULTURAL VALUES u A belief in substantial savings u Invest for the future u Persistence to achieve goals

27. ASSESSING THE COMPANY'S SITUATION u Management's assessment of the situation faced by their companies u US managers favor techniques such as the SWOT and competitive analyses

28. GERMAN AND BRITISH EXAMPLES u Successful companies from both countries identified the same key success factors u Differences: the organizational characteristics that managers believe achieve the key success factors

29. EX 7.9 MOST IMPORTANT PERFORMANCE CRITERIA

30. WHY? u Different resource pools u Different cultural values and norms u Different institutional biases regarding organizational strengths

31. ASSESSING THE ENVIRONMENT: US AND JAPANESE APPROACHES u Both seek information concerning environments u Japanese – More information – Use information differently – Opportunities a catalyst to action

32. CRAFTING STRATEGY CONTENT: US AND JAPANESE APPROACHS u US: Logical-deductive u Japanese: Incremental/inductive – Trial and error adjustments to environmental and competitive conditions

33. NATIONAL DIFFERENCES IN STRATEGY CONTENT: THREE EXAMPLES u Examples of "typical" strategy content or game plans of companies from various nations

34. JAPANESE STRATEGIES: GENERAL ORIENTATIONS JAPANESE STRATEGIES: GENERAL ORIENTATIONS u Compete with a high ratio of products where the company can add value with knowledge u Emphasize production to improve productivity u Use the resources of networks

35. JAPANESE PRODUCT/MARKET STRATEGIES u Carefully select product market u Gain market share/customer loyalty with low prices u Create value with better products u Move upscale and raise prices

36. u Export manufacturing expertise u Reinvest profits to go global or enter new markets

37. US, JAPANESE, AND BRITISH FIRMS IN THE UK u British and US companies: – Both dominated by financial and efficiency concerns – British firms focused on cost reduction – British firms emphasized their brand recognition

38. u Japanese companies: – Dominant goals: enter new and growing market segments – Entered the low end of the market, moved to the mass market, then to high value- added segment

39. EX 7.10 MARKET SHARE STRATEGIES

40. KOREAN STRATEGIES: Responses to a Changing National Context u License a foreign technology u Find ways to make the product better and cheaper u Enter the market late u Be an OEM manufacturer u Move to own brand exporting

41. CONCLUSIONS u Understanding different approaches to strategy – Helps to deal with international competitors – Helps a company become better collaborators