DO USE! Logelademaden Flashcards
(72 cards)
Strategy according to (Mintzberg 1987; S)
Plan:
1) Consciously intended course of action
2) “How to deal with a situation”
3) Made in advance
Example: (SWOT, Scenario planning, Regional strategies)
Slide definition: An intended course of actions which results in an explicit strategy. Formulation before implementation.
Ploy: 1) Maneuver that outwits opponent 2) all warfare is based on deception 3) Intended Example: Threat of price war (game theory)
Pattern:
1) Stream of actions
2) Consistency
3) Focus on core competency (intention to consistency)
4) Uncovering the core
5) Emergent and realised
Example: Uppsala (empiric study pattern)
Slide: Actual actions of an organization and the consistency of these. Intended or not.
Position:
1) May overlap with preceding P’s
2) Compete in the niche that generates rent (niche=a place with economic profits according to Mintzberg)
3) Linking internal competencies with external environment (based on core competencies and environment, where do we want to play?)
4) Playing in a niche to avoid competition
5) Don’t get stuck in the middle
6) Outside-in view on strategy
7) Intended and Realised
Example: 5 forces and Generic strategies
Perspective:
1) Inside-out view on strategy: how and where do we fit in the environment
2) Individuals united to common thinking/behavior (ingrained way of viewing the world)
3) Collective and consistent behavior
Example: Sense-making for strategy
Strategy as configuration / learning (S)
o Organization is viewed as a configuration of its characteristics
o Company’s strengths or weaknesses are determined in the context of a problem
• Thus, whether competencies are good/bad for a particular strategy is relative to the problem
o Strategy maintains stability and recognizes the need for change (major transformations)
o Close link between formulation and implementation
• Centralized power, flexible organization (start-ups as an example: founders create and implement strategy
o Framework for instance resource-based view
o Dynamic capabilities!!!!!!!!!!!
Multinational company (S)
o A firm that owns and controls operations in several countries and/or any public company that engages in international activities.
o Why care? – Global FDI increases exponentially
Drivers of company internationalization (Hitt et al. 2016; S).
Emil’s Hitt et al. notes:
o Need of specialized assets (resources)
o Capability building (capability to build new capabilities to compete)
o Intense competition at home (retaliation?)
o Economic growth
o Globalisation (respond to competition)
o Diversification (reduce risk)
o Economies of scale/scope
o Location advantages
o Experimental learning
o Techonology (scalability – born global)
o Internationalisation experience
o Target country culture and institutions: Distance between home and target countries (culture and institution)
Drivers of globalization (S).
Emil’s notes:
o Ease of communication
o Transportation time dramatically reduced
o Market liberalization (which goes in the other direction now)
o World Wide Web
o Convergence of tastes
Slides:
Technology - increased use and expansion
Liberalization - of trade and resource movements
Global products and customers (developing countries increasingly consume)
Global competition
Political changes
-In Eastern Europe, China etc.
Semi-globalization / regionalism (S)
o We’re not global, we are regional (emergence of regional blocs stalls globalization, cross-border economic integration is regional)
o Local adaptation – advantages of scale and scope without global exposure
Relationship between digitization and globalization* (Ghemawat 2017).
Digitalization can facilitate globalization in certain respects (e.g., by making it easier for small firms to export).
8 reasons for why digital technologies are insufficient in driving globalization forward. These include:
- Language differences, and national borders (flow on social media heavier national)
- E-commerce depends on physical barriers to trade
- Governments can interfere with digital flows: Net Neutrality revoked in US
- Positive correlation, environment is enabling and technology advancement. However, no need for China because of 3D printing. (Text: “Another common error is to conflate digitization with technology and to assert that all technological change is pushing in the direction of increased globalization. “
Difference between product and competitive strategies (S).
o Product strategy: Choices regarding company’s products in different geographical market
• Product mix and product adaptation in given markets
• Local responsiveness (customer tastes/needs differ)
• Global integration (Standardize, international strategy, cost-saving)
o Competitive strategy: Analysing source of competitive advantage, and locating parts of value chain in markets that can best enhance competitive position
• Sources of competitive advantage:
- Location advantage
- World-scale volume
- Global brand
- Access to supply and distribution channels
Product adaptation vs. product mix (S).
o Adaptation: Altering products to fit tastes (n.b. decoupling point)
o Mix: Offering different combination of products
When to pursue global integration and when local responsiveness (S)
o Global integration pursuit: 1) when cost pressure is high (we need benefits of EOScale), no to little variation in preferences (Commodities, transportation, Apple)
o Local responsiveness pursuit: when customer tastes and preferences differ or when it is too expensive to coordinate, OR legal requirements (due to shipping costs etc., McDonalds)
Multicountry vs. global competitive strategy (Whirlpool case; S):
• Global competitive strategy(=global integration, high cost pressure)
o Same competitors in many markets
o EOS
o Competitive strategy (value chain activity where is optimal)
• Multi domestic strategy (=local responsiveness)
o Autonomous subsidiaries (support activities in subsidiaries)
o Up-stream value chain mostly in home country, and down-stream is adapted
Whirlpool:
Different tastes in home market (US), EU and China (topload/frontload washing machines)
Government interference in China, saturated market in US, recession in EU
Cost pressure high, and local responsiveness pressure high transnational strategy
Global competition vs. global business (Hamel & Prahalad 1985; S):
o Global competition:
- Battle global competitors
- companies cross-subsidise national marketshare in pursuit of global brand and distribution positions
• If you are not present on given market, global competitor cross-subsidises from that market
o Global business: Global investments are made to achieve scale &
cost efficiency not available in the home market
- Different roles of different markets: Source at low-cost; maintain minimum scale;
retaliate against a global competitor etc
3 global competitive strategies and rationales for each (Hamel & Prahalad 1985; S):
a) building global presence (Uber)
1) access volume, 2) cross-subsidise to win world, 3) redefine cost/volume relationships, 4) first-mover advantage, 5) low-cost sourcing from location advantages
b) defending domestic position (=by going global, so I can lower my price eventually),
1) Spread costs, 2) gain retaliatory capability by gaining cross-subsidising capability from other market
c) overcoming national fragmentation (open R&D in Holland to catch clever students, even though we did not have operations in Holland before = global competitive strategy)
1) Reduce costs at national subsidiary, 2) rationalize manufacturing, 3) distribute decision-making across subsidiaries
Regional strategies:
a) home base:
o Up-stream activities and support activities are in home-base (centralized), but down-stream are also internationalized (sales divisions)
o Global integration, centralization, EOS, relatively (low level of diversication vs. risk of uncertainty) low risk and high shipping costs from home region.
b) portfolio:
o Up-stream activities and support activities are in home-base (centralized), but some up-stream activities, operations (including manufacturing), and sales (down-stream) are also internationalized. Still production at home.
o Fast-to-market growth in non-home market, high risk in FDI, matching currencies (economic exposures minimized)
c) hub:
o More home-regions, some as stand-alone divisions, (up-stream activities the same in different regions) and more foreign regions (only sales divisions)
o Purest form: multi-“regional” (multi-home-base)
o Challenge: achieving balance between customization and standardization.
d) platform
o Support activities in the value chain are shared and consolidated.
o Cost-efficiency allowing customization atop common platforms (decoupling points)
o Ideally invisible to company’s customers (example: shared service center)
e) mandate
o Cousin of platform strategy (regions specialize as well as have scale)
o Centers of excellence that are responsible for making specific know-how and producing, which is available throughout the organization
• … and have decision-making power
• Need global network to succeed
o Pit-falls: 1) too much power highjacking of overall strategy, 2) specialization to the extreme creates inflexibility (disruption of single location fucks entire network)
Stages of a company’s commitment to a country (Johanson & Vahlne 1977; S)
1) Sales via agents
2) Sales subsidiary
3) Production facilities
Psychic distance (Johanson & Vahlne 1977; S).
• Theme : entry into dissimilar countries
o Factors complicating the flow of information from and to the market
o Sum of differences in 1) language, 2) education, 3) business practices, 4) culture.
Institutional distance (S).
• Regulative
o Measured in: antitrust regulation, political transparency, intellectual property protection
• Normative
o Measured in: government transparency, corruption, political risk
• Cognitive-cultural
o Based on Hofstede’s dimensions
State and change aspects of the model (Johanson & Vahlne 2009; S).
Difference between new and old model: all about relationships, psycic distance is captured in “knowledge opportunities”
• State: The now
• Change: Outcome of current activities
State: Knowledge opportunities (Market knowledge, relationships help identity opportunities) Network positions (internationalise through network in order to improve network
Change:
Relationship commitment decisions (Increase/decrease commitment, augment or develop new relationship)
Learning, creating trust-building
Psychic distance paradox: definition, causes and solutions (O’Grady & Lane 1996; S).
• Definition: overestimation of psychical closeness
o Overlooking important differences (US Canada)
- Cause: Overestimated similarity
- Solution: 1) Foreign markets are foreign. 2) Interpret market data correctly (managers with experience). 3) Check assumption.
Born globals: definition and any 2 factors affecting early internationalization (Hitt et al. 2016 from class 1; S).
o Definition: Firms that become international (resources & sales) at or shortly after inception
o 2 factors affecting early internationalization:
1) Scalability (often software, low marginal cost)
2) Small (agile/flexible)
3) Ease of communication
4 subsidiary roles (Bartlett & Ghoshal 1986; S).
Matrix: Competence of the subsidiary vs. Importance of local market
Implementer: what there is most of - Market potential is limited - Subsidiary resources are limited - Earn money in the market =Efficiency is key
Contributor:
-Unimportant market
- Subsidiary with distinctive skills
- use the subsidiary’s skills company-wide
=Often in R&D in clusters even though market is unimportant
“Black hole”:
- Important market
- Small/undeveloped subsidiary; local rivals are better.
- “Spy” on competitors: develop a full-fledged business
Strategic leader:
- Important market
- Competent subsidiary
- Not only implement, but also develop corporate strategy
Value of competencies of upstream vs. downstream subsidiaries for the organization (S)
o Upstream: “
Universal” (transferable to other markets, can be centralised), value is higher => R&D and operations
o Downstream:
Competence is local-for-local, less valued (marketing & sales)
Hierarchy vs. heterarchy (Birkinshaw & Morrison 1995; S)
Relationship between HQ and subsidiary
- Hierarchy: “Do things right” – critical resources at the top. Centralised. Brings transaction costs down.
- Heterarchy: “Do the right thing” – Autonomy/decentralized – resources are dispersed throughout the organization
Subsidiary autonomy (S).
“(…) degree to which the foreign subsidiary of the MNC has strategic and operational decision-making authority”
