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Hull University Business School
Connected Thinking!
Business Strategies 2019
Dr. Giles A. Hindle
600552
Assignment 2 and International Strategy Week 8 Session B
Dr. Giles A. Hindle E: giles.hindle@hull.ac.uk T: +44 1482 463 457
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International Strategy
Assignment 2 – full briefing available on Canvas
» Making and implementing strategy within organisations has always been a challenging task. There are many factors which affect how we go about conducting strategy projects. Some factors are ancient, like competition and culture, and some factors are contemporary, like the internet and social media.
» Choose TWO such factors which you find interesting and relevant. Discuss how they impact upon the practice of making strategy.
» When thinking about the practice of making strategy, you may consider some of the following aspects:
– Conducting strategy projects – for example, the 5 steps of Assignment 1.
– The implementation of strategy – for example, making action plans and managing change within organisations.
– Business strategies – the actual strategies themselves – for example, the decision to pursue cost leadership or the decision to sell goods online.
» This is an academic essay, so you must present your own argument and you must support your argument with relevant evidence from the literature. More briefing on essay writing will follow in another lecture.
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Drivers of Internationalisation (1)
Source: Adapted from G. Yip, Total Global Strategy II, Financial Times Prentice Hall, 2003, Chapter 2.
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
National Advantages: Porter’s Diamond
Source: Adapted with permission of The Free Press, a Division of Simon & Schuster, Inc., from The Competitive Advantage of Nations by Michael E. Porter.
Copyright © 1990, 1998 by Michael E. Porter. All rights reserved.
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
Why do some nations succeed and others fail in international competition?"
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Images from: https://en.wikipedia.org/wiki/Cinema_of_the_United_States; https://en.wikipedia.org/wiki/Bollywood; https://en.wikipedia.org/wiki/Cinema_of_Nigeria;
https://en.wikipedia.org/wiki/Flag_of_China
The Film Industry
Four International Strategies (1)
Export strategy
• Leverages home country capabilities, innovations and products in foreign markets
• Used when pressure for both global integration and local responsiveness is low
• Suitable for companies with strong brands (e.g. Google)
• The key risk is a home country-centred view in contrast to skilled local rivals
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
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Multi-domestic strategy
» Maximises local responsiveness – different product
offerings for different countries
» A low level of international co-ordination
» Organisation is like a collection of relatively independent
units
» Commonly found in marketing-orientated companies (e.g.
food companies)
» Risks include manufacturing inefficiencies and brand
dilution
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
Four International Strategies (2)
Global strategy
» Maximises global integration with little or no local
adaptation of products/services
» Standardised products are deemed to suit all markets and
efficient production is emphasised through economies of
scale
» Geographically dispersed activities are centrally controlled
from headquarters
» Common for commodity products (e.g. cement) but also
might include IKEA
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
Four International Strategies (3)
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Transnational strategy
» Complex strategy that maximises local responsiveness and global co-ordination
» Aims to maximise learning and knowledge exchange between dispersed units
» Efficient operations but products/services adapted to local conditions
» Hard to achieve but General Electric is a possible example
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
Four International Strategies (4)
The CAGE framework
Cultural Distance
– differences in language, ethnicity, religion and social norms
Administrative and
political distance – compatibility of administrative,
political or legal traditions
Geographic Distance
– not just miles but also aspects such as size, sea-access and
the quality of communications
Economic/wealth Distance
– wealth and income differences
Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved
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Competitive Characteristics
• Market attractiveness to the new entrant
• The likelihood and extent of defender’s reaction
• Defenders’ clout – the relative power of defenders to fight back.
Source: Reprinted by permission of Harvard Business Review. Exhibit adapted from ‘Global gamesmanship’ by I. MacMillan, S. van Putter and R. McGrath, May 2003.
Copyright © 2003 by the Harvard Business School Publishing Corporation. All rights reserved.
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
Size of bubble indicates defender’s relative clout
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Modes of International Market Entry
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
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Organic Development,
Mergers, Acquisitions &
Alliances
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Organic Development
Where a strategy is pursued by building on and developing an organisation’s own capabilities. This is essentially the ‘do it yourself’ method:
»Knowledge and learning can be enhanced »Spreading investment over time – easier to finance »No availability constraints – no need to search for suitable partners or acquisition targets »Strategic independence – less need to make compromises or accept strategic constraints »Culture management – new activities with less risk of a culture clash
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
Acquisitions, Alliances & Organic Development
Johnson, W hittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the W eb, 10th ed., ©Pearson Education Ltd. 2014
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Do the firm’s resources and
capabilities fit the needs of
the current strategy? YES INTERNAL
DEVELOPMENT
NO
Contract or inter-firm
combination? • Parties’ level of agreement
over the value of the
required resources
HIGH
LOW
Alliance or acquisition? • Desired closeness with
resource provider
CONTRACT
HIGH
LOW ALLIANCE
ACQUISITION
Choosing the Right Growth Path
Contemporary Strategy Analysis, 9th Ed. © Robert M. Grant , John W iley & Sons Ltd., 2016