Project 4

12/10/22, 3:28 AM

Page 1 of 6https://learn.umgc.edu/content/enforced/720963-001153-01-2228-O…lSessionVal=G8N7sgFaDuQr9y950OuOIkZtR&ou=720963&d2l_body_type=3

There are two major topics covered in Week 5:

1. Competing in International Markets 2. Selecting Corporate Level Strategies

Understanding both of these topics will be critical for doing well in your upcoming projects.

Globalization is the process by which businesses develop international influence or start operating on an international scale. International strategies are plans for globalization. Michael Porter is back this week, with his Diamond Model. This model is used when a company is trying to determine if their success on the home front (in their home country) can be translated into international success. No company starts out globally – everyone started somewhere. The question is, why do some companies make the global expansion look easy, while others fail dismally? The four factors to consider are below, and can also be found in section 7.2 of the eBook (The Saylor Foundation, 2014, Chapter 7, .7.2 Drivers of Success and Failure when competing in International Markets).

 

 

 

 

 

 

 

 

 

 

Technology, as a driver of growth is discussed in the blog

by Brinker (2014). This article discusses how technology and strategy are intertwined. Traditional strategic managers would view technology as a tool to help execute a strategy. Brinker proposes that we are missing great opportunities when we do this. We should also use technology to spark ideas about strategy (para. 13). In 2020, we saw this everyday amidst the COVID stay-at-home orders. Zoom was a popular platform that many companies used to help their teams connect from a distance. Creative strategic managers are now using Zoom to spark innovative ways of getting business done while people are forced to work from home.

It may seem premature, but it is wise to start preparing for Project #4 (at the end of this course). For Project #4, it will be important for you to understand how to identify opportunities and threats on an international level. These can also be found in Chapter 7 of the eBook.

12/10/22, 3:28 AM

Page 2 of 6https://learn.umgc.edu/content/enforced/720963-001153-01-2228-O…SessionVal=G8N7sgFaDuQr9y950OuOIkZtR&ou=720963&d2l_body_type=3

Also for Project #4, you will have to select strategies for your focal company. In the Tools and Techniques from last week, you were given some tools to help in this selection (such as the BCG matrix). This week’s strategy selection tools continue with the Grand Strategy Matrix and the “grand-daddy” of them all, the QSPM. If you need extra explanation on the Grand Strategy Matrix, scroll down to the bottom of these Notes. The QSPM is a tool that uses information from a lot of your prior matrices and will be used in Project #4 to help you prioritize strategies. One of the tools provided for you has links to these other matrices all on one page to assist in compiling your QSPM.

QSPM Examples: It sometimes helps to see examples of a QSPM that has been completed. Here are some pointers to remember about the QSPM, that you may not be apparent in these examples:

The Weights for the QSPM come from your EFE matrix (from Project #2) and your IFE matrix (from Project #3 - due next week).

The strengths, weaknesses, opportunities and threats come from your SWOT analysis (OT from Project #2 and SW from Project #3).

If you decide that a strength, weakness, opportunity or threat will have no impact on the strategy you are comparing give it a zero or a dash (-). IF YOU ASSIGN A ZERO OR A DASH TO ONE STRATEGY, YOU SHOULD ALSO GIVE THE OTHER STRATEGY A ZERO OR A DASH.

Here are two completed examples: QSPM Whole Foods and QSPM Example - Retail Store

Project #3

This project is due in Week 6 (next week) on Tuesday at 11:59 Eastern Time. The time that is required to complete this project is substantial. You will likely run out of time if you try to start this project next week. The two sections that I recommend you get out of the way this week are:

Section II: requires you to complete a partial SWOT (SW), IFE Matrix, and Grand Strategy Matrix, all of which you know how to do at this point. Scroll to the bottom of these notes to see more guidance regarding the Grand Strategy Matrix. These guidelines are very important for both projects 3 and 4.

Section IV: requires financial ratios be completed. You covered these earlier in this course.

References

Brinker, S. (2014). Strategy, marketing, and technology are all intertwined. Chiefmartec.com. Retrieved from https://chiefmartec.com/2014/01/strategy-marketing-technology-intertwined/

The Saylor Foundation. (2014). Mastering Strategic Management. Retrieved from https://learn.umgc.edu/d2l/le/content/525837/viewContent/18557183/View

 

Week Five Reading Outline: These Reading Outlines appear each week in Dr. Kathy's Notes. They are for your personal study use. You do not post the answers to these questions in learning activities. Completing this reading outline is optional and not for credit. While they are not for credit, completing these each week should help you organize your

12/10/22, 3:28 AM

Page 3 of 6https://learn.umgc.edu/content/enforced/720963-001153-01-2228-O…SessionVal=G8N7sgFaDuQr9y950OuOIkZtR&ou=720963&d2l_body_type=3

course materials and organize your notes according to topics as we cover them in class. This will be very useful to you in all weeks of this course, especially in the Weeks that a Project or Discussion are due.

Here's how to use this outline to your advantage: In creating the reading outline start with themes for the week as your main headings. As you read, answer the questions and note where you got the answers from in the class reading (including page or paragraph numbers). When you go to answer your project or discussion questions, refer to these notes and develop the themes as part of your answer.

Week 5:  Competing in International Markets

1. Explain why some companies operate in the global marketplace using the Diamond model 2. What are the benefits of operating in the global marketplace? 3. What risk do companies face with operating in the global marketplace? 4. What are the various types of risk associated with operating in the global marketplace? 5. What is outsourcing?  What are the benefits of outsourcing? 6. Explain different international strategies. 7. Differentiate between the various options for entering the global marketplace?

 

Week 5:  Selecting Corporate-Level Strategies

1. Why do some company concentrate on a single industry while others focus on multiple industries? 2. Describe vertical integration and explain why companies use this strategy. 3. What are two types of diversification and when should they be used? 4. Why and how would a company retrench or restructure? 5. What is horizontal integration and identify two reasons why horizontal integration fails? 6. What are the three concentration strategies?  What are examples of each strategy? 7. When is a concentration strategy used? 8. What is a vertical integration strategy? 9. What is backward vertical integration strategy?

Grand Strategy Matrix - VERY IMPORTANT FOR PROJECTS #3 and #4

 

The Grand Strategy Matrix is a tool for formulating alternative strategies.  An organization would be positioned in one of the four strategy quadrants.  Within an organization, its divisions could be positioned, however you will just plot the company overall for Project #3.

FOR PROJECT #3 (due next week), you will determine the positioning of your Focal Organization.

The Grand Strategy Matrix is based on two evaluative dimensions:

Competitive position on the x-axis Market (Industry) growth on the y-axis. (Note the biggest mistake students make is that they calculate their focal company's growth rate. You should calculate the INDUSTRY growth rate for the Grand Strategy Matrix.)

12/10/22, 3:28 AM

Page 4 of 6https://learn.umgc.edu/content/enforced/720963-001153-01-2228-O…SessionVal=G8N7sgFaDuQr9y950OuOIkZtR&ou=720963&d2l_body_type=3

Competitive Position for Project #3 - You will use CSI Market to determine the competitive position:

1. Go to CSI Market at this link: CSI Market

2. On the top of the home page, type your focal company name in the "Company Lookup" - green search button

3. Your company's page will appear. Click on the link next to your company's industry. (Example: on the Exxon Mobil page, click on Oil & Gas Integrated Operations).

4. Look at the Revenue for your company.

5. Calculate the market share for your company by dividing your company's revenue by the total revenue for the industry (scroll to the bottom to see the total industry revenue).

6. Look for the company on the industry list with the highest revenue. Calculate the leader's market share.

7. Compare your company's market share to the industry leader's market share. If your company's market share is at least half the size of the industry leaders market share, your company is in a strong competitive position. If your company's market share is not half of the industry leader's market share, your company is not in a strong competitive position. (Example: your company's market share is 3% and the industry leader is at 11%. Your company is NOT in a strong competitive position.)

Market (Industry) Growth for Project #3 - You will continue to use CSI Market to determine the competitive position. NOTE: This measures growth of the industry, not growth of your focal company! In the illustration below, "Market Growth" means "Industry Growth"!

8. While still on the Industry page of CSI Market, look to the right hand side of the page. Click on Growth Rates.

9. Look for the Year/Year Revenue Annual Growth (at the end of Fiscal Year) for both 2020 and 2021. Take the average of those two years. The average that appears there automatically is the 2022 average; use the drop down arrow to get the 2021 and 2020 averages.

10. There is an assumption that any industry that has average annual growth in sales that exceeds 5 percent is considered to have rapid growth.  

Once you have identified the competitive position and the market growth, decide which quadrant your company should fall in. Possible corporate strategies for an organization are listed in sequential order of attractiveness in any of the quadrants. Note Quadrant I starts at the top right hand quadrant.

Quadrant I - Strong Competitive Position in Rapid Industry Growth (top right quadrant)

Organizations that fall within quadrant I are in excellent strategic position.  What this means is that these companies, continued concentration on current markets (market penetration and market development) and products (product development) is an appropriate strategy.   A company in quadrant I would not want to shift to another quadrant because the company’s competitive advantage would be at risk.  Alternatively, a company would consider backward, forward or horizontal integration as an effective strategy.  If the company is overly committed to a single product, then related diversification may be an alternative to reduce the risk

12/10/22, 3:28 AM

Page 5 of 6https://learn.umgc.edu/content/enforced/720963-001153-01-2228-O…SessionVal=G8N7sgFaDuQr9y950OuOIkZtR&ou=720963&d2l_body_type=3

associated with having a single product.

Quadrant II - Weak Competitive Position in Rapid Industry Growth (top left quadrant)

Companies that fall within quadrant II, would need to evaluate its current approach to the marketplace.  The industry may be experiencing growth that it is likely the company is not able to compete effectively.  First, the company would need to determine why it is ineffective and how to change to improve its competitiveness.  An intensive strategy is the best option.  However, if the company does not have a distinct competitive advantage, it might want to consider horizontal integration.  An alternative would include a divestiture or liquidation, which would provide the funds to pursue other ventures.

Quadrant III - Weak Competitive Position in Slow Industry Growth (bottom left quadrant)

Companies that fall within this quadrant have slow-growth and have weak competitive positions.  A company in this quadrant has to make a quick decision about making very fast and very dramatic changes because of the potential for further decline.  With a company in this quadrant, retrenchment or diversification needs to be considered.  Options are either liquidation or divestiture.

Quadrant IV - Strong Competitive Position in Slow Industry Growth (bottom right quadrant)

Companies that fall within this quadrant have slow-growth but a strong competitive position.  A company in this quadrant can diversify with a strong possibility of growth.  Such a company typically has high cash-flow and limited internal growth needs so diversification (related or unrelated) can be pursued. 

12/10/22, 3:28 AM

Page 6 of 6https://learn.umgc.edu/content/enforced/720963-001153-01-2228-O…SessionVal=G8N7sgFaDuQr9y950OuOIkZtR&ou=720963&d2l_body_type=3

Adapted from David and David (2017).  Strategic Management Concepts and Cases:  A Competitive Advantage Approach.

===============================