reflect essay
ccc777
Week11Slides.pptxWeek 11
BUSI7280 International Strategic Management
1
What is strategy?
A roadmap to a goal
Many easily understood examples
Military, sports contest strategies based on conflict
Career and relationship strategies (maybe) more co-operative.
Consumer parking strategies
A coherent set of actions based on a philosophy
Think of examples of your own application of strategic thinking.
In what context was this?
On what philosophy was it based?
How did you implement it?
What were the results?
A few minutes to make notes and then small group discussion.
Use of strategic thinking in your life.
4
Academic commentary
Lots of data – costs, sales and inventory forecasting, production levels, market performance - to tell us what to do.
BUT how does this get simplified enough to make decisions?
Operational –v- strategic decision making
Dominated by economic analysis
5
Strategy and globalisation
Globalization provides a context of multifaceted inter-dependence.
Strategy may provide a way to link the business/organization and this context.
Strategy may provide a means of making sense of the complexity.
Some examples
HBS discussion of Enel’s transformation
https://hbswk.hbs.edu/item/how-a-coal-polluter-became-a-renewable-energy- leader
Anil Gupta – talking about innovation as a strategy in the context of globalization
https://www.youtube.com/watch?v= pqTkPSZedmg
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Strategic management
Globalization
Technology
Industry boundaries
Which may have created:
A loss of traditional sources of competitive advantage
The need for a change in management mindset.
https://hbr.org/1994/01/the-fall-and-rise-of-strategic- planning
Focus on response to changing competitive conditions
IKEA
https:// www.youtube.com/watch?v=1jn2_nZrivQ
https://www.youtube.com/watch?v=O2VqcxOxwj0
Strategic management under globalisation
Overcoming entry barriers
Acquisitions may help overcome barriers faced by new ventures trying to enter a market including: cost; economies of scale; differentiated products.
Cross-border acquisitions may overcome barriers to entering another country but can be difficult because of cultural differences.
Late 20th C. growth patterns
1950s post war recovery and economic miracles - Germany and Japan
1970s Asia Tiger rapid growth
1980s New/little tigers catching up
1990s BRIC countries acceleration off low base
What were the strategic implications?
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Discussion
Think of an organisation which had to respond to any, several or all of these shifts
Make notes on how it did this.
Small group discussion of the strategies adopted to cope with these changes
Societal risks under globalization
Globalization requires openness which rests on trust but what if you feel you’re missing out?
In market oriented democracies wages declining and voters electing more isolationist governments.
In rapidly developing nations growing middle class wealth associated with authoritarian government.
Impact of globalization on strategy
Domestic markets are: less complex; relatively stable and predictable; familiar.
Global markets are: more complex; relatively unstable and unpredictable; unfamiliar.
Globalisation facilitates global markets.
But global markets offer: increased market size; better returns on investment; economies of scale and learning; advantages of location.
summary
Questions for global expansion
Which markets to enter?
When to enter them and on what scale?
Which entry mode to use?
Factors affecting entry mode:
transport costs
trade barriers
political risks
economic risks
costs
firm strategy
Which markets?
Long-term profit potential: balance among benefits, costs and risks:
A country’s business environment
Political/regulatory environment
Geographic location-regional or country-by-country positioning
Benefits
Function of market size (demographics)
Present and future consumer’s wealth (GDP per capita)
When to enter the market?
Advantages
Preempt rivals,
ability to build sales volume (move down experience curve)
buyer switching costs
Disadvantages
Pioneering costs
shifts in technology or customer needs
incumbent inertia
First mover or early entry
Pioneers –v- late arrivals
Be first, or a close second, and do not pause for breath.
If you do not have a first-mover’s advantage, attack the one who does.
Dilemmas
Is being an innovator worth the risk?
Is it better to wait and learn from the experiences of the first entrant to the market?
What is the proper balance between the risks and rewards?
If you are a pioneer, what can you do to prevent share erosion when a new player enters the market?
Does it pay to be first
Late entry strategies
Reduce price to penetrate an existing market.
Improve a product or service, with focus on a niche market.
Target new geographic markets for existing products.
Develop new channels of distribution to access new markets or better penetrate existing ones.
Defence strategies for pioneers
Increase the barriers to entry for later entrants,
Innovate faster than the latecomers,
Build a market-responsive and flexible organization.
Late entry advantage
An entrenched pioneer may not be strong on customer service.
A new technology change costs, so a new entrant can offer similar or better service at lower cost.
The new entrant may develop a new way to access the market or an innovative distribution strategy.
The latecomer may price aggressively, or target selected market segments.
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Discussion
Make notes of the approach to foreign market entry which you see as best suited to ‘your’ case.
Note in particular the reasons why this approach is best.
Form pairs.
Explain to your partner why you would recommend one approach over others.
Approaches to Foreign Market Entry
Amount of resources committed to foreign market
Le ve
l o f c
on tr
ol o
ve r
fo re
ig n
ac tiv
iti es
Direct export
Licensing
Franchising
Export through agent or
distributor
Joint-venture with local partner
Wholly owned
subsidiary
Source: Bartlett, C. A., S. Ghoshal & J. Birkinshaw, 2004. Transnational Management, Text, Cases, and Readings in Cross-Border Management. 34
Approaches to Foreign Market Entry
Amount of resources committed to foreign market
L
e
v
e
l
o
f
c
o
n
t
r
o
l
o
v
e
r
f
o
r
e
i
g
n
a
c
t
i
v
i
t
i
e
s
Direct
export
Licensing
Franchising
Export through
agent or
distributor
Joint-venture
with local
partner
Wholly
owned
subsidiary
Source: Bartlett, C. A., S. Ghoshal & J. Birkinshaw, 2004. Transnational Management, Text, Cases,
and Readings in Cross-Border Management.
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