strategic management case study

· International strategy refers to a range of options for operating outside an organisation’s country of origin.

· Global strategy involves high coordination of extensive activities dispersed geographically in many countries around the world.

N.B. Global strategy is just one kind of international strategy.

· Porter’s Diamond – explains why some locations tend to produce firms with competitive advantages in some industries more than others.

The four drivers :

· local factor conditions

· local demand conditions

· local related and supporting industries

· local firm strategy, industry structure and rivalry.

The global–local dilemma relates to the extent to which products and services may be standardised across national boundaries or need to be adapted to meet the requirements of specific national markets.

· Zara in China

· Coke and Pepsi

· Home replication / Export strategy– emphasizes duplicating home-country competencies in foreign markets

· Low cost efficiency

· Low local responsiveness

· Wal-Mart in Brazil

· Localization strategy (multi-domestic) – emphasizes each foreign market as distinctive

· Low cost efficiency

· High local responsiveness

Zara

· Global standardized strategy – emphasizes standardization of products and services across international markets

· High cost efficiency

· Low local responsiveness

· HP

· Transnational strategy – attempts to simultaneously link cost efficiency and local responsiveness via learning

· High cost efficiency

· High local responsiveness

· GM and Daewoo

Competitive characteristics

Country markets can be assessed according to three criteria:

· Market attractiveness to the new entrant

· The likelihood and extent of defender’s reaction

· Defenders’ clout – the relative power of defenders to fight back.

· Export - standard products in different international markets – Garments manufacturers

· Franchising/ License –

· Pizza hut

· Insurance firms

· Wholly-owned by Multinationals - Lack of dependence on local; Green-field investments

· Toyota in USA

· Joint ventures - Complementary resources, Political acceptance, shared risk

– BP in Russia !

· Innovation dilemmas (1)

Technology push or market pull

· Technology push is the view that it is the new knowledge created by technologists or scientists that pushes the innovation process (i.e. the outcomes from R & D labs).

· Market pull is the view that it is the pull of users in the market that is responsible for innovation. ‘Lead users’ are of particular importance. In contrast, ‘frugal innovation’ is also important – sensitivity to the real needs of poorer consumers (e.g. Tata’s Nano car).

· Innovation dilemmas (2)

Product or process innovation

· Product innovation relates to the final product (or service) to be sold, especially with regard to its features.

· Process innovation relates to the way in which a product is produced and distributed, especially with regard to improvements in cost or reliability.

· Product and process innovation

· Innovation dilemmas (3)

Open or closed innovation

· ‘Closed’ innovation

– the traditional approach to innovation

– relying on the organisation’s own resources

– Innovation is secretive, copyrights

– avoid competitors free-riding on their ideas.

· ‘Open’ innovation

– the deliberate import and export of knowledge

– likely to produce better products more quickly.

– Open exchange of ideas

· Platform leadership

Platform leadership refers to how large firms consciously nurture independent companies through successive waves of innovation around their basic technological ‘platform’.

- Microsoft and Sony (in the video games - Intel (in the computer industry)

- Dyson ?

· Innovation diffusion

Diffusion is the process by which innovations spread amongst users. This can vary with respect to both speed and extent.

· Innovators and followers

· Evaluating strategies

· Gap analysis

· The SAFe criteria of evaluation

· Suitability

Suitability is concerned with the overall rationale of the strategy:

· Does it exploit the opportunities in the environment and avoid the threats?

· Does it capitalise on the organisation’s strengths and avoid or remedy the weaknesses?

· Some examples of suitability

· Suitability – screening techniques

There are several useful techniques:

· Ranking

· Screening through scenarios

· Screening for bases of competitive advantage – using the VRIO criteria

· Life-cycle analysis

· Acceptability

Acceptability is concerned with whether the expected performance outcomes of a proposed strategy meet the expectations of stakeholders.

· Risk

· Return

· Stakeholder reactions.

· Reaction of stakeholders

Stakeholder mapping (power/interest matrix) can be used to:

· understand the political context of strategies

· understand the political agenda

· gauge the likely reaction of stakeholders to specific strategies.

If key stakeholders find a strategy to be unacceptable then it is likely to fail.

· Feasibility

Feasibility is concerned with whether a strategy could work in practice, i.e. whether an organisation has the capabilities to deliver a strategy.

Key questions:

· Do the resources and competences currently exist to implement the strategy effectively?

· If not, can they be obtained?

· Feasibility

Need to consider:

· Financial feasibility – funding and cash flow

· People and skills – competences, knowledge and experience

· Integrating resources – obtaining and integrating new resources.