This chapter assesses strategy formulation at the business, corporate, and global levels. It discusses business strategy, which is a means of separating out and formulating a competitive strategy at the level of the individual business unit referred to as a strategic business unit (SBU). It also elaborates that an SBU is a distinct part of an organization that focuses on a particular market or markets for its products and services, devising a strategy that allows an organization to compete successfully in the marketplace and to contribute to the corporate strategy. The chapter evaluates Michael Porter's generic strategies and highlights a resource-based approach to strategy formulation. It clarifies how blue ocean strategy seeks to make competition irrelevant and analyses strategy formulation in turbulent markets and disruptive innovation as a means of capturing market share.
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Chapter
Business Strategy
Chapter
Competing in a Globalized World
This chapter highlights global strategy development. Traditionally, companies built
their international presence gradually, taking their best products and services to
markets where foreign customers share similar needs and characteristics as the home
market customers. With the increasing connectivity and digitization of business,
some firms, both small and large, are beginning to explore new ways of launching
international ventures. The chapter asserts that business-model-grounded
globalization will increase compared with the more traditional product- and
service-led global expansion. The chapter describes traditional multinational
enterprises (MNEs) that have become global entities and developed their
international operations over decades. Examples of MNEs include firms such as
Siemens, Toyota, and Rolls-Royce Engines, among many other well-known
enterprises.
Chapter
Corporate Governance And Corporate Social Responsibility
This chapter focuses on corporate governance, which is inextricably bound up with views on the purpose of corporations and how to define a corporation or business. It begins the discussion on corporate governance with a review of the origins of corporate governance and the corporate form. It also explains the reasons for the growth of modern corporations, which in turn has led to an increase in the separation of ownership and control. The chapter examines the different perspectives that exist on the role of corporations, noting the divide that exists between those who advocate a shareholder approach to corporate governance and those who adopt a stakeholder approach. It investigates corporate collapses and regulatory codes to determine if lessons can be learned to avoid further failures.
Chapter
Corporate Social Responsibility (CSR)and innovation
This chapter examines Corporate Social Responsibility (CSR) and innovation. It defines CSR as the responsibility of enterprises for their impacts on society; it encompasses the idea that firms should maximize value both for owners and for other stakeholders and that firms should identify, prevent, and mitigate any possible negative effects of their business operations. There are two major objections to international firms assuming new social and environmental roles: businesses only serve the sole purpose of making profit and multinational firms face a dilemma as to which responsibilities to follow due to differences from one country to another. CSR strategies can lead to innovation at three levels: in-market innovation, new market creation, and leadership. Firms will increasingly manage stakeholder issues in the same way as other strategic issues, as they are relevant to competing in a global market.
Chapter
Corporate Strategy
This chapter deals with corporate strategy, which is concerned with what businesses to compete in. It addresses issues on how resources are to be allocated across an organization which is made up of multiple business units. The chapter looks at how an organization determines which businesses to invest in and which to divest. It also emphasizes that the overall objectives of the organization which are paramount in guiding its direction and decisions are determined by the corporate parent. The chapter clarifies that the role of a corporate parent is to add value across the business units, noting that the measurement of the value being added by the corporate parent depends on whether it is greater than if the business units were managed independently of the parent or managed by another corporate parent. It also describes synergy achieved when a corporate parent adds greater value to the organization.
Chapter
Corporate strategy and structure
This chapter describes how organizations can form complex networks in order to
facilitate actions that would be difficult to do alone. The way that tasks are
divided, and sub-tasks are managed to fulfil overall goals is call structuring. This
chapter explores how an organization’s structure enables activities to be carried
out in a way that is consistent with its purpose. It goes on to consider
organizational structure at different levels, and considers how, from a
process-practise perspective, analysis of structure helps us to better understand
how decisions are made, how stakeholders interact and how information and resources
flow. Finally, the chapter considers systems and organizational cultures as
alternative control mechanisms and considers the relationship between
internationalization and organizational structure.
Chapter
Evaluating the Macro-environment
This chapter focuses on the macro-environment and its importance to an organization. It elaborates how changes, such as disruptions, discontinuities, or tipping points that take place in the macro-environment point to trends that can substantially impact an organization's competitive environment. It also evaluates the tools of analysis an organization can use to discern changes in its macro-environment, including scenario planning that helps managers make better decisions under conditions of uncertainty. The chapter covers the limitations of a PESTLE framework and the link between a SWOT analysis with scenario planning and PESTLE analysis. It evaluates the relationship between the macro-environment and the competitive environment.
Chapter
External Environment
Macro, Industry, and Competitive Settings
This chapter argues that individuals and organizations do not exist in a vacuum but
are embedded in relationships, systems, and structures that inform and constrain
their activity and which are, in turn, sustained or changed by organizational
activity. It examines methods and theories that can be used to build an
understanding of the external context. It considers how the external context
influences and is influenced by strategy activities now and in the future. The
chapter highlights the market-based view (MBV), also known as the outside-in
approach, which is a well-known theoretical perspective in strategy literature, and
an ecosystems perspective, which is a contemporary view of an external context in
which organizations are an active part.
Chapter
Functional Strategy and Performance
This chapter discusses strategic management which often focuses on the level of the
corporate, or the whole organization. However, strategizing can occur within
different elements of an organization. In this context, the goals and activities of
the rest of the organization form part of the context influencing what people do in
relation to strategy. The chapter refers to the application of the dynamic
frameworks of strategy which involves practitioners that make and realize decisions
on specific functional concerns. The chapter considers the functional strategies
which, particularly in medium and large organizations, will need to be in place to
support the organizational strategy and help to ensure that it is delivered as
intended. It recognizes functional strategy as the organizational strategies and
plans prepared for various functional areas of the organization, such as financial
strategy, human resources management (HRM) strategy, marketing strategy, operations
strategy, and information technology (IT) strategy.
Chapter
Global business environment:
the external macro environment
This chapter studies the external macro environment. It explains the significance of the external business environment for the strategies of multinational firms. It presents the influence of the political, social, economic, and technological business environment on global and international strategy. It also introduces PEST analysis, a broad framework to help managers understand the macro environment: political, economic, social, and technological. In addition, it also presents the CAGE framework, which considers four dimensions that can explain differences (or distance) between two countries: cultural, administrative, geographic, and economic. Finally, the application of Michael Porter's Diamond Model, which assumes that the national home base of a firm plays a key role in shaping that firm's competitive advantage in global markets is discussed.
Chapter
Global business environment:
the industry environment
This chapter explores the industry environment, where customers, competitors, and suppliers are the main elements. It shows how significant the global industry environment is for strategies of multinational firms. It illustrates the application of market segmentation analysis and strategic group analysis. The Five Forces Model, an analytical tool to understanding the underlying rules of competition in an industry, is also tackled. Lastly, the chapter considered the importance of industry evolution and the International Product Life Cycle for an industry.
Chapter
Global business environment:
analysis of the internal environment
This chapter looks into the analysis of the internal environment. The chapter starts by contrasting the resource-based perspective and the positioning perspective. Then it distinguishes between resources, capabilities, and core competencies when analysing the internal firm environment. The VRIO framework is a practical tool in identifying core competencies. The concepts of value added, value chain analysis, and value system analysis can help strategic decision-makers in identifying where value is created in the firm. An integral part of an internal firm analysis must be a comparison with its competitors, which could be achieved through competitor intelligence and benchmarking.
Chapter
Global management of change
This chapter deals with the management of change. Multinational firms must be prepared to undertake both incremental change and transformational change. Change management is the process by which a multinational firm obtains its current and future strategy. People facing change often go through five phases: denial, defence, discarding, adaptation, and internalizing. The appropriate style of change management is dependent on four factors: the magnitude of the change; the fit of the organization to its environment; the time available for discussion; and the support for change within the organization. The role of the change agent requires interpersonal and political skills.
Chapter
Global management of innovation and knowledge
Anjali Bakhru
This chapter examines the management of innovation and knowledge. It begins with a look at different types of innovation and at how the innovation process itself has changed. It shows that changes in technology and demand have created new opportunities and have required new approaches to innovation. Innovation is increasingly important for gaining and maintaining a competitive advantage and, hence, the role of capabilities and knowledge is inextricably linked to any discussion of innovation, as is the key issue of value capture. The chapter further explores the concept of innovation within a global context, especially within the context of global R&D networks. In particular, it demonstrates how innovation at the global level requires an understanding of how knowledge is both developed and transferred across international centres.
Book
Jędrzej George Frynas and Kamel Mellahi
Global Strategic Management is made up of five parts. The first part introduces the topic. The second part looks at global strategic analysis and includes examinations of the external macro environment, the industry environment, and the internal environment. Part III is about global strategic development and looks at various levels such as the subsidiary-level and headquarters-level in terms of strategy. Part IV is concerned with global strategic implementation. The last part, Part V, concentrates on global strategic innovation and includes an examination of the global management of innovation and knowledge and corporate social responsibility and innovation.
Chapter
Global structures and designs
This chapter discusses how the structure and design of an organization is used as a way for an organization to work towards its overall goals. The chapter starts with a discussion of the concept of organizational structure and design of international firms. Next, the chapter turns to structures of domestic firms. Then, it provides a detailed discussion of the various structures of multinational firms. The chapter concludes with a summary of the key issues explored in the chapter.
Chapter
Headquarters-level strategy
This chapter concentrates on headquarters-level strategy. Strategies for the whole multinational firm are formulated at the headquarters-level and are called headquarters-level or corporate-level strategies. Corporate-level strategy deals with the question of what business or businesses to compete in, and the overall game plan of the multinational firm. The corporate parent determines the overall strategic direction and structure of the firm as a whole and develops mechanisms to manage and coordinate the different activities of subsidiaries. The fundamental task of the headquarters is to manage the multinational's growth strategy. An effective strategic management at the corporate level of the multinational firm requires a clear understanding of the potential for strengthening the competitive position of the multinational through outsourcing and of the threats posed by outsourcing. The corporate parent must continuously review the performance of the existing mix of businesses and countries in which the multinational operates, and explore opportunities for growth.
Chapter
Industry Analysis
This chapter assesses the impact of the competitive environment and shows how an organization might achieve competitive advantage. It explains that the external environment facing an organization consists of its macro-environment and competitive environment, noting that any changes that occur in the macro-environment have the potential to impact an organization's competitive environment. It also highlights the importance for organizations to scan and monitor their macro-environment to discern weak signals that may be able to affect or fundamentally change the industry within which they compete. The chapter looks at some of the tools of analysis available to evaluate industries and discusses Michael Porter's approach to competitive strategy, focusing on his structural analysis of industries: the five forces framework. It outlines strategy formulations or generic strategies that emanate from Porter's framework.
Chapter
Innovation, Disruption, and Digitalization
This chapter talks about innovation, which is the successful exploitation of new
ideas, and refers to the process and outcomes of how new ideas are realized in
practice. It considers how innovation might feature in organizational strategy. The
strategic intent of innovation activity may be to improve operating efficiency, find
new sources of value creation for stakeholders, or both. The chapter explains that
innovation within an industry changes the competitive landscape for rivals,
customers, and suppliers. The chapter outlines the different types of innovation
that can happen in an organization, such as technological innovation, organizational
innovation, open innovation, platform innovation or strategic innovation. It also
considers disruption: an event or trend which unsettles stable competitive or
operating conditions. Disruptive innovation might arise from the activities of
start-ups, existing firms, or new players entering a market from adjacent
industries.” Innovation provides a means for organizations to cope with the
‘creative destruction’ of the cumulative effects of innovation occurring in its
context, and to find new ways to increase the performance of its resource base.
Chapter
Internal Environment
Resources, Capabilities, and Activities
This chapter talks about resources and capabilities: what an organization has
available to use, and what it can do with those resources. The chapter is focused on
exploring theories and methods that can assist managers in building their knowledge
of resources and capabilities, and crucially, the options that are available to
improve the effectiveness of how resources are deployed through activity. These
considerations are part of the internal context. It emphasizes how distinctive
resources might enable competitive advantage using what is known as the
resource-based view (RBV). This discussion is then extended to include the dynamic
capabilities view. The chapter includes an analysis of several key tools that
managers can use, including: VRIO analysis, capability audit, dynamic capability
analysis, and value chain analysis. The chapter concludes by critically assessing
the value of internally focused analytical tools in strategy work.
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