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Chapter

Cover Understanding Strategic Management

Business Strategy  

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.

Chapter

Cover Understanding Strategic Management

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

Cover Global Strategic Management

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

Cover Understanding Strategic Management

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

Cover Understanding Strategic Management

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

Cover Global Strategic Management

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

Cover Global Strategic Management

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

Cover Global Strategic Management

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

Cover Global Strategic Management

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

Cover Global Strategic Management

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

Cover Global Strategic Management

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

Cover Global Strategic Management

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

Cover Global Strategic Management

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

Cover Understanding Strategic Management

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

Cover Understanding Strategic Management

The Internal Environment: A Resource-based View of Strategy  

This chapter explains why organizations that possess similar resources and compete in the same industry experience different levels of profitability. It explores the resource-based view, which is a perspective that suggests that relative firm performance and profitability are determined by an organization's resources and capabilities. It also stresses how the resource-based view emphasizes the internal capabilities of the organization in formulating strategy to achieve a sustainable competitive advantage in its markets and industries. The chapter reviews the role of capabilities in helping an organization achieve competitive advantage and the VRIO framework as a means of achieving sustainable competitive advantage. It discusses a knowledge-based view of the organization and dynamic capabilities as a way of dealing with the limitations of the resource-based view of strategy.

Chapter

Cover Global Strategic Management

International strategic alliances:  

partnership and cooperation

This chapter focuses on international strategic alliances: partnership and cooperation. International strategic alliances were prompted by a range of drivers, including fierce global competition, rapidly changing technologies, shorter product life cycles, and high R&D costs. Competitiveness can be enhanced by combining complementary capabilities and competencies of different organizations in close long-, medium-, or short-term relationships rather than opting for the ‘go it alone’ strategy. Strategic alliances can serve different objectives and can take different forms. The success of a strategic alliance is determined by good partner selection. As an alliance develops, partners need to carefully develop appropriate control mechanisms to oversee the alliance performance. Multinational firms engaged in international strategic alliances face two types of risk: relational risk and performance risk. Strategic alliances do and must end; if the alliance fulfils its strategic purpose, it is a success, even if it ends earlier than expected or planned.

Chapter

Cover Understanding Strategic Management

International Strategy  

This chapter discusses different perspectives on globalization, addressing the question on why many companies are not content to simply compete in their domestic market but instead seek growth opportunities abroad. It explores the extent of organizations that operate across international borders to develop global brands and products for all markets. It also analyses the magnitude of international differences based on customer preferences that the international strategy of organizations must recognize and adapt to. The chapter evaluates the different types of international strategy and assesses the entry mode strategies for entering international markets. It explores Michael Porter's diamond, which gives an explanation for competitive advantage in different countries.

Chapter

Cover Global Strategic Management

Introduction to global strategic management  

This chapter examines the general facets of global strategic management. It begins by discussing the characteristics of the strategic management process. It then goes on to enumerate and describe the key phases of global strategy. The differences between international strategy and global strategy are also explored. Finally, it examines the national-, sector-, and firm-level drivers for global strategy.

Chapter

Cover Global Strategic Management

Managing the internationalization process  

This chapter considers the management of the internationalization process. It begins with the explanation of why firms decide to internationalize their business activities and how they should engage in international business activities. Psychic distance is defined as the distance that is ‘perceived’ to exist between characteristics of a firm's home country and a foreign country with which that firm is, or is contemplating, doing business or investing. ‘Born Global’ is a term that describes firms that, right from their birth, seek competitive advantage by using resources from different countries and by selling their products in multiple countries. The chapter also discusses the four modes of entry into foreign markets: export, licensing, franchising, and wholly owned operations. Lastly, it delves into a phenomenon known as de-internationalization or international divestment, which refers to ‘any voluntary or forced actions that reduce a company's engagement in or exposure to current cross-border activities’.

Chapter

Cover Understanding Strategic Management

The Organization: Value-creating Activities  

This chapter focuses on how an organization can analyse its value-creating activities, considering some of the different ways in which an organization can assess its performance. It points out the importance of debates about what constitutes a differential firm performance, which is just as significant as a strategy formulation. It also clarifies that a differential firm performance refers to the observation that organizations that possess similar resources and operate within the same industry experience different levels of profitability. The chapter examines how linkages in the value chain can create competitive advantage and how to undertake SWOT and TOWS matrix analyses. It identifies the benefits of using a Balanced Scorecard and Triple Bottom Line when assessing the performance of an organization.