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Presentation on theme: "Teaching Notes: FinntrackFinntrack Strategy: Analysis and Practice Strategy: Analysis and Practice ©2005 McGraw-Hill Education EuropeMcGraw-Hill Education."— Presentation transcript:

1 Teaching Notes: FinntrackFinntrack Strategy: Analysis and Practice Strategy: Analysis and Practice ©2005 McGraw-Hill Education EuropeMcGraw-Hill Education Europe Discussion Notes

2 Index Workshop Case Analysis Debate Case Questions How to Use Your Workshop Resources Disclaimer Learning Objectives Introduction to Multinational Corporations Introduction to Financial Institution and HSBCIntroduction to Financial Institution and HSBC Overview Corporate Objectives and StrategiesCorporate Objectives and Strategies Corporate Objective Corporate Strategies Managing for Value 2000 – 2001 Guide to Using Case Studies Business Drivers Business Analysis Balanced Scorecard Quantitative Methods Corporate Strategy Business Strategy Overview Business Location Value Based Management Value Creation Business Value Economic Value Added Shareholder Value Shareholder Value Analysis Value Management Models Centralization, Decentralization and Delegation Centralization, Decentralization and Delegation Why Delegate? An Assessment of HSBC's Corporate Social Responsibility Report 2004 An Assessment of HSBC's Corporate Social Responsibility Report 2004 HSBC Financial Highlights 2001, 2005 HSBC Financial Highlights 2001, 2005 Click on Image Source: WikipediaWikipedia

3 Index Global Strategies Globalization Economics Microeconomics Macroeconomics Economic Value Added Economies of Scale Economies of Scale – Integration Economies of Scope Outsourcing Demographic and Business Trends in Asia Michael Porter's Diamond Opportunities for Growth Risk, Uncertainty and Strategy Relation between Uncertainty and Risk Decision Analysis Chapter 9 - Annotated Lecture OutlineChapter 9 - Annotated Lecture Outline Chapter 11 - Annotated Lecture OutlineChapter 11 - Annotated Lecture Outline Chapter 14 - Annotated Lecture OutlineChapter 14 - Annotated Lecture Outline Click on Image Source: WikipediaWikipedia

4 HSBC: Migrating for value Workshop This workshop series is designed to compliment Teaching and Learning Strategies for undergraduate, postgraduate and executive level Strategic Management and related programmes and courses using the case studies featured in the Strategy Analysis and Practice text shown below. The overall aim is to support the learning contents offered in the relevant chapters of the book whilst expanding participants knowledge and skills base required to understand, review and analyse the issues faced by HSBCs managers in the progress of in implementing and reviewing the companys corporate strategy, Managing for Value. Strategy Analysis and Practice John McGee, Warwick Business School Howard Thomas, Warwick Business School David Wilson, Warwick Business School

5 HSBC: Migrating for value Case Analysis A case study is a particular method of qualitative research.case study qualitative research Rather than using large samples and following a rigid protocol to examine a limited number of variables, case study methods involve an in-depth, longitudinal examination of a single instance or event: a case.case They provide a systematic way of looking at events, collecting data, analyzing information, and reporting the results.dataanalyzing information As a result the researcher may gain a sharpened understanding of why the instance happened as it did, and what might become important to look at more extensively in future research. Click on Image Source: © Jian Shuo Wang

6 HSBC: Migrating for value Case Analysis Case studies lend themselves especially to generating (rather than testing) hypotheses. testinghypotheses The scope and relevance of case studies Types of case study Illustrative case studies Exploratory case studies Critical instance case studies Program implementation case studies Program effects case studies Cumulative case studies Business school case studies Medical case studies History of the case study Conclusions Notable case studies References See also External links Click on Image Source: © Jian Shuo Wang

7 HSBC: Migrating for value Workshop Debate 1.IntroductionIntroduction 2.Corporate Strategy: Adding Value in Multi-business FirmsCorporate Strategy: Adding Value in Multi-business Firms 3.Global Strategies and International AdvantageGlobal Strategies and International Advantage 4.Risk, Uncertainty and StrategyRisk, Uncertainty and Strategy Workshop discussion topics have been divided into four parts according to the relevant chapters of the book: You should ensure that you have understood the contents of chapters 9, 11 and 14 prior to attending any of the above debates Also see: How to Use Your Workshop Resources Learning Objectives Learning from Case Studies: A Short Guide for Students

8 HSBC: Migrating for value Case Questions Please Note: At your instructors discretion the indicative questions below and elsewhere in this resource may be varied or deemed unnecessary for teaching and learning purposes for some courses or modules. Also see Learning Using Case Studies for further information.Learning Using Case Studies for further information 1.Measure the stakeholder value created by the function migration to Guangzhou? 2.How could the bank learn from its earlier experiences in Guangzhou to facilitate a smoother function migration to Shanghai? 3.What alternative approaches could Or/HSBC have employed in the first round of function migration? Also see A Model for Case Analysis and Problem SolvingA Model for Case Analysis and Problem Solving

9 HSBC: Migrating for Value How to Use Your Workshop Resources Viewing You will need either MS PowerPoint program or PowerPoint Viewer installed on your computer. The latter may be downloaded free from Microsoft website here.here Navigation The Learning Contents (Literature Reviews) are linked to a relevant public domain on the Internet. Most, if not all pictures/images are clickable, i.e. linked to its source which provides further information on the topic or the copyright holder. If your version of PowerPoint does not show the navigation buttons on the slide, right click on the screen and select your destination from the dialogue box. Alternatively use the small arrowheads, indicating previous and next respectively.

10 HSBC: Migrating for Value Disclaimer This information is provided with the understanding that the authors and publishers do not assume any legal responsibility for the completeness or accuracy of the contents or any opinions or views expressed on these pages or linked destination sources. It is the nature of the media (Internet) that some of the pages may not always be available due to broken or dead links, withdrawals, etc. Whilst the publishers will be pleased to take any appropriate corrective action, for example, by replacing or removing the sources when possible, they unable to assume any legal responsibility for unavailability of any third party material for whatever reason beyond their direct control.

11 HSBC: Migrating for Value Learning Objectives strategic thinking skills appreciations of the complex decision making process involved in economic strategies such as migration and outsourcing understanding of the economic and social impact of operational migration and/or outsourcing to firms business environment analytical and critical thinking skills by reviewing the factors that influenced corporate centre's decisions on the businesses in their portfolios The main objective of the workshop is to evaluate the strategic implementation of HSBCs partial migration (outsourcing) of their Hong Kong based backroom operations to Guangzhou in mainland PRC. Participants will have an opportunity of developing and enhancing their

12 HSBC: Migrating for Value Learning Objectives understanding of distinction between scale and scope and implications that these concepts have for adding value in multi-business firms evaluation of the different ways in which the corporate centre can add value in multi-business firms appreciation of the ways in which firms can gain competitive advantage through globalization decision analysis and risk assessment skills with a range of techniques and frameworks that can be used for the purpose transferable skills, particularly in areas such as web search and research. Adapted from the Learning Objectives, Chapters 9, 11 and

13 HSBC: Migrating for Value Multinational Corporations A multinational corporation (MNC) or multinational enterprise (MNE) or transnational corporation (TNC) is a corporation/enterprise that manages production establishments or delivers services in at least two countries.multinational enterprise (MNE) corporationcountries Critiques Examples In fiction See also Fostering Growth and Promoting a Responsible Market Economy - A G8 DeclarationFostering Growth and Promoting a Responsible Market Economy - A G8 Declaration Annual Report on the Guidelines for Multinational EnterprisesAnnual Report on the Guidelines for Multinational Enterprises The 2005 edition includes a special focus on corporate responsibility in the developing world

14 HSBC: Migrating for Value Multinational Corporations Multinational corporations (MNC) are often divided into three broad groups: Horizontally integrated multinational corporations manage production establishments located in different countries to produce same or similar products.Horizontally integrated multinational corporations Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. Diversified multinational corporations manage production establishments located in different countries that are neither horizontally or vertically integrated.Diversified multinational corporations

15 HSBC: Migrating for Value Multinational Corporations Multinationals have played an important role in globalization. Given their international reach and mobility, prospective countries, and sometimes regions within countries, must compete with each other to have MNCs locate their facilities (and subsequent tax revenue, employment, and economic activity) within. To compete, countries and regional political districts offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labour standards. This process of becoming more attractive to foreign investment can be characterized as a race to the bottom.globalizationtaxenvironmentallabour standardsrace to the bottom Click on Image Source:

16 HSBC: Migrating for Value Introduction Financial Institution HSBC Overview The Nature of the Large Corporation Corporate Objectives and Strategies Managing for Value 2000 – 2001 An assessment of HSBC's Corporate Social Responsibility Report 2004An assessment of HSBC's Corporate Social Responsibility Report 2004 HSBC Financial Highlights 2001, 2005HSBC Financial Highlights 2001, 2005 Guide to Using Case Studies Larger Image Source: Ten3Ten3 Click on Image

17 Financial Institutions Introduction In Financial economics, a financial institution acts as an agent that provides financial services for its clients. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, and similar businesses.Financial economicsfinancial servicesfinancial regulationgovernmentbanksbuilding societies credit unionsstock brokerages Financial institutions provide a service of moving funds from investors, those with excess funds, to companies, those in need of funds. These financial institutions make it easy and affordable for small investors to invest. Financial economics Macroeconomics Financial markets Financial services companies Economics and finance stubs General areas of financefinance HSBC Tower by flore-leval.9online.fr flore-leval.9online.fr

18 Financial Institutions China Opinion: Spent: The End of the American EmpireOpinion: Spent: The End of the American Empire The provisions of WTO membership threaten China's antiquated banking systemThe provisions of WTO membership threaten China's antiquated banking system Source: Yale Economic ReviewYale Economic Review Click on Image

19 HSBC: Migrating for Value Overview Introduction Customer groups Personal Financial Services Commercial Banking Corporate, Investment Banking and MarketsCorporate, Investment Banking and Markets Private Banking Strategy Managing for Value Managing for Value Managing for Growth Managing for Growth Local Operations Americas Asia Pacific Europe Middle East and Africa Global product lines and programmesGlobal product lines and programmes Global Service Centres HSBC Premier HSBC Bank International HSBCnet Brand and Advertising Hexagon symbol Sponsorship Slogan History of HSBC Holdings plc Awards and rankings 2005 See also External links Articles

20 HSBC: Migrating for Value Overview HSBC Holdings PLC (LSE: HSBA, SEHK: 005, NYSE: HBC, Euronext: HSBC, BSX: ) is one of the largest banking groups in the world, the fifth- largest company and second-largest banking company in the world by the Forbes Global Its head office is located at the HSBC Tower in the London Docklands.LSEHSBASEHK 005NYSEHBCEuronextHSBCBSX banking Forbes Global 2000HSBC Tower The group is named after its founding member, the Hongkong and Shanghai Banking Corporation Limited - a bank established by Scot Thomas Sutherland to finance British trade in the Far East in 1865.Hongkong and Shanghai Banking Corporation LimitedScotThomas SutherlandFar East 1865 Click on Image Source: WikipediaWikipedia

21 HSBC: Migrating for Value Overview The bank is the second largest corporation in the world in terms of assets ([2]). It reports its results in US dollars since 80% of its earnings come from outside the UK. Nearly 22% of its earnings comes from operations in Hong Kong. Before moving the headquarters to London in 1991, it was headquartered in Hong Kong. It is the largest bank in Hong Kong, and at the end of 2004 it was the third largest banking group in the world by Tier 1 capital [3]. corporation[2] US dollars UKHong Kong1991Hong KongTier 1 capital[3] Click on Image Source: WikipediaWikipedia

22 HSBC: Migrating for Value Overview The HSBC logo, known as the Hexagon, is derived from the Hongkong and Shanghai Banking Corporation's 19th Century house flag, itself derived from the Scottish flag which is the angular cross that St. Andrew (the patron saint of Scotland) was crucified upon.Hexagon Scottish flagSt. Andrew The 2004 Jaguar car, being driven by Mark Webber.Mark Webber Click on Image Source: WikipediaWikipedia

23 HSBC: Migrating for Value Corporate Objectives and Strategies Managing for Value Larger Image Source: Ten3Ten3 Click on Image Introduction Corporate Objectives 1998 Corporate Strategies

24 HSBC: Migrating for Value Corporate Objective On their website HSBC emphasised the priorities of the Managing for Value into the 21 st Century: As a commercial organisation, our governing objective is to provide a satisfactory return on our shareholders capital. The MfV strategy aimed to double shareholder value in the five-year period 1999 – 2003 and again every five years thereafter.

25 HSBC: Migrating for Value Corporate Strategies The Implementation of the final initiative became most disruptive in Hong Kong. As such it required careful planning and management whilst raising myriad issues and concerns across the company. This poses another, obvious, question: To what extent were the principle objectives of Managing for Value: HSBC into the 21 st Century programme met?principle objectives of Managing for Value: HSBC into the 21 st Century

26 HSBC: Migrating for Value Corporate Strategies Transforming traditional branches to financial service centres Strengthening the sales force by recruiting dedicated Financial Services Executives (FSE) and re-deploying back-office staff to frontline operations. Streamlining the business processes and procedures. Migrating back-office operations, currently centralized in the Networking Services Centre (NSC) in Hong Kong, to the Guangzhou Data Centre (GZC) in mainland China. A series of initiatives were introduced across the HSBC group in a bid to align the organisation with this primary objective, including:

27 HSBC: Migrating for Value Managing for Value Literature Review Managing for Value Managing for Growth Managing for Growth Global Leadership - White Paper Larger Image Source:.webpronews.comwebpronews.com Click on Image

28 HSBC: Migrating for Value Guide to Using Case Studies In using cases you should be aware that before going onto the main theme of the case you will need to carry out a strategy analysis such as that shown in Chapters 5, 6 and 7 (see Literature Review of Chapters and here).here Thus, the question posed in this case might be: Was HSBCs 1998 response to global developments in the banking industry - Managing for Value: HSBC into the 21st Century (MfV) - still appropriate in 2001?

29 Business Analysis Business Drivers Larger Image Source: MetapraxisMetapraxis

30 Business Analysis Overview 1.Benefits of business analysisBenefits of business analysis 2.Roles of business analystsRoles of business analysts 3.Business process improvementBusiness process improvement 4.Goal of business analystsGoal of business analysts 5.External linksExternal links Introduction Also see Balanced Scorecard Quantitative Methods Quantitative Method From Wikipedia, the free encyclopediaQuantitative Method From Wikipedia, the free encyclopedia Larger Image Source: BizEdBizEd Click on Image

31 Business Analysis Balanced Scorecard Literature Reviews Balanced Scorecard Click on Image by PA Consulting GroupPA Consulting Group A comprehensive view of business performanceA comprehensive view of business performance Public sector Balanced Scorecard Purpose of the Balanced ScorecardPurpose of the Balanced Scorecard Evolution of the Balanced ScorecardEvolution of the Balanced Scorecard See also References Balanced Scorecard

32 Business Analysis Quantitative Methods Lecture 1: Functions & Economic Relationships Lecture 2: Economic Models/Linear Models Lecture 3: Basic Differential Calculus Lecture 4: Optimisation Lecture 5: Functions of Several Variables Lecture 6: Unconstrained Optimisation Lecture 7: Constrained Optimisation Lecture 8: Growth & Dynamics Lecture 9: Introduction to Difference Equations Source: Bob Beachill Leeds Metropolitan University Quants Handbook Source: Brian C. McCarthy Ohio UniversityBrian C. McCarthy Click on Image

33 HSBC: Migrating for Value Corporate Strategy Literature Reviews Business Strategy Map Business Location Value Based Management Value Creation Value Management Models Centralization, Decentralization and DelegationCentralization, Decentralization and Delegation Strategy Modelling Technique for Financial ServicesStrategy Modelling Technique for Financial Services Image by The Knowledge Management AdvantageThe Knowledge Management Advantage Synergy Click on image for further information Also see Annotated Lecture Outline

34 HSBC: Migrating for Value Global Strategies 1 Global Strategies and International Advantage Literature Reviews Image by IRCCIRCC Globalization Click on image for further information Globalization Economics Global Economy World Economy Economies of Scale Economies of Scale – Integration Economies of Scope Outsourcing Demographic and Business Trends in Asia Also see Annotated Lecture Outline

35 HSBC: Migrating for Value Global Strategies 2 Click on Image Source: Agrium Inc. 2004Agrium Inc Five emerging trends will reshape global banking in next decade: IBM studyFive emerging trends will reshape global banking in next decade: IBM study Competitiveness of Nations: The FundamentalsCompetitiveness of Nations: The Fundamentals The Competition of Countries The Competitive Advantage of Global FinanceThe Competitive Advantage of Global Finance Economist Country Briefings Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Depreciations (Abstract)Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Depreciations A Multinational Perspective on Capital Structure Choice and Internal Capital Markets (Abstract)A Multinational Perspective on Capital Structure Choice and Internal Capital Markets

36 HSBC: Migrating for Value Global Strategies 3 Global Strategies and International Advantage Literature Reviews Larger Map Image by BizEdBizEd Click on image for further information Michael Porters Diamond Opportunities for Growth Also see Annotated Lecture Outline

37 HSBC: Migrating for Value Risk, Uncertainty and Strategy Risk, Uncertainty and Strategy Literature Review Prospect Theory Click on image for further information Image by WikipediaWikipedia Relation between Uncertainty, Probability and RiskRelation between Uncertainty, Probability and Risk Decision Analysis Also see Annotated Lecture Outline

38 Literature Review Business Strategy Overview Larger Map Source: BizEd, University of BristolBizEd Click on image for further information

39 Literature Review Business Location Larger Image Source: BizEdBizEd Click on Image Operations Research OR-Notes are a series of introductory notes on topics that fall under the broad heading of the field of operations research (OR): Facility location Source: J E BeasleyJ E Beasley

40 Literature Review Value Based Management Source: FDCFDC Click on Images for further information Source: Dresden International UniversityDresden International University

41 Literature Review Value Creation Business Value Michael Goold, Andrew Campbell and Marcus Alexander, Corporate Strategy and Parenting Theory, Long Range Planning, Vol.31, No.2, pp , 1998.Corporate Strategy and Parenting Theory Parenting Advantage (Goold & Campbell)Parenting Advantage (Goold & Campbell) Parenting Styles (Goold & Campbell) Core Competence (Hamel & Prahalad) Distinctive Capabilities (Kay) Financial Institutions Re-evaluate Offshore OperationsFinancial Institutions Re-evaluate Offshore Operations Copyright © 2000, Community Intelligence Labs. Click on ImageCommunity Intelligence Labs Also see Economic Value Added

42 Literature Review Value Creation - Business Value In management, business value is an informal term that includes all forms of value that determine the health and well-being of the firm in the long-run. Business value expands concept of value of the firm beyond economic value (also known as economic profit, Economic value addedtm, and Shareholder value) to include other forms of value such as employee value, customer value, supplier value, channel partner value, alliance partner value, managerial value, and societal value.economic profitEconomic value addedShareholder value Many of these forms of value are not directly measured in monetary terms. Business value often embraces intangible assets not necessarily attributable to any stakeholder group. Examples include intellectual capital and a firm's business model.stakeholderintellectual capitalbusiness model The Balanced scorecard methodology is one of the most popular methods for measuring and managing business value.Balanced scorecard

43 Literature Review Value Creation - Business Value Philosophy History Components of Business Value Shareholder Value Customer Value Employee Value Channel Partner Value Supplier Value Managerial Value Societal Value Strategies for Creating Business ValueStrategies for Creating Business Value Business Value of Information TechnologyBusiness Value of Information Technology Criticisms Click on Image. Larger ImageLarger Image Source: AndersenAndersen

44 Literature Review Value Creation - Shareholder Value Shareholder Value What is Shareholder Value? What Drives Shareholder Value? Shareholder Value Analysis Larger Image Source: AccentureAccenture

45 Literature Review Shareholder Value Analysis Larger Image Source: agility.com.auagility.com.au Rediscovering Shareholder Value: A Proven ApproachRediscovering Shareholder Value: A Proven Approach How to Build Value into a Merger Shareholder Value Tool

46 Literature Review Value Management Models Larger Image Source: performgroupperformgroup Click on Image for further information

47 Literature Review Value Management Models Six Sigma Six Sigma was pioneered by Bill Smith at Motorola in 1986[1]. Originally, it was defined[2] as a metric for measuring defects and improving quality; and a methodology to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO). Six Sigma is a registered service mark and trademark of Motorola, Inc[3]. Motorola has reported over US$17 billion savings[4] from Six Sigma to date.Bill SmithMotorola[1][2] Defects Per (one) Million Opportunities[3][4] AlliedSignal and GE became early adopters of Six Sigma and reported benefits of over US$300 million during its first year of application[5]. Their CEO's, Larry Bossidy and Jack Welch, played a vital role in popularizing Six Sigma. Other major organizations who claim to have benefited from Six Sigma implementation are Ford, Caterpillar, Microsoft, Raytheon, Quest Diagnostics, Seagate Technology, Siemens, Merrill Lynch, Lear, 3M and many more.GE[5]FordCaterpillarMicrosoft RaytheonQuest DiagnosticsSeagate Technology SiemensMerrill LynchLear3M Click on Image Source: KETCH.caKETCH.ca

48 Literature Review Value Management Models Definition Application & Success Healthcare Banking Insurance Construction Military Methodology DMAIC DMADV Roles Required for Implementation Examples of Some Key Tools Used Criticisms of Six Sigma Of its origin Of the term: Six Sigma Of statistics Of methods Of effects References See also External links Six Sigma Click on Image Source: QCI International. All rights reserved.QCI International. All rights reserved.

49 Literature Review Value Management Models Value Chain Click on Image Source: Vickers Vickers

50 Literature Review Centralization, Decentralization and Delegation Advantages of Centralization Close control of operations Uniformity of policies, practices, and procedures Better use of centralized experts Advantages of Decentralization Faster decision-makingdecision-making Decision better adapted to local condition Better management experience for managers that are considered for promotion to higher level management Click on Image Copyright: Cornell University Cornell University

51 Literature Review Why Delegate? At a certain point, there are just too many facets to running a successful business to continue doing it alone. In an increasingly complex business environment, with all the trends affecting business today, such as globalization, the information technology explosion, strategic alliances, increased mergers and acquisitions, heightened competition, and higher expectations of nearly every customer, it just isn't possible to still be that one person in control of everything. Bringing in others to manage is an absolute necessity for survival now.increasingly complex business environment strategic alliancesmergers and acquisitions Source:

52 Literature Review An Assessment of HSBC's Corporate Social Responsibility Report 2004 Image: Big banks are under fire from NGOs on lending practices on both sides of the Atlantic. Copyright: ethicalcorp.com ethicalcorp.com Source: ethicalcorp.comethicalcorp.com HSBC Business case for CSR Corporate Governance Click on images for further information

53 Literature Review HSBC Financial Highlights 2001, 2005 Source: Johnson MattheyJohnson Matthey Annual Results 2005 Click on image for further information.

54 Literature Review Global Strategies Larger Map Source: BizEd, University of BristolBizEd Also see: World Economic Forum Banking Financial Services Click on image for further information Globalization

55 Literature Review Global Strategies GlobalizationGlobalization (or globalisation1) refers to the worldwide phenomenon of technological, economic, political and cultural exchanges, brought about by modern communication, transportation and legal infrastructure as well as the political choice to consciously open cross-border links in international trade and finance.1 technologicaleconomicpoliticalculturalinternational trade finance Meaning & Debate History Nature and existence of globalization Characteristics Anti-globalization Pro-globalization (globalism)Pro-globalization Other uses Measurement of Globalization Notes See also External links Illustration by Viktor Koen for NewsweekNewsweek Also see The Global Economy, World EconomyThe Global Economy

56 Literature Review Economics Larger Map Source: BizEd, University of BristolBizEd Economics, which focuses on measurable variables, is broadly divided into two main branches: microeconomics, which deals with individual agents, such as households and businesses, and macroeconomics, which considers the economy as a whole, in which case it considers aggregate supply and demand for money, capital and commodities. Aspects receiving particular attention in economics are resource allocation, production, distribution, trade, and competition. Economic logic is increasingly applied to any problem that involves choice under scarcity or determining economic value. Click on Image for further information.microeconomicsmacroeconomicsaggregate supply demandmoneycapitalcommoditiesresource allocationcompetitionvalue Economics Source: WikipediaWikipedia

57 Literature Review Microeconomics Larger Map Click on Image Image by BizEdBizEd Microeconomics

58 Literature Review Macroeconomics Larger Map Click on Image Image by BizEdBizEd Macroeconomics Macroeconomics is the economics sub-field of study that considers aggregate behavior, and the study of the sum of individual economic decisions. This is in contrast to microeconomics which is the study of the economic behaviour of individual consumers, firms, and industries.economicsaggregate behaviorindividualmicroeconomics Macroeconomics can be used to analyze how best to influence government policy goals such as economic growth, price stability, full employment and the attainment of a sustainable balance of payments.governmenteconomic growthprice stabilityfull employmentbalance of payments

59 Literature Review Global Economy Click on Image Source: 2006 Deloitte Development LLC.2006 Deloitte Development LLC. The rise of technology has allowed our environment to be characterized as a global one. The global economy gave business the ability to market products and services all over the globe. It has also allowed them to develop partnerships and alliances throughout the world, which has become essential for success in todays business.technologyglobal oneeconomybusiness Advantages Disadvantages Economies of Scale The Global Economy See also References Also see Economies of ScaleEconomies of Scale

60 Literature Review World Economy The world economy The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways (for example, in 2006 US dollars). It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth.US dollarsgeography and ecology of Earth Economy - overview Statistical indicators Economy Employment Industries Energy Cross-border Gift economy Communications Transport Military See also External links Click on Image Source:

61 Literature Review Economic Value Added What Does Economic Value Added Really Mean? Click on Images for further information Source: David Harper, (Contributing Editor - Investopedia Advisor)Investopedia Advisor Larger Image

62 Literature Review Economies of Scale Larger Map Source: BizEd, University of BristolBizEd Economies of Scale Economies of Scale refers to the decreased per unit cost as output increases. Click on image for further information. Economies of Scale Source: WikipediaWikipedia

63 Literature Review Economies of Scale - Integration Integration This occurs when two firms join together to form one new company. Integration can be voluntary (a merger) or forced (a takeover). The figure below shows the three main types of integration. Source: BizEd, University of BristolBizEd Click on image for further information

64 Literature Review Economies of Scope Economies of Scope From Wikipedia, the free encyclopediaWikipedia Economies of scope are conceptually similar to Economies of scale. Whereas economies of scale apply to efficiencies associated with increasing or decreasing the scale of production, economies of scope refer to efficiencies associated with increasing or decreasing the scope of marketing and distribution.Economies of scalemarketingdistribution Whereas economies of scale refer to changes in the output of a single product type, economies of scope refer to changes in the number of different types of products. Whereas economies of scale refer primarily to supply-side changes (such as level of production), economies of scope refer to demand-side changes (such as marketing and distribution). Economies of scope are one of the main reasons for such marketing strategies as product bundling, product lining, and family branding.productsproduct bundlingproduct liningfamily branding

65 Literature Review Outsourcing Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation.operationssubcontractor Outsourcing is a business decision that is often made to lower costs or focus on competencies. A related term, offshoring, means transferring work to another country, typically overseas.competenciesoffshoring Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. Outsourcing became a popular buzzword in business and management in the 1990s.buzzwordbusinessmanagement1990s Paper shreddingPaper shredding can be contracted out

66 Literature Review Demographic and Business Trends in Asia Conference Themes and Policy Issues: Regional Conference on Migration and Development in Asia by: Frank LaczkoConference Themes and Policy Issues: Regional Conference on Migration and Development in Asia Internal Migration in China - China Case Study by: Prof. Huang Ping and Mr. Zhan ShaohuaInternal Migration in China - China Case Study Labour Migration in PRC by: Xiang BiaoLabour Migration in PRC How Migrant Labour is Changing Rural China by: Rachel MurphyHow Migrant Labour is Changing Rural China The second industrial revolution Image: Shanghai has been the template for many of the developments. Copyright BBC Global Business

67 Literature Review Michael Porter's Diamond Source: Bundesministerium fur wirtshaftliche Zusammenarbeit und EntwicklungBundesministerium fur wirtshaftliche Zusammenarbeit und Entwicklung Click on image for further information and other useful models

68 Literature Review Opportunities for Growth Retail Banks Must Focus on Organic Growth to Remain Competitive as Battle for Market Share Heats up GloballyRetail Banks Must Focus on Organic Growth to Remain Competitive as Battle for Market Share Heats up Globally The Golden Rules of Successful Offshoring Succeeding with Growth: Creating Value in Banking 2005 The Age of the Banking Titans Searching for Profitable Growth: Global Wealth 2005 Delivering Profitable Growth in a Crowded Market Global Corporate Banking 2005Delivering Profitable Growth in a Crowded Market Global Corporate Banking 2005 From

69 Literature Review Relation between Uncertainty and Risk Source: Coblands ConsultingCoblands Consulting Relation between Uncertainty, Probability and Risk In his seminal work Risk, Uncertainty, and Profit, Frank Knight (1921) established the important distinction between risk and uncertainty: Frank Knightrisk "… Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated. … The essential fact is that "risk" means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating. … It will appear that a measurable uncertainty, or "risk" proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all."

70 Literature Review Decision Analysis Larger Image Source: Global Decision AnalysisGlobal Decision Analysis Decision model A decision method is an axiomatic system that contains at least one action axiom.decision axiomaticaction axiom See also Decision theory Decision support

71 CHAPTER 9 Annotated Lecture Outline 1/3 Lecture Introduction The move from a focus on competitive strategy to a focus on corporate strategy. A discussion of the growth in multi-business firms with illustrative examplescompetitive strategygrowth in multi-business firms Slide: Definition of corporate strategy. Changes in Organisational Structures over Time An explanation of the ways in which organizational structures have evolved and developed over time and a discussion of the advantages and disadvantages of U versus M forms of organizationorganizational structures Slide: Figure 9.2 plus bullet points outlining strengths and weaknesses of this form of organizationFigure 9.2 Slide: Figure 9.3 bullet points outlining strengths and weaknesses of this form of organizationFigure 9.3 Click on Image for further information

72 CHAPTER 9 Annotated Lecture Outline 2/3 Strategy and Structure A discussion of the two-way relationship between strategy and structure and Alfred Chandlers work. A consideration of the questions raised by the rise of M forms of organizationrelationship between strategy and structure Slide: Bullet points of issues (page 343) Managing the Multi-business Firm 1: The Corporate-Business Interface An introduction to issues of business unit boundaries, groupings of businesses and headquarter/business unit relationships. An exposition of common corporate- business interface styles.corporate- business interface styles Slide: Bullet points relating to three different styles (p.347) Managing the Multi-business Firm 2: The Role of the Corporate Headquarters An explanation of the different ways in which the centre can add value and a description of Gold and Campbells work on parenting styles Slide: Figure 9.7Figure 9.7 Slide: Figure 9.8Figure 9.8

73 CHAPTER 9 Annotated Lecture Outline 3/3 Managing the Multi-business Firm 3: Managing the Portfolio A brief review of portfolio models such as the familiar BCG matrix plus an explanation of the limitations of these models and the reasons why they are no longer popular.BCG matrix Slide: Figure 9.9Figure 9.9 Evidence and Experience A brief review of the finding of some of the empirical work in the area, emphasizing the difficult of measuring relatednessmeasuring relatedness Slide: bullet points on concept of relatedness Concluding Comments Link back to the resource-based view highlighting the connection between core competences and relatedness. A summary of the key tensions in managing portfolio businesses including centralization v decentralization, vertical v horizontal focus and co-operation v competitioncentralization v decentralization

74 CHAPTER 11 Annotated Lecture Outline 1/5 Lecture The global strategies and international advantage' topic covers a lot of ground and on undergraduate programmes it might be worthwhile covering the topic over two lectures. The first lecture could focus on the concept globalization and the pursuit of international competitive advantage at the nation and industry level. The second could focus on firm level choices and the strategic options available to international firmsglobal strategiesinternational advantageconcept globalization Introduction – opening remarks should establish the link with previous lectures on competitive and corporate strategy and explain this lectures focus on the global arena The Terminology of International Business – an explanation of key terms and the introduction of the notions of internationalization and globalization.internationalizationglobalization Slide: The terminology of international business (list of key definitions drawn from p.412 and 413)

75 CHAPTER 11 Annotated Lecture Outline 2/5 The Context of International Strategy – a brief review of the major trends in trade and foreign direct investment. A discussion of the factors driving globalizationfactors driving globalization Slide: Table 11.1 and 11.2 National Competitive Advantage – an introduction to, and explanation of, the determinants of national competitive advantage (Porters diamond model). Lectures to postgraduate audiences could also include a discussion of the limitations of the model (discussed on p of the text) and introduce the double diamond model.national competitive advantage limitations of the model Slide: Figure 11.1Figure 11.1 The Internationalization process – an explanation of the ways in which domestic firms develop their overseas activities and the evolution of different forms engagement in foreign markets over time. A summary of the advantages and disadvantages of these different forms of international activity, e.g. licensing, foreign direct investment, etc.foreign direct investment Slide: Figure 11.2Figure 11.2

76 CHAPTER 11 Annotated Lecture Outline 3/5 From international to global strategies – a reiteration of the opening themes of internationalization, moving to a discussion of the strategic options available to multi-national firms, introducing the notion of multi-domestic and global strategies. multi-national firms Slide: Figure 11.3Figure 11.3 Slide: Bullet points contrasting multi-domestic and global strategies The Drivers of Globalization – a discussion of the forces that are driving the industries and firms to go global and the limitations of, and tensions in, this processDrivers of Globalization Slide: Table 11.4 Global v Local – an outline of the trade-offs between standardisation and differentiation and the link between the strategic environment and available strategic options. Slide: Table 11.5 Click on Image for further information

77 CHAPTER 11 Annotated Lecture Outline 4/5 Strategic Choices – an explanation of Bartlett and Ghosal's four basic strategies used to enter and compete in international environments Slide: Figure 11.5 The Best of Both Worlds – Transnational Strategies – an outline of what is understood by a transnational strategy and an explanation of implementing this strategy in practice.transnational strategy Strategy and Organization Strategy and Organization – a return to one of the key themes running through the strategy literature, namely the strategy/structure debate. A discussion of the fit between strategy and structure in international firms, paying particular attention to Bartlett and Ghoshal's (1989) model. If time permits the lecturer may also like to re-introduce the notions of country-specific and firm-specific advantages and Rugman & D'Cruz's (2000) 'flagship'modelcountry-specific and firm-specific advantages Slide: Figure 11.7Figure 11.7 Slide: Figure (optional)Figure 11.11

78 CHAPTER 11 Annotated Lecture Outline 5/5 Managing International Organizations – an explanation of the complexity inherent in organizing a multi-product, multi-market firm and a discussion of the ways in which managers may seek to organise and control such businesses. Slide: Bullet points for and against a matrix structure Slide: Figure 11.13Figure Concluding Comments – a summary of some of the main themes including the nature of globalization and the significance of national competitive advantage, the global/local debate and the way this connects with firm-specific versus country-specific advantages, the tantalizing possibility of gaining the 'best of both worlds' through transnationality and the possibilities and problems of developing appropriate organizational structures and systems to make the transnational organization a reality. globalization Click on Image for further information

79 CHAPTER 14 Annotated Lecture Outline 1/3 LectureLecture - A statement of the problems of decision making in the absence of complete information and dealing with risk and uncertainty. Topical examples of crafting strategies in the face of risks and uncertainties to highlight some of the key debates. Examples might include 3G licences in the mobile phone industry or risks from natural disasters.problems of decision making dealing with risk and uncertainty What is risk? An explanation of different definitions and perspectives on risk.definitions and perspectives on risk Slide: definitions of risk taken from page 530 Organisational versus Management Risk A discussion of the location and sources of risks and the relationship between the two. Slide: Definitions taken from page 533/Table 14.2 Click on image for further information. Larger Image Source: uscg.miluscg.mil

80 CHAPTER 14 Annotated Lecture Outline 2/3 Larger Image Source:LiveWire.orgLiveWire.org Prospect Theory and Risk An explanation of the key propositions of prospect theory and the relevance of this theory for managers. This section may be omitted in undergraduate lectures. prospect theory Slide: Bullet points taken from p 536. Dealing with Uncertainty An explanation of the difference between risk and uncertainty and the notion of a scale of uncertainty. A recap on PEST and the link with Millers (1992) work on the micro and macro influences that create macro and micro level uncertainties.difference between risk and uncertainty Slide: Table 14.4 Click on image for further information.

81 CHAPTER 14 Annotated Lecture Outline 3/3 Risk Analysis and Assessment Techniques and Quantitative Techniques A brief discussion of NPV, IRR and decision tree techniques which refer students to other parts of their programme where the mechanics of these techniques are dealt with in great depth. The emphasis here is on the link to strategic decision making in the face of uncertainty rather than to the techniques themselves.decision tree techniques Slide: Bullet points testing main techniques analysis plus limitations. Risk Analysis and Assessment Techniques: Risk Indices An explanation of the technique plus its limitation. Larger Image Source: MurTon GroupMurTon Group


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