Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Strategizing Around the Globe

Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Outline A global global-strategy book Why study global strategy? What is strategy? Fundamental questions in strategy What is global strategy? What is globalization? Global strategy and globalization debate Organization of the book

Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Global Global-Strategy Book Text departs from traditional view of global strategy Important to respond to local needs Traditional view of global strategy is incomplete and unbalanced  Sacrifices local responsiveness and global learning  Ignores how domestic firms compete with each other and with foreign entrants  Traditional global strategy is only appropriate for large MNEs in developed countries  It is dangerous to ignore less developed economies

Why Study Global Strategy? A prerequisite in top ranks of large firms Dealing with foreign-owned suppliers is common in all businesses Domestic corporations can buy foreign-owned corporations Domestic corporations can be bought by foreign- owned corporations Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What Is Strategy? Origin – Greek word (strategos) “art of the general”  Sun Tzu, Chinese military strategist in 500 BC  Modern-day application to business and competition dates to the 1960s Plan versus Action – strategy is “explicit, rigorous formal planning” versus “a set of flexible, goal- oriented actions” Strategy as Theory – how to compete successfully  Integrate both planning and action schools Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What Is Strategy? (continued)  Leverage the concept of “theory,” which serves both explanation and prediction  Require replications and experimentations  Understand the difficulty of strategic change  Strategy is a firm’s theory about how to compete successfully  Strategy should be communicated in a powerful but easy-to-remember way  Strategy should give coherence to decisions and actions  Managers must exercise strategic leadership Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Our Definition: Strategy as Theory Integrating both planning and action schools Leveraging the concept of “theory”  A theory serves two purposes: Explanation and prediction Requiring replications and experimentations  To establish the applicable boundaries and limits of an existing theory Understanding the difficulty of strategic change Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Fundamental Questions in Strategy Why do firms differ?  Cultural differences between Western and Japanese firms  Networks of relationships have powerful effect – keiretsu, guanxi, chaebol, blat How do firms behave?  Industry-based view – focus on competitive forces affecting an industry, external opportunities and threats  Resource-based (capabilities) view – focus on internal strengths and weaknesses, firm-specific resources and capabilities  Institution-based view – includes formal and informal “rules of the game” Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Fundamental Questions in Strategy (continued) What determines the scope of the firm? What determines the success or failure of firms around the globe?  Balanced scorecard: A performance evaluation method from the customer, internal, innovation and learning, and financial perspective  How do customers see us?  What must we excel at?  Can we continue to improve and create value?  How do we look to shareholders? Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What Is Global Strategy? Provide standardized products and/or services on a worldwide basis (i.e., traditional view) Any strategy outside one’s home country Our definition of global strategy  Strategies of firms around the globe  MNEs and smaller firms  Both developed and emerging economies  Both international and domestic Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What Is Globalization? Globalization: The close integration of countries and peoples of the world  New force sweeping through the world in recent times?  Long-run historical evolution since the dawn of history?  Closer integration of the countries and people of the world?  Pendulum view: Globalization swings between embracing and restricting due to success, world events, crises, etc.  A process similar to the swing of a pendulum: Postwar history, emerging economies, outsourcing, MNEs, terrorist attacks, BRIC, recession…  Semiglobalization: Market barriers are high but not high enough to completely insulate countries Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Strategy and Globalization Debate Events require making strategic choices in this complex, rapidly moving world  Anti-globalization protests  Terrorist attacks  Economic crises  Corporate governance crisis (Asian financial crisis, U.S. scandals) Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Strategy and Globalization Debate (continued) Know Yourself, Know Your Opponents  Understand strengths AND limitations  Recognize the social, political, and environmental costs associated with globalization  Current business school students exhibit values and beliefs different from the general public  Be aware of bias and strategic blind spots (of students, instructors, and managers) Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Organization of the Book Part I: Foundations of Global Strategy  Chapter 1: Strategizing Around the Globe  Chapter 2: Managing Industry Competition  Chapter 3: Leveraging Resources and Capabilities  Chapter 4: Emphasizing Institutions, Cultures, and Ethics Part II: Business-Level Strategies  Chapter 5: Growing and Internationalizing the Entrepreneurial Firm  Chapter 6: Entering Foreign Markets  Chapter 7: Making Strategic Alliances and Networks Work  Chapter 8: Managing Global Competitive Dynamics Part III: Corporate-Level Strategies  Chapter 9: Diversifying and Managing Acquisitions Globally  Chapter 10: Strategizing, Structuring, and Learning Around the World  Chapter 11: Governing the Corporation Around the World  Chapter 12: Strategizing with Corporate Social Responsibility Copyright © 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.