A Strategic Approach Flashcards
Firm-Specific Advantages (FSAs):
Unique capabilities proprietary to the organization (Ownership Advantages)
Built upon product or process technology, marketing or distributional skills
Country-Specific Advantages (CSAs):
Country or industry factors (Location Advantages)
Natural resource endowments (minerals, energy and forests), the labour force and associated cultural factors, etc.
Internalization Advantages:
Costs/benefits of keeping firms’ activities (production, HR, distribution, etc.) internal vs. outsourcing these
The Strategic Management Process
Strategy Formulation→Mission→ Analysis of External & Internal Environment→Objectives & Plan→Strategy Implementation→Strategy Evaluation & Control of Operations
Mission
The following questions must be answered:
What is the firm’s business?
What is the reason for its existence?
What sustainable end-user needs will be met by long term product/service benefits?
Royal Dutch/Shell; BP; ExxonMobil are in the Energy business, not the oil business
AT&T and France Telecom are in the Communication business, not the telephone business
Analysis of External and Internal Environment
Strengths and Weaknesses are the internal environment
Opportunities and Threats are the external environment
Formulation of Objectives & Overall Plan
Internal and external analyses will help identify:
Long-term (2–5 years) goals
Short-term (< 2 years) goals
The Implementation Process
Once goals have been established, the plan is then broken into major parts and each affiliate and department is assigned goals and responsibilities
Evaluation & Control of Operations
Progress is periodically measured against objectives & goals and changes are made in the plan to accommodate changing circumstances and new information
Strategic planning:
The process of evaluating the enterprise’s external environment (Opportunities and Threats) and its internal Strengths & Weaknesses, identifying long- and short-range objectives and implementing a plan of action for attaining these objectives
External Environmental Assessment (OT):
Information gathering
Information assessment
Internal Environmental Assessment (SW):
Physical Resources and Personnel Competencies Generic Strategies (Value chain analysis not covered)
EXTERNAL ASSESSMENT
Four common methods:
- Asking experts in the industry to discuss industry trends & make future projections
- Using historical industry trends to forecast future developments
- Asking knowledgeable managers to write scenarios anticipating the industry over the next two to three years
- Using computers to simulate the industry environment & likely future developments
Resources & Competencies
The physical resources are the assets the MNE will use to carry out its strategic plan
The degree of integration that exists within the operating units of the MNE
Vertical integration:
To obtain control over the supply and to reduce costs
