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MGCR382 - Strategy > International Strategies > Flashcards

International Strategies Flashcards

1
Q

Define strategy

A

A set of integrated, purposeful choices made for the future in the face of uncertainty to create and capture value. It aligns internal resources and activities to succeed in the external environment.

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2
Q

What are internal and external factors in the business environment which are crucial?

A

External: customers, suppliers, competition, operating env

Internal: offerings, ppl, capabilities, resources

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3
Q

Define ‘integration’ in a business context

A

Integration is the act of bringing together smaller components or information stored in different subsystems into a single functioning unit.

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4
Q

What factors does strategy rely on?

A

Integrated fit requires commitment to a consistent set of trade-offs to produce clear alignment with what is offered to the world.
It is essential that one knows what to prioritise and thus that clear choices are made so that all decisions align with one vision

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5
Q

What is the goal of having a strategy?

A

Stratey sets the direction to achieve a future vision - an achievable destination - aligned with purpose and defines a plan with tools to reach the destination BUT not all obstacles are known in advance

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6
Q

What are the three different kind of obstacles one can face when defining a strategy, and what kind of thinking must one adapt to adress them?

A
  1. known knowns (bad weather, following checklist) –> scenario thinking
  2. known unknowns (smartphone crashes so run diagnostic) –> diagnostic thinking
  3. unknown unknowns (exploring new territory) –> strategic thinking
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7
Q

What characterises scenario thinking?

A

prep w training
assess situation
execute

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8
Q

What characterises diagnostic thinking?

A

sort options
test variables
respond

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9
Q

What characterises strategic thinking?

A

broad observation
creative thinking
iterative adjustments

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10
Q

Define value creation

A

measure of a firm’s capability of selling what it makes for more than the costs incurred to make it - you can create value using

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11
Q

Describe a cost leadership strategy

A

an integrated set of actions taken to produce goods or services w features that are acceptable to customers at the lowest cost, relative to that of competitors.

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12
Q

What are the product characteristics of a cost leadership strategy?

A
  • relatively standardised / commoditised products
  • features broadly acceptable to many customers
  • lowest competitive price
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13
Q

Which cost-saving actions are required when adopting a cost leadership strategy?

A
  • building efficient scale facilities
  • tightly controlling production costs and overhead
  • minimising cost of sales, R&D and service
  • building efficient manufacturing facilities
  • monitoring costs of activities provided by outsiders
  • simplifying production processes
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14
Q

Describe a differentiation strategy

A

an integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them. The focus is on non-standardised products, and it is appropriate when customers value differentiated features more than they value low cost

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15
Q

What are the two types of focused strategies?

A

focused cost leadership strategy
focused differentiation strategy

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16
Q

What is a focused strategy?

A

integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment

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17
Q

Which factors drive focused strategies?

A

large firms may overlook small niches. Parallelly, a firm may lack the resources needed to compete in the broader market OR a firm is able to serve a narrow market segment more effectively than its larger industry-wide competitors. Focusing allows the firm to direct its resources to certain value chain activities to build competitive advantage

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18
Q

What are five business-level strategies?

A

Cost leadership,
focused cost leadership

differentiation,
focused differentiation

integrated cost leadership/differentiation

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19
Q

What are the results of an integrated cost leadership/differentiation strategy?

A

a firm that successfully uses an integrated cost leadership/differentiation strategy should be in a better position to
- adapt quickly to environmental changes
- learn new skills and technos more quickly
- effectively leverage its core competencies while competing against its rivals

Furthermore, a commitment to strategic flexibility is necessary for its implementation –> Flexible manufacturing systems (FMS), information networks (CRM), total quality management (TQM) systems

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20
Q

What are the risks of an integrated cost leadership/differentiation strategy?

A
  1. Often involves compromises of becoming neither the lowest cost nor the most differentiated firm
  2. Becoming “stuck in the middle” -> lacking the strong commitment and exerptise that accompanies firms following either a cost leadership or a differentiated strategy
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21
Q

Which elements constitute a competitive advantage?

A

Core competencies, capabilities, (in)tangible resources

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22
Q

How are resources defined in Competitive Advantages?

A
  • are broad in scope
  • cover a spectrum of individual, social and organisational phenomena
    alone, dont yield a competitive advantage
  • can be transferred or acquired → intangible is generally more difficult to acquire
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23
Q

What are the source of a firm’s capabilties?

A

Its resources

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24
Q

Of what consists a firm’s capabilities?

A

They are firm-specific bundles of resources that are non-transferable and enable actions/activities/procedures that are integrated, consistent and productive. They may be learned, copied or developed elsewhere.

25
Q

What are a firm’s core competencies?

A

Core Competencies link resources and capabilities, and they are essential to creating or capturing value in a superior way, and should thus be protected and sustained. When done, they will lead to sustainable competitive advantage.

26
Q

What are the different kinds of tangible resources?

A

Financial, organisational, physical, technological

27
Q

What are the different kind of intangible resources?

A

human, innovation, reputational

28
Q

What is the lien between competitive advantage and core competencies?

A

firms achieve strategic competitiveness and earn above-average returns when their core competencies are effectively acquired, bundled and leveraged. The ultimate goal of such strategies is for the firms to achieve a sustainable competitive advantage that will enable them to earn above-average returns. To achieve strategic comp and earn above-avg returns, firms must leverage their core competencies to exploit opportunities in the ext env.

29
Q

How do firms create value?

A

By exploiting their core competencies or CA, firms create value, which is measured by product performance characteristics and product attributes for which customers will pay. Firms create value by innovatively bundling and leveraging resources + capacities, and superiour value leads to above-avg returns.

30
Q

Why do competitive advantages not always last?

A

CA doesnt always last bc value-creating strategies may be successfully imitated/duplicated by comp. The sustainability of CA is a function of the rate core comp obsolescence bc of env changes, the availability of substitutes and the imitability of core competencies.

31
Q

What are the criterias for keeping a sustainable advantage?

A
  1. Value Capabilities - help a firm neutralise threats/exploit opportunities
  2. Rare Capabilities - not possessed by many others
  3. Costly-to-imitate capabilities
    a. historical - unique/valuable org culture/brand name
    b. ambiguous cause - use and causes of competence are unclear
    c. social complexity - interpersonal relationships, trust, friendship
  4. nonsubstitutable capabilities - no strategic equivalent
32
Q

What are the two types of conflicting pressures that firms face?

A

pressure for global integration = process of combining differentiated parts into a standardized whole, maximising efficiency

vs

pressure for local responsiveness = process of disaggregating a standardised whole into differentiated parts, optimising effectiveness

33
Q

What are the drivers for the pressure for global integration?

A

●globalisation of markets
○techno helps standardise consumer preferences
○global products have become popular, allows for standardisation of product design

●efficiency gains of standardisation
○location, scale, learning effects
○WTO supports global standards

34
Q

What are the drivers for pressures for local responsiveness?

A

consumer divergence -> cultural predisposition, historical legacy, nationalism

host gvt policies -> fiscal, monetary, business regulations

35
Q

When does pursuing an international strategy work?

A

International strategies leverage a company’s CC into foreign markets, and they have critical CC that foreign rivals lack

36
Q

Describe an international strategy

A

Objective: leverage core CC

Strategic Emphasis: control, stability, predictability

Dominant attributes: formal order, rules/regulations uniformity

Leadership style: director, administrator, enforcer

Collaboration Standard: rules, policies/procedures, clear expectations

Low pressures for global integration + local responsiveness

37
Q

Describe a global strategy

A

Objective: productivity and efficiency

Strategic Emphasis: integration + efficiency

Dominant attributes: standardised goal achievement, global competitiveness

Leadership style: production achievement oriented, decisive control orientation

Collaboration Standard: objective goal orientation, efficiency-driven

high pressures for global integration
low pressures for local responsiveness

38
Q

Describe a transnational strategy

A

Objective: integration responsiveness, learning

Strategic Emphasis: innovation, ideas, collaboration

Dominant attributes: creativity, dynamism, flexibility

Leadership style: visionary, entrepreneurial, risk affinitive

Collaboration Standard: multicultural, teambuilding

high pressures for global integration + local responsiveness

39
Q

Describe a multi-domestic/localisation

A

Objective: local market responsiveness

Strategic Emphasis: philosophical consensus, operational commitment

Dominant attributes: cohesiveness, trust, affiliation

Leadership style: adaptive, facilitator, mentor

Collaboration Standard: egalitarianism, tolerance, mutual respect

Low pressures for global integration
High pressures for local responsiveness

40
Q

which strategy has low pressures for both local responsiveness and global integration?

A

international strategy

41
Q

which strategy has low pressures local responsiveness and high pressures for global integration?

A

global strategy

42
Q

which strategy has high pressures local responsiveness and low pressures for global integration?

A

multidomestic strategy

43
Q

which strategy has high pressures for both local responsiveness and global integration?

A

transnational strategy

44
Q

What does it mean that industry pressures for global integration are high or low?

A

High industry pressure for GI: standardisation and central control are imperative across intl operations

Low industry pressure for GI: standardisation and central control are useful but not necessary across intl operations

45
Q

What does it mean that industry pressures for local responsiveness are high or low?

A

low: adaptation and decentralisation are unnecessary to sell generic products to similar markets

high: adaptation and decentralisation are needed to sell customised products to differing markets

46
Q

name an example of a company using each type of MNE’s strategies

A

international: Google, Apple,

localisation: Pfizer, McDonalds

global: Toyota, Walmart, American Express

transnational: Zara, IBM

47
Q

What are the supply factors influencing FDIs?

A

Production costs
logistics = transportation
Availability of natural resources
access to key technology

48
Q

What are the demand factors influencing FDIs?

A

Customer access
Marketing advantages
Exploitation of competitive advantages
Customer mobility

49
Q

What are the political factors influencing FDIs?

A

avoidance of trade barriers
economic development incentives

50
Q

What is the connection between resources, capabilites and core competencies?

A

Resources drive the production of goods and services that are sold to customers, and they represent the stocks of available factors that managers bundle together into capabilities, and once together, they are merged and transformed into core competencies

51
Q

What are the risks of cost leadership strategies?

A
  • disruptive technologies change efficiency standards
  • customer’s needs change
  • cheaper, better products from rivals
52
Q

What are some of the risks of having a differentiation strategy?

A
  • customer’s expectations change
  • customers no longer see sufficient value to justify the premium price
  • rival introduces a newer, cooler, high-performing alternative
  • counterfeits that offer a cheaper imitation
53
Q

What are arguments in favour of the productivity of strategic planning?

A
  • allows for managers to keep the bigger picture in mind
  • improves flexibility to change as market change
  • supports higher performance and improved competitiveness
  • planning imposes analytical frame to understand markets
54
Q

What are arguments against the productivity of strategic planning?

A
  • reality consitently and continously doesn’t correspond to planning made
  • comprehensive strategic plan influences short-term competitiveness and long-term sustainability, prey to delusions
55
Q

What are the limits of international strategy?

A
  • confidence in superior competitiveness of CC discourages local adaptation
  • only strong as long as there are no strong rivals
56
Q

What are the limits of a localisation/multidomestic strategy?

A
  • By encouraging operational overlap, there is an increased overhead expense.
  • if too much power given to local subsidiaries, they can evolve into their own operation, neutralising headquarters authority
57
Q

What are the risks of a global strategy?

A
  • each change of product to adapt to local conditions reduces efficiency
  • single bet on single approach is risky, vulnerability to disruptive changes
58
Q

What are the limits of a transnational strategy?

A

tough to direct, difficult to configure, prone to shortfalls,
difficult to implement in practice bc of complicated agenda, high costs and cognitive limits

MGCR382 - Strategy (10 decks)

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