lecture 1 (Introduction to strategy) Flashcards
Strategy as plan, pattern and position (Mintzberg 1987; S).
Strategy as a plan: this strategy has two essential characteristics: they are made in advance of the actions to which they apply, and they are developed consciously and purposefully.
Strategy as a pattern: strategy is a Pattern - specifically. a pattern in a stream of actions.
“Strategy as a pattern can be considered consistency in behavior whether intended or not.”“ Executive announced: “gradually the successful approaches merge into a pattern of action that becomes our strategy. We certainly don’t have an overall strategy on this.”
Strategy as position: how a company positions themselves in the environment they compete in (internal and external). Combine porters five forces and generic strategies. When the strategy is the linkage between the environment(external) and the organization (internal context)
“Strategy as position is when strategy becomes the mediating force - or match according to Hofer and Schendel - between the organization and environment, that is, between the internal and the external context. In other words, when the strategy is the link between environment (external) and organization (internal context).”
What are the definitions of multinational companies
Definition of multinational companies:
- “Multinational companies own and controls operations abroad”
o Many multinationals are not global but regional
o Mærsk could be an example of a global (operating in 130 countries)
o Apple is a global
o Walmart (more or less regional - 28 countries)
- Any company that engages in international business activities
- Has “direct production and generally direct business activities.
Strategy as configuration / learning (S).
Organization is viewed as a configuration of its characteristics.
Material taken from slides
• Organizations are viewed as configurations of its characteristics with occasional transformations to new configurations
• A Company’s strength and weakness should be determined in the context of a problem. It is hard to say in advance whether a competence will be strength or a weakness for a particular strategy.
• Strategy’s role: maintain stability & recognize the need for major transformation
• Close link between formulation and implementation. Centralization of power, flexible organizations. Moreover, start-ups are good examples where both founder both create and implement strategy.
This refers to the perspective of Internal strategy. Here among we have scholars such as Barney's (1991) Resource based view. Dynamic capabilities (Teece et al. 1997), Core competences (Prahalad & Hamel 1990; S)
What are drivers of globalization?
- Technology: increased use and expansion
o Reach customers
o Manage operations - Liberalization of trade and resource movements
o Regional trade blocs( Mercosur, SADC, ASEAN, NAFTA)
o WTO - Global products and customers
o Developing countries increasingly consume, not only produce.
o Consumer tastes converging. - Global competition
o Companies locate and sell where is makes business sense (off-shoring due to the location benefits)
o In services, too (call centers, legal work, health care (X-ray diagnostics) - Political changes
• In Eastern Europe, China, Vietnam etc.
• China from Communism to leading market (Asian catch-up). Fall of communism
• India
Drivers of company internationalization
OLI-framework
Uppsala-model
Previous internationalization experience (also the management).
International experience of founders
Breadth and depth – risk diversification
International diversification enhances innovation.
Mitigating (hedging against location specific disasters) risk.
Cost efficiency, cluster effect, exploration and exploitation of location advantages. Sales, competition
Tax benefits (Ireland)
Born globals, Niche market (focus differentiation strategy).
off-shoring
Semie-globalization / regionalism
Very few are global
– Most are regional (EU, North America, Asia)
– Advantages of scale & scope without the risks of
global operations
