c chapter

h ap t e r

I
1

Strategizing
Around the Globe
Part I: Foundations of Global Strategy

Global Strategy
Mike W. Peng
Copyright 2009 Cengage.
All
All rights
rights reserved.
reserved.

PowerPoint
PowerPoint Presentation
Presentation by
by John
John Bowen,
Bowen, Columbus
Columbus State
State Community
Community College
College

Outline
Why study global strategy?
What is strategy?
Fundamental questions in strategy
What is global strategy?
What is globalization?
Global strategy and globalization at a
crossroads

Copyright 2009 Cengage. All rights reserved.

12

Why Study Global Strategy?

Job and career aspiration opportunities
Awareness of what is going on in the world
Avoid downside risks of globalization

Copyright 2009 Cengage. All rights reserved.

13

What is Strategy?
Origin-Greek word (strategos)-art of the general
Sun Tzu, Chinese military strategist in 500 B.C.
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

Firms have both intended and emergent strategies
One firms strategies may not work in all situations
Past success does not guarantee future success
It is often difficult to change strategy
Copyright 2009 Cengage. All rights reserved.

14

Strategy
STRATEGY AS PLAN
Concerned with drafting the plan of war and shaping the
individual campaigns and, within these, deciding on the
individual engagements (Von Clausewitz, 1976)1

A set of concrete plans to help the organization accomplish

its goal (Oster, 1994)2

STRATEGY AS ACTION
The art of distributing and applying military means to fulfill
the ends of policy (Liddel Hart, 1967)3

A pattern in a stream of actions or decisions (Mintzberg,

1978)4

The creation of a unique and valuable position, involving a

different set of activities ... making trade-offs in
competing ...creating fit among a companys activities
(Porter, 1996)5

Copyright 2009 Cengage. All rights reserved.

15

Strategy, Contd.
STRATEGY AS INTEGRATION
The determination of the basic long-term goals and

objectives of an enterprise, and the adoption of courses of

action and the allocation of resources necessary for
carrying out these goals (Chandler, 1962)6

An integrated and coordinated set of commitments and

actions designed to exploit core competencies and gain a

competitive advantage (Hitt, Ireland, and Hoskisson,
2003)7

Sources: Based on (1) K. Von Clausewitz, 1976, On War, vol. 1 (p. 177), London: Kegan Paul; (2) S.
Oster, 1994, Modern Competitive Analysis, 2nd ed. (p. 4), New York: Oxford University Press; (3)
B. Liddell Hart, 1967, Strategy, 2nd rev. ed. (p. 321), New York: Meridian; (4) H. Mintzberg, 1978,
Patterns in strategy formulation (p. 934), Management Science, 24: 934948; (5) M. Porter,
1996, What is strategy? (pp. 68, 70, and 75), Harvard Business Review, 74(6): 6178; (6) A.
Chandler, 1962, Strategy and Structure (p. 13), Cambridge, MA: MIT Press; (7) M. Hitt, D.
Ireland, & R. Hoskisson, 2003, Strategic Management, 5th ed. (p. 9), Cincinnati: Thomson SouthWestern
Copyright 2009 Cengage. All rights reserved.

16

The Essence of Strategy

Figure 1.2
Copyright 2009 Cengage. All rights reserved.

17

Fundamental Questions in
Strategy
Why do firms differ?
Cultural differences between Western firms and Japanese
companies
Networks of relationships have powerful effect

How do firms behave?

Industry-based view - focus on competitive forces within
an industry that impact all firms
Resource-based (capabilities) view - focus on internal
strengths and weaknesses, firm specific resources and
capabilities
Institution-based view - focus on government and societal
forces
Copyright 2009 Cengage. All rights reserved.

18

Fundamental Questions in
Strategy contd

What determines the scope of the firm?

What determines the international success or

failure of firms?
Industry-based view - degree of
competitiveness in the industry
Resource-based view - firm specific differences
in capabilities
Institution-based view - institutional forces,
such as economic reforms and government
policy
Copyright 2009 Cengage. All rights reserved.

19

The Strategy Tripod

Three Leading Perspectives on Strategy

Figure 1.3
Copyright 2009 Cengage. All rights reserved.

110

What Is Global Strategy?

Provide standardized products and/or services
on a worldwide basis (i.e., traditional view)
Any strategy outside ones home country
Our definition of global strategy:
Strategies of firms around the globe
Both international and non-international (domestic)
Both developed and emerging economies

Copyright 2009 Cengage. All rights reserved.

111

What is Globalization?
A new phenomenon since the late 20th century?
A part of long-run human history?
A pendulum view: Transportation and
communication revolutions + breakdown of
artificial barriers in trade and investment
A process

similar to the swing of a pendulum:

Postwar history
Semiglobalization?

Copyright 2009 Cengage. All rights reserved.

112

Global Strategy and Globalization

at a Crossroads
Three Defining Events - have brought corporate
social responsibility, ethics, and governance to
the forefront of strategic decisions
Anti-globalization protests - lost jobs, downward
pressure on wages for unskilled labor,
environmental destruction
Terrorist attacks
Corporate governance crisis (Asian financial
crisis, U.S. scandals)
Copyright 2009 Cengage. All rights reserved.

113

Global Strategy and Globalization

at a Crossroads, Contd.
Know Yourself, Know Your Opponents
Understand strengths AND limitations
Recognize the social, political, and
environmental costs associated with
globalization
Do not ignore non-government organizations
(NGOs)-view them as partners

Copyright 2009 Cengage. All rights reserved.

114