Global Strategy Overview

Global Strategy

• Global strategy is a firm's theory for successful competition.
• Three perspectives: rooted in military strategy, blending planning and execution, and tested hypothesis.
• Global strategy encompasses multinational enterprises and local competitors
• Four fundamental questions:
  • Why firms differ: exploring organizational, resource, and institutional differences.
  • How firms behave: examining competitive and cooperative strategies.
  • What determines the scope of the firm: deciding operational boundaries.
  • What determines success and failure: balancing internal (resource-based) and external (institutional) factors.
• Globalization: increasing interconnectedness of economies, reducing costs, and barriers.
• Semi-Globalization: acknowledgment of persistent national divides, creating uneven integration.
• Black Swan events: rare, unpredictable events with significant consequences, requiring resilience and adaptation (e.g., COVID-19).

Managing Industry Competition

• Industry competition: ongoing rivalry among firms for market share, profitability, or dominance.
• Shaped by various strategic choices.
• Tactics include price wars, marketing campaigns, and product launches.
• Intensity of competition is influenced by the number of competitors and industry growth rates, product differentiation, and exit barriers.
• Strategic groups: subsets of firms within an industry that compete directly.
• Differentiated by pricing strategies (e.g., premium vs. low-cost), product differentiation (e.g. luxury vs. mass market), and distribution channels (e.g. ecommerce vs physical retail).

Leveraging Resources and Capabilities

• Resources: tangible and intangible assets (financial, physical, technological, and organizational).
• Capabilities: the ability to deploy resources effectively to enhance value.
• Resource-based view (RBV): competitive advantage stems from valuable, rare, inimitable, and organized (VRIO) resources.
• Value chain analysis: dissecting a firm's activities to identify areas adding value for customers.

Emphasizing Institutions, Cultures, and Ethics

• Institutions: human-created constraints structuring human interaction (formal and informal).
• Culture dimensions: power distance, individualism-collectivism, masculinity-femininity, uncertainty avoidance, and long-term orientation.
• Ethics in strategy: firms are influenced by norms, laws, and standards regarding conduct.
• Strategic responses: reactive, defensive, accommodative, and proactive.
• Ethical decision making is important for long term success

Entering Foreign Markets

• Liability of foreignness: disadvantages faced by foreign firms due to being outsiders.
• Liability of outsidership: lacking network ties in a foreign market.
• Strategic considerations for entry choices include:
  • Entry timing
  • Market selection
  • Market entry modes
  • Degree of adaptation/standardization
• Frameworks used for analysis: industry-based, resource-based, and institutional views.

Making Strategic Alliances and Networks

• Strategic alliances: voluntary cooperation agreements between firms, including contractual and equity-based arrangements.
• Strategic networks: alliances among multiple firms, competing together.
• Factors to consider include costs, control, and required commitment, aligning strategic goals, and establishing trust.
• Evaluation of alliance performance: alignment of goals, learning opportunities, and partner compatibility.
• Comparing acquisition vs alliance: both have advantages depending on the conditions.

Diversifying and Managing Acquisitions

• Corporate-level strategy: how firms create value across multiple businesses.
• Diversification: expanding into new products, services, or geographic markets.
• Types of diversification: product-related and product-unrelated.
• Considerations: industry attractiveness, resource capabilities, institutional environments, and potential synergies.
• Evaluating acquisition performance: synergies, cultural fit, and management capabilities.

Making Global Strategic Alliances and Networks Work

• Critical steps include evaluating potential synergies and risks.
• Choosing the best contractual or equity model.
• Position the relationship to align strategic goals and build trust.
• Developing ways to combat opportunism during the alliance lifetime.
• Shifting from strong to weak ties to enhance operational flexibility.