MIM 578: Global Strategy II Day 1

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MIM 578 Global Strategy IIDay 1

• Scott Marshall
• SBA Corporate Partners Professor
• School of Business Administration
• Portland State University

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Alternative Perspectives on Strategy

• Business Strategy is rooted in two interrelated
  concepts
• Competition
• industry conditions,
• relative position, and
• resource scarcity
• Uncertainty
• driver of change
• motivation for strategic thinking

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Alternative Perspectives on Strategy
Rational Perspective
SWOT

• Analyze internal and external environments,
• Establish strategic alternatives,
• Create and implement strategy(ies).
• Achieve Positional Advantage (Low
  Cost/Differentiation/Focus/Integrated)

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Alternative Perspectives on Strategy
Rational Perspective

• Analyze internal and external environments,
• Establish strategic alternatives,
• Create and implement strategy(ies).
• Achieve Positional Advantage (Low
  Cost/Differentiation/Focus/Integrated)

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Alternative Perspectives on Strategy
Rational Perspective

• Rational Youre going to try to be rational
• You know your goals
• All relevant information and alternatives are
  known
• Problem is clear and unambiguous.
• You have clear and constant preferences.
• And you know that your decision is in the best
  interest of the organization, not you (the
  manager)

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Alternative Perspectives on Strategy
Rational Perspective

• Satisficing Perhaps you can simply satisfice

AND
LEAD TO
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Alternative Perspectives on Strategy
Incrementalist Perspective
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Alternative Perspectives on Strategy
Incrementalist Perspective

• Formal planning important but long range planning
  is futile.
• Realized strategy evolves as internal decisions
  and external events come together in minds of
  managers.
• Complexity and consensus are key attributes of
  strategy formulation.
• Flexibility and reactive capacities key
  attributes of implementation.

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Alternative Perspectives on Strategy
Stakeholder Perspective
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Alternative Perspectives on Strategy
Stakeholder Perspective

• Determine companys position in respect to key
  stakeholders.
• Establish options available based on key
  positions.
• Long term planning is preferred when feasible.
• Achieve viable long term position based on strong
  stakeholder relationships.

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Alternative Perspectives on Strategy

• Institutional Perspective

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Alternative Perspectives on Strategy
Institutional Perspective

• Strategies depend on particular social settings
  in which the company is embedded.
• Deviate from profit maximization deliberately to
  pursue other outcomes.
• Strategy attributed to relational activities.
• Long term thinking, not necessarily planning, is
  inherent.

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In-Class Exercise

• Alternative Perspectives on Strategy
• What perspective(s) generally lead to strategic
  planning and 3- or 5-year strategic plans?
• What perspective(s) may be more prominent in
• The US?
• Japan?
• South Korea?
• China?
• Germany?
• Brazil?
• What perspective(s) may be more prominent in
• Digital electronics industries?
• Food and beverage industries?
• Aircraft industries?
• Apparel industries?

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Effective Strategy Regardless of Perspective

• Clear, decisive objectives specific goals of
  subordinate units may change in the heat of
  competition, but the overriding goals of the
  strategy for all units must remain clear to
  provide continuity and cohesion.
• Maintaining the initiative does the strategy
  preserve the freedom of action and enhance
  commitment? A prolonged reactive strategy
  increases costs and decreases the number of
  options available.
• Concentration Does the strategy concentrate
  superior power at the place and time likely to be
  decisive? A distinctive competency yields greater
  success with fewer resources and is the essential
  basis for higher gains.

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Effective Strategy Regardless of Perspective

• Flexibility Has the strategy purposely built in
  resource buffers and dimensions for flexibility
  and maneuver? Reserved capabilities, planned
  maneuverability, and repositioning allow a firm
  to use minimum resources while keeping
  competitors at a relative disadvantage.
• Coordinated and committed leadership Does the
  strategy provide responsible, committed
  leadership to each of its major goals?
  Successful strategies require commitment, not
  just acceptance.

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Effective Strategy Regardless of Perspective

• Surprise Has the strategy made use of speed,
  secrecy, and intelligence to attack exposed or
  unprepared opponents at unexpected times?
  Surprise can decisively change strategic
  positions.
• Security Does the strategy secure resource bases
  and all vital operating points for the entire
  firm? Intelligence systems, logistics and
  coalitions need to be used to extend the resource
  base.

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Discussion Questions

• Of these 7 criteria for effective strategy, which
  ones were most relevant to the success of the
  emerging market companies from todays reading?

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Assessing Positional Advantage

• Looks at internal resources and capabilities of a
  company, such as

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Assessing Positional Advantage

• Sustained Positional Advantage
• A company that possesses and exploits resources
  capabilities that are
• Valuable
• Rare
• Costly to Imitate (Inimitable)

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Assessing Positional Advantage

• Do these resources and capabilities lead to
• Competitive Advantage?
• Valuable Do a firms resources help it
• deal with external threats?
• For example, do Toyotas manufacturing and
  distribution systems and brand equity help it
  deal with the external threats associated with
  industry overcapacity and competitive pricing
  pressures?
• capitalize on external opportunities?
• For example, do Nikes product development
  procedures, brand equity and subcontracted
  assembly, help it deal with the external threat
  of the entry of many niche competitors in the
  footwear industry?

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Assessing Positional Advantage

• Do these resources and capabilities lead to
• Competitive Advantage?
• Rare Do only a few companies have these
  resources and capabilities?
• Is Toyota the only company in the industry with
  this unique combination of manufacturing and
  distribution systems and brand equity?
• Is Nike the only company with the combination of
  new product development procedures, brand equity
  and subcontracted manufacturing?

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Assessing Positional Advantage

• Do these resources and capabilities lead to
• Competitive Advantage?
• Inimitability Will firms that do not have the
  resources and capabilities have to spend a lot of
  time and money to acquire or develop them?
• How much time and money will FMC, GMC and DC have
  to use to achieve a similar combination of skills
  and assets possessed by Toyota?
• How much time and money will adidas have to use
  to achieve a similar combination of skills and
  assets possessed by Nike?

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Assessing Positional Advantage
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Assessing Positional Advantage
Competitive Edge

• Rapid change erodes positionsleading
  totemporaryopportunities

Strategic Window
Launch
Exploitation
Counterattack
Time
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Assessing Positional Advantage
Within Industry Dynamics Economies of Scale,
Efficiency, Globalization and Consolidation
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Assessing Positional Advantage
Within Strategic Group Competitiveness
Within Industry Competition
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Assessing Positional Advantage
Within Strategic Group Competitiveness
For 2005, what should be on the axes to determine
competitiveness in the mass market strategic
group?
Should quality still be on one of the axes?
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(No Transcript)
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Assessing Positional Advantage
For 2010, what will be on the axes?
Safety self-drive Environmental hybrid,
hydrogen Convenience home/office Individual
Customizability interior exterior (the
elimination of models?) Low-Income Basics
simplified with regional production
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Experiential Exercise

• The Paper Chase Game

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Strategy-Structure-Performance

• Formulate Strategy New Strategy?
• Implement Strategy New Structure?
• New Structure New Performance?

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Strategy-Structure-Performance

• Changes to Structure
• Approaches Organic versus External
• Forms of Structural Change
• Product and Market Diversification
• Merger and/or Acquisition
• Joint Venture and Alliance

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Emergence and Dynamism
The future isnt what it used to be
Past, but still somewhat relevanteconomies of
scale and scope Current and quite relevantmass
customization and flexible manufacturing Futureth
e story continues to change Current thinking is
still largely tactical in focusnow evolving to
strategic orientation. Why? Because success
increasingly depends on the next arena of
commercial competition, not the last one.
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Emergence and Dynamism

• Characteristics of Emerging Competitive Paradigm
• War is no longer an appropriate metaphor
• Inter-enterprise cooperation is ubiquitous.
• Must respond routinely and profitably to
  transient market opportunities
• Knowledge-based, customer-configured products and
  services will wintemporarily

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Emergence and Dynamism

• Characteristics of Emerging Competitive Paradigm
• Goes beyond flexible manufacturing, maximum
  operational efficiency, or fast manufacturing
  response time alone.
• Must operate in a way that allows synthesis of
  new productive capabilities very quickly
• Integrate resources to develop, produce, and
  market new products wherever those resources may
  be located and to do so in close coordination
  with customer requirements.

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Emergence and Dynamism

• Lots of Terms Creative Destruction,
  Reconstructionism, Strategic Inflection Points,
  Blue Oceans

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Emergence and Dynamism

• Basically the Same Idea -
• Rising dissonance between strategic intent
  (strategy) and strategic actions (structure)
  within the company.
• Intense competition encourages new market
  creation.
• Long term success hinges on minimizing dissonance
  and creating new markets.

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Emergence and Dynamism

• Webcast Research in Motion
• Lets watch this interview and think about RIMs
  strategy. From this interview, what did you take
  note of in terms of
• strategic perspective,
• positional advantage,
• strategic windows, and
• emergence and dynamism?

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Key Take-Aways from Today

• Strategy Competition and Uncertainty
• Alternative Views on Strategy
• 7 Criteria for Effective Strategy
• Positional Advantage
• VRIO
• Strategic Windows
• Continuous Learning and Repositioning
• Strategy-Structure-Performance Linkages
• Emergence and Dynamism