116  The Chinese Economy

The Chinese Economy, vol. 47, nos. 5–6,

September–October/November–December 2014, pp. 116–30.
© 2014 M.E. Sharpe, Inc. All rights reserved. Permissions: www.copyright.com
ISSN 1097–1475 (print)/ISSN 1558–0954 (online)
DOI: 10.2753/CES1097-1475470505

Anna Fung

International Business Strategies: A

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Review and Extension of Theories

Abstract: Leveraging current research in international business strategies, this

article reviews existing theories related to international strategies, such as industry-
based, resource-based, and institutional-based theories, and how they fit within
the concepts of relative positioning and strategic planning. Overall, this article
seeks to extend these existing theories by providing a conceptual framework that
originates in the ancient Chinese theory of yin and yang.

In terms of business and management, strategic decisions for firms affect long-term
performance and survival. In light of a global economy and growing competition,
domestic firms are affected by global market forces and no longer can act solely
within domestic constraints. Thus, they cannot ignore the actions of other firms
across national borders (Chung 2005, Bruton, Dess, and Janney 2007). As a re-
sult, international business strategies have become increasingly more relevant and
important as once isolated companies may connect (or fail to connect) with other
companies and cultures (Ramamurti 2004, Rugman and Verbeke 2004).
In 2011, after China became the second largest economy in the world after the
United States, the importance of international business greatly increased for both
domestic Chinese and foreign firms. Most global companies now have operations
in China; at the same time, there has been a recent increase in Chinese firms going
abroad as the Chinese government has relaxed its restrictions on currency conver-
sion and foreign earnings. As a result of these expansions, international business
strategies are becoming increasingly important (Li 2005, Peng 2006). A more
nuanced understanding of these strategies would benefit both individual firms and
society as a whole (Hoskisson et al 2000).
Before delving into the specific strategies for international business, this article

Anna Fung is a doctoral student in the Department of Management and Organization, Uni-
versity of Washington; email: annafung@uw.edu.

116
 september–october/November–December 2014  117

begins by defining the concept of a strategy. According to Merrijam-Webster, there

are two main definitions that seem applicable. First, strategy is defined as “the art
of devising or employing plans or stratagems toward a goal.” Alternatively, one
might look at a strategy as an “adaptation or complex of adaptations (as of behavior,
metabolism, or structure) that serves or appears to serve an important function in
achieving evolutionary success.” In these definitions, there are, thus, two different
approaches: one is static, employed at the beginning of a decision-making process
to achieve a fixed objective; the other is an evolving mindset that may change over
time, helping an organism (or an organization) adapt to achieve success.
The purpose of this article is to discuss the existing strategies for international
business and to create a conceptual framework that incorporates some of the most
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common theories and frameworks. Beginning with the SWOT analysis, a matrix
used to calculate strengths, weaknesses, opportunities, and threats, this discussion
continues onto the resource-based theory, industry-based theory, and institutional-
based theory. The article will analyze the arguments and limitations of these
theories, as well as consider the concepts of relative positioning and cyclical plan-
ning, reviewing the strategies of companies and how they fit into these theories.
Ultimately, it will argue that no single theory can summarize the strategy any firm
should take. Instead, a collective mind frame that will be referred to as a yin-yang
theory will best allow leadership to consider profitability and growth, both in the
present and future, through strategies and strategic options.
In addition to some of the most common analytical theories, philosophies, and
strategic options, this article will look at some infamous failures of companies that
did not develop good strategies. Certainly, one complication is that international
business strategy or activities must comply with local laws and norms as well as
their domestic laws and norms: in addition to setting objectives and continuing
to evaluate potential avenues for success, the management of a company cannot
simply ignore local practices regarding rules and regulations.

Discussion on Existing International Business Strategies

SWOT Analysis

One of the oldest and most common examples of an existing framework of strat-
egy is the SWOT analysis, a matrix developed in the 1960s (Hill 1997). This is a
common analytical method for leadership within a company to develop relevant
objectives or goals, as well as to compare the strategies of specific companies while
looking at how other businesses may be performing within the industry. In the latter
example, the SWOT analysis may be looking at strategic fit of the internal firm-wide
environment in comparison to the external environment. For example, an investor
looking to purchase stock may use a SWOT matrix to decide which stocks may
better suit a specific portfolio: depending on the specific investment strategy, the
same stock could be included in one portfolio but not another.
 118  The Chinese Economy

The appeal of the SWOT approach is that the matrix is general and applies to
most situations. However, the idea itself is a static theory. That is, it does not take
into consideration potential change over time. In addition, it looks at a company’s
strength and weakness as separate entities, when in fact they may be interrelated.
Threats may be viewed as bad in general, but may pose new opportunities if they
are properly managed and embraced into the analysis. Likewise, an opportunity
may be viewed as good but may ultimately turn into a real danger. In the same vein,
weaknesses and strengths are correlated: a weakness today could be considered a
strength in a different situation, or even develop into a core competency at a later
date. A famous example of this endogeneity, Apple founder Steve Jobs hit adversity
early on in his career in his extreme attention to design and unwillingness to relax
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his strict requirements; this was later touted as the prime foundation of Apple’s
success, but only after streamlined user interfaces and mobile technology became
more integrated into more people’s lives (Isaacson 2011).

Industry-Based Theory

Porter (1980) wrote about industry-based theory through the Five Forces model;
this framework explains that conditions within an industry largely determine firm
strategy and performance. In short, industries will tend to dictate the growth and
focus of companies; companies in the same industries will ultimately form similar
strategies. The appeal of this theory is that it focuses on the firm’s core competency;
thus, the firm can excel by utilizing the strategy. In a relatively stable economy, or
a market-based institutional framework like the United States, the rise of specific
industries can be used to support this view. In essence, the development of geo-
graphical locations means that business clusters can be formed, driven by a specific
commodity within the industry to increase productivity as well as innovation (In-
gram and Silverman, 2002). The Silicon Valley area in California and the automobile
industry in Detroit are well-known examples that support the industry-based theory:
these clusters become self-sustaining while allowing the individual firms to succeed
based purely on how well they perform their core competencies.
However, this theory tends to ignore time and institutional effects (Peng and
Delios 2006, Oliver 1997). Thus, examples that support the industry-based theory
may bias managers towards focusing on the competition rather than other environ-
mental factors. In essence, companies internalize the successful factors within an
industry, and look outward to compare growth and success with other companies.
As a result, this theory seems to underemphasize the need to look inward to create
internal successful factors or resources, as well as discount the effect that leader-
ship may have on a company’s success or failure. In addition, the industry-based
theory tends to assume that geography will play a heavy role. While this may be
more accurate in the United States, where land has historically been available for
development, this may not be universally true. Moreover, the advances in technology
 september–october/November–December 2014  119

may mean that in the future, companies within an industry can support and expand
upon one another without needing to be in the same geographical location.

Resource-Based Theory

The resource-based theory focuses more on a specific resource and how it affects
a company’s strategy (Barney 1991). Here, firm-specific differences are used to
explain growth and performance. In addition, politically connected firms need to
exploit assets outside the firm with political power. For example, a firm that holds
a monopoly on some resource has a strategic advantage—and any other company
that is able to access that monopolized resource would likewise be advantaged.
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As a result, this acknowledgement of resource superiority further builds the brand

name and helps reinforce homogeneity within the company. Continuous growth
thus stems from the ability of a company to continue using a resource that is rare,
valuable, inimitable, and nonsubstitutable (Barney 1991). In this theory, firms can
be compared within the same industry—for example, the profit difference between
Coke and Pepsi might hinge on the trademark secret process of making Coke;
Apple might capitalize on its trademark higher-than-average secrecy to maintain
its strategy of surprise and delight during its product launches as opposed to other
tech firms.
It is difficult to compare the industry-based theory and resource-based theory
at face value. One observation of this is in the unit of analysis: the industry-based
theory compares industries, while the resource-based theory might sample firms
or individuals (Asad 2013). While the industry-based model emphasizes external
impacts on strategy development, the resource-based theory is more inward-focused,
allowing a company to focus on internal strengths and thus plan strategies with that
in mind. Yet, the resource-based theory is likewise subject to similar limitations:
current events and developments within the industry may be underrepresented,
whereas brand name and focus on a specific resource might be overemphasized. In
addition, too much emphasis on homogeneity may reinforce a too rigid mentality;
ultimately, this might contribute to a failure of a company to adapt. This is difficult
to test, especially as the theory posits that long-term growth may be ambiguous
if it is dependent upon a resource monopoly. Some have argued that instead of
taking resource-based and industry-based theories as separate models, interna-
tional business strategy should embrace both as part of a three-pronged approach,
introducing the institutional-based theory (Peng 2008). This theory builds on the
previously mentioned theories by explaining the importance of the institution in a
decision-making process for a company—anything that relates to social, economic,
or political activities, whether formal or informal.
Some modern-day examples are beginning to challenge these traditional theo-
ries as well. Traditionally, companies such as Coca-Cola and KFC have kept their
trademark technology or other inputs secret from competitors as well as from the
 120  The Chinese Economy

public. This seems to suggest that a company’s success hinges upon its ability
to keep a monopoly on a resource or otherwise dominate an institution—often
through information or politics. Yet, open-source technologies and platforms, such
as Arduino and Android, are encouraging those with interests or skills to create
applications outside what the company itself might be using: these companies
are thus helping to dispel the myth that companies must be secretive about their
resources.

Overall Limitations on Existing Theories

The Agency Cost: Strategy and Leadership

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Strategy for a company is usually talked about in terms of maximizing growth or

value for a firm. That is, the leadership for a company should select strategies for
the project that has the highest net present value (NPV). However, there may be
different strategies that lead to other outcomes: some may be better in the long
term; others may be a quick-cash opportunity. As there may be no formal incentive
for leadership to do what is best for shareholders or stakeholders, as opposed to
themselves, companies must consider ways to reduce this agency problem. One
mitigation effort may include different organization structures between boards and
CEOs (George 2013).
Unfortunately, the existing theories do not discuss the agency cost problem and
how this affects strategy. While it is intuitive that the success of strategy depends on
leadership, ultimately, leadership and strategy can be evaluated separately: the one
who implements the strategy plays a critical role in formulating and implementing
the strategy, but is obviously not the strategy itself. This article will touch upon
leadership and strategy further on.

Politics and Participation

One obvious difficulty that a company might face is getting commitment from
those responsible for making strategic decisions. The existing theories do not
touch upon the politics of decision making; indeed, it is difficult to throw in hu-
man behavior with the already rather large concept of organizational strategy and
behavior. However, it is important to note that although an executive leader may
like a specific strategy, the rest of the top management team (and, indeed, the rest
of the company) may not be on board. Even once the decision has been made to
proceed in a specific direction, the company may face more problems. Moreover, it
might be difficult to persuade leadership to commit fully. Human nature is difficult
to control, and it is likely that people who want recognition for their individual
successes feel an incentive for disproving a strategy. Alternatively, those who have
decided to commit may be so locked into a specific strategy that they fail to consider
whether alternatives may be better. Whether managers are rational or irrational,
 september–october/November–December 2014  121

the existing strategies do not take human behavior into consideration. Due to the
complexity of this overall process, this article will not touch upon the intricacies
any more than to reiterate that they exist.

The Importance of Chinese Philosophy on International Business Strategy

A well-known Chinese philosophy for managing people/affairs is the traditional

Confucian approach (Han 2013; Su and Fung 2013). The other traditional Chinese
theory, called the yin-yang theory, is comprehensive in outlining critical elements
for any strategy, in particular for the business decision-making setting (Qiao, Fung,
and Ju 2013). In this theory, two considerations are equally important and criti-
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cal. One is the concept of relative positioning, portraying the objective nature of
one’s position relative to the external environment, while the other concept is the
consideration of cycles, relating changes in terms of an external environment or
actors. Relative positioning deals with issues or decisions at a point in time. That
is, relative position focuses on a static analysis. On the other hand, cyclical plan-
ning deals with decisions made in parallel to changes in time. Thus, adding these
two perspectives together provides analysts with a dynamic view of any situation
to be examined.

Relative Positioning

Traditionally, existing international business theories in the Western world have

primarily dealt with the notion of relative positioning in a limited sense. This is the
concept that progress can be defined by looking at the present, then projecting future
goals and making decisions based on that existing information. Companies that
are aware of relative positioning care about where they stand within the context of
the relevant environment. Much of the research here seems to come from competi-
tive thinking. This article has touched upon some theories where companies may
solely consider competitive forces or partners, such as in industry-based theory or
resource-based theory (Hitt et al 2000).
The failure of a company to comprehend fully its own position may result in
numerous problems. In a relatively innocent example, emotional biases and a lack
of self-reflection might lead to the “IKEA effect,” where people tend to overestimate
their own created value (Norton 2009). Expanding this to a firm-wide example,
this may mean that leaders of a company could become too attached to a product
or idea at the expense of the company: notable examples of such failed products
include Apple’s Newton, Microsoft’s Zune, Coca-Cola’s New Coke, as well as
Pepsi’s Crystal Pepsi. While none of these products harmed the parents company in
the long run, not every company is fortunate enough to make debilitating mistakes
and be able to recover.
Another interesting human phenomenon occurs when significant events from
recent history might affect people’s emotions to the point where leaders may over-
 122  The Chinese Economy

correct in that regard. This might be seen in politics, where one leader’s failure in
a specific area is strongly scrutinized, leading the next leader to overemphasize,
whether in agreement or disagreement, in that area. This can often be seen in the
American two-party political system; one politician’s policy may encourage subse-
quent leaders to campaign heavily to shift direction. For example, the controversial
wartime policies of President Bush in 2000 led Republicans to defend military
tactics stridently while Democrats harshly denounced them. The American people
ultimately chose more Democratic politicians, showing an emotional reaction
against the wars in Iraq and Afghanistan.
These examples show that analyzing a company via the relative positioning
model is not without flaws: this paints an incomplete picture. In summary, companies
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may suffer as leadership’s subjectivity overrides objectivity (i.e., past experiences

dominate current thinking). Moreover, those in leadership may have certain unre-
alistic expectations or simply be unaware of changes in the external environment.
Here are three examples of how companies fail to understand fully the implications
of relative positioning as they stick to a more comfortable existing position.

Wal-Mart in Germany

One internationally renowned company, Wal-Mart, was surprised when their brand
failed to become deeply rooted into German culture. From an American point of
view, their cheerful greetings to customers, “everyday low prices,” and quality
leadership should have produced stunning results when they opened several Wal-
Marts in Germany. However, in German culture, smiling at strangers is considered
strange and off-putting; moreover, Wal-Mart’s products were seen as cheaply made
and foreign.
To make matters worse, executive leadership at Wal-Mart failed to consider
that the German people preferred local leadership and customs: among the worst
cultural offenders, forbidding employees to flirt with or date one another; butting
heads with local trade unions; and failing to hire managers who spoke German,
understood Germans, and were understood by Germans. This miscarriage in con-
sidering how other cultures might consider Wal-Mart’s admittedly American ways
ultimately backfired: Wal-Mart was forced to close shop and stop its business in
Germany after several years of financial difficulties.

Home Depot in China

Home Depot, which thrives in America as well as many other foreign countries, is
another example of a company that failed to take a look at itself and consider how
it might perform in a different environment. Although executive leadership may
first have been surprised when the company failed to take off in China, hindsight
and observation make it obvious that Home Depot could have expected no other
outcome: the “do it yourself” culture that is so prevalent in countries like America,
 september–october/November–December 2014  123

did not translate well to China’s “do it for me” culture. In 2012, after six years of
effort, Home Depot decided to close many of its stores in China and consider new
approaches in areas with better cultural fits.

Borders’ Online Strategy

The Borders Corporation is perhaps one of the best-known examples of failure

through too much dependence on relative positioning. The turning point came in
2001, when Borders decided to outsource their e-commerce to Amazon.com. This
seemed logical: the online store was struggling and detracted from the core bricks-
and-mortar retail business. Yet, the result was that Borders was never able to claim
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a digital experience as a core competence of the business. As Amazon flourished

and adapted to consumer tastes, Borders fell woefully behind—the last year that
Borders made a profit was 2006.
Borders is just one of many companies that failed to adapt to the changing
circumstances, perhaps relying too much on relative positioning and creating
strategies from it. Other well-known examples include Circuit City and Reader’s
Digest. In these examples, companies that have failed to consider the future while
making strategic decisions must then reconsider their options once adverse factors
make themselves clear.

Cyclical Planning

The theory of cycles is quite different from that of relative positioning—instead of

taking snapshots of a company and comparing them across industries, resources, or
other current measurements, cyclical planning revolves around the idea that events
are dynamic in nature; there are random or causal factors underlying changes. As
a result, winning strategies will necessarily change over time.
The idea of cycles is prevalent as a philosophy throughout much of Chinese
history: the rise and fall of dynasties and the nonlinear concept of time are two
prominent examples of the acceptance of cycles. One concept central to the idea
of cyclical planning is the endogeneity of change: that is, from one extreme comes
another. This paper has made some mention of this in the discussion of SWOT
analyses: strengths may be produced through weaknesses; weaknesses may actu-
ally mask or deliver strengths. While this makes sense as a philosophy, the idea of
cyclical planning tends to be forgotten as part of business strategies. In the realm
of international business, this attention—or lack of—to cycles may manifest itself
in various ways. At one extreme, leaders at the forefront of a successful company
may dismiss other ways of doing business at their own expense (such as the United
States Postal Service struggling with the advent of electronic communications).
At the other end, companies that may seem unnecessary could fill a niche market
(such as Twitter managing to exist outside of Facebook’s similar features).
Examples of cyclical effects can be found even outside corporate management:
 124  The Chinese Economy

the philosophy of karma, where a user performs a deed and then gets rewarded
or punished simply as a consequence of the action; the phrase “what goes around
comes around” is well known; even Newton’s third law of motion—that a body
exerting a force on another body will experience an equal and opposite reaction
from the second body—is a concept that spans continents and generations. These
commonplace ideas about cycles are well entrenched in our everyday lives.
When these concepts are applied to large-scale corporations, the need for
planning around these cycles becomes even more important. One far-reaching
example can be seen in the automobile industry. There have been numerous cycles
throughout the automobile industry, as various trends have promenaded in and out
of public awareness. For example, one cause of the popularity of the automobile
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was the convenience of transportation, not to mention the relatively cheap cost
and easier maintenance: it was easier for the average worker to buy and maintain
a car than a horse and carriage. As cars became more mainstream due to this in-
expensive pricing, the focus of car manufacturers thus shifted to visual as well as
mechanical design to differentiate their products. These designs ultimately enabled
automobiles to evolve toward faster speeds, creating a need for increased safety
and manufacturing standards: the industry then shifted to examine the materials
used in producing cars.
Most recently, since the early 2000s, the push toward environmentally friendly
cars has encouraged consumers to consider the environmental effect of purchas-
ing cars: fuel cleanliness and energy efficiency have gained priority in the minds
of consumers. In 2006, Toyota’s Prius was a quick and effective response to the
demand of consumers who wanted to purchase a car that was less environmentally
hazardous. Yet, in 2008, General Motors continued to push for Jeeps and other
gas-guzzling cars. While this strategy had been profitable for several years, it ul-
timately backfired as consumer tastes changed to more energy-efficient vehicles.
GM’s lack of foresight ultimately contributed to its need for a bailout. It is impor-
tant to note that in some instances, too much foresight can be just as hazardous as
none at all: the Smart Car, which was smaller, environmentally friendly, and more
futuristic likewise did not experience the popularity for which its manufacturers
had hoped. These examples showcase one of the largest complexities of cycli-
cal planning: it is difficult to predict, time, and plan the next cycle. At the same
time, this process illustrates the endogeneity of change, where the focus from
one salient issue leads to a completely different focus on another. Indeed, as each
cycle spawns more considerations and features, companies must remain in tune
with their consumers.
One last common example of cycles is the product life cycle. A quick look at
recent technology shows us how adoption cycles, production cycles, and even the
product itself have cyclical tendencies. When the PC first became popular, two of
the biggest brands positioned themselves very differently: Microsoft packaged just
software but made sure it was compatible with almost every external system; Apple
created specifically designed software that was only compatible within other Apple
 september–october/November–December 2014  125

products. Years later, with the rise of ultraportable technology, Apple continues to
dominate an industry by packaging and creating software, whereas Google has
become the dominant software-producing company.

Yin-Yang Theory as a Combination of Relative Theory and Cyclical

Planning

Every decision made today reflects a decision in a point in time of the cycle and
other events that have occurred. There is a macro-factor (from social pressure) in-
fluencing any leader’s decision along with a micro-factor (personal factor), which
may have a huge impact on the decisions that any company may then make. Thus,
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in using relative positioning and strategic planning together in this vein, companies
will have a better picture of both the environment and themselves. In the previ-
ously given example about the automobile industry, Toyota was able to leverage
the market conditions and consumer responses, successfully manufacturing and
marketing the Prius—this is in stark contrast to the current bankruptcy crisis in
Detroit, exacerbated by the lack of thriving car manufacturers. Likewise, in the
technology and electronic device industries, Apple, Google, and Microsoft are
examples of companies that successfully adapted their strategies through periods
of uncertainty and change. Notable failures include AOL. Throughout these suc-
cesses and failures, the common thread that emerges is that those companies that
considered both relative positioning and cyclical planning together were in the best
position to create an adaptive, successful strategy.

Strategic Options

Although developing a main strategy is critical to the success of a company, leader-

ship should not fail to develop strategic options to deal with an uncertain future. This
includes many aspects: considering long-term growth; preparing for contingency
plans and crisis management; establishing socially responsible investments; and
sustaining a strong company culture. All these factors combined show that manag-
ers and leaders need to be able to differentiate personal bias from objective data in
order to develop strategic options for firms.

Sustainable Long-Term Growth

Common sense suggests that companies should labor to create strategies with the
future in mind. Pharmaceutical companies and medical device companies could
hardly expect to continue to be sustainable without creating viable drugs and de-
vices in the future. On the other hand, firms in industries such as retail or jewelry
need to be in tune with consumers and anticipate changes in demand. No matter the
industry, companies must not fail to consider whether their strategies and current
procedures can continue to generate profit and growth over the long term.
 126  The Chinese Economy

It is obvious that agency cost problems will likely lead managers to short-term,
visible results, deviating from the long-term goals for the company, given the
current incentive schemes. However, leaders need to structure deals and develop
an organization structure that can motivate others to take actions that support the
long-term view of the firm.

Crisis Management

Anticipation of future emergencies is crucial for a company, even if everything

seems to be going well. Leaders within a company must have the necessary fore-
sight to realize that changes in the industry or environment, no matter how small,
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may still have an effect. The concept of crisis management is an integral part of
both relative positioning and cyclical planning. Leadership must carefully ponder
future potential outcomes, not just the present issues under consideration. Often, a
strategy for mitigating crises can be developed from current policies that may be in
place to cope with any current problems. In addition, management must consider
the best times to be more, or less, aggressive within an industry. These decisions
will usually depend upon changes in time or position.
Crisis management reflects the leader’s broader vision as to how future adverse
events could be managed. A good leader should not only focus on current issues
but should be able to envision future market shifts or consumer tendencies. Thus,
having a systematic approach to deal with future crisis is essential to survival and,
thus, is a strategic option.

Socially Responsible Investments

Socially responsible investments are becoming more popular as companies and cor-
porations acquire more recognition for performing acts that consider the social and
environmental consequence of investments. This is a deviation from the past, where
the best thing a company could do was to focus on short-term profit, potentially
leading to its long-term downfall. Consumers are becoming more intelligent about
the products they buy, given better-developed social networks and wider-reaching
communication tools. Thus, one common method for companies to build branding
and develop social capital and goodwill is to invest in public projects that benefit a
variety of social criteria. as well as the consumers and stakeholders of the firm.
Some examples of social criteria include religious freedoms, human rights,
environmental concerns, labor relation practices, and even product safety. A very
well-known example of a company that failed to consider the social ramifications
of company policy is Hon Hai Precision Industry Co., Ltd., known better as Fox-
conn, in its partnership with Apple (Frost and Burnett 2007). During 2006, there
were several news reports claiming systematic labor abuses at a factory in China,
Hongfujin Precision Industry that made electronics for Apple. This company owned
by Foxconn, a large Taiwanese conglomerate, only paid its workers $50 USD per
 september–october/November–December 2014  127

month for daily fifteen-hour shifts. As a result of this negative publicity, managers at
Hongfujin filed a suit against these reporters, refuting the claims. Apple responded
promptly, setting up audits. Within six weeks, Apple completed the audit and
highlighted some of the problems that had occurred, which pressured managers
at Hongfujin to drop the lawsuit and issue an apology. The increased awareness
of social criteria catapulted both Apple and Foxconn into the spotlight. However,
whereas Foxconn became the focus of much negative attention due to the lack of
consideration of human rights, Apple was able to turn the scrutiny into a more
positive light by displaying attention to its workers and promising to improve.
A more recent example is Bangladesh’s garment industry, in which more than a
thousand people were killed in April 2013 when the Rana Plaza building in Savar
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collapsed as a result of financial and managerial measures that ranged from the
negligent to the illegal. Even after workers had discovered cracks in the building’s
walls, due to factories with heavy machinery and illegal extra floors, no safety
precautions had been taken. Indeed, some workers had even been threatened by
managers to have a month’s salary withheld for failure to show up (Devnath 2013).
As the tragedy unfolded, many companies rushed to distance themselves from the
factory—either coming forward to display their lack of involvement or to com-
mitting to future change. Since then, pushed in part by the heavy news coverage
and condemnation from various leaders and humans rights groups, several peti-
tions have been created to reduce risk of similar future events. Indeed, companies
are either creating their own safety agreements (Burke 2013) or working with the
Bangladeshi government to support better workers’ rights. The rapid response
and general outcry around the world, thus, also shows the idea of reputation of a
corporation as a strategic option.
One federal mandate to enforce more socially responsible actions, both nation-
ally and globally, is the U.S. Foreign Corrupt Practices Act (FCPA). The FCPA
prohibits bribery activities of any U.S. firms, and since 1977, all U.S. persons
and certain foreign issuers of securities are obligated to enforce and follow these
anti-bribery regulations. Some examples of these anti-bribery provisions include
requiring corporations to keep accurate records and to reflect all transactions fairly,
as well as to devise and maintain an adequate system of internal accounting. This
ensures that the leadership of a company continues to focus on the ethical benefits
of profit (which also addresses the agency cost), considering ways to build capital
transparently and also benefit the society of which they are a part. Thus, legisla-
tion can also motivate companies to consider strategic options such as socially
responsible strategies.

Company Culture

It is often in the company’s benefit to ensure a sense of company culture: this

helps to increase productivity and harmony within organizations, boosting morale
and the overall sense of community. Many things contribute to a healthy sense of
 128  The Chinese Economy

culture: diversity, fairness, openness in communication, pride in good work, equal

opportunities, and so forth. Different companies may choose to keep their internal
culture strong through motivating steadfast employees through stock benefits,
various types of employee recognition, or investing time and money in learning
and training employees.
Sapient is an example of a company with a strong culture. This is partially due to
very dedicated hiring practices, but also consistent reinforcement of the company’s
six core values (client-focused delivery, creativity, leadership, openness, people-
growth, and relationships). Additionally, new hires from college campuses are
encouraged to attend a two to four month training institute in Bangalore, India. This
enables recent graduates not only to understand the global markets better through
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training and by learning the specific aspects of their roles, but also to understand
the core values better and, thus, continue to uphold the strong company culture.
In addition to training new campus hires, Sapient also encourages its employees
to continue to grow and reflect its core values through recognition and rewards
programs for taking additional training classes or demonstrating exceptional com-
mitment to the core values.
Google is another excellent example of a corporation with a strong culture.
Famously, its amenities for its employees include gyms, daycare centers, and nu-
merous kitchens, thus providing additional incentives for employees to work hard
without worrying about potential disruptions to their work-life balance. Indeed,
this model has been so successful that many in the Silicon Valley in California have
attempted to copy the model to attract employees, to the point where it has become
an expected benefit. Thus, companies that maintain a strong sense of company
values and culture tend to be those with a clear sense of direction and purpose who
encourage their employees to live out the culture. While culture does not ensure
continued success, it is certainly an aspect that many successful companies must
consider. Thus, company culture is another type of strategic option in which leaders
can boost loyalty, motivation, and morale.

Conclusion

Throughout history, different cultures have various mindsets about the interactions
of people and how societies function. As countries, cities, and even corporations
have formed within these cultures, they grow and propagate—through spoken or
unspoken means— within the philosophy, leadership, and ultimately strategies
dictated by those mindsets. As a result, corporations in a specific geographic area
have historically aligned to similar strategies. As communication between traditional
geographic networks becomes easier, faster, and more widespread, these social
groups are more likely to find themselves partnering with out-of-network groups.
In these cases, the specific strategies, as well as how these strategies affect both
short-term decision making and long-term goals, become interesting.
This article began with a discussion on existing strategies and prominent theories
 september–october/November–December 2014  129

for international business, including the SWOT analysis, as well as the resource-
based theory, industry-based theory, and institutional-based theory. It then put them
into a conceptual framework. While each of these theories has added new dimen-
sions to the existing structure, they have also come with certain limitations: some
strategies are static without considering the flow of time or other resources; other
ignore the human interactions that shape the strategies, policies, and ultimately
the direction of a company.
Using the ideas of relative positioning and cyclical planning, this article high-
lighted examples of companies that both failed and succeeded to consider potential
macro- and micro- factors. The conclusion that can be drawn from these examples
is that no single existing international business theory can ultimately explain how
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international businesses succeed and thrive. Thus, a step back is needed; analysis
can be accomplished by utilizing multiple strategies. In essence, the concepts of
relative positioning and cyclical planning can cumulatively be referred to as a yin-
yang theory: the most adaptive strategies arise from leadership that best considers
all possible angles of a decision, focusing on current profitability as well as longer-
term strategic options and future growth. The usefulness of the yin-yang theory
merits more future research.

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