Ch01-Strategizing Around The Globe-Global Strategy

Chapter 1
Strategizing
Around the
Globe
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2017 Cengage
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Outline
• A global global-strategy book
• Why study global strategy?
• What is strategy?
• Fundamental questions in strategy
• What is global strategy?
• What is globalization?
• Global strategy and globalization debate
• Organization of the book
A Global Global-Strategy Book
• Text departs from traditional view of global
strategy
• Important to respond to local needs
• Traditional view of global strategy is incomplete
and unbalanced
 Sacrifices local responsiveness and global learning
 Ignores how domestic firms compete with each other
and with foreign entrants
 Traditional global strategy is only appropriate for
large MNEs in developed countries
 It is dangerous to ignore less developed economies
Why Study Global Strategy?
• A prerequisite in top ranks of large firms
• Dealing with foreign-owned suppliers is common
in all businesses
• Domestic corporations can buy foreign-owned
corporations
• Domestic corporations can be bought by foreign-
owned corporations
What Is Strategy?
• Origin – Greek word (strategos) “art of the general”
 Sun Tzu, Chinese military strategist in 500 BC
 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
 Integrate both planning and action schools
What Is Strategy? (continued)
 Leverage the concept of “theory,” which serves both
explanation and prediction
 Require replications and experimentations
 Understand the difficulty of strategic change
 Strategy is a firm’s theory about how to compete
successfully
 Strategy should be communicated in a powerful but
easy-to-remember way
 Strategy should give coherence to decisions and
actions
 Managers must exercise strategic leadership
Our Definition: Strategy as Theory
• Integrating both planning and action schools
• Leveraging the concept of “theory”
 A theory serves two purposes: Explanation and
prediction
• Requiring replications and experimentations
 To establish the applicable boundaries and limits
of an existing theory
• Understanding the difficulty of strategic change
Fundamental Questions in Strategy
• Why do firms differ?
 Cultural differences between Western and Japanese firms
 Networks of relationships have powerful effect
– keiretsu, guanxi, chaebol, blat
• How do firms behave?

 Industry-based view – focus on competitive forces affecting
an industry, external opportunities and threats
 Resource-based (capabilities) view – focus on internal
strengths and weaknesses, firm-specific resources and
capabilities
 Institution-based view – includes formal and informal “rules
of the game”
Fundamental Questions in Strategy
(continued)
• What determines the scope of the firm?
• What determines the success or failure of firms
around the globe?
 Balanced scorecard: A performance evaluation
method from the customer, internal, innovation and
learning, and financial perspective
 How do customers see us?
 What must we excel at?
 Can we continue to improve and create value?
 How do we look to shareholders?
What Is Global Strategy?
• Provide standardized products and/or services
on a worldwide basis (i.e., traditional view)
• Any strategy outside one’s home country
• Our definition of global strategy
 Strategies of firms around the globe
 MNEs and smaller firms
 Both developed and emerging economies
 Both international and domestic
What Is Globalization?
• Globalization: The close integration of countries and
peoples of the world
 New force sweeping through the world in recent times?
 Long-run historical evolution since the dawn of history?
 Closer integration of the countries and people of the world?
 Pendulum view: Globalization swings between embracing
and restricting due to success, world events, crises, etc.
 A process similar to the swing of a pendulum: Postwar history,
emerging economies, outsourcing, MNEs, terrorist attacks, BRIC,
recession…
 Semiglobalization: Market barriers are high but not high enough to
completely insulate countries
Global Strategy and Globalization Debate
• Events require making strategic choices in this

complex, rapidly moving world
 Anti-globalization protests
 Terrorist attacks
 Economic crises
 Corporate governance crisis (Asian financial crisis,
U.S. scandals)
Global Strategy and Globalization Debate
(continued)
•Know Yourself, Know Your Opponents

 Understand strengths AND limitations
 Recognize the social, political, and environmental
costs associated with globalization
 Current business school students exhibit values and
beliefs different from the general public
 Be aware of bias and strategic blind spots (of
students, instructors, and managers)
Organization of the Book
• Part I: Foundations of Global Strategy
 Chapter 1: Strategizing Around the Globe
 Chapter 2: Managing Industry Competition
 Chapter 3: Leveraging Resources and Capabilities
 Chapter 4: Emphasizing Institutions, Cultures, and Ethics
• Part II: Business-Level Strategies
 Chapter 5: Growing and Internationalizing the Entrepreneurial Firm
 Chapter 6: Entering Foreign Markets
 Chapter 7: Making Strategic Alliances and Networks Work
 Chapter 8: Managing Global Competitive Dynamics
• Part III: Corporate-Level Strategies
 Chapter 9: Diversifying and Managing Acquisitions Globally
 Chapter 10: Strategizing, Structuring, and Learning Around the World
 Chapter 11: Governing the Corporation Around the World
 Chapter 12: Strategizing with Corporate Social Responsibility

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Chapter 1

• How do firms behave?

• Events require making strategic choices in this

•Know Yourself, Know Your Opponents

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