global strategy mike w. peng copyright © 2014 cengage learning. all rights reserved. may not be...

Global StrategyGlobal StrategyMike W. PengMike W. Peng

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Strategic ManagementGlobal Strategic ManagementMike W. PengMike W. Peng

Chapter 1

Strategy Around the

Globe

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Why Study Global Strategy?

• Job and career aspiration opportunities

• Awareness of what is going on in the world

• Avoid downside risks of globalization


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 firm’s strategies may not work in all situations

Past success does not guarantee future success

It is often difficult to change strategy


What is Strategy? Cont’d

Strategy should give coherence to decisions and actions

Managers must exert effective strategic leadership


What Is Strategy?


The Essence of Strategy

Figure 1.3


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 experimentationsTo establish the temporal (time-related) and

geographic limits of an existing theory

• Understanding the difficulty of strategic change


Fundamental Questions in Strategy

• Why do firms differ? Cultural differences between Western firms and Japanese

companies

Networks of relationships have powerful effect - keiretsu, guanxi, chaebol, blat

• 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


Fundamental Questions in Strategy cont’d

• 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


The “Strategy Tripod”Three Leading Perspectives on

Strategy

Figure 1.4


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

Both international and non-international (domestic)Both developed and emerging economies


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?


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)


Global Strategy and Globalization at a Crossroads, Cont’d.

•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

Do not ignore non-government organizations (NGOs)-view them as partners

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