Global Business Strategy
Overview of Global Business Strategy
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Contents
Objectives
What is Strategy?
The concept of Globalization
The concept of a Learning Organization
The Strategic Management Model
Objectives
• Understand the concept of Strategy and Strategic
Management.
• Address the importance of Globalization and becoming a
Learning Organization.
• Learn the Four Phases of the Strategic Management Model.
• Environmental Scanning.
• Strategy Formulation.
• Strategy Implementation.
• Evaluation and Control.
What is Strategy?
Origin-Greek word: Strategos (art of the general).
• Tactics.
• Siegecraft.
• Logistics.
What is Strategy?
Sun Tzu.
Qi state (544–496 BC).
His name means: "Master Sun".
He was a Chinese military strategist and
philosopher.
He is the author of The Art of War, a
influential work of military strategy as well as
business strategy.
What is Strategy?
Hannibal Barca
Carthage (247 – 181 BC)
Was a Carthaginian general, considered one of
the greatest military commanders in history.
Historians called Hannibal the "father of
strategy“,
His greatest enemy, Rome, adopted many
elements of his military tactics.
Hannibal earned a strong reputation in the
modern world, like Napoleon.
Strategy in modern days
Strategy is a high level plan to achieve one or more goals under conditions of
uncertainty.
Strategy generally involves setting goals, determining actions to achieve the
goals, and mobilizing resources to execute the actions.
A strategy describes how the ends (goals) will be achieved by the means
(resources).
It involves activities such as strategic planning and strategic management.
Strategy as Action
• Strategy is explicit, rigorous formal planning actions.
• Strategy is interaction.
• One firm’s strategies may not work in all situations.
• Past success does not guarantee future success.
• The resources available to achieve the goals are usually limited.
• Firms, like militaries, often compete aggressively.
• Military principles cannot be completely applied in business.
• Business is simultaneously war and peace.
• Militaries fight over geography, firms compete in markets.
• Markets involve products and geography.
• Multimarket competition: Firms engaging the same rivals in multiple markets.
The Essence of Strategy
Strategic Thinkers
Michael Porter Henry Mintzberg Bruce Henderson Alfred Chandler
Globalization
Globalization: the internationalization of markets and corporations.
During the 90’s a corporation could be successful by focusing only on the domestic
market. International considerations were minimal.
Globalization has changed the way modern corporations do business nowadays.
To reach economies of scale necessary to achieve the low costs, and thus the low
prices needed to be competitive, companies are thinking of a global (worldwide) market
instead of a national market.
Globalization compels organizations to adapt more quickly to changing conditions by
becoming learning organizations.
Learning Organization
Learning Organization: an organization skilled at creating, acquiring, and
transferring knowledge, and at modifying its behavior to reflect new knowledge
and insights.
Learning Organizations are skilled at four main activities:
1. Solving problems systematically.
2. Experimenting with new approaches.
3. Learning from their own experiences and past history as well as from the experiences
of others.
4. Transferring knowledge quickly and efficiently throughout the organization
Learning Organization
Research has finally found that organizations that are willing to experiment and
able to learn from their experiences are more successful than those that do not.
Strategic Planning or Strategic Management?
Strategic Planning is an organization´s process of defining its strategy
or direction, and making decisions on allocating its resources to pursue
this strategy.
Strategic Planning became prominent in corporations during the 1960s
and remains an important aspect of strategic management.
It is executed by strategic planners or strategists, who involve many
parties and research sources in their analysis of the organization and its
relationship to the environment in which it competes.
Strategic Planning or Strategic Management?
Strategic Management involves the formulation and implementation of
the major goals and initiatives taken by a company´s top management
on behalf of owners, based on consideration of resources and an
assessment of the internal and external environments in which the
organization competes.
Strategic Management is the set of managerial decisions and
actions that determines the long-run performance of a corporation.
The study of strategic management, therefore, emphasizes the
monitoring and evaluating of external opportunities and threats in
light of a corporation´s strengths and weaknesses.
The Strategic Management Model
Evaluation
Environmental Strategy Strategy
and
Scanning Formulation Implementation
Control
The Strategic Management Model
Environmental Evaluation
Strategy Strategy and Control
Scanning Formulation Implementation and Control
External Vision and
Mission
Reason for
General Forces existence Objectives
What results
to
Strategies
Industry Analysis accomplish
by when Plan to
achieve the
Policies
mission &
Internal objectives Broad
guidelines for Programs
Structure Process
decision
to monitor
making Activities
performance
Corporate Culture needed to Budgets and take
accomplish
corrective
a plan Cost of the
action
Resources programs
Procedures
Capabilities
Sequence
of steps
Competencies,
needed to
do the job Performance
Feedback/Learning
1 - Environmental Scanning
General Forces
Sociocultural Economic
Forces Industry Analysis Forces
Shareholders Suppliers
Internal Employees/
Special Environment
Interest Labor Unions
Groups Structure
Culture
Resources
Competitors
Customers
Trade Associations
Creditors
Political-Legal Communities Technological
Forces Forces
1 - Environmental Scanning
1. General Forces:
Comprised of political-legal, economic, sociocultural, and technological forces (PEST
Analysis).
2. Industry Analysis:
Composed of groups in environment that directly affect or are affected by the organization’s
operations in the specific industry (stakeholders).
3. Internal Analysis:
Structure:
The way a corporation is organized in terms of communication, authority, and workflow
(organizational structures).
Corporate Culture:
Collection of beliefs, expectations, and values learned and shared by members and
transmitted from one generation of employees to another.
1 - Environmental Scanning
3. Internal Analysis:
Resource:
Is an asset, competency, process, skill, or knowledge controlled by the corporation.
Capability:
Are activities through which the firm adds unique value to its goods or services.
Core Competency:
Are activities that a firm performs exceptionally well relative to rivals.
What is the core competency of USIL?
2 - Strategy Formulation
Strategy Formulation is the process of developing long- range plans to deal
effectively with environmental opportunities and threats in light of corporate
strengths and weaknesses (SWOT).
It includes defining the corporate vision, mission, specifying achievable objectives,
developing strategies, and setting policy guidelines.
Composed of:
• Vision.
• Mission.
• Objectives.
• Strategies.
• Policies.
2 - Strategy Formulation
Vision:
Describes what the Organization wants to become.
It puts into words not only what the company is now but what it wants to become.
Mission:
Describes what the Organization is now.
Is the purpose or reason for the corporation’s existence.
2 - Strategy Formulation
Strategic Objectives:
Are the end results of planned activity. They state WHAT is to be accomplished by
WHEN. They should be quantified, if possible.
The achievement of corporate objectives should result in the fulfillment of a corporation's
mission.
2 - Strategy Formulation
Strategy:
A strategy of a corporation forms a comprehensive master plan stating how the
corporation will achieve its mission and objectives.
It maximizes competitive advantages and minimizes competitive disadvantages.
The typical business firms usually consider three types of strategy:
1. Corporate Strategies.
2. Business Strategies.
3. Functional Strategies.
2 - Strategy Formulation
2 - Strategy Formulation
Policies:
• Its a broad guideline for decision making that links the formulation of strategy with its
implementation.
• Companies use policies to make sure that employees throughout the firm make
decisions and take actions that support the corporation´s vision, mission, objectives,
and strategies.
3 - Strategy Implementation
Strategy Implementation is a process by which strategies and policies are put into
action through the development of programs, budgets, and procedures.
• A program is a statement of the activities or steps needed to accomplish a single-use
plan.
• A budget is a statement of a corporation’s programs in financial terms.
• Procedures, sometimes termed Standard Operating Procedures (SOP), are a system
of sequential steps or techniques that describe in detail how a particular task or job is
to be done.
4 - Evaluation and Control
Evaluation and Control is the process of monitoring corporate activities and
performance results so that actual performance can be compared with desired
performance.
Evaluation
Environmental Strategy Strategy
and
Scanning Formulation Implementation
Control
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