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MIM 578: Global Strategy II Day 1

MIM 578: Global Strategy II Day 1. Scott Marshall SBA Corporate Partners Professor School of Business Administration Portland State University. Alternative Perspectives on Strategy. Business Strategy is rooted in two interrelated concepts: Competition – industry conditions,

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MIM 578: Global Strategy II Day 1

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  1. MIM 578: Global Strategy IIDay 1 Scott Marshall SBA Corporate Partners Professor School of Business Administration Portland State University

  2. 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

  3. 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) SWOT

  4. 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)

  5. Alternative Perspectives on Strategy Rational Perspective • Rational: You’re 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)

  6. Inadequate Information and Control Limited Search Satisficing Decisions Alternative Perspectives on Strategy Rational Perspective • Satisficing: Perhaps you can simply “satisfice” AND LEAD TO

  7. Alternative Perspectives on Strategy Incrementalist Perspective adapted from Mintzberg (2003)

  8. 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.

  9. Alternative Perspectives on Strategy Stakeholder Perspective

  10. Alternative Perspectives on Strategy Stakeholder Perspective • Determine company’s 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.

  11. Alternative Perspectives on Strategy Institutional Perspective

  12. 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.

  13. 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?

  14. 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.

  15. 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.

  16. 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.

  17. Discussion Questions • Of these 7 criteria for effective strategy, which ones were most relevant to the success of the emerging market companies from today’s reading?

  18. Assessing Positional Advantage Looks at internal resources and capabilities of a company, such as… Material extracted from Barney (2001)

  19. Assessing Positional Advantage • Sustained Positional Advantage – • A company that possesses and exploits resources & capabilities that are… • Valuable • Rare • Costly to Imitate (Inimitable)

  20. Assessing Positional Advantage Do these resources and capabilities lead to Competitive Advantage? Valuable: Do a firm’s resources help it… • …deal with external threats? • For example, do Toyota’s 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 Nike’s 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? Material extracted from Barney (2001)

  21. 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?

  22. 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? Material extracted from Barney (2001)

  23. Assessing Positional Advantage Material extracted from Barney (2001)

  24. Assessing Positional Advantage • Rapid change erodes positions…leading totemporaryopportunities Competitive Edge Strategic Window Launch Exploitation Counterattack Time

  25. Assessing Positional Advantage Within Industry Dynamics – Economies of Scale, Efficiency, Globalization and Consolidation

  26. Assessing Positional Advantage Within Strategic Group Competitiveness Within Industry Competition

  27. 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?

  28. 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

  29. Experiential Exercise The Paper Chase Game

  30. Strategy-Structure-Performance • Formulate Strategy New Strategy? • Implement Strategy New Structure? • New Structure New Performance?

  31. 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

  32. Emergence and Dynamism “The future isn’t what it used to be” Past, but still somewhat relevant…economies of scale and scope Current and quite relevant…mass customization and flexible manufacturing Future…the story continues to change… Current thinking is still largely tactical in focus…now evolving to strategic orientation. Why? Because success increasingly depends on the next arena of commercial competition, not the last one.

  33. 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 win…temporarily…

  34. 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.

  35. Emergence and Dynamism • Lots of Terms – Creative Destruction, Reconstructionism, Strategic Inflection Points, “Blue Oceans”

  36. 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.

  37. Emergence and Dynamism • Webcast: Research in Motion • Let’s watch this interview and think about RIM’s strategy. From this interview, what did you take note of in terms of: • strategic perspective, • positional advantage, • strategic windows, and • emergence and dynamism?

  38. 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

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