International Business
Strategy (IBS) - b
Corporate strategy
Business strategy
Functional strategy
Corporate strategy (CS)
Overall scope of activities
– Competition: geographic location of activities
– currency: balance worldwide activities
– country: recognise individual factors
Corporate parenting
– in head office how to manage various businesses
– add parenting value - add a business to a
portfolio - divest in the portfolio
– different styles: planning, performance control
=> match to the business
1b-Strategy (18)
2
Corporate value added
Corporate scope
Corporate parenting
Corporate strategy
Business strategy
Products
Markets
1b-Strategy (18)
Corporate
advantage
3
SM styles-I: Strategic Planning
„Orchestrator”
Characteristics
• HQ: deeply involved at business level
• Formally planning strategies
• Planning lever  clear directions
Performance
• Longer-term view: short term financial
suffering
• Planning: time consuming  centre losing
objectivity
• Business unit: may be frustrated
1b-Strategy (18)
4
SM styles-II: Strategic Control
„Coach”
Characteristics
•
•
•
•
Strategic development: left to units
No directions are set, no coordination
Capitol projets: business initiates
Business units: detailed reports
Performances
• Balance long term - short term financial goals
• It is difficult
• No exploiting synergies
1b-Strategy (18)
5
SM styles-III: Financial Control
„Controller”
Characteristics
•
•
•
•
•
Strong delegation of responsibility
Budget process and aggreeing budget critical
Budget: contract
Strong emphasis on short-term payback
Financial performance monitored in detail
Performance
•
•
•
•
Maximise short-term financial performance
Failure: organic growth
Linkages not developed
1b-Strategy (18)
Strong incentives
6
Centre
Centre
A
A
B
Holding
(“CONTROLLER”)
B
Strategic control
(“COACH”)
Centre
A
B
Strategic planning
(“ORCHESTRATOR”)
Legends:
Financial monitoring, controlling, resources allocation
1b-Strategy
(18),
=
“=
=“=
, consultative coordination 7
=“=
,
=“=
, directives
Business strategy (BS)
– How a business seeks to compete in its
product-market?
– create competitive strategy
– large range of businesses
– Develope sustainable competitive
advantege
– emulate existing rivals: same game
– inventing new ways: new game
1b-Strategy (18)
8
Yamaha piano
– ovearall demand started decline
10%/year
– same game: fight harder, more effictively
– new game: fresh eye for opportunities
» superb acustic piano (combination of
digital amd optical technology)
» 40 million piano => refitting with PC
& disk
» additional digital value-creating
possibilities
1b-Strategy (18)
9
Same game
Delayering
Divestment
Deteriorating performance
1b-Strategy (18)
10
New Game
Improving performance
New vision and capabilities
New strategic
recipe
1b-Strategy (18)
11
SAME GAME
NEW GAME
Characteristics
Identify market segments
Positioning in a segment
Serve more effectively
Strategic intent
Outcompeting rivals
Similar strategic approach
Doing the same thing better
Characteristics
Strategic innovation
First mover advantage
Avoidance head-to head
competition
Strategic intent
Strategic intent investing in new
strategic recipes
Innovation, vision
Potential outcome
Parity at the best
New strategy: incremental
approach
Potential outcome
Competitive superiority
Distinct advantage
‘fundamental’ approach
1b-Strategy (18)
12
Competition for
industry foresight
and intellectual
leadership
Core
comptencies
Competition for
market position
and share
STRECH
CORE
Have
Competing for the
COMPETENCIES
Have not
Future
Essential
Develop
Growth, acquire
Non-essential
1b-Strategy (18)
Harvest/divest
Buy in
13
Corporate strategy:
forward integration: closer to the customer
Market penetration
Corporate strategy:
related diversification
Product development
Product expansion
BS
Corporate strategy:
unrelated diversification
Geographical expansion
Corporate strategy:
backward integration:1b-Strategy
closer(18)to the source of inputs
14
Functional strategy (FS)
– How the different activity areas of a business
contribute to the overall business?
– Changes in BS  changes in FS
– New FS
 changes in BS
Key requirements: to fit and match
1b-Strategy (18)
15
BUSINESS STRATEGIES
Bi-directional
Human resources
Finance
FUNCTIONAL
STRATEGIES
Logistics
Marketing
1b-Strategy (18)
Operations
16
Business
FUNCTIONS
Strategies Human Logistics Operations Marketing Finance
resources
BS Nr.1.
BS Nr.2.
BS Nr.3.
…..
BS Nr.n
1b-Strategy (18)
17
Business performance, corrective
adjustments
Functional Str.
Business
performance
Corporate Str.
Business Str.
Corrective
adjustment
1b-Strategy (18)
18