Strategic Management
MGMT 490
Chapter Outline Part II Chapters 8 – 13
Spring 2007
Dr. Dennis R. Briscoe
Chapter 8: Strategy in the Global Environment
I. The global and national environments
A. The globalization of production and markets
i. Implications for competition within an industry
B. National competitive advantage
i. Factor endowments
ii. Local demand conditions
iii. Competitiveness of related and supporting industries
iv. Intensity of rivalry
2. Increasing profitability and profit growth through global expansion
A. Expanding the market: leveraging products (develop at home and sell them
internationally)
B. Realize cost economies of scale from global volume
C. Realize location economies
D. Leveraging the skills of foreign subsidiaries
3. Pressure for localization (local responsiveness) versus central (headquarters) control
and cost reductions
4. Pressures for local responsiveness
A. Differences in customer tastes and preferences
B. Differences in infrastructure and traditional practices
C. Differences in distribution channels
D. Host government demands
5. Choosing a global strategy
A. Pressures for centralization versus local responsiveness
i. Global standardization
ii. Localization
iii. Transnational
iv. International
B. Basic entry decisions
i. Deciding which overseas marketsd to enter
ii. Timing of entry
iii. Scale of entry and strategic commitment
C. Choice of entry mode
i. Exporting
ii. Licensing
iii. Franchising
iv. Joint venture
v. Wholly owned subsidiary
vi. Advantages and disadvantages of each entry mode (Table 8.1)
D. Choosing an entry mode
i. Importance of distinctive competencies
ii. Pressures for cost reductions
6. Global alliances
A. Advantages
B. Disadvantages
7. Making global strategic alliances work
A. Partner selection
B. Alliance structure to reduce opportunism
C. Managing the alliance to maximize the benefits
Chapter 9: Corporate-level strategy: Horizontal integration, vertical integration, and
strategic outsourcing
1. Horizontal integration: single-industry strategy
A. acquisition
B. merger
C. Benefits
i. lower cost structure
ii. increased product differentiation
iii. replicating the business model
iv. reduced industry rivalry
v. increased bargaining power
D. Problems
2. Vertical integration: Entering new industries to strengthen the “core” business
model
A. Define vertical integration
i. Backward
ii. Forward
iii. Full integration
iv. Taper integration
B. Increasing profitability through vertical integration
i. Facilitating investments in specialized assets
ii. Enchancing product quality
iii. Improved scheduling
C. Problems
i. Increased cost structure
ii. Technological change
iii. Demand unpredictability
D. Limits of vertical integration
i. Increased bureaucratic costs
ii. Inability to change to meet changing technology or market
3. Alternatives to vertical integration: cooperative relationships
A. Strategic alliances
B. Short-term contracts and competitive bidding
C. Long-term contracting
D. Building long-term cooperative relationships
i. Hostage taking
ii. Credible commitments
iii. Maintaining market disciplline
4. Strategic outsourcing
A. Outsourcing
B. Offshoring
C. Benefits of outsourcing
i.Reducing the cost structure
ii.Enhanced differentiation
iii.Focus on the core business
D. Risks of outsourcing
i. Holdup
ii. Loss of information
Chapter 10: Formulating and Implementing Related and Unrelated Diversification
[Be sure to be able to distinguish between Differentiation and Diversification]
1. Expanding beyond a single industry
A. Original industry versus new industries
B. A portfolio of distinctive competencies
2. Increasing profitability through diversification
A. Define diversification
B. Define a diversified company
C. Define “free cash flow”
D. Transferring competencies across industries
i. Related business
ii. Commonality
E. Leveraging competencies
F. Sharing resources: economies of scope versus economies of scale
G. Using product bundling
H. Managing rivalry
i. define multipoint competition
I. Utilizing general organizational competencies
i. Entrepreneurial capabilities
ii. Capabilities in organizational design
iii. Superior strategic capabilities
3. Types of diversification
A. Related diversification
B. Unrelated diversification
4. Disadvantages and limits of diversification
A. Changing industry- and firm-specific conditions
B. Diversification for the wrong reasons
C. The bureaucratic costs of diversification
1. The number of businesses
2. Coordination among businesses
D. Choosing a strategy: depends on a comparison of the benefits of
each strategy against the bureaucratic costs of pursuing it
1. When does it pay a company to pursue related
diversification?
2. When does it pay a company to pursue unrelated
diversification?
5. Choice of entry strategies
a. Internal new ventures
A. The attractions of internal new ventures
B. The pitfalls of new ventures
1. Scale of entry
2. Commercialization
3. Poor implementation
C. Guidelines for successful internal new venturing
b. Acquisitions
A. Attractions
B. Pitfalls
1. Integrating the new company
2. overestimating economic benefits
3. expense of acquisitions
4. inadequate pre-acquisition screening (due diligence)
C. Guidelines for successful acquisition
1. Good due-diligence: identification and screening
2. Good bidding strategy
3. Well thought out and implemented integration
4. Learning from experience
c. Joint ventures
6. Restructuring
a. Define restructuring
b. Why restructure?
Chapter 11: Corporate performance, governance, and business ethics
1. Stakeholders and corporate performance
a. Define stakeholders
i. internal stakeholders
ii. external stakeholders
b. Stakeholder impact analysis
c. The unique role of stockholders
2. Governance mechanisms
a. The board of directors
i. Inside directors
ii. Outside directors
b. Stock-based compensation
c. Financial sta tements and auditors
d. The takeover constraint
i. Corporate raiders
ii. Greenmail
e. Governance mechanisms inside a company
i. Strategic control systems
1. purposes
2. balanced scorecard
f. employee incentives
3. Ethics and strategy
a. Define ethics
b. Define business ethics
c. Define ethical dilemmas
d. Ethical issues in strategy
i. Conflicts between goals of the enterprise and its managers and the
fundamental rights of important stakeholders
ii. Define self-dealling
iii. Define information manipulation
iv. Define anti-competitive behavior
v. Define opportunistic exploitation
vi. Define substandard working conditions
vii. Define environmental degradation
viii. Define corruption
e. Approaches to ethics
i. Utilitarianism
ii. Rights theories
iii. Justice theories
f. Behaving ethically
i. Hiring and promotion
ii. Organization culture and leadership
1. codes of ethics
iii. decision-making processes
iv. ethics officers
v. strong corporate governance
vi. moral courage
Chapter 12: Implementing Strategy in Companies That Compete in a Single Industry
1.Implementing strategy through organizational design: “Organizational structure,
control, and culture shape people’s behaviors, values, and attitudes and determine how
they will implement an organization’s business model and strategies.”
a. Define organizational design
b. Define organizational structure
c. Define control systems
d. Define organizational culture
2. Building blocks of organizational structure
a. Three basic choices
b. Grouping tasks, functions, and divisions
c. Allocating authority and responsibility
i. Hierarchy of authority
ii. Span of control
iii. Tall versus flat organizations
iv. Minimum chain of command
v. Pros and cons of centralization versus decentralization
d. Integration and integrating mechanisms
i. Direct contact
ii. Liaison roles
iii. Teams
4. Strategic control systems
a. Define
b. Levels of strategic control
i. Personal control
ii. Output control
iii. Behavior control
1. Define
2. operating budget
3. standardization
c. Using information technology
d. Strategic reward systems
5. Organizational culture
a. Define culture, values, norms and the relationship between them
b. Organizational socialization
c. Relationship between strategic leadership and organizational culture
i. Adaptive culture
6. Building distinctive competencies at the functional level
a. Functional structure: grouping by function
b. The role of strategic control
i. Management by objectives
c. Functional structure and bureaucratic costs
i. Communication problems
ii. Measurement problems
iii. Customer problems
iv. Location problems
v. Strategic problems
d. The outsourcing option
7. Implementing strategy in a single industry
a. Good organizational design (Figure 12.6)
b. Implementing cost leadership
c. Implementing differentiation
d. Product structure: implementing a wide product line\
e. Market structure: increasing customer responsiveness
f. Geographic structure: expanding nationally
g. Matrix and product-team structures: competing in fast-changing high-tech
environments
8. Restructuring and reengineering (define)
a. Also define: business process
Chapter 13: Implementing strategy in companies that compete across industries and countries
1. Managing corporate strategy through the multidivisional structure
a. Advantages
i. Enhanced corporate financial control
ii. enhanced strategic control
iii. Growth
iv. Stronger pursuit of internal efficiency
b. Problems
i. Establishing the divisional-corporate authority relationship
ii. Distortion of information
iii. Competition for resources
iv. Transfer pricing
v. Short-term R&D focus
vi. Duplication of functional resources
c. Corporate strategy and structure and control (Table 13.1)
2. Implementing strategy across countries
a. See Table 13.2 for relationship between various global strategies
(localization, internationalization, global standardization, and transnational)
and various control and structure relationships (centralization of authority,
horizontal differentiation, need for complex integrating mechanisms, and
organizational culture)
3. Implementation issues for the various entry-into-new businesses modes
a. Internal new venturing; intrapreneurs
b. Joint ventures
c. Mergers and acquisitions
THAT’S ALL FOLKS! GOOD LUCK!