IBUS1101 Lecture Notes - Lecture 8: Electronic Data Interchange, Jaguar Land Rover, Information Technology Management
24 Jun 2018
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What is strategy?
A planned set of actions that managers take to make best use of the firm’s resources and core
competencies, to gain a competitive or firm-specific advantage
- When developing strategies, managers examine the firm’s strengths and weaknesses,
and the opportunities and challenges facing the firm
- They then decide which customers to target, what product lines to offer, how best to
contend with competitors, and how generally to configure and coordinate the firm’s
activities around the world
- Competitive strategy is “about being different.. It means deliberately choosing a different
set of activities to deliver a unique mix of value” (porter, 1996)
International strategy
- International strategy is strategy carried out in 2 or more countries
- Managers develop international strategies to:
- Allocate scarce resources and configure value-adding activities on a worldwide
scale
- Participate in major markets
- Implement valuable partnerships abroad
- Engage in competitive moves in response to foreign rivals
Global, sustainable competitive
advantage
- Managers should aim to “develop, at one and the same time, global scale in efficiency,
multinational flexibility, and the ability to develop innovations and leverage knowledge on
a worldwide basis” (Bartlett and Ghoshal, 1989)
- Thus, the firm that aspires to become an internationally competitive enterprise should
simultaneously strive for: (often only excel in 1 or 2 of these)
- Efficiency
- Lower the cost of the firm’s operations and activities internationally
- Flexibility
- The agility to manage diverse country-specific risks and opportunities by
tapping resources in individual countries and exploiting local opportunities
- Learning
- Develop the firm’s products, technologies, capabilities, and skills by
internalising knowledge gained from international ventures and networks
Essentials of successful Global Firm
● Strategy
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○ Global Industry
■ An industry in which competition is on a regional or worldwide scale
● Firms that specialise in such industries as aerospace, cars,
computers, chemicals, and industrial equipment, typically cater to
customers on a regional or global scale
● In such industries, customer needs vary little from country.Firms
sell relatively standardised offerings across entire regions or
throughout the world
● The industry usually has only a handful of the same competitors
that compete regionally or worldwide
○ Multidomestic industry
■ An industry in which competition takes place on a country-by-country
basis
● Firms that specialise in such industries as processed food,
consumer products, fashion, retailing, and publishing usually cater
to specific conditions in each country where they do business
● In such industries, the firm must adapt its offerings to suit the
language, culture, laws, income level, and other specific
characteristics of each country
● Each country tends to have a unique set of competitors
● Organisational structure
○ The reporting relationships inside the firm, “the boxes and lines” that specify the
linkages among people, functions, and processes, allowing the firm to carry out
its operations
■ In large MNEs, these linkages are extensive and include the firm’s
subsidiaries, affiliates, suppliers, and other partners worldwide
■ issue= how much
● Organisational processes
○ Managerial routines, behaviours, and mechanisms that allow the firm to function
as intended
■ Typical processes include mechanisms for collecting information,
ensuring quality control in manufacturing, and maintaining effective
payment system
■ Important organisational processes:
● Global teams = an internationally distributed group of employees
charged with a specific problem-solving or best practice mandate
that affects the entire firm
● Global information systems= Global IT infrastructure, together with
tools like intranets and electronic data interchange, provide virtual
interconnectedness within the international firm
● Functions must function especially well as they are international
● Organisational culture
○ The pattern of shared values, behavioural norms, systems, policies, and
procedures that employees learn and adopt
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■ Employees acquire the culture as the correct way to perceive, think, feel,
and behave in relation to new problems and opportunities that confront
the firm
■ Usually derives from the influence of founders and visionary leaders or
some unique history of the firm
■ Management should seek to build a global organisational culture, key to
the development and execution of successful international strategy
■ Firms with a global organisational culture:
● Value and promote a global perspective in all major initiatives
● Value international competence and cross-cultural skills among
their employees
● Adopt a single corporate language for business communication
● Promote interdependency between headquarters and subsidiaries
● Subscribe to appropriate ethical standards
● Visionary leadership
○ A quality of senior management that provides superior strategic guidance for
managing efficiency, flexibility, and learning
■ International mindset and cosmopolitan values
● Openness to, and awareness of, diversity across culture
■ Willingness to commit resources
● Financial, human ect
■ Strategic vision
● Articulating what the firm wants to be in the future and how it will
get there
■ Willingness to invest in human assets
● Emphasising the use of diverse nationals, promoting multi-country
careers, and training to develop global managers
○ Example: Tata purchase of Jaguar Land Rover (UK) in 2008 from Ford
Reasons for Global Integration
➔Seek cost reduction through economies of scale
➔Capitalise on converting consumer trends and universal needs
➔Provide uniform service to global customers
➔Conduct global sourcing of raw materials, components, energy, and labour
➔Monitor and respond to global competitors
➔Take advantage of global media
Reasons for local responsiveness
➔Leverage natural endowments available to the firm
➔Cater to local customer needs
➔Accommodate differences in distribution channels
➔Respond to local competition
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
A planned set of actions that managers take to make best use of the firm"s resources and core competencies, to gain a competitive or firm-specific advantage. When developing strategies, managers examine the firm"s strengths and weaknesses, and the opportunities and challenges facing the firm. They then decide which customers to target, what product lines to offer, how best to contend with competitors, and how generally to configure and coordinate the firm"s activities around the world. It means deliberately choosing a different set of activities to deliver a unique mix of value (porter, 1996) International strategy is strategy carried out in 2 or more countries. Allocate scarce resources and configure value-adding activities on a worldwide scale. Engage in competitive moves in response to foreign rivals. Managers should aim to develop, at one and the same time, global scale in efficiency, multinational flexibility, and the ability to develop innovations and leverage knowledge on a worldwide basis (bartlett and ghoshal, 1989)
