Chapter 1: Strategizing around the globe

1. What is global strategy? A sceptical classmate says: “Global strategy is relevant for top
executives such as CEOs in large companies. I am just a lowly student who will struggle to
gain an entry-level job, probably in a small company. Why should I care about it?” How do
you convince her that she should care about global strategy?
Answer
 A global strategy is one that a company takes when it wants to compete and expand
in the global market. In other words, a strategy business pursues when they wish to
expand internationally. A global strategy refers to the plans an organization has
developed to target growth beyond its borders ( lay tren mang)
 Global strategy is one that the company provide standardized products and/or
services on a worldwide basis, which any strategy outside one’s home country.
 Ask her to list the products that she uses in her daily life that are made outside her
home country. This might create some awareness that as a consumer she is already
participating in the global economy. She will able to make better decisions about the
products she purchases if she has a better understanding of the choices that firms
make when they sell their products in other countries.
You could ask her to identify the brands she uses -jeans, shoes, mobile phone,
computer, etc. Many of these brands will probably be made by firms in foreign
markets. If they do not understand how to implement effective strategies, she might
have to find new brands to buy in the future. You could also encourage her to think
about the kind of job she wants to have five or ten years from now-what industry
the job be in? Will other job candidates have more exposure to global strategy than
she has, thus causing her to miss out on exciting employment or career
opportunities?

2. What is globalization? Some argue that globalization benefits citizens of rich countries.
Others argue that globalization benefits citizens of poor countries. What are the ethical
dilemmas here? What do you think?
Answer:
 Globalization is the spread of products, technology, information, and jobs across
national borders and cultures. Globalization is the close integration of countries and
peoples of the world. ( lay tren mang)
 Globalization is the process by which businesses or other organizations develop
international influence or start operating on an international scale.
 Globalization can help people in poor as well as in rich countries. On the one hand,
globalization gives customers in rich countries more choices, as well as forcing all
firms, foreign and domestic, to be more competitive in term of pricing and quality of
their products and services. Globalization can also stimulate economies in rich
countries because more and more firms export their goods and services.
Globalization can also help rich countries gain access to innovations developed in
poorer countries, which means that how to use resources more wisely and
environmentally.
 On the other hand, poor countries can take benefits from globalization because of
job creation, the development of infrastructure such as telecommunication and
transportation and the increase the standard of living. Globalization also encourage
 govt to follow international standard and help individual people as well as whole
nation to overcome poverty.
 Ethical dilemmas can arise that even if citizens of both rich and poor countries
benefit, there will likely be people in both types of countries that are losers. For
example, not all who lose jobs can find others that can comparable. Although the
number of those who benefit may outnumber those who do not, those who lose
may not be comforted by the gains of majority.

Chapter 2: Managing industry competition

1. Why do price wars often erupt in certain industries, such as the automobile industry, but
less frequently in other industries, such as the diamond industry? What can a firm do to
discourage price wars or to better prepare for price wars?
Answer:
Price wars erupt due to:
- Very little differentiation in products i.e. automobile industry
- Slow growing, fierce competition to emerge
- Large influxes of demand (i.e. Hotels) encourage price wars

This doesn't happen in other industries due to:

- The diamond industry are high end, in which products are priced on worth and branding
- They don't compete, they are there to provide the nest of the best
- Moreover, there are usually certain dominant firms that run the industry price

How do you stop price wars?

- Differentiate
- Do things consistently with a low cost strategy- trimming the product line, minimizing
product variation and customization, reducing promotion expenditure, selling products in
quantity (bundling) whenever possible
C2
Price war is a phase of sharp competition in which businessmen continuously cut prices
in order to undercut the competition. Price war sometimes would be used for an
overture to increase the revenue as a short-term strategy and gain market shares as a
long-term strategy. Cutting price is the most liable way for a company to take for increase
the share of market. On the contrary, the force to follow suit will occurs to the
competitors in case the products are similar. Through the non-aggressive pricing
strategy management and understanding of the competition, it can help in avoid the price
wars. The price war often occurs when the trader cannot differentiate his/her
product, wherefore the only way for the trader to take for compete in the industry is to
cut prices. For the diamond industry, diamond is categorized as exclusive unique product
which can be highly diff erenti ate, meanwhile compare with the car in automobile
industry. For diamond, it is a product that can highly differentiate from a lot aspect
such as the main aspects are colour, clarity, and carat (the size of the diamond), and
also other aspects like shape, Cut Grade, and Fluorescence. These are the aspects that use
to determine the price of diamond, that is why the price war is less frequently erupts
in the diamond industry. However, cars are difficult to differentiate from the quality like
Toyota and Honda, unless it is luxury brands which have more advance features.
Therefore, automobile industries can only cut price to undercut the competition among
 the competitors which have similar quality of products. For example, there was a hybrid
price war between the Honda Insight and Toyota Prius in 2009 which the Toyota reduced
the current price of Prius in order to more closely matched the new Honda Insight’s price.
Apart from this, the cut price occurs will lead to affect the perceived value of a
product. Perceived value is the value that worth for a product or service which has in the
mindset of the consumer. Therefore, there is no or too much price wars for the
certain industry due to the cut price will affect on consumers’ perceived value.

2. Compare and contrast the five forces affecting the airline industry, the fast food industry,
the beauty products industry, and the telecommunication industry in your country. Which
industry holds more promise for earning higher returns? Why?

Worldwide Basis In Vietnam

Bargaining Power of Suppliers
Airline Industry
Fast Food Industry
Beauty Products Industry
Pharmaceutical Industry
Moderate. Travel agents are
weak and consumers have
many choices and can easily
switch but not apply to all
routes.
Low. Large population of
providers reduce the effect
of individual suppliers.
Low. There are many
market players and large
supply for the products by
both small and large scales
producers.
Low. Suppliers have little
power for negotiation.
Pharmaceutical firms will
usually have significant
buying power, so they can
state the price.
Low. There is not too much
choices for Malaysian
travellers. They may be able
to switch but airlines maybe
dominant by country such
as Air Asia and Malaysia
Airlines.
Low. Large population of
providers reduce the effect
of individual suppliers.
Low. There are many
market players and large
supply for the products by
both small and large scales
producers.
Low. Suppliers have little
power for negotiation.
Pharmaceutical firms will
usually have significant
buying power, so they can
state the price.

Bargaining Power of Buyers

Airline Industry Moderate. Travel agents are
weak and consumers have
many choices and can easily
switch but not apply to all
routes.
Low. There is not too much
choices for Vietnamese
travellers. They may be able to
switch but airlines maybe
dominant by country such as
Vietnam Airlines and VietJet.

Fast Food Industry
Beauty Products Industry
High. Low switching costs
enable buyers to impose their
demands.
High. There are many
producers for beauty products,
High. Low switching costs
enable buyers to impose their
demands.
High. There are many
producers for beauty products,
 so consumers can force them
to lower the price by
purchasing competitors’
products.
Pharmaceutical Industry Low. The medication is
prescribed by doctors and if
the patients need the drug,
they need to buy it at any
given price.
Threat of New Entrants
Airline Industry High. There are many
secondary airports in
developed countries such as
US are looking for expansion
and attracting passenger
aircraft to land.
Fast Food Industry Moderate. It needs moderate
capital to start up a new
restaurant make it easy for
newbie to enter this industry.
Beauty Products Industry Low. Developing special
beauty products requires a lot
of capital for R&D and actual
manufacturing process.
Pharmaceutical Industry Low. The firm need to invest
lot of capital for research and
development to engage in this
industry.
Threat of Substitutes
Airline Industry Low to moderate. Some
substitutes are possible on
short routes. There are some
plans for high speed regional
trains but it will not be built in
the near time.
Fast Food Industry High. There are many
substitutes for this industry.
Consumers can cook at home,
buy food from bakeries or
artisanal food producers.
Beauty Products Industry High. There are many
competitors provide similar
products that satisfy market
needs at lower price with
higher quality.
Pharmaceutical Industry Moderate. Possess threat from
generic competition once
so consumers can force them
to lower the price by
purchasing competitors’
products.
Low. The medication is
prescribed by doctors and if
the patients need the drug,
they need to buy it at any
given price.
Low. Vietnam has many
airports that are almost all
under capacity. So, there is no
significant competition for new
entrants.
Moderate. It needs moderate
capital to start up a new
restaurant make it easy for
newbie to enter this industry.
Low. Developing special
beauty products requires a lot
of capital for R&D and actual
manufacturing process.
Low. The firm need to invest
lot of capital for research and
development to engage in this
industry.
Low. Unless they have time to
travel by ship, otherwise, they
will be stuck with flying. The
fare sometimes is higher and it
took longer time to travel with
bus.
High. There are many
substitutes for this industry.
Consumers can cook at home,
buy food from bakeries or
artisanal food producers.
High. There are many
competitors provide similar
products that satisfy market
needs at lower price with
higher quality.
High. Threat from alternative
medicines and treatments
 patents run out. such as traditional Chinese
treatment.

Competition of Rivalry
Airline Industry
Fast Food Industry
Beauty Products Industry
Pharmaceutical Industry
High. There are many airline
providers that provide route to
same destination with lower
fare and better services.
High. There are many global
and local firms that compete in
the market and promote their
products aggressively.
High. There are many
competitors with a wider
range of collection for
consumers.
High. Small company usually
goes bankrupt if they don’t
possess potential products.
Low. There is still have market
craving up in collaboration
with the government.
High. There are many global
and local firms that compete in
the market and promote their
products aggressively.
High. There are many foreign
and local competitors that
provide same products with
better promotion.
High. Private sectors in this
industry are increasing day by
day.

Based on Porter’s model, low to medium forces possess in pharmaceutical industry make it a strong
player. This industry is attractive to investors mostly due to the strong credit profiles of existing
firms, purchasing and pricing power, and high-barriers to entry. All of this attractiveness make

pharmaceutical industry holds more promise for higher returns .

Chapter 3: Leveraging resources and capabilities

1. Pick any pair of rivals in the same industry (such as Boeing/Airbus and Cisco/Huawei), and
explain why one outperforms another.
We have been hearing a lot about Samsung VS Apple these days. One way or another
two giant companies always find some ways to outperform one another. Talking
about Apple: they have their own set of loyal consumers who stick to their product.
These kinds of target groups are the ones who give importance to brand and
qualitative products rather than calculating cost and benefits. Whereas when we look
at Samsung products, it is comparatively cheaper in terms of price. They have been
successful in becoming rival of the giant company like Apple. Despite of apple’s
popularity, Samsung has been able to maintain its own position in the market.
Samsung’s android phones are giving quite competition to the iOS, Apple’s mobile
operating system. Not only they are focusing on their products, but Samsung is
spending quite a lot of money in the massive marketing and advertisements.
Innovating at a faster pace, it has been able to beat apple in terms of apps and other
feathers. Apple is one step farther when it comes to adding new software to its
 devices. Older apple devices can’t get access to the latest and greatest features. Some
of the main reasons why one outperforms another are:
2. ·         Quality
3. ·         Cost
4. ·         Employee Satisfaction
5. ·         Customer centric
6. ·         Marketing Strategy – (Promotion/ Advertisement)
7. ·         Creating value for stakeholders

Chapter 4: Emphasizing institutions, cultures and ethics

1. How does the institution-based view complement and differ from the industry-based
and resource-based views? Why has the institution-based view become a third leg in the
“strategy tripod?”
 The institution-based view is a leading perspective of strategy that argues that
in addition to industry-and firm-level conditions, firms also need to take into
account wider influences from sources such as the state and society when crafting
strategy. The industry-based view suggests that the strategic task is mainly to
examine the c o m p e ti ti v e f o r c e s a ff e c ti n g a n i n d u s t r y , a n d i t
f o c u s e s o n t h e e x t e r n a l opportunities and threats. The resource-based
view concentrates on the internal strengths and weaknesses of the fi rm.
This view posits that it is fi rm-specifi c capabilities that differentiate
successful firms from failing ones. The institution- based view combines both the
industry-based and resource-based views and further argues that in addition to
industry-level and firm-level conditions, firms also need to take onto account the
impact of governmental rules, economic reforms, and even the cultural codes
that govern an organizati on. The fi ve dimensions of culture proposed by
Hofstede would be useful to understand the institution-based view.
 To answer the question of how firms behave, the three leading perspectives lead
to the formation of the strategy tripod. The industry-based view and the
resource-based view represent the two legs of the strategic tripod with the
institution-based view as the third leg.
2. Find one example of institutional transitions from developed economies and one example
from emerging economies. What are their similarities and differences?
 Though countries make different political choices—communism or capitalism—
their economic policies have been quite similar. All governments are interested
in market development and economic growth. Initially, in all emerging economies,
competition was v irtu ally non- exist ent . Ma rk et s were c losed an d
ind ust ries we re p rotect ed. Insti tuti onal transiti ons are economies that
are moving from central planning to market competition. Examples include
countries like Russia, China, and Poland. An example of an institutional
transition from a developed economy would be IKEA, which entered the
Russian market. An example of insti tuti onal transiti on from an emerging
economy would be China’s investments in Central and Eastern Europe, in the
fields of infrastructure, new technology and renewable energy.