Ch 7 Strategies to compete in foreign markets

1. What are the 4 Big Strategic Issues in Competing Multinationally?

a. Whether to customize a company’s offerings in each different country market to match
preferences of local buyers or offer a mostly standardized product worldwide
b. Whether to employ essentially the same
basic competitive strategy in all countries
or modify the strategy country by country
c. Where to locate a company’s production facilities,
distribution centers, and customer service operations to realize the greatest locational
advantages
d. How to efficiently transfer a company’s resource strengths and capabilities from one
country to another to secure competitive advantage

2. Why Do Companies Expand into Foreign Markets?

a. Gain access to new customers
b. Obtain access to valuables natural resources
c. Achieve lower costs and enhance competitiveness
d. Spread business risk across wider market base
e. Capitalize on core competencies

3. What are the key characteristics of multi-country and global competition?

a. Multi Country characteristics
i. Market contest among rivals in one country not closely connected to
market contests in other countries
ii. Buyers in different countries are attracted to different product attributes
iii. Sellers vary from country to country
iv. Industry conditions and competitive forces in each national market differ in
important respects
b. The stand-out characteristic of multicountry competition is : that there is so much cross-
country variation in market conditions and in the companies contending for leadership
that the market contest among rivals in one country is not closely connected to the
market contests in other countries—as a consequence, there is no global or world
market, just a collection of self-contained country markets.
c.
d.

International Competitor: Company operates in a select few foreign countries, with modest ambitions to
expand further
Global Competitor: Company markets products in 50 to 100 countries and
is expanding operations into additional country markets annually

4. Identify and describe 6 international strategies.

a. Exporting
b. Licensing
c. Franchising strategy
d. Strategic alliances or
joint ventures
e. Multi-country strategy
f. Global strategy

5. Identify three ways to gain competitive advantage.

1. Locating activities among nations in ways that lower costs or achieve greater product
differentiation

2. Efficient/effective transfer of competitively valuable competencies and capabilities from

company operations in one country to company operations in another country

3. Coordinating dispersed activities in ways a domestic-only competitor cannot

Ch 8 Diversification: Strategies for Managing a Group of Businesses
 1. What is the ultimate purpose of diversification?

 Increase Shareholder Value

 2. What is the best standard for evaluating whether a diversification move has been successful?

 Strong competitive position, rapid market growth -- Not a good time to diversify

 Strong competitive position, slow market growth -- Diversification is top priority

consideration

 Weak competitive position, rapid market growth -- Not a good time to diversify

 Weak competitive position, slow market growth -- Diversification merits consideration

 3. What three tests signal whether a diversification move will increase shareholder value?

 Diversification is capable of building shareholder value if it passes three tests:

 Industry Attractiveness Test — The industry being entered presents good long-term
profit opportunities

 Cost of Entry Test — Cost of entering is not so high as to spoil the ability to earn
attractive profits

 Better-Off Test — A company’s different businesses should perform better together than
as stand-alone enterprises, such that company A’s diversification into business B
produces a 1 + 1 = 3 effect for shareholders

 4. What are the two fundamental approaches to diversification?

 Related Diversification: Involves diversifying into businesses whose value chains possess
competitively valuable “strategic fits” with value chain(s) of firm’s present business(es)

 Unrelated Diversification: Involves diversifying into businesses with no competitively

valuable value chain match-ups or strategic fits with firm’s present business(es)
 5. Where do we look to find strategic fit advantages in related companies?

 COST SAVINGS (ECONOMIES OF SCOPE)

 EFFICIENT TRANSFER OF KEY SKILLS. TECNOLOGIES AND MANAGEMENT KNOW-HOW

 COMMON BRAND NAME

 STRENGTHEN RESOURCES AND COMPETITIVE CAPABLITIES

 6. Name three potential financial advantages in unrelated diversifications?

 SPREAD RISK OVER INDUSTRIES

 QUICK FINANCIAL GAIN

 STABLE EARNINGS

 7. Name 2 potential disadvantages in unrelated diversifications.

 STRETCHED RESOURCES AND ATTENTION

 DEARTH OF TALENTED AND SHREWD MANAGERS AND LEADERS

 8. What are the rationales for related and unrelated diversification strategies?

 Related Diversification: A strategy-driven approach

to creating shareholder value

 Unrelated Diversification: A finance-driven approach

to creating shareholder value


 9. Be able to build and interpret the GE 9 cell and BCG matrices.

 Businesses in upper left corner

 Accorded top investment priority

 Strategic prescription – grow and build

 Businesses in three diagonal cells

 Given medium investment priority

 Invest to maintain position

 Businesses in lower right corner

 Candidates for harvesting or divestiture

 May, based on potential for good earnings and ROI, be candidates for an overhaul and
reposition strategy
 Relative Market Share

High Low
 Boston Consulting Group Matrix
Relative Growth Share

High
?
STARSLow
COWS DOGS

 10. What are the six post-diversification management tasks?

 NEW ACQUISITIONS

 DIVEST WEAK AND NON-FITS

 RESTRUCTURE BUSINESS PORTFOLIO

 RETRENCH TO NARROWER BASE

 PURSUE MULTI-NATIONAL

 LIQUIDATE LOSERS

 11. Describe the action imperative for each of the following strategies

 Turnaround: RESTORE PROFITS

 Retrenchment: REDUCE # OF COMPANIES AND INDUSTRIES

 Restructuring: RADICAL PORTFOLIO SHAKEUPS

  12. What is a DMNC? What does a DMNC use to build global competitively superior positions?

 DIVERSIFIED MULTI-NATIONAL CORPORATION

 USES STRATEGIC FIT ADVANTAGES OF RELATED DIVERSIFICATION (EOS, TRANSFERS

AND COMMON BRANDS)

Ch 9 Ethical Business Strategies, Social Responsibility, and Environmental

Sustainability
 1. Distinguish between ethical universalism, ethical relativism and integrative social contracts
theory.

 Ethical Universalism: Same standards of what is ethical and what is unethical resonate with
peoples of most societies regardless of ; Local traditions and Cultural norms

 Thus, common ethical standards can be used to judge conduct of personnel at

companies operating in a variety of Country markets and Cultural circumstances

 Draws on collective views of multiple societies and cultures to place clear boundaries on
what constitutes Ethical business behavior and Unethical business behavior

 Regardless of what country a company is operating in When basic moral standards do

not vary significantly from country to country, a multinational company can

 Apply a code of ethics more or less evenly across its worldwide operations

 Ex: Honesty, trustworthiness, golden rule

 Ethical Relativism: Different societies/cultures/countries Put more/less emphasis on some

values than others have different standards of right and wrong,
Have different social mores and behavioral norms, what is ethical or unethical

 Must be judged in light of local customs and social mores and

 Can vary from one country to another

 Few ethical absolutes to judge a company’s conduct in various countries

 Plenty of situations where ethical norms are contoured to fit

 Local customs and traditions

 Local beliefs about what is fair

 Local standards of “right” and “wrong”

  Ethical problems in business cannot be fully resolved without appealing to the shared
convictions of the parties in question

 The ethical relativism rule of “when in Rome, do as the Romans do” presents problems

 Cannot assume that local ethical standards are an adequate guide to ethical
behavior

 What if local standards condone kickbacks and bribery?

 What if local standards don’t require safe working conditions?

 What if local custom is to permit companies to engage in egregious

pollution of the environment?

 From a global markets perspective, ethical relativism results in a maze of conflicting

ethical standards for multinational companies wanting to address the issue of what
ethical standards to enforce companywide

 Concept of Integrative Social Contracts Theory: According to the integrative social contracts
theory, the ethical standards a company should try to uphold are governed by both

 A limited number of universal ethical principles that are widely recognized as putting
legitimate ethical boundaries on actions and behavior in all situations

 The circumstances of local cultures, traditions, and shared values that further prescribe
what constitutes: ethically permissible behavior and , What does not

 Universal ethical principles establish “moral free space” based on the collective view of
multiple societies and cultures

 Commonly held views about morality and ethical principles combine to form a “social
contract” with society

 It is appropriate for societies or companies to go beyond universal ethical principles and

specify local or second-order ethical norms

 Where firms have developed ethical codes, the standards they call for provide
appropriate ethical guidance

 Social contracts theory maintains adherence to universal or first-order ethical norms

should always take precedence over local or second-order norms.
 2. What are the categories and characteristics of management morality?

 Moral Manager:

 Dedicated to high standards of ethical behavior in Own actions

 How the company’s business is to be conducted

 Considers it important to Be a steward of ethical behavior Demonstrate ethical

leadership

 Pursues business success, Within confines of both letter and spirit of laws

 With a habit of operating well above what laws require

 Immoral Managers:

 Actively opposes ethical behavior in business

 Willfully ignores ethical principles in making decisions

 Views legal standards as barriers to overcome

 Pursues own self-interests

 Is an example of self-serving greed

 Ignores interests of others

 Focuses only on bottom line –

making one’s numbers

 Will trample on others to avoid being trampled upon

 Amoral Managers:

 Intentionally :

 Believes business and ethics should not be mixed since different rules
apply to : Business activities Other realms of life

 Believes if a business-related action is legal then it is OK; ethical

considerations in business activity don’t matter and lie outside sphere of
moral judgment

 Views ethical considerations as inappropriate for tough, competitive

business world concept of right and wrong is
lawyer-driven (what can we get by
with without running afoul of the law)
  Unintentionally:

 Is blind to or casual about ethics of decision-making and business

actions

 Displays lack of concern regarding whether ethics applies to company

actions

 Sees self as well-intentioned or personally ethical

 Typical beliefs Do what is necessary to comply with laws and regulations

 Government provides legal framework stating what society will put up

with—if it is not illegal, it is allowed

 3. What are the principal drivers of unethical behavior?

 Large numbers of immoral and amoral business people

 Overzealous pursuit of personal gain, wealth, and other selfish interests

 People obsessed with wealth accumulation, greed, power, status, and other
self-interests often Push ethical principles aside in their quest for self gain

 Exhibit few qualms in Skirting the rules or Doing whatever is necessary

to achieve their goals

 Engage in all kinds of unethical strategic maneuvers and behaviors

 Heavy pressures on company managers to meet or beat earnings targets

 Managers often feel enormous pressure to do whatever it takes to deliver good

financial performance

 Actions often taken by managers:

 Cut costs wherever savings show up immediately

 Squeeze extra sales out of early deliveries

 Engage in short-term maneuvers to make the numbers

 Stretch rules to extreme, until limits of ethical conduct are overlooked

  Executives feel pressure to hit performance targets since their compensation
depends heavily on company performance

 Fundamental problem with a “make the numbers” syndrome

 Company does not create additional value for customers or improve its
competitiveness

 Company cultures that place profits and good performance ahead of ethical behavior

 In an ethically corrupt or amoral work climate, people have a company-

approved license to Ignore “what’s right” Engage in most any behavior or
employ most
any strategy they think they can get away with

 Pressures to conform to cultural norms can prompt otherwise honorable

people to:

 Make ethical mistakes, Succumb to the many opportunities

to engage in unethical practices

 4.What are the characteristics of managers committed to ethical approaches to strategy-

making?

 Possess strong moral character and

deeply-ingrained ethical convictions

 Are genuinely committed to certain

core values and business practices

 Push for and support adoption of values statements/ethics codes that truly paint the
white lines for a company’s business practices

 Insist on strict ethics compliance

 Expect company personnel to practice/display corporate values

 Are a role model and walk the talk in

 Displaying a company’s stated core values

 Living up to high ethical standards

 Consciously opt for strategic actions passing moral scrutiny

  Which one of the following is false when it comes to making a case for why a company’s
strategy should be ethical?

 Shareholders profits are not greatly reduced by using ethical strategies.

 5. Identify alternative approaches to managing a company’s ethical conduct.

 6. Identify the major “levels” of costs resulting from ethical failures.

 7. What are the 5 components of socially responsible business behavior?

Ch 10 Building an Organization Capable of Good Strategy Execution

 1. Identify 8 action agenda components which must be considered to ensure successful strategy
execution?

Organization

Leadership
Budgets

Culture Policies

Rewards
Information Systems

Best Practices
  2. What are the major actions necessary to support the organization building
component of strategy execution?

 3. What comes first...structure or strategy?

 4. Identify 5 organizational designs and describe a strength and weakness of each.

 5. Identify coordinating mechanisms that supplement basic organization structures.

 Cross-functional task forces

 Dual reporting relationships

 Informal networking

 Voluntary cooperation

 Incentive compensation tied to group performance

 Teamwork and cross- departmental cooperation

CH 11 Managing Internal Operations: Actions That Promote Good Strategy Execution

 1. What impact will a change in strategy have on an organization’s budgets? Why?

 2. Describe some benefits delivered by relevant policies and procedures.

 Role of new policies

 Channel behaviors and decisions

to promote strategy execution

 Counteract tendencies of
people to resist chosen strategy

 Too much policy can be as stifling as

 Wrong policy or as

 Chaotic as no policy

 Often, the best policy is empowering employees, letting them operate between the
“white lines” anyway they think best

 3. Identify four major continuous improvement initiatives and their specific contribution to
strategy execution.

 Initiatives: Benchmarking; Best practice Adoption

 Contribution: targets ,World class value chain

 Reengineering : Total quality management

 Quantum Leaps: Continuous quality enhancement

 4. What Ire the chief contributors to performance produced by continuous improvement

efforts?

 5. Describe “real-life” examples of support systems that enable implementation.

 Arthur Andersen Worldwide

 Electronic system, with data, voice, and video capabilities, linking more than
82,000 people in 360 cities in 76 countries
  Mrs. Fields’ Cookies

 System to monitor sales, at 15-minute intervals, to suggest product mix changes

and to improve customer response

 6. Describe the eight elements of a well designed reward system.

 Payoff must be a major piece of compensation package

 2. Incentive plan should extend to all

 3. Administer system with fairness

 4. Link incentives to achieving the performance targets in strategic plan

 5. Targets each person is expected to achieve must involve outcomes that can be
personally affected

 6. Keep time between performance review and payment short

 7. Make liberal use of non-monetary rewards

 8. Avoid rewarding non-performers

CH 12 Corporate Culture and Leadership: Keys to Good Strategy Execution
 1. What elements describe/make-up a company’s culture?

 Beliefs

 Values and principles

 “How we do things around here”

 Story telling

 “Sacred cows”

 Traditions

 Ethical expectations

 2. Identify and differentiate four categories of corporate cultures.

 Strong vs. Weak Cultures

 STRONG Conduct business according to a clear, widely-understood philosophy

 Considerable time spent by management communicating and reinforcing values

 Values are widely shared and deeply rooted

 Have a well-defined corporate character,

reinforced by a creed/values statement

 Careful screening/selection of new

employees to be sure they will “fit in”

 WEAK Lack of a widely-shared core set of values

 Few behavioral norms evident in operating practices

 Few strong traditions

 No strong sense of company identity

 Little cohesion among departments

 Weak employee allegiance to company’s vision and strategy

 Unhealthy Cultures

 Highly politicized internal environment

 Issues resolved on basis of political clout

 Hostility to change:

 Avoid risks and don’t screw up: Experimentation and efforts to

alter status quo discouraged

 “Not-invented-here” mindset – company personnel discount need to look

outside for:

 Best practices; New or better managerial approaches ; Innovative ideas

 Disregard for high ethical standards and overzealous pursuit of wealth by key
executives

 High-Performance Cultures

 Standout cultural traits include

 A can-do spirit;

 Pride in doing things right

 No-excuses accountability

 A results-oriented work climate in which people go the extra mile to

achieve performance targets

 Strong sense of employee involvement

 Emphasis on individual initiative & creativity

 Performance expectations are clearly identified for all organizational members

 Strong bias for being proactive, not reactive

 Respect for the contributions of all employees

 Adaptive Cultures

 Willingness to accept change and embrace challenge of introducing new

strategies

 Risk-taking, experimentation, and innovation to satisfy stakeholders

  Entrepreneurship is encouraged and rewarded

 Funds provided for new products

 New ideas openly evaluated

 Genuine interest in well-being of all key constituencies

 Proactive approaches to implement workable solutions

 3. Identify examples of each of the following:

 Symbolic culture changing actions

 Emphasize frugality

 Eliminate executive perks

 Require executives to spend

time talking with customers

 Alter practices identified as cultural hindrances

 Visible awards to honor heroes

 Ceremonial events to praise people and teams who “get with the program”

 Substantive culture changing actions

 Benchmarking and best practices

 Set world-class performance targets

 Bring in new blood, replacing

traditional managers

 Shake up the structure

 Change reward structure

 Increase commitment to employee training

 Reallocate budgets
 4. What things can leaders do to enhance strategy-supportive cultures?

 Build a high performance spirit

 Stay current/relevant

 Nurture strategy-supportive culture

 Keep organizations responsive

 Empower champions

 Deal with politics

 Enforce ethical behaviors

 Lead adjustments

 5. How might an excellent leader 1) stay current and relevant and 2) be effective politically?\