Strategic Management

What we have discussed

 Social Segment
• Demographic factors
– aging population
– changes in ethnic composition
– geographic distribution of population
– greater disparities in income levels
• Public attention to health, environment, and
food safety
• The power of social media
• Informal institutions
 Formal institutions
vs.
informal institutions
• What are institutions
• What are formal vs. informal institutions
• When one form of institutions works better
than the other
 Guanxi
• What is guanxi
• How to cultivate guanxi
• How to maintain guanxi
 What is Guanxi
• Dyadic particularistic ties of sentiments and obligation
• Guanxi critically hinges on Ren-qing
– Repeated favor exchange
• Guanxi exists in various forms based on the closeness
of the relationship
– Jiaren (literally, “family member”)
– Shuren (literally, “acquaint”)
– Shengren (literally, “stranger”)
• Different levels of Guanxi
– Familiarity
– Intimacy
– Trust
• How Guanxi differs from interpersonal
connections?
– Connections defined by reciprocity and mutual obligation
– Supported by a sense of goodwill and personal affection
 Features of Guanxi

• Repeated exchange of favor

• Long-term oriented
• Relational particularism
• Reciprocal expectation/obligation
• Strong sentiments
• High of relational constraints
– Hard to get in and hard to get out
• Significance of small non-redundancy
 How to cultivate Guanxi?

• Renqing
• Repeated favor exchange
• Unequitable favor exchange
• Unspecified time frame
 How to cultivate guanxi

• Common background or shared experience

• Meeting people through common third party
• Networking with individuals, not organizations
• Cultivate a diverse network
• Gift-giving: it is the thought that counts
 How to maintain Guanxi
• Mianzi (literally, “face”)
• Bad times make good friends
• Continuous building and interaction
– Never take guanxi for granted
• Respect for family
 Does Guanxi still matter today?
• A dynamic view of Guanxi
• The cultural genes of Guanxi
• Tradeoff between formal and informal
institutions
– Regional heterogeneity
 Technological Segment
• Tech develops much more quickly, substantially,
and fundamentally
• High-tech industries drive national economy
• New technology re-shape industries
We are experiencing the 4th
industrial revolution
Technological development completely changes
the competition landscape
Value

Cost
18
• Technology can create new arenas for
competition
• Rise and fall of Nokia
• From cell phone to smart phone
– From function to experience
V.S.
How will technology re-shape
traditional industries?
New technology as the source of
new business
• IT technology à Platform economy
Three ways platform economy changes
the competition
• De-centralization
• De-intermediary
• De-boundary
 New technology as the source of
new business
• AR/VR technology à experience economy
New technology as the source of
new business model
Get wool from pigs

But paid by dogs …

O2O2O?
Online order, offline
serve

Online community
The future of tech firms:
Look for the unicorns?

Do unicorns make money?

32
World’s biggest unicorn
In 2020, valued at between $90bn and $100bn
Only technology firm bar Apple with more than 100m
users in both China and America
Its TikTok (Douyin) as taken on the likes of YouTube and
Instagram
2019 revenue ($15bn-20bn) more than Uber, Snapchat
and Twitter combined
 The future of technology:
good, bad, and ugly
• How technology affects supply side, positively
and negatively?
– Human replaced by machine?
– Privacy of labor
• How technology affects demand side,
positively and negatively?
– Privacy of consumers
– Manipulate public sentiment?