Discussion Notes

Teaching Notes: Finntrack Strategy: Analysis and Practice ©2005 McGraw-Hill Education Europe
 Index
• Workshop • Competitive Position: Competitive Advantage
– Case Analysis – Strategic Planning
– Debate – Competition
– Case Questions
– What is Sustainable Competitive Advantag
– How to Use Your Workshop Resources e
– Disclaimer
– Sustainable Competitive Advantage
– Learning Objectives
– Competitive Strategies
• Multinational Corporations
• Introduction to Retailing and IKEA
– Introduction to IKEA
– Corporate Strategy

• Business Analysis
– Business Drivers
– Quantitative Methods
– Strategic Business Analysis
– Organisation
– Organisational Culture
– Financial Statements - The System
– Financial Statements - Analysis
• Financial Ratios

Click on Image
Index
• Strategic Capability: Core Competence
– Corporate Capabilities
– Core Competency
– Strategic Intent
– Innovation
– Theory of Constraints
– Value Chain
• IKEA Modified Value Chain
– Six Sigma
• Global Strategies
• Process Analysis for Strategic Decisions
– Game Theory
• Competitive Strategy: the Analysis of Strategic Po
sition
– Lecture
• Competitive Strategy: the Analysis of Strategic Ca
pability
– Lecture
• Global Strategies and International Advantage
– Lecture
• Process Analysis for Strategic Decisions
– Lecture Click on Image
 Workshop

This workshop series is designed to compliment Teaching and Learning

Strategies for undergraduate, postgraduate and executive level Strategic
Management and related programmes and courses using the case studies
featured in the text below.

The overall aim is to support the learning contents offered in the relevant chapters
of the book whilst expanding participants’ knowledge and skills base required to
understand, review and analyse the decisions taken during the company’s
strategy development and implementation processes.

Strategy Analysis and Practice

John McGee, Warwick Business School
Howard Thomas, Warwick Business School
David Wilson, Warwick Business School
Case Analysis
A case study is a particular method
of qualitative research.
Rather than using large samples and
following a rigid protocol to examine
a limited number of variables, case
study methods involve an in-depth,
longitudinal examination of a single
instance or event: a case.
They provide a systematic way of
looking at events, collecting data,
analyzing information, and reporting
Click on Image
the results. Source: doyleresearch
As a result the researcher may gain
a sharpened understanding of why
the instance happened as it did, and
what might become important to look
at more extensively in future
research.
Case Analysis
Case studies lend themselves especially to generating (rather than testing
) hypotheses.

• The scope and relevance of case studie

s
• Types of case study
• Illustrative case studies
• Exploratory case studies
• Critical instance case studies
• Program implementation case stud
ies
• Program effects case studies
• Cumulative case studies
• Business school case studies
• Medical case studies
• History of the case study
• Conclusions
• Notable case studies
• References
• See also
• External links Click on Image
Source: © Inter IKEA Systems B.V.
2002-2006 
 Workshop Debate
Workshop discussion topics have been divided into six parts according to the relevant
chapters of the book involved in the case study:
1. Introduction
2. Business Analysis
3. Competitive Position: Competitive Advantage
4. Strategic Capability: Core Competence
5. Global Strategies
6. Strategic Decision Making

You should ensure that you have understood the contents of chapters 6, 7, 11 and 13 prior to
attending any of the above debates.
Also see:
How to Use Your Workshop Resources
Learning Objectives
Learning from Case Studies: A Short Guide for Students
Case Questions
Please Note:
At your instructor’s discretion the indicative questions below and elsewhere in this
resource may be varied or deemed unnecessary for teaching and learning
purposes for some courses or modules.

1. Using the information given in the Case Study and this resource,
describe the Elements of IKEA’s Organisational Culture.
2. How has the Organisational Culture shaped IKEA’s Business Model?
3. Measure the value of IKEA’s Organisational Culture.

Also see Learning Using Case Studies for further information

Also see A Model for Case Analysis and Problem Solving
How to Use Your Workshop Resources

Viewing

You will need either MS PowerPoint program or PowerPoint Viewer installed on

your computer. The latter may be downloaded free from Microsoft website here.

Navigation

The Learning Contents (Literature Reviews) are linked to a relevant public

domain on the Internet.

Most, if not all pictures/images are ‘clickable’, i.e. linked to its source which
provides further information on the topic or the copyright holder.

If your version of PowerPoint does not show navigation buttons on the slide, right
click on the screen and select your destination from the dialogue box.
Alternatively use the small arrowheads, indicating ‘previous’ and ‘next’.
 Disclaimer

This information is provided with the understanding that the authors and publishers
do not assume any legal responsibility for the completeness or accuracy of the
contents or any opinions or views expressed on these pages or linked destination
sources.

It is the nature of the media (Internet) that some of the pages may not always be
available due to broken or dead links, withdrawals, etc. Whilst the publishers will
be pleased to take any appropriate corrective action, for example, by replacing or
removing the sources when possible, they unable to assume any legal
responsibility for unavailability of any third party material for whatever reason
beyond their direct control.
 Learning Objectives

The main objective of the workshops is to evaluate IKEA’s corporate strategic planning
process and outcomes and their impact on the company’s business level operations.
Participants will have an opportunity of developing and enhancing their

• strategic thinking and internet research skills

• analytical and critical thinking skills by reviewing the factors that influenced
corporate centre's decisions on the business
Multinational Corporations
A multinational corporation (MNC) or multinational enterprise (MNE) or
transnational corporation (TNC) is a corporation/enterprise that manages
production establishments or delivers services in at least two countries.

• Critiques Annual Report on t

• he Guidelines for M
Examples ultinational Enterpri
• In fiction ses
• Furnishings The 2005 edition
• International Furnishing Mark
et
includes a special
• See also focus on corporate
• Fostering Growth and Promo responsibility in the
ting a Responsible Market Ec developing world
onomy - A G8 Declaration
Multinational Corporations
Multinational corporations (MNC) are often divided into three broad groups:

• Horizontally integrated multinational corpo

rations
manage production establishments located in
different countries to produce same or similar
products.
• Vertically integrated multinational
corporations manage production
establishment in certain country/countries to
produce products that serve as input to its
production establishments in other
country/countries.
• Diversified multinational corporations
manage production establishments located in
different countries that are neither horizontally
or vertically integrated.
Multinational Corporations

Multinationals have played an

important role in globalization. Given
their international reach and mobility,
prospective countries, and sometimes
regions within countries, must compete
with each other to have MNCs locate
their facilities (and subsequent tax
revenue, employment, and economic
activity) within. To compete, countries
and regional political districts offer
incentives to MNCs such as tax
breaks, pledges of governmental
assistance or improved infrastructure,
or lax environmental and
labour standards. This process of Click on Image
Source:
becoming more attractive to foreign
investment can be characterized as a
race to the bottom.
Introduction to Retailing
Retailing consists of the sale of
goods/merchandise for personal or household
consumption either from a fixed location such
as a department store or kiosk, or away from
a fixed location and related subordinated
services.[1] In commerce, a retailer buys
goods or products in large quantities from
manufacturers or importers, either directly or
through a wholesaler, and then sells
individual items or small quantities to the
general public or end user customers, usually
in a shop, also called store. Retailers are at
the end of the supply chain. Marketers see
retailing as part of their overall distribution
strategy.

Click on Images
Source: ©
Inter IKEA Systems B.V. 2002
Introduction to Retailing

• Shops and stores

• Retail pricing
• See also
• References

Click on Image. Larger Image

Source: San Diego State University
Introduction to IKEA
IKEA is a Swedish home furnishings
retailer. It has 231 stores in 33 countries,
most of them in Europe, the rest in the
United States, Canada, Asia and
Australia. More than 20 opened during
2005. IKEA is one of the few store
chains to have locations both in Israel
and in other Middle Eastern nations.
IKEA is generally pronounced (IPA
/i'ke.a/) but in many English-speaking
regions, it is pronounced (IPA /aɪ'ki:ə/) Click on Image
rhyming with the word "idea". Source: en.wikipedia.org
The IKEA catalogue, containing about
12,000 products, is printed in 160 million
copies (2006) worldwide, and distributed
free of charge. [2]
IKEA is famous for its affordable
furniture which consumers are required
to assemble for themselves.
Introduction to IKEA

• Overview
• Organization
• History
• Products
• Financial
• Community Impact
• Store Format
• Corporate structure
• Criticisms
• Diversity
• Design Reform
• IKEA Organisational Culture
• Popular Culture
• IKEA's Debut in Each Country
• Corporate Strategy
• See also
• Notes
• External links Click on Image
• Data
Source: Inter IKEA Systems B.V. 1999 - 2006
• Directory
Introduction to IKEA

Ingvar Kamprad, believes that: "Most

things still remain to be done - a
glorious future! Time is your most
important asset. Split your life into10-
minute units and sacrifice as few as
possible to futurities" (Mclvor, Laurance,
1994: 38).
The corporate culture of Ikea is built
upon this philosophy all the way from
design teams to suppliers and to the
customer. A continuous strife for
improvement in all areas of the value
chain is an effective way to shape the
industry to better fit Ikea's future
strategies. Due to the uniqueness of
Ikea's strategic positioning, being the
Click on Image
largest competitor in its field, the firm
Source: IKEA Deutschland
has the advantage of setting the phase
of the industry.
Introduction to IKEA
Bureaucracy is fought at all levels in the
organization. Kamprad believes that
"simplicity and common sense should
characterize planning and strategic
direction" (Bartlett et Al, 1993: 78).
In addition, the culture emphasizes
efficiency and low cost which is not to be
achieved on the expense of quality or
service.
Symbolic policies, such as only flying
economy class and stay at economical
hotels, employing young executives and
sponsoring university programs have
made cost part of corporate culture and Click on Image
has further inspired the influx of Source: www.csd.uwo.ca
entrepreneurship into the organization.
Source: Johan Olsson
Introduction to IKEA

For instance, all design teams enjoy

complete autonomy in their work, but
are expected to design new appealing
products regularly.

Click on Image
Source: Themanager.org
Corporate Strategy
• Background
• Objectives
• International Strategy -
Case Study: How Ikea of Sweden Got to India
• Financial Strategy -
Re. Case Study: How Ikea of Sweden Got to India

• Marketing
• Advertising and Public Relations
• Management Strategy Click on Image. Larger Image
Re. Case Study: How Ikea of Sweden Got to India Source: © The M. Polo Group, 2002

• Cultural Challenge
• Corporate and Social Responsibility
• Conclusions
Re. Case Study: How Ikea of Sweden Got to India

• Also see
• Ikea knockoffs a hit with India's elite Swedish chain has no stores there, but its fu
rniture catalog is used by carpenters as a guide to copy designs
• In India, it’s IKEA without the assembly
Corporate Strategy - Background

Background

• The Values that Characterize IKEA

• Vision

• Objectives
• Mission (IKEA Concept)

• Product
• Turnover

• Stores Click on Image

Source:
• Store Openings 2005 - 2006 © Inter IKEA Systems B.V. 1999 - 2004

• IKEA Catalogue

• IKEA Franchising
© Inter IKEA Systems B.V. 2003 - 2006
Corporate Strategy - Objectives

The Challenge

IKEA want to increase the return on investment for the catalogue distribution, which is a
substantial investment, and remain ahead of the competition in terms of business
strategy.

IKEA needs to ensure that catalogue distribution is targeted to reach people who are
likely to be or become IKEA customers in terms of their demographic attributes and their
likelihood to travel to the store.

IKEA requires a solution to maximise their return on investment while expanding their
appeal and maintaining their dominant market position.

Specifically IKEA’s key objectives are to:

• Identify target consumer types and geographic areas for

distribution of catalogue
• Identify types and areas with poor sales potential
• Increase sales return on catalogue expenditure
• Develop business strategy

Source: caci.co.uk
Corporate Strategy - International

• The Internationalization of IKEA

• Joint Ventures
• Alternative Entry Strategies
• Expansion by Franchising
• Supporting Organizational Stru
cture

• Balance of Autonomy and Strat Click on Image. Larger Image.

egic Direction Source: © Transcultural Synergy Ltd

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - International

Joint Ventures

Ikea will need to look at joint ventures and strategic alliances to become
successful in the Indian market. Since the government requires that local
business operations require 51% control by Indian nationals, Ikea's first step will
be to find franchise owners. These in turn will have to form alliance and joint
ventures to raise enough capital to develop the links necessary to form a
successful entity.

In high-risk markets (defined as those that are not similar to Scandinavian

markets) Ikea's local market strategy is to develop supplier links in the host
country. This is meant to reduce the strategic risk that may result from political
legal and financial issues. By developing a relationship with local suppliers, the
suppliers can provide valuable input into the opportunities and threats.
Joint Ventures mean even more. They establish that the local owner/operators
become an integral part of the stakeholder group. It is expected that they will
therefore be more contentious of operations and therefore be more successful.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Financial
International Financial Market
• The Foreign Exchange Market Foreign Exchange Market
• Currency options and futures

Derivatives traders at the Chicago Board of Trade. Click on Image

Foreign Exchange Options by Wikipedia Source: Wikipedia

Main Text Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Financial
Financial Strategy

The cost of establishing a new store (approximately 22,000 items) is quite high
when considering:
• Building acquisition, layout and design
• Sourcing franchise owners and human resources
• Establishing local supplier links
• Advertising and promotion of the new location (catalogues are expensive)
• Stocking the new store

The advantage of borrowing money locally is that the cost of borrowing will be
protected from inflation and exchange rate fluctuations. Investment money taken
from reserves of other operations may not carry any interest cost and therefore
be a cheaper source of investment. In the case of India, if Ikea decides to
franchise its operations there, the problem of financing the operation is taken care
of through franchising fees and royalties. Return of profit/royalties to Ikea of
Sweden could be facilitated in the transfer of product produced in India thus
increasing the marginal return from everyone involved.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Financial

Financial Strategy

Profits

Profits in India should be maintained at a similar level to other countries. Since

the per capita income of Indian peoples is substantially lower than other markets,
product will have to be modified to lower price categories and volumes will have
to increase to offset the difference.

Except in the largest cities, operation costs should be lower than Western
Europe. Labour costs are substantially lower in India, but the Ikea store concept
requires little human resources, so cost reductions must rely on other overhead
such as store, warehousing, power, taxes and advertising.

Probably the most effective method for cost reduction is to source a higher
percentage of goods form India.
Even Scandinavian designs could be reproduced in India.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Marketing
Marketing
Printable Fact Sheets:

• The IKEA catalogue

• How IKEA creates its low prices
• How IKEA is organised
• IKEA products are manufactured all over th
e world
• The right quality for IKEA products
• IKEA provides solutions for all domestic nee
ds
• IKEA stores - everything under one roof Click on Image
Distribution - from supplier to store Source:
Inter IKEA Systems B.V. 1999 -
2006
Click here to IKEA main menu
Corporate Strategy - Marketing
Marketing

Ikea does not have its own manufacturing

facilities. Instead, it is using subcontracted
manufacturers all over the world for supplies. All
research and development activities are, however,
centralized in Sweden.
In order to maintain low cost, Ikea shoppers are
Pro-sumers - half producers, and half consumers
(Normann, 1993: 70). In other words, they have to
assemble the products themselves.
To facilitate shopping, Ikea provides catalogs, tape
measures, shopping lists and pencils for writing
notes and measurements. Car roof racks are
available for purchase at cost and Ikea pick-up
vans/mini trucks are available for rental
(Economist, 1994: 101). Click on Image
Source:
Inter IKEA Systems B.V. 1999 -
2006
Source: Johan Olsson, 1996
Corporate Strategy - Marketing

Marketing

Effective marketing through catalogues

usually attracts the customer at first, what
keeps customers coming back is good
service.

Ikea believes that a strong in-stock position

in which the most popular style and design
trends are correctly anticipated is crucial to
keep satisfied customers. For that, Ikea
depends on leading-edge technology.

According to Ikea's logistics manager, "there

are a lot of Just-In-Time concepts built into
how we're trying to do business" (Chandler, Click on Image
1993: 12). Ikea has developed its own global Source:
distribution network. Inter IKEA Systems B.V. 1999 - 2006

Source: Johan Olsson, 1996

Corporate Strategy - Marketing

Marketing
By utilizing control points in the distribution
cycle, the firm is able to insure timely deliver
of products to retail stores all over the world.

Internationally, these stores range in size

from 20,000 to 30,000 square feet in Hong
Kong and in Singapore to 500,000 square
feet in Stockholm, Sweden. Ikea has over
1,800 suppliers located in over 50 different
nations (Retail Business, 1995: 78).

Ikea's, marketing manager believes that Click on Image

Consumer tastes are merging globally. Source:
Inter IKEA Systems B.V. 1999 -
2006

Source: Johan Olsson, 1996

Corporate Strategy - Marketing

Marketing
In one example, Ikea, which has been
importing the "streamlined and
contemporary Scandinavian style" to the
United States since 1985, found at least
one opportunity to export an American style Click on Image
to Europe, as Europeans are picking up on Source: © 2006 by the
some American furnishing concepts. In US-China Business Council
order to respond to this new demand, Ikea
now market "American style" furnishings for
the European market.

Source: Johan Olsson, 1996

Corporate Strategy - Marketing

Advertising and Public Relations

Ikea's success is based on the relatively simple

idea of keeping the cost between manufacturers
and customers down. According to Ingvar
Kamprad, the founder of Ikea; "To design a desk
which may cost $1,000 is easy for a furniture
designer, but to design a functional and good desk
which shall cost $50 can only be done by the very
best. Expensive solutions to all kinds of problems
are often signs of mediocrity." (Chandler, 1993: 12)
Costs are kept under control starting at the design
level of the value-added chain. Ikea also keeps
costs down by packing items compactly in flat
standardized embalages and stacking as much as Click on Image
possible to reduce storage space during and after Source: Forbes
distribution in the logistics process (Economist,
1994: 101).

Source: Johan Olsson, 1996

Corporate Strategy - Advertising and PR

Advertising and Public Relations

• Online Promotion
• IKEA stand at HotelExpo 2006 exhibition
• IKEA catalog “Furnishing Recipes for Hot
els Big and Small”
• “Fixhult” print ad for IKEA
• “Uninterruptible Food Supply”, IKEA print
ad
• IKEA print ad “Any table can become a s
morgasbord”
• IKEA promotion page “Office of Decorum”

Click on Image
Source: © 1995–2006
Art. Lebedev Studio
Corporate Strategy - Advertising and PR

Advertising and Public Relations

• “Four Neat Examples of Orderly Bu

siness Practices”, an IKEA print ad
• IKEA B-to-B website
• B2B IKEA
• Do you know what’s the Swedish for
“thanks”?

Click on Image
Source:
Inter IKEA Systems B.V. 1999 -
2006
Corporate Strategy - Management

IKEA Management Strategy

IKEA is a very successful multinational
corporation, which indicates that earlier
discussed focused generic, or long-term
strategy of cost leadership and product
differentiation has served it well. IKEA
approaches unknown, small, high risks
markets by franchising.

So this company actively expands in

this field as well. Click on Image. Larger Image
Source: Kanji Quality Culture
IKEA has a lot of subsidiaries in many Also see Management by Wikipedia.
countries of the world. Franchisees
have to carry basic items, but have the
freedom to design the rest of the
products.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Management
• Cost leadership as a part of the management process
• Differentiation strategy

Click on Image
Source: Professional Management Review Africa
Corporate Strategy - Culture

Cultural Challenge

In international business, the culture is

very important and we can consider one
fundamental element " the culture
shock" where there are several stages in
the difference of the country’ culture: the
honeymoon stage (we know that it is a
new culture and we want to be there),
the irritation-hostility stage, the gradual
adjustment and the bi-culturalism, at this
stage, the company gets a comfortable
way in the settlement of the new culture.
Click on Image
Source:
Inter IKEA Systems B.V. 1999 -
2006

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Culture
Cultural Challenge
But, few countries in the world have such an
ancient and diverse culture as India. India’s
culture has been enriched by successive
waves of migration, which were absorbed into
the Indian way of life. And, the diversity lies
the continuity of Indian civilization and social
structure from the very earliest times until the
present day. Modern India presents a picture
of unity in diversity to which history provides
no parallel.
Doing Business in India
Moreover, the Indian Council for Cultural
Source:
Relations (ICCR) has been working to project © 2000-2005 Executive Planet Inc.
Indian culture abroad and to bring to India the
rich manifestations of international culture. It
has thus become a major vehicle of
international cultural exchange.
Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Culture

Cultural Challenge
We can also focus on the Indian’s process of
development, which has been accompanied by
significant social changes and an increasing
awareness about issues.

This period has also seen the burgeoning of the

voluntary movement in India.

Today, the Government makes constant

attempts to promote values like democracy and
independence and India is working to have
equal opportunities in all spheres of life. We
cannot rule out the Indian Art, because it is also
an Art of social, political and religious Click on Image
Source: india-seminar.com
influences. It changed and evolved with the
evolution of a civilization, which is full of
remarkable innovation.
Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - Culture

Cultural Challenge

Finally, we can make point on Indian religion,

because it is another way of life and an
entire part of Indian tradition.

So in doing business with India, IKEA have

to make attention with the culture and the
communication (verbal and non-verbal)
because the communication can be
interpreted in different meanings and can
Click on Image
provoke some mistakes, misunderstanding Source: © 2003 international-business-
and also some troubles. center.com

So, the firm has to be careful with the context

where it decides to set up its business.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Corporate Strategy - CSR

Corporate and Social Responsibili

ty

“Is it possible to make traditional business

objectives and social and environmental
responsibility work together for the benefit
of the many? We believe they can work
very well together.

IKEA makes good business while being a

good business. We realize that we are
only at the beginning and we have a long
way to go but we are proud of the results
achieved so far.
Click on Image
IKEA CSR activity involves three main Source:
Inter IKEA Systems B.V. 1999 -
areas: children, better living and 2006
environmental projects.”
Corporate Strategy - CSR
Corporate and Social
Responsibility
“IKEA wants its products to have the
minimum impact on the environment.
And for these products to be
manufactured in a socially responsible
way.
• Low price but not at any price
• The IKEA code of conduct
• We use resources wisely
• Projects we support
• Read our brochure and report
• UK corporate and social responsibili
ty
”
© Inter IKEA Systems B.V. 2003 - 2006
Corporate Strategy - CSR
Corporate and Social
Responsibility

• Special Report: Tackling Child Labour

• Child Labour Resource Guide

Source:
Corporate Strategy - Conclusions
Conclusion, Appendices and References

Together with innovative changes in the value chain, where consumers become Pro-sumers
and suppliers are turned into consumers, the concept of marketing high quality products at
low cost through a focused generic strategy, intended for the globally emerging middle-class
has served Ikea well.

Centralized control and product standardization is two necessary components of the firm's
long-term strategy.

In addition, the company has facilitated its international expansion through owned
subsidiaries subsidiaries and franchises. Future localization pressures will force Ikea to
change its global strategy in order to become more sensitive to local demands.

Greater emphasis on joint ventures and strategic alliances represent possible vehicles to
further build on Ikea's focus strategy. A new transnational oriented organizational structure
would further provide the necessary infrastructure needed to support such vehicles towards
true internationalization.

This in turn would impact on the present homogenous Scandinavian culture and introduce
new values, ideas and, perhaps, broaden Ikea's core competencies.
Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India
Business Analysis

1. Benefits of Business Analysi

s
2. Roles of Business Analysts
3. Business Process Improvem
ent
4. Goal of Business Analysts
5. External Links

Also see
Quantitative Method
From Wikipedia, the free
encyclopedia
Larger Image
Source: BizEd
Click on Image
Business Drivers
Also see

• Association of Master Up
holsterers and Soft Furni
shers

• Furniture Industry Resear

ch Association
(FIRA)
• Kitchen Specialists Asso
ciation
(KSA)
• National Bed Federation
(NBF)
• The association for Britis
h Furniture Manufacturer
s
Larger Image (BFM)
Source: Metapraxis • Economic Value Added
Quantitative Methods

Quants Handbook
Lecture 1: Functions & Economic Relationships
Lecture 2: Economic Models/Linear Models
Lecture 3: Basic Differential Calculus
Lecture 4: Optimisation
Lecture 5: Functions of Several Variables
Lecture 6: Unconstrained Optimisation
Lecture 7: Constrained Optimisation
Lecture 8: Growth & Dynamics
Lecture 9: Introduction to Difference Equations

Click on Image Source: Bob Beachill

Source: Brian C. McCarthy Leeds Metropolitan University
Ohio University beach@thenet.co.uk
 Strategic Business Analysis
SWOT Analysis
• PEST market analysis tool
• Porter's Five Forces Model
• Resources and Capabilities
• Value Chain
• Managing Your Value Ch
ain
• Organisation
• Organisational Culture
• attitudes,
Click on Image
• values, Source: QuantAA

• beliefs,
• norms and Larger Image
Click on Image
• customs Source: Wikipedia
• Organisational Capabilities
• Financial Analysis
Organisation
An organization or organisation (read more about -ize vs -ise) is a formal group
of people with one or more shared goals. The word itself is derived from the
Greek word ὄργανον (organon) meaning tool. The term is used in both daily and
scientific English in multiple ways.

• Organization terms
• Organisation in sociology
• Organisation in management and

organisational studies
• Organization theories
• Organizational structures
• Pyramids or hierarchies
• Committees or juries
• Staff organization or cross-functi
onal team
• Matrix organization
• Ecologies
• "Chaordic" organizations
• See also Click on Image. Larger Image.
Source: Howell & Costley
• Related lists
Financial Statements: The System

Larger Image

Larger Image
Click on Images
Source: Investopedia.com
Financial Statements: Analysis

1) Financial Statements: Introduction

2) Financial Statements: Who's In Charge?
3) Financial Statements: The System
4) Financial Statements: Cash Flow
5) Financial Statements: Earnings
6) Financial Statements: Revenue
7) Financial Statements: Working Capital
8) Financial Statements: Long-Lived Assets
9) Financial Statements: Long-Term Liabilities
10) Financial Statements: Pension Plans
11) Financial Statements: Conclusion

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Source: Investopedia.com Source: Investopedia Inc
Financial Ratios
A financial ratio is a ratio of two numbers of reported levels or flows of a company. It
may be two financial flows categories divided by each other (profit margin,
profit/revenue). It may be a level divided by a financial flow (price/earnings). It may be a
flow divided by a level (return on equity or earnings/equity). The numerator or
denominator may itself be a ratio (PEG ratio).

• Ratios Larger Image

• Flow-to-flow
• Level-to-level Download
• Ratio-to-ratio Financial Ratio Analysi
• To cash flow s
• To earnings (177K)
• To market cap for Microsoft Excel.
• See also
Source: Baarns
• External links Consulting Group
Competitive Position: Competitive Advantage

Literature Review
• Strategic Planning
• Competition
• What in the World is Competitiv
e Advantage?
• Competitive Postion
: Competitive Advantage
• What is Sustainable Competiti
ve Advantage
• Sustainable Competitive Adva
ntage
Click on Image
Source: BRS
• Creating Business Value
• Interest Alignment Rents and
Competitive Advantage
Click on Image
Source: businessballs.com
• Performance measures to sup
port competitive advantage
Competitive Position: Competitive Advantage

Literature Review
• Competitive strategy
• Michael Porter: Generic Strategie
s
• Risk-related Challenges

Larger Image
Click on Image
Source: Vadim Kotelnikov, GIVIS, Ten3 East-West

Also see Annotated Lecture Outline

 Strategic Capability: Core Competence

Literature Review
• Corporate Capabilities
• Core Competency
• Strategic Intent
• Innovation
• New Paradigm: Resource-Based Theory
• Theory of Constraints
• Value Chain
• IKEA Modified Value Chain
• Organisational Culture
• Organisational Structure
• Economic Value Added
• Six Sigma
Larger Image
Click on Image
Also see Annotated Lecture Outline Source: Sumitomo Corporation
Global Strategies

Literature Review
• Going Global: Assess Market Opp
ortunities
• Institutions and Business Strategie
s in Emerging Economies: A Study
of Entry Mode Choice
• Globalization, Models of Competitiv
e Advantage and Skills
• The Competition of Countries
• Competitiveness of Nations: The F
undamentals
• Economist Country Briefings

Click on Image
Source: Agrium Inc. 2004
Also see Annotated Lecture Outline
Strategic Decision Making

Literature Review
• Decision Theory
• Decision Making
• Game Theory
• The Future of Game Theory

Click on Image
Source: Yale Economic Review

Also see Annotated Lecture Outline

Strategic Planning
Strategic planning consists of the
process of developing strategies to
reach a defined objective. As we label a
piece of planning "strategic" we expect
it to operate on the grand scale and to
take in "the big picture" (in
contradistinction to "tactical" planning, Click on Image
Source:
which by definition has to focus more Long Range Planning - International Journal of
on the tactics of individual detailed Strategic Management
activities).
"Long range" planning typically projects
current activities and programs into a
revised view of the external world,
thereby describing results that will most
likely occur (whether the planner wants
them or not!)

Also See Introduction to Strategic Management

Strategic Planning

"Strategic" planning tries to "create"

more desirable future results by
(a) influencing the outside world or
(b) adapting current programs and
actions so as to have more
favorable outcomes in the external
environment.

Click on Image
Source:
learningworks@telus.net
Strategic Planning

• Methodologies
• Situation Analysis
• Identifying cultures
• Perspectives
• Ethnographical versus Clinical approac
h
• Functionalistic versus Interpretionistic
approach
• Artifacts
• Visible artifacts
• Invisible artifacts
• Culture types
• Changing cultures and strategy
• Approaches Click on Image. Larger Image
• Resistance Source: University of Cambridge,
• Measurements Department of Engineering
• Goals, objectives and targets
• Mission statements and vision statements
• Why strategic plans fail
• External links
Competitive Position: Competitive Advantage
Competition is the act of striving against another force for the purpose of
achieving dominance or attaining a reward or goal, or out of a biological imperative
such as survival. Competition is a term widely used in several fields, including
economics, business, politics, and sports. Competition may be between two or
more forces, life forms, agents, systems, individuals, or groups, depending on the
context in which the term is used.
• Sizes and levels of competition
• Consequences of competition
• Competition in different fields
• Economics and business comp
etition
• Competition in biology and ecol
ogy
• Competition in politics
• Sports competition
• Competition in education
• The Study of competition
• Competitiveness
• Econometrics
• See also Click on Image
Source:Brecker Associates
Sustainable Competitive Advantage

• Owning Competitive Advantage

• Competition
• Hypercompetition

Larger Image
Click on Image
Source: Vadim Kotelnikov, GIVIS, Ten3 East-West
Sustainable Competitive Advantage
In marketing and strategic management
, sustainable competitive advantage
is an advantage that one firm has
relative to competing firms. The source
of the advantage can be something the
company does that is distinctive and
difficult to replicate, also know as a
core competency, for example P&G'
ability to derive superior consumer
insights and implement them in
managing its brand portfolio.

Larger Image
Click on Image
Source: Infosys Consulting
Creating Business Value
Information technology facilitates new and more
efficient way of creating business value in the
new economy. As a result, instead of the
traditional vertically integrated value chains,
organizations must adopt business models
based on independent layers of value-creating
activities.
• Meltdown of the Value Chain

Impact of rising strength of emerging economies

on market expansion Role of emerging market
conditions on first mover advantages Sources of
first mover advantages in emerging markets
Strategies to sustain these advantages

• Complementing for Complexity: Leading T

hrough Managing  The first mover in an e Source: General Management Review
merging market
Competitive Strategy: Michael Porter

• Michael Porter: Generic Strategies

Larger Image Image by benchmarkporter.com

Click on Image
Source: www.tutor2u.net
Strategic Capability: Core Competence

• Internal capabilities
• Corporate capabilities
• Resource-based view
• Capabilities in the new economy
• Synergy
• Patents
• Effective leadership
• Teamwork
Larger Image
• Continuous learning Click on Image
Source: Vadim Kotelnikov, GIVIS,
• Tacit knowledge Ten3 East-West
Core Competency

• Core Competency
• The Work of Hamel and Prahalad
• Sustainable competitive advantage
• Synergy

• The Competence Problem

• Principles and Functions of Manage
ment - Henri
Fayol
• Qualities of a Successful Manager
• The Motivation and Performance Ob
session
Larger Image
Click on Image
• Leadership and Management Source: Forio Corporation

• Managerial Competency Questionn

aire
Strategic Intent
• Corporate Vision, Mission, Goals and Strat
egies
• Your Enterprise Strategy
• Dynamic Business Strategy
• Strategy Innovation
• Marketing and Selling

• Strategic Thinking
• New-to-the-World Product Developme
nt
• Managing Your Value Chain Larger Image
Click on Image
• Strategy Implementation Source: Vadim Kotelnikov, GIVIS, Ten3 East-West
Innovation

• Efficiency Improvement
• New ways of doing business
• New rapidly globalizing economy
• Technological innovation
• Technology Transfer

• Fast Company
• Reaching and servicing customers
• The Entrepreneur
• Innovation project management
• Roadmaps
• Guiding principles
• Business processes
Click on Image
Source: Vadim Kotelnikov, GIVIS,
Ten3 East-West
New Paradigm: Resource-Based Theory
• Strategic Marketing and the Resource
Based View of the Firm

• Business Strategy
• Setting Objectives & Planning
• Customer Satisfaction
• Performance Management
• Performance Measurement Syst
em
• Balanced Scorecard (BSC)
• Service-Profit Chain
• Sustainable Growth Strategies

• Porter's Five Forces Model for Ind

ustry Analysis
Larger Image -
• Economic Value Added (EVA) Click on Images
Source: Vadim Kotelnikov, GIVIS,
• Business Architect Ten3 East-West
Theory of Constraints
Theory of Constraints (TOC) is a body of knowledge on the effective
management of (mainly business) organizations, as systems. The author is
Eliyahu M. Goldratt, with many others contributing to the body of knowledge.
• The Thinking Process (TP)
• Throughput Accounting
• Application-specific TOC solution
s
• Operations
• Supply Chain / Logistics
• Finance and Accounting
• Project Management
• Marketing and Sales
• The Six Necessary and Sufficient
Questions relating to Technology
• Development and practice
• Also See Larger Image
• References Click on Image
Source: Osaka Gakuin University

A Guide to Implementing the Theory of Constraints (TOC)

Value Chain

Click on Image
Source: Vickers
 IKEA Modified Value Chain
Michael Porter argues that an
organization can enhance its
competitive positioning by performing
key internal activities in the value
chain at a lower cost and better than
its competitors (Bartol et al, 1993:
211).

The value chain approach identifies

two major activities- primary and
secondary. Primary actives include
production, marketing, logistics and
after-sale functions. Secondary
activities, on the other hand, are
identified as support processes to
primary activities.
IKEA Modified Value Chain
These include, firm infrastructure, Human Resource Management. Technology
development, and procurement. The ultimate purpose of the firm is to add as
much customer "value" in each of the primary activities (Pearce et. al, 1993: 184-
187).

Ikea has modified the value chain approach by integrating the customer in the
process and introducing a two-way value system between customers, suppliers,
and Ikea's headquarters.

In this global sourcing strategy, the customer is a supplier of time, labor,

information, knowledge and transportation. On the other hand, the suppliers are
customers, receiving technical assistance from Ikea's corporate technical
headquarters through various business services. The company wants customers
to understand that their role is not to consume value, but rather to create it
(Norrmann et al, 1993: 67).
IKEA Modified Value Chain
Ikea's role in the value chain is to mobilize suppliers and customer to help them
further add value to the system. Customers are clearly informed in the catalogs of
what the firm's business systems provides, and what they are expected to add to
the final process.

In order to furnish the customer with good quality products at a low cost, the firm
must be able to find suppliers that can deliver high quality items at low cost per
unit. The headquarters provides carefully selected suppliers with technical
assistance, leased equipment and the necessary skills needed to produce high
quality items.

This long-term supplier relationship does not only produce superior products, but
also add internal value to the suppliers (Normann et al, 1993: 72). In addition, this
value-chain modification differentiates Ikea from its competition.
Organisational Culture
Organizational culture comprises the attitudes, values, beliefs, norms and
customs of an organization. Whereas organizational structure is relatively easy to
draw and describe, organizational culture is considered to be less tangible and
more difficult to measure. It is also called Company Culture.

• Influences on organizational cult

ure
• Strong/Weak cultures
• Classifying organizational cultur
e
• Johnson’s Cultural Web
• Hofstede
• Deal and Kennedy
• Charles Handy
• Edgar Schein
• Elements of culture
• Critical Views on Organizational
Culture
• Figures in organizational culture
• See also Click on Image. Larger Image
• Sources Source: University of N. Carolina
Organisational Structure

Organizational structure is the way in which the interrelated groups of an

organization are constructed. The main concerns are effective communication
and coordination.

• Pre-bureaucratic
• Bureaucratic
• Functional Structure
• Divisional Structure
• Post-Bureaucratic
• Matrix organization
• Multi-Unit Organization
• Adhocracy
• See also

Click on Image. Larger Image

Source: © 2004-2006 Visitask
Economic Value Added

What Does Economic Value A

dded Really Mean?

Click on Images for further

information
Larger Image
Source: David Harper, (Contributing
Editor - Investopedia Advisor)
Six Sigma
Six Sigma was pioneered by Bill Smith at Motorola
in 1986[1]. Originally, it was defined[2] as a metric
for measuring defects and improving quality; and a
methodology to reduce defect levels below 3.4
Defects Per (one) Million Opportunities (DPMO). Six
Sigma is a registered service mark and trademark of
Motorola, Inc[3]. Motorola has reported over US$17
billion savings[4] from Six Sigma to date.

AlliedSignal and GE became early adopters of Six

Sigma and reported benefits of over US$300 million
during its first year of application[5]. Their CEO's,
Larry Bossidy and Jack Welch, played a vital role in
popularizing Six Sigma. Other major organizations
who claim to have benefited from Six Sigma
implementation are Ford, Caterpillar, Microsoft,
Raytheon, Quest Diagnostics, Seagate Technology,
Siemens, Merrill Lynch, Lear, 3M and many more.
Click on Image
Source: KETCH.ca
Six Sigma
• Definition
• Application & Success
• Healthcare
• Banking
• Insurance
• Construction
• Military
• Methodology
• DMAIC
• DMADV
• Roles Required for Implementation
• Examples of Some Key Tools Used
• Criticisms of Six Sigma
• Of its origin
• Of the term: Six Sigma
• Of statistics Click on Image
• Of methods
Source: QCI International. All rights reserved.
• Of effects
• References
• See also
• External links
Global Strategies
Globalisation

Larger Map
Source: BizEd,
University of Bristol

Click on image for further information

Global Strategies

Globalization (or globalisation1) refers to the worldwide phenomenon of

technological, economic, political and cultural exchanges, brought about by
modern communication, transportation and legal infrastructure as well as the
political choice to consciously open cross-border links in international trade and
finance.

• Meaning & Debate

• History
• Nature and existence of globalization
• Characteristics
• Anti-globalization
• Pro-globalization (globalism)
• Other uses
• Measurement of Globalization
• Notes
• See also
• External links

Illustration by Viktor
Koen for Newsweek
Comparative Advantage
In economics, the theory of comparative advantage explains why it can be
beneficial for two countries to trade, even though one of them may be able to
produce every kind of item more cheaply than the other. What matters is not the
absolute cost of production, but rather the ratio between how easily the two
countries can produce different kinds of things. The concept is highly important in
modern international trade theory.

• Origins of the theory

• Analysis of Ricardo's theor
y
• Examples
• Example 1
• Example 2
• Example 3
• More complexities
• References
• See also
• External links Click on Image
Source: Pakissan.com
International Trade
International trade is the exchange of goods and services across international
boundaries or territories. In most countries, it represents a significant share of
GDP. While international trade has been present throughout much of history (see
Silk Road, Amber Road), its economic, social, and political importance has been
on the rise in recent centuries. Industrialization, advanced transportation,
globalization, multinational corporations, and outsourcing are all having a major
impact. Increasing international trade is the usually primary meaning of "
globalization".
• International trade theory
• Ricardian model
• Heckscher-Ohlin model
• Specific Factors
• Gravity model
• Regulation of international trade
• Risks in international trade
• Economic risks
• Political risks
• See also
• External links
• Data Click on Image
Source: Copyright ©  2006 Time Inc.
Multinational Corporations

A multinational corporation (MNC) or multinational enterprise (MNE) or

transnational corporation (TNC) is a corporation/enterprise that manages
production establishments or delivers services in at least two countries.

• Critiques Annual Report on t

• he Guidelines for M
Examples ultinational Enterpri
• In fiction ses
• See also The 2005 edition
• Fostering Growth and Prom
oting a Responsible Market
includes a special
Economy - A G8 Declarati focus on corporate
on responsibility in the
developing world
Multinational Corporations
Multinational corporations (MNC) are often divided into three broad groups:

• Horizontally integrated multinational corpo

rations
manage production establishments located in
different countries to produce same or similar
products.
• Vertically integrated multinational
corporations manage production
establishment in certain country/countries to
produce products that serve as input to its
production establishments in other
country/countries.
• Diversified multinational corporations
manage production establishments located in
different countries that are neither horizontally
or vertically integrated.
Multinational Corporations

Multinationals have played an

important role in globalization. Given
their international reach and mobility,
prospective countries, and sometimes
regions within countries, must compete
with each other to have MNCs locate
their facilities (and subsequent tax
revenue, employment, and economic
activity) within. To compete, countries
and regional political districts offer
incentives to MNCs such as tax
breaks, pledges of governmental
assistance or improved infrastructure,
or lax environmental and
Click on Image
labour standards. This process of Source:
becoming more attractive to foreign
investment can be characterized as a
race to the bottom.
Decision Theory
Decision theory is an interdisciplinary area of study, related to and of interest to
practitioners in mathematics, statistics, economics, philosophy, management, and
psychology. It is concerned with how real decision-makers make decisions, and
with how optimal decisions can be reached.
• Normative and descriptive decision t
heory
• What kinds of decisions need a theor
y?
• Choice between incommensurable c
ommodities
• Choice under uncertainty
• Pascal's Wager of choice unde
r uncertainty
• Alternatives to probability theory
• Intertemporal choice
• Social decisions
• Complex decisions
• Paradox of choice
• See also Larger Image
Click on Image
• References
Source: Times Books
Decision Making
Decision making is the cognitive process of selecting a course of action from
among multiple alternatives. Every decision-making process produces a final choice.
It can be an action or an opinion. It begins when we need to do something but we do
not know what. Therefore decision-making is a reasoning process which can be
rational or irrational, and can be based on explicit assumptions or tacit assumptions.

Click on Image
Source:
Cognitive Technolo
gies
.
Decision Making

• Decision making style

• Cognitive and personal biases in decisi
on making
• Cognitive neuroscience of decision mak
ing
• Decision making in groups
• Principles
• Decision making in one's personal life
• Decision making in healthcare
• Path dependency
• Decision making in business and mana
gement
• See also
• References
• External links
• Some important research journals

Larger Image
Click on Image
Source: DM Review
Game Theory
Game theory is a branch of
applied mathematics that studies strategic
situations where players choose different
actions in an attempt to maximize their
returns. First developed as a tool for
understanding economic behavior, game
theory is now used in many diverse
academic fields, ranging from biology,
psychology to philosophy. Beginning in the
1970s, game theory has been applied to
animal behavior, including species'
Larger Image
development by natural selection. Because Click on Image
of interesting games like the Source: David D Friedman
prisoner's dilemma, in which rational self-
interest hurts everyone, game theory has
been used in political science, ethics and
philosophy. Finally, game theory has recently
drawn attention from computer scientists
because of its use in artificial intelligence and
cybernetics.
Game Theory
• Representation of games
• Normal form
• Extensive form
• Types of games
• Symmetric and asymmetric
• Zero sum and non-zero sum
• Simultaneous and sequential
• Perfect information and imperfect informatio
n
• Infinitely long games
• Uses of game theory
• Economics and business
• Descriptive
• Normative
• Biology
• Computer science and logic
• Political science Larger Image
• Philosophy Click on Image
• History of game theory Source: Elmer G. Wiens: Egwald Web Services Ltd
• Notes
• References

Also see Game Theory, Strategic Behavior, and Oligopoly

Competitive Position - Competitive Advantage 1/4

Lecture
Opening Remarks
It is useful to start the session by recapping on
the previous lecture and emphasizing the notion
of ‘strategy as imperfection’ or the quest for
‘unfair’ advantage. This lecture explores the idea
of competitive advantage in more detail and puts
some flesh on the bare bones of generic
strategies introduced in the preceding session.
The lecture focuses on the idea that strategy is
about the position of an organisation with respect
to its markets and competitors (the so called
market-based or positioning school) and looks at
the relationships between market structure,
pricing and strategy. Larger Image
Click on Image
Source: Wikipedia
The Market Positioning School
A recap on the ‘generic strategies’ framework
introduced briefly in the last chapter and
restatement of the stuck in the middle hypothesis.
Competitive Position - Competitive Advantage 2/4

The Nature and Source of Cost Advantage

A more detailed look at the nature and sources of cost advantage focussing on the links
between economies of scale, scope and learning and the achievement of cost advantage.

The Nature and Source of Differentiation Advantage

A more detailed look at the nature and source of differentiation advantage and the risks
associated with this strategy emphasising the difference between differentiation and cost
based strategies. Identifying the potential for differentiation.

The Concept of Competitive Advantage

A definition of competitive advantage and a description of its constituent elements. An
explanation of firm-specific imperfections as the source of competitive advantage and the
interrelationship between industry structure and competitive advantage.. This latter point may
be omitted from undergraduate lectures and developed in a tutorial context.
Figure 6.7. An explanation of the concept of sustainability and its determinants (on
undergraduate programmes this may be included a little later in the course)
Competitive Position - Competitive Advantage 3/4

Three Major Routes to Competitive Advantage: Is it possible for a firm to pursue

more than one generic strategy?
A re-statement of the ‘stuck in the middle’ hypothesis and a summary of the reasons for
arguing that, in order to be successful, a firm should commit to a single strategy. The
critique of this position and the implications of composite strategies. The relationship
between generic strategies and market structure (this may be omitted on undergraduate
programmes).
On undergraduate programmes the following sections may form the basis of a second
lecture

Market Segmentation Analysis

The rationale for market segmentation analysis. The concept of offer curves and
price/quality trade-offs (this element may be omitted on undergraduate programmes).
The identification of segmentation variables.

Value Creation and Value Analysis

The concept of value and consumer surplus. The link between value, competitive strategy
and competitive advantage. Value maps could be included if time permits but can be
omitted without losing the main thrust of the argument.
Competitive Position - Competitive Advantage 4/4
Strategic Group Analysis
An explanation of the
concept of strategic groups and rationale for
this kind of analysis.
Mapping strategic groups over time and
strategic groups in practice.

Industry Transformation
Using the 5 forces framework to gain insight in
to industry transformation
. On undergraduate programmes this may be
omitted from the main lecture and developed
in tutorial sessions.

Larger Image
Click on Image
Business Models
Source: Vadim Kotelnikov, GIVIS,
This is an optional part of this session and Ten3 East-West
may be considered in a later slot.
An explanation of the terminology. The key
elements of a business model. Business
models in practice. Achieving a sustainable
and defensible strategic position.
Strategic Capability: Core Competence 1/3

Lecture – a recap of prior concepts and the logic of the market-based view of the firm. A
discussion of the way this lecture fits with the overall framework of the strategy course.
SLIDE: Figure 1.6 A systemic model of strategy

The Resource-based View of the Firm- an explanation of the main tenets of the resource-
based view and the ways in which it differs from the market-based view.
SLIDE: The market-based versus the resource-based view of the firm.

The Language of Resources and Capabilities – a discussion of key terminology, for

example ‘capabilities’, ‘competences’, ‘strategic assets’ highlighting the fact that different
authors use different terms to refer to similar concepts.
SLIDE: Some key definitions
SLIDE: Core Competences = Distinctive Capabilities = Strategic Assets

The Importance of Intangibles – an explanation of what is meant by intangibles and why

they are considered to be of particular importance
SLIDE: Identifying Intangibles p. 263
Strategic Capability: Core Competence 2/3

Determining the Value of Competences – an explanation of the concepts of imitability,

durability, substitutability and appropriability.
SLIDE: Figure 7.5

Linking the Market-based and Resource-based Views – discussion of the ways in which
these two perspectives complement each other which draws on the notion of key
success factors. For undergraduates this could be the concluding slide.
SLIDE 7.10
SLIDE: Figure7.6
Strategic Capability: Core Competence 3/3
Competence-based Competition – an
introduction to the notions of strategic intent and
strategic innovation, emphasizing the role of
learning.
SLIDE: Figure 7.7

Competitive strategy in practice – some

prescriptive advice about
managing the business for value and positioning
the business for growth. More suited to
postgraduate students with management
experience.
SLIDE: Figure 7.2
SLIDE: Figure 7.15

Concluding comments – a brief summary of the

Click on Image
key ideas highlighting of the fact that every firm is
different and that managerial processes, Source: SUNY Cobleskill
information and communication together with
intangible assets and core competences are
central to developing and sustaining competitive
advantage.
 Global Strategies 1/6
Lecture
The 'global strategies and international
advantage' topic covers a lot of ground and
on undergraduate programmes it might be
worthwhile covering the topic over two
lectures.

The first lecture could focus on the

concept globalization and the pursuit of
international competitive advantage at the
nation and industry level. The second could
focus on firm level choices and the strategic
options available to international firms

Introduction – opening remarks should

establish the link with previous lectures on
competitive and corporate strategy and
explain this lecture’s focus on the global
arena.
Click on Image. Larger Image
Source:
Carnegie Endowment for Internatio
nal Peace
Global Strategies 2/6
The Terminology of International Business
– an explanation of key terms and the
introduction of the notions of
internationalization and globalization.
Slide: The
terminology of international business (list of
key definitions drawn from p.412 and 413)

The Context of International Strategy – a

brief review of the major trends in trade and
foreign direct investment. A discussion of the
factors driving globalization
Slide: Table 11.1 and 11.2

Click on Image
Source: © 2000-2006 by The Globalist
 Global Strategies 3/6
National Competitive Advantage – an
introduction to, and explanation of, the
determinants of national competitive advantage
(Porter’s diamond model). Lectures to
postgraduate audiences could also include a
discussion of the limitations of the model
(discussed on p.434-436 of the text) and
introduce the double diamond model.
Slide: Figure 11.1

The Internationalization process – an

explanation of the ways in which domestic firms
develop their overseas activities and the
evolution of different forms engagement in Click on Image
foreign markets over time. A summary of the Source:
advantages and disadvantages of these Irish Agriculture and Food Developmen
different forms of international activity, e.g. t Authority
licensing, foreign direct investment, etc.
Slide: Figure 11.2
Global Strategies 4/6
From international to global strategies – a reiteration of the opening themes of
internationalization, moving to a discussion of the strategic options available to
multi-national firms, introducing the notion of multi-domestic and global strategies.
Slide: Figure 11.3
Slide: Bullet points contrasting multi-domestic and global strategies

The Drivers of Globalization – a discussion of the forces that are driving the industries
and firms to go global and the limitations of, and tensions in, this process
Slide: Table 11.4

Global v Local – an outline of the trade-offs between standardisation and differentiation

and the link between the strategic environment and available strategic options.
Slide: Table 11.5

Strategic Choices – an explanation of Bartlett and Ghosal's four basic strategies used to
enter and compete in international environments
Slide: Figure 11.5

The Best of Both Worlds – Transnational Strategies – an outline of what is understood by

a transnational strategy and an explanation of implementing this strategy in practice.
Global Strategies 5/6
Strategy and Organization – a return to one
of the key themes running through the strategy
literature, namely the strategy/structure
debate. A discussion of the fit between
strategy and structure in international firms,
paying particular attention to Bartlett and
Ghoshal's (1989) model. If time permits the
lecturer may also like to re-introduce the
notions of country-specific and firm-specific
advantages and Rugman & D'Cruz's (2000)
'flagship'model
Slide: Figure 11.7
Slide: Figure 11.11 (optional) Click on Image. Larger Image
Source:
© Department of Industrial Engineering and Ma
Managing International Organizations – an nagement 2006, Helsinki University of
explanation of the complexity inherent in Teachnology
organising a multi-product, multi-market firm
and a discussion of the ways in which
managers may seek to organise and control
such businesses.
Slide: Bullet points for and against a matrix
structure
Slide: Figure 11.13
Global Strategies 6/6
Concluding Comments – a summary of some of the main themes including the nature of
globalization and the significance of national competitive advantage, the global/local debate
and the way this connects with firm-specific versus country-specific advantages, the
tantalizing possibility of gaining the 'best of both worlds' through transnationality and the
possibilities and problems of developing appropriate organizational structures and systems to
make the transnational organization a reality

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Source: BizEd
Strategic Decision Making 1/4
Lecture - a discussion of the change in
emphasis from micro and macroeconomic
analyses of strategy to more process-based
approaches. A re-iteration of the earlier theme
of 'what happens when strategy meets
organization?'
Slide: Figure 2.2

Different perspectives on strategic decision-

making - an explanation of Mintzberg, Quinn
and Ghoshal's (1998) 5 'Ps' of strategy and a
discussion of the ways in which the dominant
view of strategic decision-making has changed
over time.
Slide: Bullet points outlining the 5 Ps of
strategy

Making Choices - an explanation of rules of

thumb and option selection techniques
emphasizing the fact that the way strategy is
viewed determines, at least in part, the
Click on Image. Larger Image
techniques used to aid decision-making.
Slide: Table 13.1 Source: David M. Boje
Strategic Decision Making 2/4
Game Theory - an explanation of the basic
terminology and approach of game theory and
the introduction of a simple game such as the
Prisoners' Dilemma. Undergraduate lectures may
choose to omit the slide and merely introduce the
general concept of game theory.
Slide: Table 13,2

Sensitivity Analysis - a brief explanation of the

technique
Slide - Definition of sensitivity analysis from
13.2.2

Options - an explanation of the key dimensions

of strategic options namely the identification of
additional or alternative capabilities and the Click on Image
identification of potential future markets and/or Source: Drexel University
new customer behaviours.
Slide: Figure 13.1
Strategic Decision Making 3/4
Decision-making Processes: Thinking and
Acting - a reiteration of the point that decision-
making is not a simple process that happens
in a linear sequence - a period of thinking and
followed by a period of acting. Decision-
making and the development of alternative
courses of action are fashioned in their doing.
An explanation of different perspectives on
decision-making processes e.g. planned v
chaotic
Slide: Figure 13.2 and the architecture of
strategic decision-making Click on Image
Source: guuui.com
The architecture of strategic decision
making - the importance of decision-specific
characteristics and organizational context to
decision-making processes. (Please note:
undergraduate tutors may decide to omit this
topic from the lecture and to explore these
issues raised in separate lectures.)
Slide: Bullet points taken from top of page 514
Slide: bullet points taken from middle of page
515
Strategic Decision Making 4/4
Strategic Decision-making and
Performance - a discussion of the
relationship between decision processes and
their outcomes, highlighting the importance of
the knowledge base of managers and the
receptivity of the organizational context
Slide: factors of success - bullet points of sub-
headings in 13.5.2

Closing remarks - A re-statement of the key

themes of the lecture placing emphasis on
not only the choices made but also on how
managers make decisions and the
relationship between decision-making
processes and performance outcomes.

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