MGF 3684

Business Strategy
Week 10
 What you need to know today

1. Case Analysis Communique 4. IBM Case

2. Ethnics & Corporate Social 5. Capstone Final Round 6
Responsibility
3. Emergent Strategy

Concepts Case Studies MGF

3684

Concepts StratBusines
eg y s
Mgt

IT Security Vs
Take-aways Cybersecurity
What we will be learning this week?
Housekeeping
Announcements

• Case Analysis Take Home Exam

Assignment
 Take Home Exam Assignment

Release & due in week 14 – submission by Sat 18 June 2022

The Assignment brief will be uploaded inside Moodle’s submission box

There will be 3 cases, which you will:

1. Itemize the major strategic actions/events contained in each case

2. Link these to the relevant concepts/theories covered

3. Provide your own assessment where possible, especially in terms of any debate/controversy

.
 S E C T I O N 1

Ethics & CSR

Business Ethics / CSR: An
Overlooked Issue?
Three schools of thought regarding extent
to which ethical standards can be applied . . .

Ethical Universalism

Ethical Relativism

Integrative
Integrative Social
Social Contracts
Contracts Theory
Theory

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Concept of Ethical Universalism
According to the school of ethical universalism . . .
 Same standards of what is ethical and what is
unethical resonate with peoples of most societies
regardless of local tradition 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

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Examples of Universal Ethical
Principles or Norms
Honesty
Trustworthiness
Treating people with dignity and respect
Respecting rights of others
Avoiding unnecessary harm to
 Workers

 Users of a company’s product or service

Respecting the environment

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What Is the Appeal of Ethical
Universalism?
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

Whenever basic moral standards do not vary significantly
according to local cultural beliefs, traditions, or religious
convictions, a firm can
 Apply a code of ethics more or less evenly across its
worldwide operations
But… seen as ethical imperialism by many

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Concept of Ethical Relativism
According to the school of ethical relativism . . .
 Different societies/cultures/countries
 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 place to another

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

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Payment of Bribes
A thorny ethical problem is faced by companies operating
across different environments
 Degree of cross-country variability in paying
bribes as part of business transactions
Companies forbidding payment of bribes in their codes of
ethics face a formidable challenge in countries where
payments are entrenched as a local custom
Foreign Corrupt Practices Act prohibits U.S. companies from
paying bribes in all countries where they do business
 Lucent in China
 More recently the GlaxoSmithKline case
The “grease” and “sand” views
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Appeal of Integrative Social
Contracts Theory
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
A middle-of-the-road approach

Social contracts theory maintains adherence to

universal or first-order ethical norms should always
take precedence over local or second-order norms

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Drawbacks of Ethical Relativism
The ethical relativism rule of “when in Rome, do as the
Romans do” presents problems
 It is ethically dangerous for company personnel
to assume that local ethical standards are an
adequate guide to ethical behavior
 What if local standards condone bribery?

 What if local standards blink at environmental

degradation?
 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 company-wide
 Compromises a firm’s long-term valuation

 My study finds that bribery increases short-term

sales growth but lowers Tobin’s Q. 15
Google and Yahoo in China

Google’s retreat from China, and criticisms of Yahoo’s

cooperation with the Chinese government, illustrate how
difficult it is for companies to make decisions on ethical
issues

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Positioning School’s Route to Competitive
Advantage (CA)

Positioning School’s view of strategy is mostly

externally oriented.

“Understanding the forces that shape industry competition is

the starting point for developing strategy”
(Porter 2008: 88)

“Strategy can be viewed as building defenses against the

competitive forces or finding a position in the industry where
the forces are weakest.”
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(Porter 2008: 89)
A recently published study

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Positioning School’s Route to Competitive
Advantage (CA)

Positioning School’s view of strategy is mostly

externally oriented.

“Understanding the forces that shape industry competition is

the starting point for developing strategy”
(Porter 2008: 88)

“Strategy can be viewed as building defenses against the

competitive forces or finding a position in the industry where
the forces are weakest.”
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(Porter 2008: 89)
Positioning School’s Route to CA
“Choices”:

Porter (1985): Following external analysis, choose a generic strategy that promises
protection from competitive forces.

Porter (1996): Following external analysis, choose a strategic position. Perform a

unique set of activities characterised by fit that creates value for customers and is
difficult to imitate, assisted by value chain analysis.

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The RBV Route to CA

Why does Wal-Mart have lower cost structure?

 Because of underlying distinctive
resources/capabilities.

RBV brings a more subtle understanding of

competition.
Firms are severely constrained in their choices by existing
res/cap and the rate at which new res/cap can be built.

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Synthesis: Positioning School and RBV

Differing lenses, but mostly complementary

Porter on its own too externally oriented. Inadequate attention

to the difficulties and uncertainties in building distinctive
res/cap: long-term commitment and long-term investments

RBV on its own too internally oriented. Environment

determines opportunities!

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Next Week’s Lesson

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