Week5 2 Vision AFIE SWOT BlueOcean ValueChain DiversificationActivity 2023

INTRODUCTION TO INTERNATIONAL
BUSINESS (IIB)
Week 5 Second Session

Business Strategy
2023 - 1
Strategy
How to play this game?
What we are going to study next?
1. Strategic Planning for Business

2. Vision and Mission
3. Competitive Advantage
4. Conceptual framework of Business Strategy – AFIE
5. SWOT Analysis
6. Business Level Strategies
• Cost Leadership
• Differentiation
• Blue Ocean
7. Corporate Level Strategies
• Diversification
• Vertical and Horizontal Integration
Strategy is about understanding where you are now, where you are
heading and how you will get there.
1. Strategic Planning for Business: concepts
Business Strategy (1): a set of goal-directed actions a firm takes to gain and sustain
superior performance relative to competitors (Sustainable Competitive Advantage -
SCA)
Business strategy (2) : is the plans, choices and decisions used to guide a company
to greater profitability and success
Strategy Is about creating superior value

Business strategy example
Some years ago, Samsung

Home appliances
https://vimeo.com/315997434
Source: Frank T. Rothaermel. Strategic Management. 2017.
Competitive Advantage: Key Points
• Competitive Advantage
• Superior performance relative to other competitors in the same industry or the
industry average
• Sustainable Competitive Advantage
• Outperforming competitors or the industry average over a prolonged period of time
https://www.youtube.com/watch?v=fujboh-W7Sk https://www.youtube.com/watch?v=X0JdbZEKz7k
So which one has a competitive advantage?
Global revenue of Nike, Adidas and Puma from 2006 to
2019 (in billion euros)*
Source: Statista
What strategy is not
a) A vision or mission statement such as “Our strategy is to be a leading-edge

provider/employer”. This explains neither where the firm is going nor how it will
make progress. Consequently, it is not a strategy.
b) A goal, budget or business plan. Strategy is not a goal such as “We aim to be the
best or number one”. This is, at best, an aspiration. Also, strategy in neither a
budget nor a business plan, although elements of these may contribute to how a
strategy is implemented.
c) Data analysis. Too often, data analysis leads to strategy, when what should
happen is that strategic choices are made first and then refined and explored
further using data analysis

best or number one”. This is, at best, an aspiration. Also, strategy is neither a
c) Data analysis. Too often, data analysis leads to strategy, when what should
happen is that strategic choices are made first and then refined and explored
further using data analysis

best or number one”. This is, at best, an aspiration. Also, strategy in neither a
c) Data analysis. Too often, data analysis leads to strategy. Data serves as input to
decide the strategic choices.
Contents :

3. Conceptual framework of Business Strategy – AFIE
4. SWOT Analysis and TOWS Matrix
5. External Analysis and tools
6. Internal Analysis and tools
7. External Factor Evaluation Matrix (EFE)
8. Internal Factor Evaluation Matrix (IFE)
2. Vision, Mission, and Values
• Vision:
What do we want to become?
• Mission:
Which is our reason for being?
• Values /Principles/ Ethics:
-What commitments do we make?
-What limits do we put in place?
-How can we act legally and ethically in pursuing our vision and
mission?
Example of mission:
Example of mission:
Example of mission:
https://www.huawei.com/en/fully-connected-intelligent-world
Contents :

3. The AFIE framework
4. SWOT Analysis and TOWS Matrix
5. External Analysis and tools
6. Internal Analysis and tools
7. External Factor Evaluation Matrix (EFE)
Basic conceptual framework of Business Strategy – AFIE
A Analysis
F Formulation
I Implementation
E Evaluation
Now let me show you 4 graphs that summarizes
all our course!
TA TA TA TAN…
Analysis & Formulation Implementation Evaluation
External
(Industry)
Analysis Implement
Strategic Plan : HOW
New O&T Strategies 1 :

Venture (B) (D) Management
(A) Issues
Business • Vision (F) (G)
Measure and
Idea • Mission Sustainable
SWOT Long Term Strategic Evaluate
(Idea • Values/Principles Competitive
Analysis Objectives Choice Performance
Generation) /Ethics Advantage
(B) (D) (F) G) (A) (D) (H) (D) - KPI
Within (A) Implement
(A) (H)
an Strategies 2:
Existing Marketing,
Internal Finance,
Business
(Firm) Accounting,
(A)
Analysis R&D
S&W (E) (F) (G)
(D) (F) (G)
Business Plan : WHAT
External
(Industry)
Analysis Implement

(A) Issues
Measure and
(B) (D) (F) G) (A) (D) (H) (D) - KPI
(A) (H)
an Strategies 2:
Existing Marketing,
Internal Finance,
Business
(Firm) Accounting,
(A)
Analysis R&D
S&W (E) (F) (G)
(D) (F) (G)
Business Model
CANVAS
Business Resources, Value Customers

Activities & Proposal (Market)
Idea Partners (A) (C) (E) (F)
(Idea (F) (G)
Generation)
(A) Costs (H) Revenues (H) Financial Viability
Net Profits
(H)
External
(Industry)
Analysis Implement

(A) Issues
Measure and
(B) (D) (F) G) (A) (D) (H) (D) - KPI
(A) (H)
an Strategies 2:
Existing Marketing,
Internal Finance,
Business
(Firm) Accounting,
(A)
Analysis R&D
S&W (E) (F) (G)
(D) (F) (G)
Business Plan Outline

(A) Company Overview
Business Model
CANVAS (B) Industry Analysis
(C) Customer Analysis

Business Resources, Value Customers
Activities & Proposal (Market) (D) Competitive Analysis and Strategy (Development Plan)
Idea Partners (A) (C) (E) (F)
(Idea (F) (G) (E) Marketing Plan
Generation)
(A) Costs (H) Revenues (H) Financial Viability (F) Operations Plan
Net Profits
(H)
(G) Management (Organization)
(H) Financial Plan (ROA / ROE)

Macro environment :
EFE : External Factor Evaluation
PESTEL Framework
CP : Competitive Profile
( Institution–Based View
(InBV) IFE : Internal Factor Evaluation
VRIO: Value, Rarity, Imitability and Organization
Micro environment :
External (Industry) 5 Forces Model
Analysis Industry – Based View (IBV)
Balance Score
Card (KPIs)
EFE Matrix : O &
T
CP Matrix Strategic
Competitive
Strategic Implementation
SWOT Choice (alignment)
Evaluation Advantage
(Sustainable)
Analysis
IFE matrix : S & W Cost Leadership / Differentiation &
Business Level Integration
Strategy (BLE)
Resource-Based View - Innovation & Entrepreneurship
RBV (VRIO Framework)
Internal (Firm) Build (innovate internally)
Analysis Value Chain Analysis (VCA) Corporate Level
Borrow / Partner (Entry Modes / Strategic
Strategy (CLE)
Alliances)
Core Capabilities,
Competencies (Gap) Buy (M&A)
Global Level Strategy
(GLE) Offshoring /Global Entry Strategies/
Global Conglomerates / FDI
Macro environment :
PESTEL Framework
( Institution–Based View
(InBV)
Micro environment :
External (Industry) 5 Forces Model
Analysis Industry – Based View (IBV)
Let´s concentrate in the SWOT analysis
Balance Score
Card (KPIs)
EFE Matrix : O &
T
CP Matrix Strategic
Competitive
Strategic Implementation
SWOT Choice (alignment)
Evaluation Advantage
(Sustainable)
Analysis
IFE matrix : S & W Cost Leadership / Differentiation &
Business Level Integration
Strategy (BLE)
Resource-Based View - Innovation & Entrepreneurship
RBV (VRIO Framework)
Internal (Firm) Build (innovate internally)
Analysis Value Chain Analysis (VCA) Corporate Level
Borrow / Partner (Entry Modes / Strategic
Strategy (CLE)
Alliances)
Core Capabilities,
Competencies (Gap) Buy (M&A)
Global Level Strategy
(GLE) Offshoring /Global Entry Strategies/
Global Conglomerates / FDI
A Analysis
F Formulation
I Implementation
E Evaluation
Analysis (A)
SWOT (FODA in Spanish)
Analysis (A)
Analysis (A)
Strengths and Weaknesses

– Internal assessment of
the organization leading to
management decisions.
INTERNAL (Firm)
Opportunities and Threats –

External assessment of the
business environment to
identify the uncontrollable
events that might impact
management decisions.
EXTERNAL (Industry)
A Analysis
F Formulation
I Implementation
E Evaluation
Strategic Management Process
Global Level
Strategy
Analysis Formulation Implementation Evaluation
Formulation (F)
Long-Term Objectives
• The results expected from pursuing certain strategies

• 2-to-5 year timeframe
Formulation (F)
Examples of long term goals
Increase our company´s Reduce our CO2 emissions

market share by 15%. by 50% in the next 5 years
Increase our profit by 10% Open 2 new stores a year in Latin

over the next two years. American countries in the next 5 years.
Formulation (F)
Increase our company´s Reduce our CO2 emissions

market share by 15% in Peru by 50% in the next 5 years

Formulation (F)
Reduce our CO2 emissions

Increase our company´s
by 50% in the next 5 years
market share by 15% in Peru

Formulation (F)
Reduce our CO2 emissions

Increase our company´s
by 50% in the next 5 years
market share by 15% in Peru

Formulation (F)
Long-Term Objectives
• The results expected from pursuing certain strategies
• 2-to-5 year timeframe
Objectives should be:
1. Quantitative
2. Measurable
3. Realistic
4. Time-specific
Why is it so important to define our objectives?
The Nature of Long-Term Objectives
Objectives
• Provide direction
• Allow synergy
• Assist in evaluation
• Establish priorities
• Reduce uncertainty
• Minimize conflicts
• Stimulate effort
• Aid in both the allocation of resources and the design of jobs
Strategic Management Process
Global Level
Strategy
Analysis Formulation Implementation Evaluation
Global Level
Strategies
How to “Go Global”?

• Entry Modes
• Strategic Alliances
(global)
• Blue Ocean • Global Conglomerates
International
Business Plan
Global Level
Strategies

• Entry Modes
(global)
International
Business Plan
Global Level
Strategies

• Entry Modes
(global)
Business-Level Strategy
• Goal-directed actions taken by managers

• Competing in a single product market (not internationally, not globally)
• In quest for competitive advantage
It concerns the broad question, How should we compete?

Managers must answer the who, what, why, and how questions of
competition:
• Who—which customer segments will we serve?

• What customer needs, wishes, and desires will we satisfy?
• Why do we want to satisfy them?
• How will we satisfy our customers’ needs?
Blue Ocean
-Creating a market space not in
existence today
Cost Leadership Strategy
• Offer a no-frills product or service oriented to large markets
• Consumers are price sensitive.
• Produce at a low per-unit cost.
• Economies of scale are very important
• Fosters innovation to keep costs down
There are two types of cost leadership strategies:
1) Low-Cost: is to offer products or services to a wide range of customers at

the lowest price on the market
2) Best-Value: is to offer the lowest price compared to a competitor`s product
with similar attributes
Cost Leadership examples
Cost Leadership example
Cost Leadership example
https://www.youtube.com/watch?v=4kIGNHiEWPU
Differentiation Strategy
• Offering of products or services considered unique to the industry

(at a higher perceived value)
• Directed at consumers who are willing to pay extra money
Examples of Differentiation Strategy
https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/
Blue Ocean Strategy
• Created a completely new market place
• That made competition irrelevant (traditional circus)
• Created and captured new demand
• Broke the value-cost ratio
https://www.youtube.com/watch?v=R6pRvnueztk
International
Business Plan
Global Level
Strategies

• Entry Modes
(global)
Corporate-Level Strategy
• Goal-directed actions taken by senior management

• Competing in a several industries and markets at the same time
Provide answer to the key question Where to compete?

Involves decisions along three dimensions:
• Vertical integration (along the industry value chain)

• Diversification (of products and services), and
• Geographic scope (regional, national, or global markets).
What is a value chain (cadena de valor)?
A value chain describes all the progression of
activities performed by a company in order to
deliver its products or services to the end
customer.
In manufacturing, it includes the:

• Reception of raw materials
• Production
• Selling of the finished products
Vertical Integration along the Industry Value Chain
The industry value chain describes the

transformation of raw materials into finished goods
and services along distinct vertical stages
Each stage of the vertical value chain is typically a

different industry (un grupo de empresas del mismo
sector industrial) in which a number of different
firms are competing.
Example of the production of a cell phone

Cellphone companies normally start as OEMs and then vertically
integrate alongthe value chain (backward and/or forward).
Integración
hacia atrás OEMs are able to vertically integrate when they acquire the skills
needed to compete.
In our example Taiwanese firm HTC was able to upgrade its

capabilities from just producing smartphones to also designing
them
So HTC engaged in backward vertical integration—moving

ownership of activities upstream to the originating inputs of the
value chain.
HTC also moved downstream into sales and branding so HTC has
also engaged in forward vertical integration—moving ownership
Integración of activities closer to the end customer.
hacia adelante
Although HTC has long benefited from economies of scale as an
OEM, it is now also benefiting from economies of scope through
Rothaermel page 266 participating in different stages of the industry value chain.
Corporate-Level Strategy
• Goal-directed actions taken by senior management

• Competing in a several industries and markets at the same time
Provide answer to the key question Where to compete?

Involves decisions along three dimensions:
• Vertical integration (along the industry value chain)

• Diversification (of products and services), and
• Geographic scope (regional, national, or global
markets).


different industry (un grupo de empresas del
mismo sector industrial) in which a number of
different firms are competing.



different industry (un grupo de empresas del
mismo sector industrial) in which a number of
different firms are competing.

Industry Value Chain of cell phones
Chemicals, metals, oil (petróleo):
Antamina (Peru), DuPont (US), BASF (Germany), Shell
(UK)
Integrated circuits, displays, touchscreens, cameras, batteries :
Intel (US), LG (Korea), Altek (Taiwan), BYD (China)
Original equipment manufacturing firms (OEMs) such as

Flextronics (Singapore) or Foxconn (China):
Service providers: Telefónica (Perú), AT&T (US),

Orange (France), China Mobile (China)
All of these companies—from the raw-materials suppliers to the service providers

—make up the global industry value chain of your cellphone.
They are very few companies that are fully vertically integrated.
Other firms have a low degree of vertical integration.
Companies generally focus on only one or a few stages of

the industry value chain.
Apple, for example, focuses only on design, marketing, and retailing;

all other activities of the value chain are outsourced.
Note that not all stages at the value chain are equally
profitable.
Each firm decides where in the industry value chain to

participate depending on its strategy
Apple is more profitable than the generic manufacturers of cell

phones.
There is more value in the design and concentrates on

innovation
So Apple outsources the manufacturing to Foxconn.
Let´s see the example of vertical integration of HTC
https://www.youtube.com/watch?v=mD7rdVN4QwQ
, Huawei
Consumer electronic company from

Taiwan founded in 1997
Rothaermel page 266

Cellphone companies normally start as OEMs and then
vertically integrate alongthe value chain (backward and/or
forward).
Integración
hacia atrás
OEMs are able to vertically integrate when they acquire the
skills needed to compete.
In our example Taiwanese firm HTC was able to upgrade its

capabilities from just producing smartphones to also
designing them
So HTC engaged in backward vertical integration—moving

ownership of activities upstream to the originating inputs of
the value chain.
HTC also moved downstream into sales and branding so

Integración HTC has also engaged in forward vertical integration—
hacia adelante
moving ownership of activities closer to the end customer.
Netflix used to be a rental service of DVDs.
But then started to produce its own films a series
This is an example of _________________________________

Netflix used to be a rental service of DVDs.
But then started to produce its own films a series
This is an example of backward integration (integración hacia atrás)

Example of backward (upstream) vertical integration of Netflix
Integración hacia atrás
Netflix moved upstream by producing content—moving

ownership of activities closer to the originating inputs of
the value chain transforming itsel into a provider of films
and series.
Apple decided in 2001 to open its first retail
stores long after it started designing iphones
and Mac computers
This is an example of __________________

Apple decided in 2001 to open its first retail
stores long after it started designing iphones
and Mac computers
This is an example of forward integration (integración hacia adelante)

Example of forward (downstream) vertical integration of Apple
Integración hacia adelante
Apple moved downstream into retail—moving ownership

of activities closer to the end customer
Now, let´s see more examples of corporate level strategies!
Types of Corporate Level Strategies (1 of 2)
Strategy Definition Example
Forward Vertical Acquiring or moving to business activities Apple decided in 2001 to open its
Integration closer to the end customer first retail stores long after it started
designing iphones and Mac
computers
Backward Vertical Acquiring or moving to business activities Lenovo (China) started producing key
Integration upstream towards the originating inputs components for its computers.
of the value chain
Horizontal Seeking ownership or increased control Typically in US bank industry and in
Integration over competitors advertising industry
Market Penetration Seeking increased market share for Under Armour signed tennis
present products or services in present champion Andy Murray to a 4-year,
markets through greater marketing efforts $23 million marketing deal.
Market Introducing present products or services Carolina Herrera opened its first
Development into new geographic area store in Peru.
Product Seeking increased sales by improving Any consumer electronic product:
Development present products or services or smart phones, TVs, computers.
developing new ones
Forward Vertical Acquiring or moving to business activities Apple decided in 2001 to open its
Integration closer to the end customer first retail stores long after it started
designing iphones and Mac
computers
of the value chain
Integration over competitors advertising industry Mergers
Acquisitions
developing new ones
Example of horizontal integration (adquisión o compra)
Example of horizontal integration (adquisión o compra)
Bayer (Chemical and Pharmaceutical) bought (acquired) Monsanto (Chemicals and one of largest producers of GM seeds)
Forward Vertical Acquiring or moving to business activities Amazon Local Services started
Integration closer to the end customer installation services if you buy things
like a ceiling fan, car stereo.
of the value chain
developing new ones
Example of market penetration
https://www.youtube.com/watch?v=1u8HI1qSZk0
https://www.youtube.com/watch?v=Pc02GUenOfI
Types of Corporate Level Strategies
of the value chain
Mergers
Acquisitions
Market Introducing present products or services Luis Vuitton opened its first store in
Development into new geographic area Peru.
developing new ones
Example of market development
Expands in Latinamerica
But also enters Africa and Asia
https://www.ajegroup.com/nuestras-marcas/
Types of Corporate Level Strategies
of the value chain
developing new ones
Example of product development
Example of diversification
Intercorp.com
Retail
Financial Education
More business units
Hotels Gambling
Movie theaters
Restaurants
Activity
Find out the the different companies of Grupo Breca and Grupo
Romero
What conclusions could you draw?
https://www.america-retail.com/peru/grupo-breca-uno-de-los-imperios-empresariales-
mas-grandes-del-pais/
http://www.gruporomero.com.pe/es-PE/empresas/

Week5 2 Vision AFIE SWOT BlueOcean ValueChain DiversificationActivity 2023

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Week5 2 Vision AFIE SWOT BlueOcean ValueChain DiversificationActivity 2023

Uploaded by

Copyright:

Available Formats

INTRODUCTION TO INTERNATIONAL

Week 5 Second Session

1. Strategic Planning for Business

Strategy Is about creating superior value

Some years ago, Samsung

a) A vision or mission statement such as “Our strategy is to be a leading-edge

a) A vision or mission statement such as “Our strategy is to be a leading-edge

a) A vision or mission statement such as “Our strategy is to be a leading-edge

1. Strategic Planning for Business

1. Strategic Planning for Business

New O&T Strategies 1 :

New O&T Strategies 1 :

Business Resources, Value Customers

New O&T Strategies 1 :

Business Plan Outline

(C) Customer Analysis

(H) Financial Plan (ROA / ROE)

Strengths and Weaknesses

Opportunities and Threats –

• The results expected from pursuing certain strategies

Examples of long term goals

Increase our company´s Reduce our CO2 emissions

Increase our profit by 10% Open 2 new stores a year in Latin

Examples of long term goals

Increase our company´s Reduce our CO2 emissions

Increase our profit by 10% Open 2 new stores a year in Latin

Examples of long term goals

Reduce our CO2 emissions

Increase our profit by 10% Open 2 new stores a year in Latin

Examples of long term goals

Reduce our CO2 emissions

Increase our profit by 10% Open 2 new stores a year in Latin

Objectives should be:

How to “Go Global”?

How to “Go Global”?

How to “Go Global”?

• Goal-directed actions taken by managers

It concerns the broad question, How should we compete?

• Who—which customer segments will we serve?

There are two types of cost leadership strategies:

1) Low-Cost: is to offer products or services to a wide range of customers at

• Offering of products or services considered unique to the industry

How to “Go Global”?

• Goal-directed actions taken by senior management

Provide answer to the key question Where to compete?

• Vertical integration (along the industry value chain)

In manufacturing, it includes the:

The industry value chain describes the

Each stage of the vertical value chain is typically a

Example of the production of a cell phone

In our example Taiwanese firm HTC was able to upgrade its

So HTC engaged in backward vertical integration—moving

• Goal-directed actions taken by senior management

Provide answer to the key question Where to compete?

• Vertical integration (along the industry value chain)

The industry value chain describes the

Each stage of the vertical value chain is typically a

Example of the production of a cell phone

The industry value chain describes the

Each stage of the vertical value chain is typically a

Example of the production of a cell phone

Original equipment manufacturing firms (OEMs) such as

Service providers: Telefónica (Perú), AT&T (US),