why do strategic management practices differ? u national context - includes national culture, the...
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WHY DO STRATEGIC WHY DO STRATEGIC MANAGEMENT PRACTICES MANAGEMENT PRACTICES
DIFFER?DIFFER?
National context - includes National context - includes national culture, the country’s national culture, the country’s available labor and other natural available labor and other natural resourcesresources
NationalCulture
andBusiness
Culture
NaturalFactor
Conditions
InstitutionsCreate
IsomorphicPressures
BusinessEnvironment
ResourcePool
StrategyFormulation
Strategy Content·Generic Strategies
·CompetitiveStrategies
Helps Create
National Differences in StrategyFormulation and Content
National Context
InducedFactor
Conditions
Influences
SOCIAL INSTITUTIONS SOCIAL INSTITUTIONS
Include the family, educational, Include the family, educational, economic, and the political and economic, and the political and legal systems legal systems
Closely linked with national and Closely linked with national and business culture business culture
THREE TYPES OF THREE TYPES OF ISOMORPHISMISOMORPHISM
CoerciveCoercive MimeticMimetic NormativeNormative
NATIONAL AND BUSINESS NATIONAL AND BUSINESS CULTURE CULTURE
Characteristics of national and Characteristics of national and business culture influence business culture influence strategic decision making both strategic decision making both directly and indirectly directly and indirectly
THE NATIONAL CONTEXT AND THE NATIONAL CONTEXT AND KEY BUSINESS PRACTICESKEY BUSINESS PRACTICES
Explanations for the existence of Explanations for the existence of companies companies
Capital markets/sources of funds Capital markets/sources of funds Government policies/legislation Government policies/legislation Labor markets Labor markets Top management characteristicsTop management characteristics
EXHIBIT 7-2 WHOSE EXHIBIT 7-2 WHOSE COMPANY IS IT?COMPANY IS IT?
0%10%20%30%40%50%60%70%80%90%
100%
Middle Managers Priorities
OtherStakeholders
Shareholders
RESOURCE POOLRESOURCE POOL
The resource pool represents all the The resource pool represents all the human and physical resources human and physical resources available in a country - both from available in a country - both from natural and induced factor natural and induced factor conditionsconditions
COMPARATIVE STRATEGY COMPARATIVE STRATEGY FORMULATION: FORMULATION:
EXAMPLES FROM AROUND EXAMPLES FROM AROUND THE WORLDTHE WORLD
US model: used as basis for US model: used as basis for comparison comparison –Represents the attempt of a Represents the attempt of a
rational decision making process rational decision making process
THE US MODEL OF STRATEGY THE US MODEL OF STRATEGY FORMULATIONFORMULATION
1--Define the business 1--Define the business 2--Develop a mission statement2--Develop a mission statement3--Define objectives3--Define objectives4--Assess the company's situation: 4--Assess the company's situation:
SWOT, competitors' actions SWOT, competitors' actions 5--Craft strategy content 5--Craft strategy content
DEFINING THE BUSINESS: DEFINING THE BUSINESS: US/KOREA COMPARISONUS/KOREA COMPARISON
US: Few limitationsUS: Few limitations Korea: More coercive institutions Korea: More coercive institutions Large corporations and national Large corporations and national
economic policyeconomic policy–A special status to engage in A special status to engage in
businessbusiness
DEVELOPING MISSION DEVELOPING MISSION STATEMENTS: DEFINING THE STATEMENTS: DEFINING THE
ORGANIZATIONAL DOMAINORGANIZATIONAL DOMAIN
The mission defines the domain The mission defines the domain of the organization of the organization
US MISSION STATEMENTSUS MISSION STATEMENTS
Often emphasize market issues Often emphasize market issues closely related to key elements of closely related to key elements of success in their respective success in their respective industriesindustries
EEXXHHIIBBIITT 77..33 KKEEYY SSUUCCCCEESSSS FFAACCTTOORRSS AANNDDEEXXAAMMPPLLEESS FFRROOMM UU..SS.. MMIISSSSIIOONN SSTTAATTEEMMEENNTTSS
KKeeyy SSuucccceessssrr
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PPrroodduucctt oorree
““IIBBMM mmeeaannss sseerrvviiccee”” IIBBMM
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DDuu PPoonntt
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wwoorrlldd””
CCaatteerrppiillllaarr
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eexxcceelllleennccee""
EEllllii LLiillllyy
JAPANESE MISSION JAPANESE MISSION STATEMENTSSTATEMENTS
Japanese managers prefer more Japanese managers prefer more abstract mission statements than abstract mission statements than do their US counterpartsdo their US counterparts
FRENCH AND BRITISH FRENCH AND BRITISH MISSION STATEMENTSMISSION STATEMENTS
British mission statements: focus British mission statements: focus on strategic issues emphasizing on strategic issues emphasizing shareholder returns shareholder returns
French mission statements: French mission statements: reflect a national context in a reflect a national context in a social democracy social democracy
CCoommppoonneennttss BBrriittiisshh FFrreenncchh
TTiimmeeOOrriieennttaattiioonn::
SShhoorrtt ((lleessss tthhaannaa yyeeaarr))
LLoonnggeerr ((mmoorreetthhaann aa yyeeaarr))
FFooccuuss:: SSttaatteeggiicc GGeenneerraall VVaalluueess
PPrriioorriittyySSttaakkeehhoollddeerrssaanndd IIssssuueess:: SShhaarreehhoollddeerrss
aannddIInnvveessttoorrss
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PPaarrttiicciippaattiioonnaanndd
OOwwnneerrsshhiipp::MMoossttllyy SSeenniioorrMMaannaaggeemmeenntt
MMaannaaggeemmeenntt aannddWWoorrkkeerrss
EX 7.4
DEFINING OBJECTIVESDEFINING OBJECTIVES
National differences exist mostly National differences exist mostly in priorities in priorities –Financial or strategic Financial or strategic
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NNNeeewww PPPrrroooddduuucccttt DDDeeevvveeelllooopppmmmeeennnttt BBBooonnnddd aaannnddd CCCrrreeedddiiitttRRRaaatttiiinnngggsss
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EX 7.6 U.S. AND JAPANESE EX 7.6 U.S. AND JAPANESE FINANCIAL AND STRATEGIC FINANCIAL AND STRATEGIC
OBJECTIVESOBJECTIVES
0 2 4 6 8 10
Market Share
Product Mix
New Products
Profit
Dividends
Stock Price
U.S.Japanese
Least Important Most Important
WHY?WHY?THE INSTITUTIONAL THE INSTITUTIONAL
ENVIRONMENTENVIRONMENT US: purpose of the corporation to US: purpose of the corporation to
maximize shareholder wealth maximize shareholder wealth US stockholders: emphasize short-US stockholders: emphasize short-
term transactions and dividends term transactions and dividends US: clear link between earnings per US: clear link between earnings per
share and stock prices share and stock prices
If managers fail to emphasize short If managers fail to emphasize short term profits and stock prices fall, term profits and stock prices fall, the managers loose personallythe managers loose personally
If companies are undervalued on If companies are undervalued on the stock market, they are the stock market, they are vulnerable to takeovers vulnerable to takeovers
JAPANESE SITUATIONJAPANESE SITUATION Japanese investors: less volatile Japanese investors: less volatile
than US investors than US investors Companies do not pay dividends Companies do not pay dividends
as a percentage of profitsas a percentage of profits Japanese managers do not have Japanese managers do not have
stock options compensation plans stock options compensation plans
Consistent dividends reassure the Consistent dividends reassure the Japanese stockholder of a company's Japanese stockholder of a company's health health
Stockholders are not the most Stockholders are not the most important stakeholders important stakeholders
Lack of outside directors to look out Lack of outside directors to look out for the welfare of the stockholder for the welfare of the stockholder
JAPANESE CULTURAL JAPANESE CULTURAL VALUESVALUES
A belief in substantial savings A belief in substantial savings Invest for the future Invest for the future Persistence to achieve goalsPersistence to achieve goals
ASSESSING THE COMPANY'S ASSESSING THE COMPANY'S SITUATIONSITUATION
Management's assessment of the Management's assessment of the situation faced by their situation faced by their companiescompanies
US managers favor techniques US managers favor techniques such as the SWOT and such as the SWOT and competitive analysescompetitive analyses
GERMAN AND BRITISH GERMAN AND BRITISH EXAMPLES EXAMPLES
Successful companies from both Successful companies from both countries identified the same key countries identified the same key success factors success factors
Differences: the organizational Differences: the organizational characteristics that managers characteristics that managers believe achieve the key success believe achieve the key success factors factors
EX 7.9 MOST IMPORTANT EX 7.9 MOST IMPORTANT PERFORMANCE CRITERIAPERFORMANCE CRITERIA
0% 20% 40% 60% 80% 100%
Profit
CashFlow
Sales BritishJapaneseU.S.
WHY?WHY?
Different resource poolsDifferent resource pools Different cultural values and Different cultural values and
normsnorms Different institutional biases Different institutional biases
regarding organizational regarding organizational strengths strengths
ASSESSING THE ASSESSING THE ENVIRONMENT: US AND ENVIRONMENT: US AND
JAPANESE APPROACHESJAPANESE APPROACHES Both seek information concerning Both seek information concerning
environmentsenvironments JapaneseJapanese–More informationMore information–Use information differentlyUse information differently–Opportunities a catalyst to action Opportunities a catalyst to action
CRAFTING STRATEGY CONTENT: CRAFTING STRATEGY CONTENT: US AND JAPANESE APPROACHSUS AND JAPANESE APPROACHS
US: Logical-deductiveUS: Logical-deductive Japanese: Incremental/inductiveJapanese: Incremental/inductive–Trial and error adjustments to Trial and error adjustments to
environmental and competitive environmental and competitive conditionsconditions
NATIONAL DIFFERENCES IN NATIONAL DIFFERENCES IN STRATEGY CONTENT: THREE STRATEGY CONTENT: THREE
EXAMPLES EXAMPLES
Examples of "typical" strategy Examples of "typical" strategy content or game plans of content or game plans of companies from various nations companies from various nations
JAPANESE STRATEGIES: JAPANESE STRATEGIES: GENERAL ORIENTATIONS GENERAL ORIENTATIONS
Compete with a high ratio of products Compete with a high ratio of products where the company can add value with where the company can add value with knowledge knowledge
Emphasize production to improve Emphasize production to improve productivity productivity
Use the resources of networksUse the resources of networks
JAPANESE PRODUCT/MARKET JAPANESE PRODUCT/MARKET STRATEGIESSTRATEGIES
Carefully select product market Carefully select product market Gain market share/customer Gain market share/customer
loyalty with low prices loyalty with low prices Create value with better products Create value with better products Move upscale and raise pricesMove upscale and raise prices
Export manufacturing expertiseExport manufacturing expertise Reinvest profits to go global or Reinvest profits to go global or
enter new marketsenter new markets
US, JAPANESE, AND BRITISH US, JAPANESE, AND BRITISH FIRMS IN THE UK FIRMS IN THE UK
British and US companies:British and US companies:–Both dominated by financial and Both dominated by financial and
efficiency concerns efficiency concerns –British firms focused on cost reduction British firms focused on cost reduction –British firms emphasized their brand British firms emphasized their brand
recognitionrecognition
Japanese companies:Japanese companies:–Dominant goals: enter new and Dominant goals: enter new and
growing market segmentsgrowing market segments–Entered the low end of the market, Entered the low end of the market,
moved to the mass market, then to moved to the mass market, then to high value-added segmenthigh value-added segment
EX 7.10 MARKET SHARE EX 7.10 MARKET SHARE STRATEGIESSTRATEGIES
0% 10% 20% 30% 40% 50% 60% 70%
Defend and Maintain
Steady Growth
Agressive Growth
Win and Dominate
Up-Scale Market
BritishJapaneseU.S.
KOREAN STRATEGIES: KOREAN STRATEGIES: Responses to a Changing National Responses to a Changing National
Context Context License a foreign technologyLicense a foreign technology Find ways to make the product Find ways to make the product
better and cheaperbetter and cheaper Enter the market late Enter the market late Be an OEM manufacturerBe an OEM manufacturer Move to own brand exportingMove to own brand exporting
CONCLUSIONSCONCLUSIONS
Understanding different Understanding different approaches to strategyapproaches to strategy–Helps to deal with Helps to deal with
international competitorsinternational competitors–Helps a company become Helps a company become
better collaboratorsbetter collaborators