International Business

Strategy (IBS) - b
Corporate strategy
Business strategy
Functional strategy

Corporate strategy (CS)

Overall scope of activities
Competition: geographic location of activities
currency: balance worldwide activities
country: recognise individual factors
Corporate parenting
in head office how to manage various businesses
add parenting value - add a business to a
portfolio - divest in the portfolio
different styles: planning, performance control
=> match to the business
1b-Strategy (18)

Corporate value added

Corporate scope

Corporate parenting

Corporate strategy

Business strategy
Products

Markets
Corporate
advantage
1b-Strategy
(18)

SM styles-I: Strategic Planning

Orchestrator
Characteristics
HQ: deeply involved at business level
Formally planning strategies
Planning lever clear directions
Performance
Longer-term view: short term financial suffering
Planning: time consuming centre losing
objectivity
Business unit: may be frustrated
1b-Strategy (18)

SM styles-II: Strategic Control

Coach
Characteristics

Strategic development: left to units

No directions are set, no coordination
Capitol projets: business initiates
Business units: detailed reports

Performances
Balance long term - short term financial goals
It is difficult
No exploiting synergies
1b-Strategy (18)

SM styles-III: Financial Control

Controller

Characteristics
Strong delegation of responsibility
Budget process and aggreeing budget critical
Budget: contract
Strong emphasis on short-term payback
Financial performance monitored in detail

Performance
Maximise short-term financial performance
Failure: organic growth
Linkages not developed
1b-Strategy (18)
Strong incentives

1b-Strategy (18)

Business strategy (BS)

How a business seeks to compete in its
product-market?
create competitive strategy
large range of businesses

Develope sustainable competitive

advantege
emulate existing rivals: same game
inventing new ways: new game
1b-Strategy (18)

Yamaha piano
ovearall demand started decline
10%/year
same game: fight harder, more effictively
new game:
game fresh eye for opportunities
superb acustic piano (combination of
digital amd optical technology)
40 million piano => refitting with PC
& disk
additional digital value-creating
possibilities
1b-Strategy (18)

Same game
Delayering
Divestment

Deteriorating performance
1b-Strategy (18)

10

New Game
Improving performance

New vision and capabilities

New strategic recipe

1b-Strategy (18)

11

SAME GAME

NEW GAME

Characteristics
Identify market segments
Positioning in a segment
Serve more effectively
Strategic intent
Outcompeting rivals
Similar strategic approach
Doing the same thing better

Characteristics
Strategic innovation
First mover advantage
Avoidance head-to head
competition
Strategic intent
Strategic intent investing in new
strategic recipes
Innovation, vision

Potential outcome
Parity at the best
New strategy: incremental
approach

Potential outcome
Competitive superiority
Distinct advantage
fundamental approach

1b-Strategy (18)

12

Competition for
industry foresight
and intellectual
leadership

Core
comptencies

Competition for
market position
and share

STRECH
CORE
Have
Competing for the
COMPETENCIES

Have not

Future

Essential

Develop

Growth, acquire

Non-essential

Harvest/divest
1b-Strategy (18) Buy in

13

Corporate strategy:
forward integration: closer to the customer

Market penetration

Corporate strategy:
related diversification
Product development

Product expansion

BS

Corporate strategy:
unrelated diversification
Geographical expansion

Corporate strategy:
backward integration: closer to the source of inputs
1b-Strategy (18)
14

Functional strategy (FS)

How the different activity areas of a business
contribute to the overall business?
Changes in BS changes in FS
New FS

changes in BS

Key requirements:
requirements to fit and match
1b-Strategy (18)

15

BUSINESS STRATEGIES

Bi-directional
Human resources

Finance

FUNCTIONAL
STRATEGIES
Logistics
Marketing
Operations(18)
1b-Strategy

16

1b-Strategy (18)

17

Business performance, corrective

adjustments
Functional Str.
Corporate Str.

Business
performance

Business Str.
Corrective
adjustment
1b-Strategy (18)

18