BMAL 590 Global Dimensions of Business (Answered)
Complete Solution
Why Study Global Strategy? - ANSWER Knowing the concepts and components of
global strategy will improve job and career aspiration opportunities, build awareness
of what is occurring in the world, and avoid the downside risks of globalization.
Approximately 80 million people worldwide are directly employed by foreign-owned
firms.
global strategy - ANSWER a firm's intention to provide standardized products
and/or services on a world-wide basis. Another definition suggests that global
strategy is any strategy outside one's home country.
However, the best definition is that "global strategy" is each firm's theory about how
to compete successfully in whatever global markets the firm chooses to compete.
"strategy as plan" - ANSWER The first school of thought
This school is the oldest and is based on the work of Carl von Clausewitz, a Prussian
(German) military strategist. This school suggests that strategy is embodied in the
same explicit rigorous formal planning as in the military.
"strategy as action" - ANSWER suggests that strategy is most fundamentally
reflected by firms' patterns of action.
The planning school has been challenged by Liddell Hart, a British military strategist.
Hart argues that the key to strategy is a set of flexible goal-oriented actions. He
favored an indirect approach, which seeks rapid flexible actions to avoid clashing
with opponents head-on.
emergent strategy - ANSWER Henry Mintzberg, a Canadian scholar, posited that in
addition to the intended strategy that the planning school emphasizes, there can be
an emergent strategy that is not the result of "top-down" planning, but that is the
outcome of a stream of smaller decisions from the "bottom up."
"strategy as integration" - ANSWER Although the debate between the planning
school and action school is difficult to resolve, many scholars and managers have
realized that the essence of strategy is likely to be a combination of both planned
deliberate actions and unplanned emergent activities
defines strategy as "a firm's theory about how to compete successfully." In other
words, if we have to define strategy with one word, our choice is neither plan nor
action - it is theory. A theory serves two purposes: explanation and prediction.
,Strategy as a theory - ANSWER describes how to compete successfully in a global
market. Firms have both intended and emergent strategies, meaning, some
strategies are defined from the outset while others develop with the firm's
participation in the marketplace.
It is often difficult to change strategy so firms must guard against total adherence to
a strategy because to do so would hamper adaptation in new situations. Strategy
should continue to give coherence to decisions and actions. Managers must exert
effective strategic leadership both in a global and a local perspective.
Theory building and development requires replication and experimentation to
establish the temporal (time-related) and geographic limits of an existing theory. The
strategy as theory perspective helps us understand why it is often difficult to change
strategy.
Why do firms differ? - ANSWER The largest influences are a reflection of the
cultural differences between Western and Japanese companies.
In Western firms, the competition among companies drives the process. In other
companies, like the Japanese, networks of relationships have powerful effects.
Where does most of our knowledge of firms come from? - ANSWER Anglo-
American capitalism
keiretsu - ANSWER Japanese firms extensively employ a network form of supplier
management, giving rise to the term keiretsu (inter-firm network).
guanxi - ANSWER The Chinese favor guanxi (interpersonal networks), cultivated by
managers, that may serve as informal substitutes for formal institutional support. In
other words, interpersonal relationships among managers are translated into an
inter-firm strategy of relying on networks and alliances to grow the firm, which, in the
aggregate, contributes to the growth of the economy.
How do firms behave? - ANSWER Companies that embrace the industry-based
view focus on competitive forces within an industry that impact all firms.
According to this perspective, a firm's success in the Indian IT industry depends on
the unique attributes of the IT industry, its knowledge-intensive nature, and non-
location based boundaries.
resource-based (capabilities) - ANSWER Those firms that adhere to the resource-
based (capabilities) view focus on internal strengths and weaknesses, that is, firm-
specific resources and capabilities.
For example, successful Indian IT firms tend to have capabilities that are valuable,
unique, and hard for rivals to imitate or replicate.
institution-based view - ANSWER focus on government and societal forces.
, For example, the pro-market reforms in India have opened the door for many Indian
IT companies to win foreign contracts, while at the same time, legislation by various
states in the U.S. has banned Indian IT firms from winning contracts.
Triad markets - ANSWER North America, Europe, and Japan
If a firm wants to become a true "global leader," it is necessary to create a strong
competitive position in each of the Triad markets
BRIC - ANSWER Brazil, Russia, India, and China are the four fast-growing markets
that represent important opportunities
how do the three views lead to a strategy that ultimately must address the firm's
performance? - ANSWER Industry-based competition, firm specific resources and
capabilities, and institutional conditions and transitions--> strategy--> performance
What determines the scope of the firm? - ANSWER A firm's scope pertains to its
growth as well as its contraction, that is, the way it curtails and alters its business
practices through downsizing, downscoping, and withdrawals. Obviously, though, the
primary focus is on the growth of the firm
conglomerate diversification - ANSWER a strategy used to add new businesses
that produce unrelated products or are involved in unrelated markets and activities
in the 1960s and 1970s was found to destroy value and was largely discredited in
the 1980s and 1990s - witness how many firms are still trying to divest and downsize
(or "right-size") in the West.
However, this strategy seems to be alive and well in many emerging economies
because of its relatively positive link with performance that may be a function of the
level of institutional (under)development in these countries
What determines the success and failure of firms around the globe? - ANSWER
The focus on performance, more than anything else, defines the field of strategic
management and international business. Businesses are not only interested in
acquiring and leveraging competitive advantage, but also in sustaining such
advantages over time and across regions. All three major perspectives that form the
"strategy tripod" ultimately seek to answer this question.
The international success or failure of firms is determined by three views of the
marketplace and how the firm responds to each of those views.
The industry-based view attends to the degree of competitiveness in the industry.
The resource-based view evaluates success or failure on firm-specific differences in
capabilities and the resulting performance differences.
The institution-based view attends to institutional forces, such as economic reforms
and government policy, which may affect a firm's success or failure.
Complete Solution
Why Study Global Strategy? - ANSWER Knowing the concepts and components of
global strategy will improve job and career aspiration opportunities, build awareness
of what is occurring in the world, and avoid the downside risks of globalization.
Approximately 80 million people worldwide are directly employed by foreign-owned
firms.
global strategy - ANSWER a firm's intention to provide standardized products
and/or services on a world-wide basis. Another definition suggests that global
strategy is any strategy outside one's home country.
However, the best definition is that "global strategy" is each firm's theory about how
to compete successfully in whatever global markets the firm chooses to compete.
"strategy as plan" - ANSWER The first school of thought
This school is the oldest and is based on the work of Carl von Clausewitz, a Prussian
(German) military strategist. This school suggests that strategy is embodied in the
same explicit rigorous formal planning as in the military.
"strategy as action" - ANSWER suggests that strategy is most fundamentally
reflected by firms' patterns of action.
The planning school has been challenged by Liddell Hart, a British military strategist.
Hart argues that the key to strategy is a set of flexible goal-oriented actions. He
favored an indirect approach, which seeks rapid flexible actions to avoid clashing
with opponents head-on.
emergent strategy - ANSWER Henry Mintzberg, a Canadian scholar, posited that in
addition to the intended strategy that the planning school emphasizes, there can be
an emergent strategy that is not the result of "top-down" planning, but that is the
outcome of a stream of smaller decisions from the "bottom up."
"strategy as integration" - ANSWER Although the debate between the planning
school and action school is difficult to resolve, many scholars and managers have
realized that the essence of strategy is likely to be a combination of both planned
deliberate actions and unplanned emergent activities
defines strategy as "a firm's theory about how to compete successfully." In other
words, if we have to define strategy with one word, our choice is neither plan nor
action - it is theory. A theory serves two purposes: explanation and prediction.
,Strategy as a theory - ANSWER describes how to compete successfully in a global
market. Firms have both intended and emergent strategies, meaning, some
strategies are defined from the outset while others develop with the firm's
participation in the marketplace.
It is often difficult to change strategy so firms must guard against total adherence to
a strategy because to do so would hamper adaptation in new situations. Strategy
should continue to give coherence to decisions and actions. Managers must exert
effective strategic leadership both in a global and a local perspective.
Theory building and development requires replication and experimentation to
establish the temporal (time-related) and geographic limits of an existing theory. The
strategy as theory perspective helps us understand why it is often difficult to change
strategy.
Why do firms differ? - ANSWER The largest influences are a reflection of the
cultural differences between Western and Japanese companies.
In Western firms, the competition among companies drives the process. In other
companies, like the Japanese, networks of relationships have powerful effects.
Where does most of our knowledge of firms come from? - ANSWER Anglo-
American capitalism
keiretsu - ANSWER Japanese firms extensively employ a network form of supplier
management, giving rise to the term keiretsu (inter-firm network).
guanxi - ANSWER The Chinese favor guanxi (interpersonal networks), cultivated by
managers, that may serve as informal substitutes for formal institutional support. In
other words, interpersonal relationships among managers are translated into an
inter-firm strategy of relying on networks and alliances to grow the firm, which, in the
aggregate, contributes to the growth of the economy.
How do firms behave? - ANSWER Companies that embrace the industry-based
view focus on competitive forces within an industry that impact all firms.
According to this perspective, a firm's success in the Indian IT industry depends on
the unique attributes of the IT industry, its knowledge-intensive nature, and non-
location based boundaries.
resource-based (capabilities) - ANSWER Those firms that adhere to the resource-
based (capabilities) view focus on internal strengths and weaknesses, that is, firm-
specific resources and capabilities.
For example, successful Indian IT firms tend to have capabilities that are valuable,
unique, and hard for rivals to imitate or replicate.
institution-based view - ANSWER focus on government and societal forces.
, For example, the pro-market reforms in India have opened the door for many Indian
IT companies to win foreign contracts, while at the same time, legislation by various
states in the U.S. has banned Indian IT firms from winning contracts.
Triad markets - ANSWER North America, Europe, and Japan
If a firm wants to become a true "global leader," it is necessary to create a strong
competitive position in each of the Triad markets
BRIC - ANSWER Brazil, Russia, India, and China are the four fast-growing markets
that represent important opportunities
how do the three views lead to a strategy that ultimately must address the firm's
performance? - ANSWER Industry-based competition, firm specific resources and
capabilities, and institutional conditions and transitions--> strategy--> performance
What determines the scope of the firm? - ANSWER A firm's scope pertains to its
growth as well as its contraction, that is, the way it curtails and alters its business
practices through downsizing, downscoping, and withdrawals. Obviously, though, the
primary focus is on the growth of the firm
conglomerate diversification - ANSWER a strategy used to add new businesses
that produce unrelated products or are involved in unrelated markets and activities
in the 1960s and 1970s was found to destroy value and was largely discredited in
the 1980s and 1990s - witness how many firms are still trying to divest and downsize
(or "right-size") in the West.
However, this strategy seems to be alive and well in many emerging economies
because of its relatively positive link with performance that may be a function of the
level of institutional (under)development in these countries
What determines the success and failure of firms around the globe? - ANSWER
The focus on performance, more than anything else, defines the field of strategic
management and international business. Businesses are not only interested in
acquiring and leveraging competitive advantage, but also in sustaining such
advantages over time and across regions. All three major perspectives that form the
"strategy tripod" ultimately seek to answer this question.
The international success or failure of firms is determined by three views of the
marketplace and how the firm responds to each of those views.
The industry-based view attends to the degree of competitiveness in the industry.
The resource-based view evaluates success or failure on firm-specific differences in
capabilities and the resulting performance differences.
The institution-based view attends to institutional forces, such as economic reforms
and government policy, which may affect a firm's success or failure.
