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International Business Strategy
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Introduction to StrategyWhat is Strategy?
• Chandler defines it as ‘the determination of the long-run goals and objectives of an
enterprise and the adoption of courses of action and the allocation of resources
necessary for carrying out these goals.’
• Porter points: ‘competitive strategy is about being different. It means deliberately
choosing a different set of activities to deliver a unique mix of value.’
• Mintzberg defines it as ‘a pattern in a stream of decisions.’
• Strategy is defined as ‘the long-term direction of an organization’
Three Horizon Framework
• Horizon 1 – the current core activities, which need defending and extending, and in
the long run they will likely be flat or declining.
• Horizon 2 – emerging activities that should provide new sources of profit.
• Horizon 3 – activities with which nothing is sure. Examples are risky R&D projects,
start-up ventures, test-market pilots, etc.
Levels of Strategy
Inside an organization, strategies can exist at three main levels:
• Corporate-level strategy
o How value is added
o Geographical scope
o Diversity of products and services
o Acquisitions of businesses
o Allocation of resources
• Business-level strategy (competitive strategy)
o How individual businesses should compete in their particular markets
o Innovation
o Appropriate scale
o Response to competition
• Operational strategies
o Delivery of strategies in terms of resources, processes, and people
Strategy Statement
• Mission
o What business are we in? What do we do?
o Helps management keep focused on what is most important to their strategy
• Vision
o What do we want to achieve? Goals
o The desired future state of the enterprise
• Objectives
o Quantifiable statements of the organization’s goals
o What do we have to achieve in the coming period?
o Introduce discipline to strategy
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, • Scope (refers to 3 dimensions)
o Customers
o Geographical location
o Extent of internal activities
• Advantage
o Describes how the organization will achieve the objectives it has set for itself
in its chosen domain (competitive advantage)
• Collis and Rukstad suggest that statements should not be more than 35 words. They
have to be easy to remember and communicate between different players.
The Exploring Strategy Model
This model includes understanding the strategic position of an organization. As Mintzberg
notices, the elements of strategy in real life do not always follow a linear sequence. Most
often, choices must be made first, before the position is fully understood. Thus, the inter-
connected circles represent this potentially non-linear relationship.
Strategic Position
Concerns the impact that the external environment (SWOT), the organization’s strategic
capabilities, its goals and its culture have on the strategic position.
• Environment
• Strategic capability
• Strategic purpose
• Culture
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, Strategic Choices
Involve the options for strategy in terms of the directions in which strategy might move
(diversifying into new products, introducing a new international market) and the methods by
which strategy might be pursued (acquiring an already functioning business, forming
alliances).
• Business Strategy (competitive strategy)
• Corporate Strategy and Diversification
• International Strategy
• Innovation Strategies
• Mergers, Acquisitions, and Alliances
Strategy in Action
Concerned with how chosen strategies are actually put into practice
• Processes
• Organizing
• Resourcing
• Changing
• Practice
Strategy Development Processes
Strategies do not always develop in logical sequences of analysis, choices, and actions. There
are 2 broad explanations of strategy development:
• The Rational-Analytic View
o Conventional, linear sequence explanation
o Strategic position is analyzed, then options are compared with corresponding
choices, then procedures are put in place for effective implementation
o Inflexible plans however hinder learning and prevent the seizing of
opportunities
• The Emergent Strategy View
o Strategies tend to emerge after practical experience or even accidental
actions at the bottom of the organization
o Cultural and political processes can also drive changes in strategy
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