Summary
Summary Synthesis of IBS
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International Business StrategyDuration of exam: 2h30.
No need to be able to draw the figures. But need to understand them, know what they’re
about, compare them. Give examples of different archetypes!
Important names on the course from Arjen Slangen. But he will give some hints of the
topic.
Articles are also important.
Topic 1: 26/09 – Introduction to strategic thought
Historical Perspective of Strategic Thinking: 3 elements of strategy
• “If we wish to increase the yield of grain in a certain field and on analysis it appears
that the soil lacks potash, potash may be said to be the strategic (or limiting) factor.”
• “The term “strategy”...is intended to focus on the interdependence of the
adversaries’ decisions and on their expectations about each other’s behavior.”
• “Strategy can be defined as the determination of the basic long-term goals and
objectives of an enterprise, and the adoption of courses of action and the allocation
of resources necessary for carrying out those goals.”
Origins of Strategic Thinking:
• Military Interpretations:
o Ancient Greek origins.
o Carl von Clausenwitz (early first half 19th Century)
• First Industrial Revolution (mid-1700s to mid-1800s).
o Failed to induce strategic thinking or behavior.
o Companies lacked power to influence market outcomes.
o Adam Smith’s “invisible hand”.
• Second Industrial Revolution (second half of 19th Century): way to shape market
forces and affect competitive environment.
• Railroads built mass markets (1850): improved access to capital and credit allowed
economies of scale to emerge.
• Improved access to capital and credit allowed economies of scale to emerge.
• Alfred D. Chandler, Jr.:
o “visible hand” superseded “invisible hand”.
• Second Industrial Revolution (late 19th Century).
o Large, vertically integrated companies emerged in U.S., then Europe
• Captains of industry articulated strategic thinking:
o GM - Alfred Sloan (1923-1946): devised strategy based on strengths and
weaknesses of competitor, Ford.
o New Jersey Bell - Chester Barnard (1930s): managers should pay close
attention to ‘strategic factors’ which depend on ‘personal or organizational
action’.
o Philips – Anton Philips (1950s).
• World War II era (1939-1945):
o Allocating scarce resources across the economy was problematic.
1
, o New operations research techniques emerged and paved the way for
quantitative analysis in formal strategic planning.
o “learning curves” concept (1920s – 1930s): discovered in military aircraft
industry, manufacturers noticed direct labor costs tended to decrease by a
constant percentage as the cumulative quantity of aircraft produced doubled,
became an important tool for planning.
o The Theory of Games and Economic Behavior (1944): solved the problem of
zero-sum games (military applications) and framed issues regarding nonzero-
sum games (business situations).
▪ John von Neumann.
▪ Oskar Morgenstern.
• World War II era (1939 - 1945):
o Strategic thinking guides management decisions.
o Peter Drucker: management is not just passive, adaptive behavior, it means
taking action to make the desired results come to pass.
▪ Company could exert positive control over market forces by using
formal planning - ° manager.
Competition between different military divisions like divisions in a multi-business firm:
• Post WWII:
o inter-service competition among the U.S. military divisions.
▪ Army, Navy, AirForce, Marines.
o bridged strategic concept development to business applications.
o distinctive competence had great resonance for strategic management.
• E-book: Movement and Maneuver. RAND corporation.
• Culture and the Competition for Influence Among the U.S. Military Services.
Andrew’s Strategy Framework: SWOT Analysis.
2
,Ansoff’s Product/Mission Matrix: Planning Techniques for your company – business
development in your company and/or with the help of private consulting firms.
Experience (learning) curve (1965-1966):
• for each doubling of cumulated output.
• total costs would decline roughly 20% due to.
o Economies of scale.
o organizational learning.
o technological innovation
Portfolio Analysis:
• Growth Share Matrix.
• BCG Basic strategy recommendation.
o Maintain balance between “cash cows”
and “stars”.
o Allocate resources to “Question marks”.
o Sell off “Dogs”.
The industry attractiveness-business strength matrix to
benchmark performance of SBUs:
3
, Example: McKinsey & Company
Fred Gluck’s Four Phases of Strategy:
4
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