International Business

Strategy
( BMAN 24132)
Course unit Coordinator :
Prof Mo Yamin
Mo.Yamin@manchester.ac.uk
www.manchester.ac.uk/research/mo.yamin

Other Colleagues involved in the course unit

Dr Claudio De-Mattos(DCM)
Lecture in International Business
Claudio.de-mattos @manchester.ac.uk
www.manchester.ac.uk/research/claudio.de-mat
tos

Dr Faith Hatani (FH)

Lecturer in in International Business
Faith.hatani@manchester.ac.uk
www.manchester.ac.uk/research/faith.hatani

DR Jia Jia Liu (JL)

Lecturer in Asian Business
jiajia.liu@manchester.ac.uk
www.manchester.ac.uk/research/jiajia.liu

The agenda for today's session

Introducing the course unit on International
Business Strategy (BMAN 24132)
Course unit aims and learning objectives
Reading resources
Overview of the syllabus
Assessment
Lecture and seminar programme

the Agenda for todays lecture (continued)

Lecture One : Strategy Around the Globe
What is strategy ?
Strategy as the theory of the business
Case study of Marks and Spencer
Fundamental questions in Strategy
why do firms differ?
How do firms behave?
What determines the scope of the firm ?
What determines the success and failure of the firm around the world?
Strategy tripod : integrating three theoretical perspectives:
Based on industry analysis ,firm resources and institutions

Overview of today's session (continued)

Global strategy
Traditional meaning of global strategy
Contemporary meaning of Global Strategy :
Strategy around the globe!

Global strategy and the globalization debates

Globalization or Semi globalization?
Implications for global strategy

The increasing importance of NonGovernmental organizations(NGOs)

Ethical and social responsibility aspects

Course aims
International business strategy requires the analysis of
complex, uncertain and incomplete information and the
ability to make and implement company-wide judgements.
This module, through mix of lectures, class discussions, and
case study analysis provides the opportunity for the participant
to develop and practice analysis, thinking, and
judgement competencies at an international and strategic
level.

The unit also aims to enhance transferable skills including

group work skills; the ability to assess different management
policy choice options in a situation of strategic
interdependence; and the ability to work in (case-study) teams
and to present collective analysis effectively
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Learning outcomes
Knowledge and understanding: Knowledge and understanding of
the main analytical approaches to international business strategy.
Ability to recognize and explain the role and implications of external and
internal factors for the development of successful international business
strategies.
understanding of the tools and techniques used in the analysis of company
performance and strategic positioning in multinational companies.

Intellectual skills: Development of critical thinking, and problem

solving skills.
Ability to analyse cases, make critical judgments and develop potential solutions
to international business problems.
Ability to critically assess how the tools and techniques are applied in the reevaluation and formulation of international business strategy. Ability to assess
the problems and challenges of developing and implementing international
business strategy.

Practical skills: Ability to analyse case studies, apply core skills

developed in earlier courses, and evaluate different strategic choice
options in international management.
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Textbook and additional readings

Main Textbook
Mike Peng(2014) Global Strategic Management.
South Western , Cengage Learning
( ISBN:978113395326-5)

Additional Reading Resources

Harvard Business Review (HBR)
One article from HBR is recommended for each lecture.
Access articles via: www.library.manchester.ac.uk/search-resources /

Further additional readings will be recommended during the lecture sessions

Overview of the syllabus

The
Part 1: FOUNDATION OF GLOBAL STRATEGY

strategy
Introduction: Strategy around the Globe
tripod as
The Industry and resource-based views of Strategy
an
The Institution based view of Strategy
analytical

Part 2: BUSINESS LEVEL STRATEGY

Foreign Market Entries
Strategic Alliances and Networks
Global Competitive Dynamics

Part 3: CORPORATE LEVEL STRATEGY

tool and
template

Applying the
strategy
tripod at the
business and
the corporate
levels

Diversification and Acquisitions.

Multinational Strategies, Structures and Learning
Corporate Social Responsibility

Assessment is by coursework (100%):

Students submit one individual essay of 2000
words (excluding references, tables etc.).
Students choose one of three essay titles.
Essay titles will be uploaded on blackboard on Monday
15th February 2016.

The DEADLINE for submission of your essay is

3pm Friday 13th May 2016.
Blackboard submission will be activated on Monday 2 nd
May 2016. Please note that assessed essays can only be
submitted via Blackboard/Turnitin.

Resit arrangement: The resit format will also be

a 2000 words essay.
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Lecture and Seminar sessions

Week
1 //

2 //

3 //

4 //

5 //

6 //

7 //

8 //

9 //

10 //

Lecture Topic
Introduction to the
course and lecture
on Strategy
The Industry and
firm perspectives on
Global Strategy

The Institutional
perspective on Global
strategy
Foreign market entry
Strategic alliances
and networks

Global Competitive
Dynamics
Diversification and
acquisition
Multinational
strategy, structure
and learning
Corporate Social
Responsibility
conclusion

Seminar Topics

Session 1:Strategy
concepts; meaning and
relevance of global
strategy

Session 2: Integrative
Case 1: A Nordic
Investor in Eurasia.
Core textbook,pp124128

Session 3:
Individual mock test

Session 4 :
Integrative Case 2:
Flying with Ryanair
Core textbook, pp.
284--289
Session 5:

Seminars 1, 2, 3, 4, 5 and 6

Seminars 7, 8, 9, 10 and11
Seminars 1, 2, 3, 4, and 5 and 6

Seminars 6, 7, 8, 9, 10 and 11

Seminars 1, 2, 3, 4, 5 and 6
Seminars 7, 8, 9, and 10, and 11
Seminars 1, 2, 3, 4, 5 and 6

Seminars 6, 7, 8, 9, 10 and 11
Seminars 1, 2, 3, 4, 5 and 6

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What is Strategy ? - Some background

Origin-Greek word (strategos)-art of the general . Strong military roots
The definition of strategy in the business and management field has been a topic of
debate.
Plan Or Action ?
The Planning School believes that strategy is embodied in the same rigorous formal
planning as in a military strategy :
Strategy is deliberately planned for at the top by the firms
leadership or generals( usually CEOs)
The Action School believes that strategy is a set of flexible goal-oriented actions.
Along with the intended strategy formulated at the top there is also the emergent strategy:

Emergent Strategy: A strategy based on the outcome of a stream of smaller decisions from
the bottom up
For example, actions taken by managers of foreign subsidiaries in a multinational
company to formulate new strategies and persuade top managers in the headquarter to alter
strategic priorities
12

The essence of strategy is the integration of plan

and action ( Peng , 2014, p.14)

13

What is Strategy ? : A definition

Your core textbook ( Peng 2014, page 11 ) defines Strategy as :

A Firms THEORY about how to compete successfully.

This is a practically useful definition!

It captures the essence of strategy : The integration of the insights of the

Planning and the Action schools :

Successful strategy is underpinned by a valid theory of the business:

If the strategy is unsuccessful ( firm does not compete successfully) OR if
it succeeds beyond expectation by a large margin , the underlying theory of the
business s is invalid.

14

A firms theory of its business incorporate

three sets of assumptions
1.

Assumptions about the environment of the firm : society and its structure,
the market, the customer, and technology. Assumptions about the
environment define what the firm gets paid for.
Includes assumptions about OPPORTUNITIES and THREATS facing the firms business

2.Assumptions about the firms mission: The assumptions about mission

point to how the firm envisions itself making a difference to the
economy and in the society at large.

3.Assumptions about the core competencies needed to accomplish the

organization's mission. Assumptions about core competencies define what
activities an organization must excel at in order to maintain leadership .

Includes assumptions about STRENGTHS and WEAKNESSES compared to RIVALS

15

A valid theory of the business has four features :

1. The assumptions about environment, mission, and
competencies must fit reality
2. The assumptions in all three areas have to fit one another.
Strategy must be coherent
3. The theory of the business must be known and understood
throughout the organization:
1. Critical for strategy implementation. An excellent strategy
formulated at the top will fail if not well understood within the rest of
the organisation.
2. Complicated and hard to describe theories are unlikely to work

4. The theory of business must be tested regularly to establish its

temporal (time-related) and geographic validity or limits
16

Examples of temporal and geographical

limits

Nokia
Until a few years ago Nokias tagline used to be
Connecting People
It has now changed to Technologies for a Connected
World
What does this tell us about (changes in) Nokia s theory of
its business?

Walmart
After its failures in Germany and Korea , Walmarts slogan
has changes from Everyday Low Price to Save
Money , Live better
What does this tell us about the limitations of Walmarts
theory of its business ?
17

Alas only diamonds are for ever!

Some

theories of the business are so powerful that they last for a long time. But
eventually every one becomes obsolete .
It is very difficult to change the underlying theory of a business as circumstances change radically and
replace it with one that fits the new reality better

Decision makers often suffer from cognitive bias: ignore cumulative evidence
contradicting their strongly held beliefs .
Generals always fight the last war ("Economists fight the last depression")

Managers focus too much on exiting competencies at the expense of developing new
ones .
Core competence becomes core rigidity.

Research suggests that the vast majority of companies do not live more than 40 years
Companies that survive a century or more( e.g. IB&M- Opening Case in Chapter 3) constitute important
sources for advancing our understanding our strategy

18

Marks and Spencers theory of its business

When first setting out in business , M&SS

founders defined their mission as being the
change agent in British society by becoming the
first classless retailer (this entailed an implicit
assumption about the environment)
Depiction of Salford working class life

A scene from Downtown

Abbey

by L. S Lowry

19

Marks and Spencers Core competence

Marks and Spencer, defined its core competence as the ability to identify,
design, and develop the merchandise it sold
Effectively , this meant a radical shift in the relationship between retailers
and suppliers that was prevalent at the time
Marks and Spencers suppliers became subcontractors rather than
manufacturers

Marks and Spencers theory of its business made it a powerful force in UK

retailing for several decades
The biggest retailer in the UK selling well-made and durable clothes at reasonable
prices that most people across different income groups wanted
See article in FT :
http://www.ft.com/cms/s/0/cd845d52-e28b-11e3-ba64-00144feabdc0.html#slide0

20

Marks and Spences THEORY of its clothing business

no longer chimes with reality
Its theory of its business now incorporates invalid assumptions
about the current environment
Clothing retailing has changed significantly , Fast- Fashion is a very
important segment . The ethos of classless retailing seems out of date

with respect to clothing and fashion ,its core competence (designing

merchandise) doesnt quite work to regain its lost markets
It's not that M&S's clothes have got older, but that old people have got
younger
From their not-quite-right pink to their too-long mini skirts, its in the
retailers DNA to always get it slightly wrong

http://www.theguardian.com/business/2015/nov/06/m-and-s-clo
thes-old-people-younger-zoe-williams

21

Fundamental Questions in Strategy

Why do firms differ?
Both across countries and within the same country

How do firms behave?

E.g. when entering foreign markets or forming alliances
and in terms of corporate social responsibility

What determines the scope of the firm?

E.g. the degree of their internationalization, outsourcing
of activities , diversification and acquisition

What determines the international success or

failure of firms?
Includes issues relating to how success is defined and
what dimensions of performance should be included.
22

Strategy tripod
Three theoretical perspectives on strategy provide
their own distinctive answers to the four
fundamental questions
Industry-based view - focusses on the degree of
competitiveness in the industry as the critical influence on
a firms strategic positioning in the industry
Resource-based view -emphasizes firm specific differences
in capabilities as the main driver of strategic behavior and
performance
Institution-based view - highlights the importance of
context- shaped by institutional forces- particularly when
companies operate outside their home market

The idea of the strategy tripod is simply that

combining these three perspectives provides a more
robust understanding of strategy
23

24

what is global strategy ?

Traditional view: standardized products and/or services on a worldwide basis
it implied an exaggerated view about the globalization of markets
The rise of emerging markets ( e.g. BRICS: Brazil , Russia, India , China and South
Africa) has necessitated a modification of what global strategy is
A broader definition: Strategies of firms around the globe
Both international and non-international (domestic)
For example how do domestic firms compete with foreign multinationals in their
markets?
Why do some strong companies choose not to internationalize ?
Both developed and emerging economies
For example how do Western companies compete in China and how do you cope with
the very different institution setting ? (Microsoft in China closing case in chapter 1 )
How can firms from emerging countries compete successfully in developed
economies?

25

Globalization , semi-globalization and Global

strategy

Definitions of globalization:
The close integration and peoples of the World (Peng)
Globalization is the shift towards a more integrated and
interdependent world Economy (Hill)
Pengs advocates the Pendulum view of globalization
The shift is not inexorably upwards towards greater integration

26

Semi globalization
Indicators of cross border market
integration (such as foreign trade and
foreign direct investment) have shown
significant increase over recent years
However it is far from the case that
markets are fully integrated
Most economic activity is still national or local
rather crossing borders.
One study has shown that Canadians were 22
times more likely to trade with fellow Canadians
than with persons equally distant but who reside
in the USA
27

Implications for Global Strategy

Semi-globalization does not imply or mandate a single right strategy
Unlike the globalization of the markets view there is no single or dominant strategic
implication (such as standardization)
Semi-globalization has made accessing markets easier but does not mean firms should have a
uniform approach to serving them
Semi-globalization has increased the strategic importance of managing the value chain (next
lecture) and deciding whether and when and what activities to outsource
The cost of monitoring outsourced activities located abroad may encourage in-sourcing
even though production costs may increase
As firms expand operations abroad particularly in less developed countries they need to
interact with non-governmental organizations(NGOs) often based in developed economies
NGOs can expose poor environmental or labour practices and with corresponding reputational
damage.

28

Children as young as seven mining cobalt used in smartphones, says Amnesty ( Guardian 19 th January
2016)

Amnesty International says it has traced

cobalt used in batteries for household
brands to mines in DRC, where children work
in life-threatening conditions

29

Overview of the key points

Understand strategy as the theory of the

business
fundamental questions in strategy and the
strategy triad as a framework for
answering them.
Understand global strategy as strategy
around the globe

30