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Tut 5 – Strategy Planning Framework: Corporate & Business Strategies
Strategy Formation
Mgt ToolsEnvironment
Scanning
Scenario PlanningGame Theory
Conceptual Mapping
Country Assessment
Strategy Planning
Corporate Strategy Planning
Business Level Planning
Strategy ImplementationPlanning & Execution
Internationalisation Process
Corporate LevelConfiguration &
Coordination
Foreign Market Strategies evaluation &
selection
Leadership, innovation & governance
Organisational Design & Control
Country Strategy Dev
Her
e no
wLast Week
Strategy Development Orientation
Emergent – evolves from continuously
improving from the past strategies
Deliberate – strategically focused
& intended
Corporate StrategyOrganisational Wide Strategy
Business StrategyOrganisational Breakdown Strategies by Business Units
Strategy Development Orientation
HQ
International
Corporate Strategy Formation
1. Choosing which international businesses to be in, depends on:• Capacity to complete internationally• Capacity to manage entry barriers
o Forex / currency riskso Target countries’ PEST risks
2. Choosing corporate parenting approach – how HQ manages IB in order to create shareable value add or increase value to HQ
• Value adding portfolio management:o IB units that creates valueo Divest from IB that has no value
control closer to target customers• Backward integration – increasing
control of suppliers• Horizontal integration – increasing
control over competitions
Influences
4. Choosing market entry and development approaches:• JV, retrenchment, divestment,
liquidation, industry to product/service diversification considerations that would influence the modes of entry or growth expansion in target countries
Influences
5. Choosing product development approaches
War Game Positioning
Corporate Strategy Considerations
1. What business to be in?2. What corporate parenting approach?3. What control criteria/integration approach?4. What market entry & development options?5. What product development options
Global & in Country Market Share capture:WAR GAME thinking in developing IB Strategies of MNCs
Business Strategy
Corporate Strategy
Different BU’sBusiness Strategies
Strategic Business Unit (SBU) Strategy
Is deployed by manyIs deployed by one
Also called competitive strategies
How each BU seeks to:• compete in its chosen markets• sustain international
competitive advantage
How org coordinates BUs or strategic projects to:• compete in its chosen markets• sustain international
competitive advantage
same
Business Strategy
Corporate Strategy
Different BU’sBusiness Strategies
Strategic Business Unit (SBU) Strategy
SAME GAME strategy - understand competition rules to winNEW GAME – changing competition rules to winINSIDE OUT strategy - – using internal strengths in strategies
1. Aim for industry foresight & intellectual leadership• Understand the external drivers of new markets & industries• Identify the opportunity scenarios of new markets and
industry developments
2. Have strategies for exploiting the new markets/industries by developing & using CORE COMPETENCIES (which are strategic services, often technology enabled these days) to dominate in new markets/industries
3. Establish your competitive market position and share targets
Hamel and Prahalad say strategy is about “stretch” and “fit” • ie stretching resource position but fit in to organisation’s
current growth and function.
NOW FUTURESustainable Strategic
Positioning
Strategic PositioningChanging the Competition through Innovation
Creating Core competencies (strategic services) that:1. Provides access to a diverse markets2. Gives significant value to customers3. Difficult to imitate by competitors
Resources
Capabilities
Hamel and Prahalad ‘s “stretch” and “fit” strategy by creating innovative core competencies
Business Strategy FormulationBusiness Unit Planning Focus:
How to compete in chosen regions/countries’ markets
Business Strategy Planning Options1. Same vs New Game2. Inside out vs Outside in 3. Generic strategies
• Porter’s model - broad or specific focus at cost/differentiation
• Hill & Jones’ model – efficiency (cost), quality, innovation & customer responsiveness
Functional Strategies
Corporate Strategy
Different BU’sBusiness Strategies
Strategic Business Unit (SBU) Strategy
SBU or BU strategies deployment by functions
Functional Strategies
Correlation Between the 3 levels of Strategy Planning
Corporate Level
Business Unit Level
Functional Level
Org Scope & Corporate parenting structures
Product/Market or Market/Product Strategies in Countries/Regions
Implementation review at program/project levels
Performance Management:
Variance (Actual – Planned KPIs) Corrections at the appropriate 3 levels
Diversification Approaches
Industry diversification strategy
Business lines diversification strategy
Breaks down to ID which businesses with each industry of interest
Diversification strategies define:
1. What businesses should the firm be in?
2. How can the HQ manage the different business lines?
Goal: Create wealth or value-add via:1. Economies of scale – more for less2. Economies of scope – reuse3. Optimisation of capital4. Marketing power increase5. etc
Case Dev Assignment & Tutorial Tasks
Case Development TipsTask 1Task 2
Case Development Tips1. Pick a company planning or already achieved its internationalisation goal/s
MAKE SURE there are NO written case studies about your company & internationalisation intent
2. Which internationalisation phase and unit topics/concepts are you orientating your case story writing and Q&As ?
a) Make sure the case story contain info that associates with your case Qs – see existing case readings for example of how this can be accomplished
b) Follow the unit guide’s guidelines for case development
c) Conclude how the answers to your Q would lead to what next step recommendations
Tutorial Task 1WAR GAME strategic positioning for:
1. Conquering MARKET SHARE of cash flows NOT product sales
2. Using cash flows from one market/country to subsidise market share battles in other markets/countries
3. Attacking competitors when most vulnerable to a cash flow siege
4. Taking aggressive NOT defensive strategies
You are executives of one of the following world leading insurance companies (Allianz, AXA, AIG, China Life, ING, Zurich) with different mixes of commercial and personal insurance around the world (some more domestic orientated).
Get your team to identify potential war game strategies that might assist them in gaining market share in an existing market of a chosen competitor (from the list above) or in entering into a new market others might also want to enter.
Present their strategy and justify it. What are the key lessons and challenges when using this approach?
1. List one example of same game strategy and one potential new game strategy for each of the following organisations going international:
• Tertiary education provider• Insurance company• Bank• Packaged food company• Beverage company (e.g. water, softdrink, coffee, tea etc) • Computer software company• One more organisation of your choice
2. List potential value propositions (what benefits/how delivered/how benefit measured) for your customers if they follow your proposed new game strategy
How might Hamel and Prahalad’s idea of strategy “fit” (match your products/services, systems and processes short term to what you are good at) versus “stretch (strive long term to do something different and better than your competitors) impact on your strategic choice of same game or new game?
Tutorial Task 2: Same Game versus New Game approach
Organisation New Game Benefits How Success Measures