INT BUS STR CHAP 1

• Strategy


  The application of the principles of military strategy to business competition
• Strategic management phenomenon developed

  1960s
• Sun Tzu, Chinese military strategist in 500 BC: '"Know yourself, know your opponents; encounter a hundred battles, win a hundred victories."'
• Schools of thought on the definition of strategy

  • Strategy as plan
  • Strategy as action
  • Strategy as theory
• Strategy as plan school

  • Strategy is embodied in the same rigorous formal planning as in a military strategy
• Strategy as action school

  • Strategy is a set of flexible goal-oriented actions
  • Along with the intended strategy there is also the emergent strategy that is the outcome of a series of smaller decisions from the "bottom up"
• Strategy of integration school

  • The essence of strategy is likely to be a combination of both plan and action
• Global strategy


  The strategy of firms around the globe essentially various firms' theories about how to compete successfully
• Fundamental questions in strategy

  • Why do firms differ?
  • How do firms behave?
  • What determines the scope of the firm?
  • What determines the international success and failure of firms?
• Why do firms differ?

  • Most knowledge about firms comes from Western capitalist countries, but the business landscape is very different in Eastern countries like Japan
  • In countries like China, interpersonal networks and relationships (guanxi), cultivated by managers, may serve as informal substitutes for formal institutional support
• The "strategy tripod"


  • Industry-based view
  • Resource-based view
  • Institution-based view
• Industry-based view


  • Focuses on the external opportunities and threats faced by the organization
• Resource-based view


  • Focuses on the internal strengths and weaknesses of an organization
• Institution-based view


  • Argues that firms also need to take into account the influences of formal and informal rules
• Each component of the strategy tripod offers different answers to what determines the success and failure of firms around the globe
• Growth is an important objective for all firms
• Growth beyond a certain limit is not possible-downsizing, down scoping, and withdrawals are often necessary
• The scope of a firm pertains to growth as well as contraction
• Product scope and geographic scope is important to an institution
• Globalization has led to increased international trade, investment, and communication among nations.
• The global economy is interdependent, with countries relying on one another to meet their needs.
• Strategy


  A firm's theory about how to compete successfully
• Strategy as integration theory

  • Borrows the idea of strategy formation from the planning school
  • Borrows the idea of strategy implementation from the action school
• Advantages of "strategy as theory" definition

  • Capitalizes on the insights of both the planning and the action schools
  • Emphasizes the idea of "theory" which helps to explain the past and to predict the future
  • Allows the possibility of replication-repeated testing of theory under a variety of conditions to establish its applicable boundanesi
• Top management team


  Led by the chief executive officer (CEO) who must exercise leadership by making strategic choices
• Business Policy


  Focused on integrating the functional areas of business administration like accounting, management, marketing, HRM, finance and operation. Aimed to apply the knowledge to solve organization's problem.
• Development of Business Policy


  1. Changing in Business

  2. Policy Content

  3. Changing Management Planning Perspective
• Changing in Business Policy Contents

  • Change in the dynamics of business environment
  • Changing managerial roles in the organization
  • Rapid changes in business and non-business environment
  • Emphasis case study method in learning
  • Concerns affecting organizational performance
• Traditional planning


  Emphasize on goal and objective
• Changes in planning


  The development of STRATEGY in management planning
• Traditional planning - focused on functional areas


  Change due to increasing demand
• Effective planning


  Take the opportunities in the environment, make through analysis of the environment and competition, resource allocation to be dynamic (quick decision)
• Concern of external environment


  Greater with more uncertainties of the future
• Benefits of Strategic Management

  • Improve financial performance of other organization
  • Broader view of problem and issues
  • Strategic decision more effectively and efficiently
  • Analyze problem more systematic way
  • More sensitive to changes in business environment
  • Coordinate multifunctional activities
  • Greater role and participation of top, middle and lower management
  • Reduce potential resistance in changes
  • Conducive organizational climate-encourage team work
  • Improve communication
• Components of Strategic Management

  • Vision
  • Mission
  • Objectives
  • External and Internal Analysis
  • Industry analysis
  • Strategy Formulation
  • Strategy Implementation
  • Strategy Evaluation and control
• Elements of Strategic Management

  • Organizational structure
  • People and leadership
  • Evaluation model and processes
  • Evaluation criteria
• Globalization


  The close integration of countries and peoples of the world
• Causes of market and industry globalisation

  • Technology
  • Multinational companies
  • Labour mobility
  • Lower tariffs
  • Improved transport
  • Capital mobility
• Business policy


  Focused on functional areas
• Strategic management


  Focused on opportunities in the environment, analysis of environment and competition, dynamic resource allocation