List of cases xxiv. How to use this book xxvi. How to use the Online Resource
Centre xxviii. PART I Introduction 1. 1 Introduction to global strategic
management.
Global Strategic Management Second Edition
•
\
J^drzej George Frynas Professor of CSR and Strategic Management, Middlesex University Business School
Kamel Mellahi Professor of Strategic Management, Warwick Business School, University of Warwick
OXFORD UNIVERSITY PRESS
Contents Preface
v
Acknowledgements List of exhibits List of cases
vii xxi
xxiv
How to use this book
xxvi
How to use the Online Resource Centre
PART
I Introduction
xxviii
1
1 Introduction to global strategic management
3
Learning outcomes
3
Opening case study: IKEA
4
1.1 Introduction
6
1.2 Defining the strategic management field
-6
1.3 Phases of global strategy
8
1.3.1 Single-country strategy
8
1.3.2 Export strategy
11
1.3.3 International strategy
11
1.3.4 Global strategy
11
1.4 International strategy and global strategy: what is the difference?
12
1.5 Defining global strategic management
13
1.6 Drivers for a global strategic perspective
15
1.6.1 Macro globalizing drivers
16
1.6.2 Industry globalizing drivers
27
1.6.3 Internal globalizing drivers
29
1.7 Organization of the book
30
Key readings
31
Discussion questions
,
31
Closing case study: Walmart v. LVMH—two retailers, two different global strategies
31
References
35
PART II Global strategic analysis
37
2 Global business environment: the external macro environment
39
Learning outcomes
39
Opening case study: The Brazilian Embraer and the external business environment
40
2.1 Introduction
41
2.2 The external business environment
42
Contents
2.2.1 Identifying threats and opportunities 2.2.2 Strategic fit and firm performance 2.3 PEST analysis 2.4 The political environment 2.4.1 Regional integration 2.4.2 Government legislation 2.4.3 Political risk 2.4.4 Corruption 2.5 The economic environment 2.5.1 Cost of production 2.5.2 Currency exchange rates 2.5.3 Cost of capital 2.6 The social environment 2.6.1 Social change 2.6.2 Global convergence 2.7 The technological environment 2.7.1 Global technology scanning and technology clusters » 2.7.2 The knowledge-based economy 2.7.3 The spread of the Internet 2.8 National environmental influences and the Diamond Model 2.8.1 Factor conditions 2.8.2 Demand conditions 2.8.3 Related and supporting industries 2.8.4 Firm strategy, structure, and rivalry 2.9 Criticisms of the Diamond Model 2.9.1 The Diamond Model for small nations 2.9.2 The Diamond Model and globalization 2.9.3 Response to criticisms 2.10 Summary Key readings Discussion questions Closing case study: Lockheed Martin—from conquering Russia to conquering space
3 Global business environment: the industry environment
73
Learning outcomes Opening case study: Global economic recession and super luxury cars 3.1 Introduction 3.2 Understanding and adapting to industry environment 3.2.1 Market segmentation analysis 3.2.2 Strategic group analysis
73 74 75 76 76 77
*
Contents 3.3 The Five Forces Model 3.3.1 Barriers to entry 3.3.2 Bargaining power of buyers and suppliers 3.3.3 Threat of substitutes 3.3.4 Rivalry 3.4 Criticisms of the Five Forces Model 3.4.1 Static v. dynamic competition 3.4.2 Industry profitability
80 83 86 88 89 90 91 91
3.4.3 Response to criticisms 3.5 Industry evolution 3.5.1 The five phases of the International Product Life Cycle (IPLC) 3.5.2 Criticisms of the IPLC model 3.6 Anticipating the future 3.6.1 Forecasting 3.6.2 Scenario analysis 3.6.3 Anticipating the future and globalization 3.7 Summary Key readings Discussion questions Closing case study: The rise ofLinux—the battle for the operating system market References
91 92 94 96 97 98 99 101 101 102 102 103 106
4 Global business environment: analysis of the internal environment
109
Learning outcomes
109
Opening case study: Google.com
110
4.1 Introduction 4.2 Positioning perspective v. resource-based perspective 4.2.1 The positioning perspective
112 112 113
4.2.2 The resource-based perspective 4.2.3 Industry profitability v. firm profitability 4.3 Analysing firm resources and capabilities 4.3.1 Resources 4.3.2 Capabilities 4.3.3 Core competencies 4.3.4 The VRIO framework 4.3.5 Resources and capabilities in multinational firms
113 114 115 115 116 116 117 120
4.3.6 Changing global markets and dynamic capabilities 4.4 Global value chains and value systems 4.4.1 Value added 4.4.2 Value chain analysis 4.4.3 Value system analysis 4.4.4 Value analysis and cost advantages
122 122 123 125 126 128
Contents
4.4.5 Value analysis and strategic linkages
130
4.4.6 Value analysis and global location decisions
131
4.5 Comparative analysis
132
4.5.1 Competitor intelligence
133
4.5.2 Benchmarking
134
4.5.3 Internal comparative analysis
135
4.5.4 Comparative analysis in global markets
137
4.6 Summary
137
Key readings
138
Discussion questions
138
Closing case study: Clothing industry supply chains and Zara's business model
139
References
141
PART ill
Global strategic development 145
5 Managing the internationalization process
147
Learning outcomes
147
Opening case study: Internationalization of a French retailer—Carrefour
148
5.1 Introduction
150
5.2 Decision and motives to internationalize
150
5.2.1 Organizational factors
150
5.2.2 Environmental factors
152
5.2.3 Motives for foreign investment
153
5.3 The internationalization process
154
5.3.1 Timing of market entry
154
5.3.2 Obstacles to internationalization
155
5.3.3 Perceptions of managers
157
5.3.4 Psychic distance and internationalization
157
5.3.5 The Uppsala Model
158
5.4 Criticisms of the Uppsala Model
159
5.4.1. Firms not following Uppsala Model 5.4.2 The Born Global firm 5.4.3 Response to criticisms 5.5 Entry mode strategies
160 .
160 161 164
5.5.1 Export
164
5.5.2 Licensing
165
5.5.3 International franchising
168
5.5.4 Wholly-owned ventures
169
5.6 Entry modes and risk v. control
171
5.7 De-internationalization
173
5.8 Summary
174
Contents Key readings
174
Discussion questions
175
Closing case study: Internationalization of a Chinese firm—the Haier Group
175
References
178
6 International strategic alliances: partnership and cooperation
183
Learning outcomes
"
183
Opening case study: Fiat—the questfor global leadership
184
6.1 Introduction
186
6.2 The concept of international strategic alliances 6.3 International strategic alliances: external drivers and internal motives 6.3.1 External drivers of alliance formation
186 188 188
6.3.2 Internal motives for alliances 6.4 Types of alliance 6.4.1 International expansion alliance 6.4.2 Vertical integration alliance 6.4.3 Diversification alliance 6.4.4 Complementary alliance
188 189 189 190 192 192
6.4.5 Shared supply alliance 6.4.6 Quasi-concentration alliance 6.5 Selecting partners 6.5.1 Partner selection criteria 6.5.2 Optimal business partner 6.5.3 Strategic alliances in emerging economies 6.6 Control in strategic alliances
192 192 193 193 195 197 198
6.6.1 Control mechanisms 6.6.2 Focus of control 6.6.3 Control and performance 6.7 International strategic alliances: balancing risks and trust 6.7.1 Risks in strategic alliances 6.7.2 Trust in strategic alliances 6.8 Summary Key readings Discussion questions Closing case study: Tyrian Diagnostics—dancing with the big pharmas References
198 200
,
200 201 202 202 205 206 206 206 208
7 The subsidiary-level strategy
211
Learning outcomes
211
Opening case study: Dell in China: will the direct sales model crack in China?
212
7.1 Introduction
214
7.2 Global strategy levels
216
Contents
7.3 Strategic role of subsidiaries 7.4 Types of subsidiary-level strategy 7.4.1 Support and implementation . 7.4.2 Autonomous subsidiaries 7.5 Global generic strategies 7.5.1 Cost leadership strategy 7.5.2 Differentiation strategy 7.5.3 Focused low-cost strategy 7.5.4 Focus differentiation strategy 7.5.5 Integrated strategy or 'stuck in the middle' 7.5.6 Criticisms of generic strategies 7.6 Summary Key readings Discussion questions Closing case study: Managing the melamine contamination crisis by Nestle China References
Learning outcomes Opening case study: The house of Tata 8.1 Introduction 8.2 The role of the corporate parent 8.3 Headquarter-level control strategies 8.3.1 Types of control 8.3.2 Focus of control 8.3.3 Control and global values 8.3.4 Barriers and challenges to headquarter-level control 8.4 Diversification strategies 8.4.1 Industrial diversification 8.4.2. Types of industrial diversification 8.4.3 Global diversification 8.5 Global sourcing strategies 8.5.1 Vertical integration 8.5.2 Outsourcing 8.6 Managing global portfolios 8.7 Summary Key readings Discussion questions Closing case study: Lufthansa's diversification strategy References
9.5 Balancing integrations and local responsiveness: broad forms of international strategy
297
9.5.1 The export firm
297
9.5.2 The multi-domestic firm
298
9.5.3 The global firm
299
9.5.4 The transnational firm
300
9.6 Summary
303
Key readings
304
Discussion questions
305
Closing case study: Restructuring Sony
305
References
312
10 Global management of change
315
Learning outcomes
315
Opening case study: Shanghai Volkswagen
316
10.1 Introduction
318
10.2 Types of change
318
10.2.1 Incremental change
318
10.2.2 Transformational change
319
10.2.3 Types of change and national cultures
320
10.2.4 Organizational change and national culture
321
10.3 People involved in the change process
325
10.3.1 The change agent
325
10.3.2 The role of subordinate and subsidiary managers
327
10.4 The change process 10.4.1 A model of the change process 10.4.2 People's reaction to change 10.5 Appropriate styles of change management
328 ,
328 329 331
Contents 10.6 Implementing change 10.6.1 Project teams 10.6.2 Moving people 10.6.3 Expatriates 10.7 Communication issues 10.7.1 Difficulties in discussing issues linked to change 10.7.2 The role of language 10.7.3 Business implications 10.7.4 Overcoming language problems 10.8 Negotiation with outside parties 10.9 Summary Key readings Discussion questions Closing case study: LG global rebranding References PARTV
Learning objectives Opening case study: Innovating the Google way 11.1 Introduction 11.2 What is innovation? 11.2.1 Innovation within the life cycle 11.2.2 Innovation and competitive advantage 11.3 Competing in technological markets 11.4 Managing knowledge ' 11.4.1 Knowledge creation 11.4.2 Knowledge transfer within multinationals 11.5 Global R&D networks 11.5.1 Outsourcing innovation globally 11.6 Summary Key readings Discussion questions Closing case study: Outsourcing innovation in the pharmaceutical industry References
12 Corporate Social Responsibility (CSR) and innovation
377
Learning outcomes Opening case study: Two crises influence the strategy ofRoyal Dutch/Shell 12.1 Introduction 12.2 Corporate Social Responsibility (CSR) and corporate objectives
377 378 379 . 380
Contents 12.2.1 Companies and profit maximization
380
12.2.2 Changing views on the role of companies in society 12.2.3 National differences
381 381
12.3 Corporate Social Responsibility (CSR) and stakeholders 12.3.1 Stakeholder view of the firm 12.3.2 Stakeholder mapping 12.3.3 Problems in stakeholder mapping 12.3.4 Which stakeholders should the firm focus on? 12.3.5 Critique of stakeholder mapping 12.3.6 Issue analysis 12.4 CSR strategies and innovation 12.4.1 Generic strategies of social responsiveness
383 383 384 386 386 387 388 390 390
12.4.2 Benefits of CSR strategies 12.4.3 CSR strategies and innovation 12.4.4 Innovation and core competencies 12.4.5 Levels of social innovation 12.4.6 Non-traditional partnerships and innovation 12.5 Summary Key readings Discussion questions Closing case study: BP tackles climate change and innovation References
