International Business International Business Strategy (IBS)Strategy (IBS) - b - b

Corporate strategy

Business strategy

Functional strategy

1b-Strategy (18) 2

Corporate strategyCorporate strategy (CS) (CS)

Overall scope of activitiesOverall scope of activities– Competition: geographic location of activities– currency: balance worldwide activities– country: recognise individual factors

Corporate parentingCorporate parenting– in head officehead office how to manage various businesses – add parenting valueparenting value - add a business to a

portfolio - divest in the portfolio– different styles: planning, performance control

=> match to the business

1b-Strategy (18) 3

Corporate value added

Corporate advantage

Corporate strategy

Business strategy

MarketsProducts

Corporate scope Corporate parenting

1b-Strategy (18) 4

SM styles-I: Strategic PlanningStrategic Planning„Orchestrator”„Orchestrator”

CharacteristicsCharacteristics• HQ: deeply involved at business level• Formally planning strategies• Planning lever clear directions

PerformancePerformance• Longer-term view: short term financial

suffering• Planning: time consuming centre losing

objectivity• Business unit: may be frustrated

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SM styles-II: Strategic ControlStrategic Control„Coach”„Coach”

CharacteristicsCharacteristics• Strategic development: left to units• No directions are set, no coordination• Capitol projets: business initiates• Business units: detailed reports

PerformancesPerformances• Balance long term - short term financial goals• It is difficult• No exploiting synergies

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SM styles-III: Financial ControlFinancial Control„Controller”„Controller”CharacteristicsCharacteristics

• Strong delegation of responsibility• Budget process and aggreeing budget critical• Budget: contract• Strong emphasis on short-term payback• Financial performance monitored in detail

PerformancePerformance• Maximise short-term financial performance• Failure: organic growth• Linkages not developed• Strong incentives

1b-Strategy (18) 7

Centre

A B

Centre

A

B

Holding (“CONTROLLER”)

Strategic control (“COACH”)

Centre

B A

Strategic planning (“ORCHESTRATOR”)

Legends: Financial monitoring, controlling, resources allocation = “ = , = “ = , consultative coordination = “ = , = “ = , directives

1b-Strategy (18) 8

Business strategyBusiness strategy (BS) (BS)

– How a business seeks to compete in its How a business seeks to compete in its product-market?product-market?

– create competitive strategy– large range of businesses

– Develope sustainable competitive Develope sustainable competitive advantegeadvantege

– emulate existing rivals: same game– inventing new ways: new game

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Yamaha pianoYamaha piano– ovearall demand started decline

10%/year – same game: fight harder, more effictively– new gamenew game: fresh eye for opportunities

» superb acustic pianosuperb acustic piano (combination of digital amd optical technology)

» 40 million piano => refittingrefitting with PC & disk

» additional digital value-creatingvalue-creating possibilities

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Same game

Delayering

Divestment

Deteriorating performanceDeteriorating performance

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New Game

New strategic recipe

New vision and capabilities

Improving performanceImproving performance

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SAME GAMESAME GAME NEW GAMENEW GAME

CharacteristicsCharacteristicsIdentify market segmentsPositioning in a segmentServe more effectively

CharacteristicsCharacteristicsStrategic innovation

First mover advantageAvoidance head-to head

competition

Strategic intentStrategic intentOutcompeting rivals

Similar strategic approachDoing the same thing better

Strategic intentStrategic intentStrategic intent investing in new

strategic recipesInnovation, vision

Potential outcomePotential outcomeParity at the best

New strategy: incremental approach

Potential outcomePotential outcomeCompetitive superiority

Distinct advantage‘fundamental’ approach

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Competition for industry foresight

and intellectual leadership

Core

comptencies

Competition for market position

and share

STRECHSTRECH

Competing for the FutureCompeting for the FutureCORE CORE COMPETENCIESCOMPETENCIES

HaveHave Have notHave not

Essential Develop Growth, acquire

Non-essential Harvest/divest Buy in

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BSBS

Corporate strategy:forward integration: closer to the customer

Corporate strategy:backward integration: closer to the source of inputs

Corporate strategy:unrelated diversification

Corporate strategy:related diversification

Product development Geographical expansion

Product expansionMarket penetration

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Functional strategy (FS)

– How the different activity areas of a business contribute to the overall business?

– Changes in BS changes in FS

– New FS changes in BS

Key requirementsKey requirements: to fit and match

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BUSINESS STRATEGIES

FUNCTIONAL STRATEGIES

Human resources Finance

Logistics

Operations

Marketing

Bi-directional

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FUNCTIONS Business Strategies Human

resources Logistics Operations Marketing Finance

BS Nr.1.

BS Nr.2.

BS Nr.3.

…..

BS Nr.n

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Business performance, corrective adjustments

Corporate Str.

Business Str.

Functional Str.Business

performance

Corrective adjustment