BMAL-590 Global Dimensions of
Business Questions and Answers
(Graded A)
Why Study Global Strategy? - ANSWER-Knowing the concepts and components of
global strategy will improve job and career aspiration opportunities, build awareness of
what is occurring in the world, and avoid the downside risks of globalization.
Approximately 80 million people worldwide are directly employed by foreign-owned
firms.
global strategy - ANSWER-a firm's intention to provide standardized products and/or
services on a world-wide basis. Another definition suggests that global strategy is any
strategy outside one's home country.
However, the best definition is that "global strategy" is each firm's theory about how to
compete successfully in whatever global markets the firm chooses to compete.
"strategy as plan" - ANSWER-The first school of thought
This school is the oldest and is based on the work of Carl von Clausewitz, a Prussian
(German) military strategist. This school suggests that strategy is embodied in the same
explicit rigorous formal planning as in the military.
"strategy as action" - ANSWER-suggests that strategy is most fundamentally reflected
by firms' patterns of action.
The planning school has been challenged by Liddell Hart, a British military strategist.
Hart argues that the key to strategy is a set of flexible goal-oriented actions. He favored
an indirect approach, which seeks rapid flexible actions to avoid clashing with
opponents head-on.
emergent strategy - ANSWER-Henry Mintzberg, a Canadian scholar, posited that in
addition to the intended strategy that the planning school emphasizes, there can be an
emergent strategy that is not the result of "top-down" planning, but that is the outcome
of a stream of smaller decisions from the "bottom up."
"strategy as integration" - ANSWER-Although the debate between the planning school
and action school is difficult to resolve, many scholars and managers have realized that
the essence of strategy is likely to be a combination of both planned deliberate actions
and unplanned emergent activities
,defines strategy as "a firm's theory about how to compete successfully." In other words,
if we have to define strategy with one word, our choice is neither plan nor action - it is
theory. A theory serves two purposes: explanation and prediction.
Strategy as a theory - ANSWER-describes how to compete successfully in a global
market. Firms have both intended and emergent strategies, meaning, some strategies
are defined from the outset while others develop with the firm's participation in the
marketplace.
It is often difficult to change strategy so firms must guard against total adherence to a
strategy because to do so would hamper adaptation in new situations. Strategy should
continue to give coherence to decisions and actions. Managers must exert effective
strategic leadership both in a global and a local perspective.
Theory building and development requires replication and experimentation to establish
the temporal (time-related) and geographic limits of an existing theory. The strategy as
theory perspective helps us understand why it is often difficult to change strategy.
Why do firms differ? - ANSWER-The largest influences are a reflection of the cultural
differences between Western and Japanese companies.
In Western firms, the competition among companies drives the process. In other
companies, like the Japanese, networks of relationships have powerful effects.
Where does most of our knowledge of firms come from? - ANSWER-Anglo-American
capitalism
keiretsu - ANSWER-Japanese firms extensively employ a network form of supplier
management, giving rise to the term keiretsu (inter-firm network).
guanxi - ANSWER-The Chinese favor guanxi (interpersonal networks), cultivated by
managers, that may serve as informal substitutes for formal institutional support. In
other words, interpersonal relationships among managers are translated into an inter-
firm strategy of relying on networks and alliances to grow the firm, which, in the
aggregate, contributes to the growth of the economy.
How do firms behave? - ANSWER-Companies that embrace the industry-based view
focus on competitive forces within an industry that impact all firms.
According to this perspective, a firm's success in the Indian IT industry depends on the
unique attributes of the IT industry, its knowledge-intensive nature, and non-location
based boundaries.
resource-based (capabilities) - ANSWER-Those firms that adhere to the resource-
based (capabilities) view focus on internal strengths and weaknesses, that is, firm-
specific resources and capabilities.
, For example, successful Indian IT firms tend to have capabilities that are valuable,
unique, and hard for rivals to imitate or replicate.
institution-based view - ANSWER-focus on government and societal forces.
For example, the pro-market reforms in India have opened the door for many Indian IT
companies to win foreign contracts, while at the same time, legislation by various states
in the U.S. has banned Indian IT firms from winning contracts.
Triad markets - ANSWER-North America, Europe, and Japan
If a firm wants to become a true "global leader," it is necessary to create a strong
competitive position in each of the Triad markets
BRIC - ANSWER-Brazil, Russia, India, and China are the four fast-growing markets that
represent important opportunities
how do the three views lead to a strategy that ultimately must address the firm's
performance? - ANSWER-Industry-based competition, firm specific resources and
capabilities, and institutional conditions and transitions--> strategy--> performance
What determines the scope of the firm? - ANSWER-A firm's scope pertains to its growth
as well as its contraction, that is, the way it curtails and alters its business practices
through downsizing, downscoping, and withdrawals. Obviously, though, the primary
focus is on the growth of the firm
conglomerate diversification - ANSWER-a strategy used to add new businesses that
produce unrelated products or are involved in unrelated markets and activities
in the 1960s and 1970s was found to destroy value and was largely discredited in the
1980s and 1990s - witness how many firms are still trying to divest and downsize (or
"right-size") in the West.
However, this strategy seems to be alive and well in many emerging economies
because of its relatively positive link with performance that may be a function of the
level of institutional (under)development in these countries
What determines the success and failure of firms around the globe? - ANSWER-The
focus on performance, more than anything else, defines the field of strategic
management and international business. Businesses are not only interested in acquiring
and leveraging competitive advantage, but also in sustaining such advantages over time
and across regions. All three major perspectives that form the "strategy tripod"
ultimately seek to answer this question.
