GLOBAL STRATEGIC MANAGEMENT

Department of International Business

University of Economics, the University of Danang

Part 1

Introduction

Chapter 1

Introduction to Global
Strategic Management

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 1.1. Strategy

1.1.1. Strategy definition

1.1.2. Levels of strategy

1.1.1. Definition of strategy

▪ Derived from the Greek word “ strategos ” –

- “ stratos ”: “an army”
- “ ago ”: “lead”, “guide”, “move”
stratego = a general, a commander
▪ stratego means planning to destroy the enemy
through efficient use of resources
▪ There can be many different definitions.

Basic Definitions

▪ "The determination of the basic long-term goals

and objectives of an enterprise, and the adoption
of courses of action and the allocation of
resources necessary for carrying out these goals.“
(Chandler, 1962).
▪ “A strategy is a pattern or plan that integrates an
organization's major goals, policies, and action
sequences into a cohesive whole.” (Quinn, 1980).

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 Basic Definitions

▪ The direction and scope of an organization over

the long term: which achieves advantage for the
organization through its configuration of
resources within a changing environment, to
meet the needs of markets and to fulfill
stakeholder expectations (Johnson and Scholes,
1999).

Basic Definitions

• Direction: Where is the business trying to get to in the long-term.

• Market and the size/ scope of the enterprise: Which markets should
a business compete in and what kinds of activities are involved in such
markets?
• Advantage: How can the business perform better than the competition
in those markets?
• Resources: What resources (skills, assets, finance, relationships,
technical competence, facilities) are required in order to be able to
compete?
• Environment: What external environmental factors affect the
businesses' ability to compete
• Stakeholder: Values and expectations of the stakeholders

Basic Definitions

▪ Mintzberg, 1987

Plan

Ploy Pattern

STRATEGY

Perspective​ Position

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 Basic Definitions

Plan: A series of actions from the present (past) to the future, planned in advance
(formal plan formulation).

Pattern: The way an organization makes strategic decisions, ensuring consistency

and certainty (Organizational behavior and observable trends).

Positioning: An organization positions itself in its operating and competitive

environment; and thereby positions its products/services to meet market needs
(Market and competitive position).

Perspective: Beliefs, values, or culture that an organization pursues in its operations

(Guiding ideology).

Strategy: Tactics to maintain, consolidate, achieve or improve an organization's

competitive position in the industry and market (strategic moves and competitive
actions).

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Basic Definitions

3 states of strategy

• Intended Strategy - Planning

• Emergent Strategy - Process
• Realized Strategy - Outcome

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Basic Definitions

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 1.1.2. Levels of strategy

Corporate/ Corporate-
Headquarter level
strategy

Strategic Strategic Strategic Business-

Business Business Business
level
Unit Unit Unit
strategy
(SBU) (SBU) (SBU)

Function-
Manufacturing Finance Marketing R&D HR level
strategy

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1.1.2. Levels of strategy

Corporate SBU Function​

What business
are we in? How do we
compete in How do we
each of our best support
major
each of our
businesses? strategy
business
strategies?

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1.2. Strategic management

1.2.1. Definition of strategic management

1.2.2. Benefits of strategic management
1.2.3. Basic model of strategic management
1.2.4. Schools of thought in strategic management

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 1.2.1.Definition of strategic management

• Strategic management is a strategic decision-making

process that establishes the long-term direction of an
organization.
• The core focus is to achieve a sustainable competitive
advantage.
• The process involves making key decisions for/on behalf
of the entire organization.

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1.2.1. Definition of strategic management

+ Sustainable competitive advantage

• Advantage: The superior benefits, position, or conditions
that an organization achieves.
• Competitive: In relation to one or more actual or potential
competitors.
• Sustainable: Maintained over a long period.
Sustainable Competitive Advantage is derived from
formulating and implementing a strategy aimed at adding value
for the organization and has unique attributes that are difficult
for other organizations to imitate, at the time of implementation
or for a certain period of time thereafter.
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1.2.1. Definition of strategic management

+ Important Decisions
• Be significantly related to the organization’s resources
• Have long-term impact
• Be future-oriented
• Involve multiple functions
• Take due consideration of external environment analysis

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 1.2.1. Definition of strategic management

+ Strategic Decision-Making Process

• Process: The organization systematically carries out
interrelated activities to achieve desired objectives.
• Representativeness: Carried out on behalf of the entire
organization.
• Functions: Plan, organize, lead and control
• Activities: Analysis, development, implementation,
evaluation, and control.

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1.2.2. Roles of strategic management

• Clearer strategic vision

• Greater focus on key strategic aspects
• Improved understanding of the operational or
strategic rapidly changing context

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1.2.3. Comprehensive strategic management

framework

Ebvironment Evaluation
Stratetgy development Strategy implementation
scanning and control

External Vision,
Mission
Macro environment
(general factors) Reason for Objectives
existence
and Results to
Industry environment
survival; be achieved Direction
(Operating
Aspiration. according to
enivironment)
milestones

Detailed
Policies
Internal action plan Guide for
decision- Action plan Results
Organizational making evaluation
structure, process process and
Beliefs, values, Budget adjustment
Organizational
culture, Main
Cost estimate
Resources, activities to
Core values implement a Procedures
plan
Deployment
process

Outcome

Feedback, Learning, Experience

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 Environment scanning

Monitor, evaluate, and disseminate the environment

information to key people in the organization

SWOT analysis:
Scanning opportunities and threats from the external
environment
Evaluating strengths/weaknesses of the internal environment

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Strategy development

The process of developing long-term strategic content aimed

at effectively addressing opportunities and threats from the
external environment based on the organization’s strengths
and weaknesses includes the following contents:
• Vision and mission
• Objectives
• Direction
• Policies

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Vision and Mission

• Vision: Describes the aspiration of what the

organization wants to achieve in the medium or
long term.
• Mission: The purpose or reason for the
organization's existence (who, what to do, and
what to become).

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 Objectives

- The final result of planned activities. What must be

achieved before a certain time.
- SMART:
+ Specific
+ Measurable
+ Achievable
+ Realistic
+ Time bounded

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Strategic Direction

• Corporate level (growth, stability, withdrawal)

• Business level (cost leadership, differentiation, focus)
• Functional level (styles of marketing, financial management,
production/operations, management of human resources)

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Policy

General guidance for decision making.

• Regulations on the roles of different stakeholders in the
decision-making process
• Regulations on information flow...
• Regulations for resolving disagreements...

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 Strategy Implementation

The process of putting directions and policies into

practice.

• Developing activity programs - Detailed programs of

activities or steps needed to complete specific plans.
• Budgeting - Preparing budgets for implementing activity
programs.
• Procedures - A system of steps or techniques that
sequentially describes how to perform specific tasks

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Evaluation and control

The process of monitoring organizational activities

and results to compare actual performance with
desired performance.

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1.2.4. Schools of thought

in strategic management

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 1.2.4. Ten Schools of thought
in strategic management

b. Descriptive Schools
Three groups of schools
• Entrepreneurial School
(Mintzberg )
• Cognitive School
a. Prescriptive/Normative • Learning School
Schools • Power School
• Design School • Culture School
• Planning School • Environmental School
• Positioning School
c. Configuration/Comprehensive
Schools
• Configuration School

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Safari strategy

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Prescriptive/Normative Schools

- Believes that strategic management is a systematic

process.
- Leadership plays an important role in the strategic
management process.
- Focuses mainly on strategy development.
- Strategy is the main guide for management activities.

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 Design School:

• Strategy as a process of cognitive formation

• The formation of strategy must go through a
conscious and controlled cognitive process.
• Strategy is formed from a specifically oriented
development process and goes through all stages of
cognition.
• However, the strategy formation model built by the
organization is informal.

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Strengths and weaknesses

Strengths
• Good strategy if there is a good manager with a good
vision.
• Suitable in a stable starting context.

Weaknesses
• Managers cannot do everything.
• Cannot take advantage of the ability and ideas of
employees due to not being officially involved in the
strategy development process.

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Planning School:
Strategy as a formal process

• Strategy is developed in a formal process.

• The steps of the process are strictly controlled, from
situation analysis to strategy implementation.
• Analytical and control tools are used extensively.

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 Strengths and Weaknesses

Strengths
• Clear strategic direction content
• Easy to allocate resources
• Easy to filter and evaluate strategies
• Easy to control

Weaknesses
• Strategies can be "too static", lack flexibility
• Groupthink can dominate and be risky
• Creativity in strategy development is hindered
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Positioning School:
Strategy as an analytical process

• Focuses on the content of strategies. Strategies are

built and implemented with an open mindset aimed at
improving the organization's competitiveness.
• The content of the strategy reflects the organization's
current position in the industry or market, and at the
same time shows the organization's expectations
compared to competitors.
• Focuses on building business-level strategies in the
context of its industry.

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Positioning School:
Strategy as an analytical process

• Analytical tools are often used to find the

organization's position.
• Strategy is considered generic; based on
assumptions of a competitive market; the
organization's position can be controlled by
the organization's own strategic choices;
market structure is the basis for choosing a
positioning strategy, and positioning strategy
will determine the organization's structure.

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 Strengths and weaknesses

Strengths
• Believes in strategic management as a science
• Useful in the early stages of strategy formation, data and
context are incorporated into strategic analysis

Weaknesses
• Narrow focus: Overly focused on the external environment
• Narrow context: Suitable for large, mature organizations
• Narrow expertise: Too focused on analysis, less reliance
on experience or learning process
• Narrow strategy: Not much room for creativity or unique
solutions
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Descriptive School of Thought

• Groups belonging to the descriptive school tend

to view strategy as not normative.

• Strategy is not a "bible" but rather descriptions

of activities within the content of the strategic
management process.

• Let me know if you have any other questions.

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Entrepreneurial School:
Strategy as a visionary process

• Strategy formation is a visionary process that takes place in

the minds of the founder or influential leader of the
organization.
• Emphasizes the state and process of innate thinking of the
leader (intuition, judgment, intelligence, experience, and
deep understanding).
• Leadership is the architect of strategy.

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 Strengths of the Entrepreneurial School

• Highly values a correct vision or an outstanding visionary

leader of the organization, especially in the early years of
establishment or during difficult times.
• Strategy reflects the utmost consideration in overall
decisions but is flexible in specific decisions.
• Entrepreneurial will determines the strategic capacity,
flexibility, creativity, and continuous innovation of the
organization.
• Focuses on identifying opportunities, exploring new value
sources, and innovating products and processes to achieve
the highest profitability.

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Weaknesses of the Entrepreneurial School

• Strategic consistency based on entrepreneurial will

can hinder the discovery of potential risks or
unexpected developments.
• In reality, there are not many leaders who possess
the necessary qualities to lead the management
process in this direction.
• Visionary leaders often tend to be detached from
reality.

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Cognitive School:
Strategy is a process that takes place in the mind

• Strategy is seen as a cognitive process of the leader's

mind.
• Strategy is interpreted in various forms of cognition
such as concepts, sketches, diagrams, and simulated
patterns of the mind about a strategic reality context.
• Emphasizes the analysis of how people perceive
mental patterns (what is happening in the strategist's
mind) and how strategic information is processed
(how information is processed).

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 Strengths and Weaknesses
Strengths
• Strategy as a cognitive process in the mind of the
strategist and emphasizes the creative aspect of the
manager's strategic process.

Weaknesses
• Not realistic when relying on imposed subjective
concepts.
• New ideas outside the logical thinking process are
not considered.
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Learning School:
Strategy as an emergent process

• Managers learn and adjust the overall strategic plan based

on successful and failed experiences.

• Due to the constantly changing environment, the content of

the strategy will be formed and adjusted over time to adapt
or apply accumulated knowledge.

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Strengths

• The complexity and unpredictability in strategy

development are well controlled.
• Experience and learning can be drawn from multiple
sources, not just from the leader.
• Performs well in conditions of constant change,
complexity, and uncertainty.
• Can be advantageous in organizations with a professional
management system.

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 Weaknesses

• May not be able to develop a strategy or only implement

some tactical or strategic adjustments.
• Not effective in times of crisis; no advantage in stable
conditions.
• May not have a good overall strategy due to the strategy
being a collection of small, logical steps for each specific
situation.
• Experience and learning always require costs.

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Power School:
Strategy is formed from a negotiation process

• Strategy is formed through negotiation/competition

between different power groups within the
organization and/or between the organization and
external stakeholders.

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Strengths

• Democratic
• Realistic
• Many aspects are considered through debate
• Obstacles to important changes are easily removed
• After the debate, opposing forces are controlled and
decisions are easier to accept.

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 Weaknesses

• Can cause division, waste a lot of time and money, distort

reality, and deviate significantly from appropriate decisions.
• May not be able to develop a strategy or only implement
some tactical actions.
• Overestimates the role of power in strategy formation.

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Cultural School:
Strategy is the result of collective activity

• Strategy is formed from the combined efforts of the

collective activity process.
• Different groups and departments within the organization
contribute to strategy formation, which is essentially a
collective and collaborative process.
• The formed strategy reflects the organizational culture.

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Strengths

• Emphasizes the important role of social processes, beliefs,

and values in decision-making and strategy formation.

• Resolves obstacles to strategic change and effectively

handles the influence of dominant values within the
organization.

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 Weaknesses

• Can be led by forces that support the current status quo

under the guise of current organizational culture.

• Not many suggestions for a future with major

breakthroughs.

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Environmental School:
Strategy is formed from an adaptation process

• Strategy is formed through a process of adapting to

challenges posed by the external environment.
• The external environment is the main subject, not a factor
of influence.
• The driving force lies in the environmental context, not in
the strategy planning department.

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Strengths and Weaknesses

Strengths
• The strategy has flexibility to quickly respond to
environmental changes due to the central role of the
environment in strategy formation.

Weaknesses
• In reality, aspects of the environment are often vague and
general.
• It is difficult to have a stable strategy choice for the
organization.
• Let me know if you have any other questions.
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 Configuration School:
Strategy is formed from a deep transformation
process

• Strategy is formed from the results of the organization's

transformation process, from one type of decision-making
structure to another.

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Strengths and Weaknesses

Strengths
• An organization has a specific organizational structure,
usually suitable and stable for a certain period of time and in
a specific context, thus suitable for a specific strategy.
Weaknesses
• There are many different types of organizational structures
in reality, and there is not much empirical evidence about
the relationship between an organizational structure and a
specific type of strategy.
• The creation of different organizational structures is often
subjective, and describing a structure does not necessarily
reflect the actual structure.
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1.3. Global strategy

1.3.1. Stages of strategy development in an organization

1.3.2. Definition and types of global strategy
1.3.3. Global strategic management
1.3.4. Factors promoting a global strategic vision

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 1.3.1. Stages of strategy development according to
the internationalization process of the enterprise

• Domestic strategy (single-country)

• Export strategy (exporting)
• International strategy (international)
• Global strategy (global)

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Domestic Strategy and Export Strategy

• Domestic strategy (single-country): Strategy when

operating in a single national market.

• Export strategy (exporting): Strategy operating in

one market and export activities to other national
markets are considered an extension of sales
activities of the domestic market.

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International strategy

Subsidiary
1

Subsidiary Subsidiary
Headquarter
2 3

Subsidiary
4

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 Global strategy

Subsidiary
1

Subsidiary Subsidiary
Headquarter
2 3

Subsidiary
4

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1.3.2. Defining global strategy

• Terms: global strategy, international strategy,

international business strategy...
• Global/international strategy: Is a part of the
organization's overall strategy, solving the
organization's management needs when operating
in a global/international context with many
different markets.

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Integration-Responsiveness Framework (IR Framework)

Different pressures in internationalization activities

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 Types of Global Strategy
(the Integration-Responsiveness Framework approach)

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Home Replication Strategy

• International business activities are separate and secondary
to domestic business activities.
• International business often pursues the goal of generating
additional revenue for domestic products.
• Products are designed for domestic customers; there is no
intention to adapt to foreign markets.
• Do not expect much from the knowledge gained from
overseas operations.
• Often based on export activities.

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Multidomestic strategy

• The parent company delegates a lot of autonomy to managers in

each national market, allowing them to operate independently
and pursue local adaptation capabilities.
• Managers significantly adjust products and practices to suit
local conditions.
• Managers operate independently, with little incentive to share
information and knowledge with managers elsewhere.
• The company consists of a set of loosely connected markets
with no coordination or integration of national markets.

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 Global strategy
• The parent company pursues the requirements of global
integration and unification, seeking to control the activities of
different national markets to minimize duplication and
maximize operational results, efficiency, and global learning.
• Emphasizes coordination and centralized control of R&D,
production, marketing, and after-sales service.
• Top management views the global market as one large
common market.
• The company provides standardized products and uses
standardized marketing methods.
• Main advantages: lower costs; easier to manage.

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Transnational strategy

• The company strives to achieve an ideal balance between

global strategy and multidomestic strategy.

• Combines the main advantages of multidomestic strategy

and global strategy, while minimizing their disadvantages.

• Apply the standardized model whenever possible; adapt

when necessary.

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Types of Global Strategy

by Level of Integration
• Global Strategy: Emphasizes the global
integration aspect of strategy, including global
strategy and transnational strategy.

• International Strategy: Emphasizes the local

adaptation aspect of strategy, including home
replication strategy and multidomestic strategy.

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 Three aspects of the global nature of strategy

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1.3.3. Global Strategic Management

• Global strategic management is the process of

designing a coherent, coordinated, integrated, and
unified strategy that sets the degree to which a firm
globalizes its strategic behaviors in different
countries through standardization of offerings,
configuration and coordination of activities in
different countries, and integration of competitive
moves across countries.

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1.3.4. Drivers for global strategic perspective

The extent to which a multinational firm adopts a global

strategy is determined by three broad factors:
• Macro globalizing drivers, namely globalization and
information and communications technology;
• Industry globalizing drivers, namely market drivers, cost
drivers, government drivers, and competitive drivers;
• Internal globalizing drivers, namely global orientation and
global experience.

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 Drivers for global strategic perspective

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Macro globalizing drivers

• Globalization: A multifaceted process involving changes

in economics, politics, and culture, deepening the
integration of the global economy, strengthening political
interdependence between countries, and converging values
among countries.
▪ Economic globalization
▪ Political globalization
▪ Social globalization
• Information and communication technology (ICT)

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Industry globalizing drivers

• Market globalization drivers

+ The convergence of gross national product (GNP) per
capita in the developed world is leading to a
convergence in markets sensitive to wealth and level of
income
+ Customers' tastes, perceptions, and buying behaviours
are converging globally ( Global need for a global
brand)
+ Global brand and company image lead to a global
standardization of marketing and advertising efforts
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 Industry globalizing drivers

• Cost globalization drivers

+ Benefits from global-scale economies
+ Global sourcing efficiencies
+ Low cost of raw material, low cost of labour, or low cost
of transport
• Government globalization drivers
+ Lowering trade barriers and reducing regulations
+ Improve international technical standards

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Industry globalizing drivers

• Competitive drivers
+ the increase in interactions between competitors from
different countries requires a globally integrated strategy
to monitor moves by competitors in different countries.
+ Major competitors, especially first movers, use a global
strategy to introduce customers to global products, late
movers adopt the same strategy so as to achieve
economies of scale or scope and other benefits
associated with adopting a global strategy.
+ Ability to transfer competitive advantage globally
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Internal globalizing drivers

• Global orientation
+ MNCs culture
“How can I manage an organization in which I am getting
different answers to the same question depending on
location?”
“We want one solution for the world rather than fifty-four
country solutions. We optimize at the company rather than
the country level.”
• International experience
+ Most experienced multinationals are likely to adopt a global
strategy

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 Differences in the era of globalization

• The combination of these drivers is unique to each

industry and to each multinational company.
• The level of global integration also varies among
national economies.

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