Global Strategic Analyses: Frameworks and Approaches


9 Δεκ 2012 (πριν από 8 χρόνια και 7 μήνες)

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Global Strategic Analyses:

Frameworks and Approaches

How do firms identify their core
competencies and competitive

“With whom and how does our
company compete?”

In an older era, a company’s competition was
relatively easy to define: firms with similar
performance and capabilities at a national level.

Now, with technological innovations in the way of
transportation and communications, competitive
environments have expanded greatly.

Our challenge will be developing processes to
identify global competitors and to be prudent in
keeping up with the times

Keep you thumb on the pulse of your industry

Seven Theoretical Perspectives

Resource Based View

Core Competence

Competitive Advantage of Nations

Strategic Groups (I
O Economics)

Cognitive Communities

Network Approaches

Competing for the Future

Resource Based View

RBV (resource based view) comes from
Michael Porter’s five forces model

The firm is a collection of capabilities

Based on the idea of economic rent

Economic rent, or Economic Value Added (EVA), is
what companies earn over and above the
company’s cost of capital

In other words, it’s the company’s competitive

What makes a core competency?

Provides access to a wide variety of markets.

Contributes to perceived customer benefits of
the end product.

Difficult for competitors to imitate.

Real Life Examples of Core


Southwest Airlines



Determinants of National Advantage

1. Factor Conditions

2. Demand Conditions

3. Related and Supporting Industries

4. Firm Strategy, Structure, and Rivalry

Factor Conditions

What is a nation’s quantity and quality of
production factors?

Human resources

Physical resources

Advanced factors (knowledge, capital,

Demand Conditions

Demand for products greater than in other

Domestic firms can benefit from the presence
of demanding customers.

Needs of domestic buyers anticipate the
needs of foreign buyers.

Related and Supporting Industries

Presence of supporting industries allows
organizations to coordinate a strategy.

What are some examples?

Firm Strategy, Structure, and Rivalry

National performance correlates with
strategies and structure of firms in a particular

Domestic competition is usually more intense
and has more effect than foreign competition.

Domestic Competition

Can it lead to competitive advantage??

Rivals push for innovation

Improve quality and characteristics of their products

Firms expand into foreign market

Lobby their govt. to take actions that benefit the
industry as a whole

Open foreign markets

Subsidies, tax breaks, direct investment

Competition and Strategic Groups

Similar firms, same industry

similar competitive

Similar performance levels

>>Structure of industry
> strategic behavior of firms

Automotive industry study by

and Garcia


11 strategic groups based on 6 factors : size,
market share, product line, technological sophistication,
organizational capability and labor costs

Major US (Ford , GM), Sec. (Chrysler), Major
Japanese (Toyota , Nissan) Secondary US( Honda,

Small (Hyundai, Daewoo ); Sports (Ferrari ,
) etc

Competition and Strategic Groups


US and Japanese medium and large groups
compete in some but not all markets

Sports cars
> carved a niche and do not face
competition from outside their strategic group.

Strategic Groups are useful for
determining relative performance and
appropriateness of a firm’s strategy!!

Competition and Strategic Groups

Another approach to indentify groups

Psychology and focuses on cognitive processes of

Their thought regarding firms

Managers develop a mental map of firms position

trial and error, observation and
interaction with others in industry

This common set of belief about the nature of
industry results in ‘Cognitive community’


Scottish knitwear industry

Border towns of


high quality by combining yarns of different colors
on knitting machine

Opposite to the cut
sew technique used
elsewhere, though cheaper, lacks in quality

Competition and Strategic Groups

Scottish knitwear industry competitors groups based on

financial and economic assets, public or private,
output volume


Also based on network of relationships with other
firms and managers social networks

Each of these perspectives provide a different view of
the strategic dynamics within the Scottish knitwear

Strategic Groups & Cognitive approach

Strategic group approach

begins at industry level and
work downwards and groups together the firms that
appears similar using a set of criteria

Cognitive approach

begins at firm level and moves
upwards using managers mental models to identify firms
whose managers have similar thoughts regarding
industry structure and rivalries


Managers are not likely to discuss openly with
competitors regarding market competitive dynamics

Lack statistical modeling skills


Board meetings, conferences, trade association


Networks in Cooperation
and Competition

Difficult for a single firm to succeed alone

Global Firms are creating alliance and joint ventures

Often created with current and potential competition

Gaining of Knowledge

Compete more effectively

Network Approaches to Studying

The idea of asking who competes with whom and how, recently new idea

Managers can build a more accurate picture of the competition

At the same time can build upon the idea of how companies within a industry
can collaborate

Network strategy is used in the forming of alliances, join ventures, equity
sharing, collaborative research pacts

Allow the forming of new skills, leverage, or to compensate for weaknesses

Strategic networks can include

Suppliers, Competitors, and Customers

Gaining of new markets, new technology, or benefits

from economies of scale

Sharing of Risk

While keeping certain resources separate and secret

Examples of Cooperation

Industries include

Auto, Movie, Textile, Biotechnology, Mining, Energy

Firms frequently share parts, product designs, and production facilities

Mitsubishi Eclipse and Plymouth Laser

Dodge Viper and Mitsubishi 30000GT


and Mitsubishi; Ford and Mazda; GM, Isuzu, and Suzuki

Cooperation in Pharmaceuticals

Biotech start
ups and Major Pharmaceuticals

Gain access to capital, production, distribution

Gain access to new technologies and innovation

Different Competencies

Merck and Johnson & Johnson Alliance

R&D and OTC Marketing


to OTC

Possible Limitations to Networks

Constraints if Environment suddenly Changes

Alliance can lead to not being able to adapt

Significant Cost

One partner may take advantage of the other


The correct
lliance should outweigh these costs

Partners can provide clues about the competition and their intent

Competing in the Future

Firms Successful in the Future

Compete for the opportunity to define the structure

In Nascent Markets (New Markets) must compete

for opportunity share and not simply market share

A single firm is unlikely to succeed alone

Coalitions and Joint Ventures must be created

10 to 15 Years

Time develop Leadership in new industry

Competition in New Markets

Develops in three stages

First Stage

Identify the opportunities available

Second Stage

Firms compete to shape the direction of industry development


of necessary competencies

Testing of product and services

Attracting partners

Final Stage

Firms will compete for market position and market share

Questions of technology platforms, products, and distribution

channels have been resolved

Weaknesses to Developing new Markets

Can shift attention away from existing markets

Time Lag

Risk of focusing large amounts of time

10 to 15 years to dominate new market

Can miss what opportunities exist in current

developed market

Dominating a new market can have an enormous payoff, but there are risk

“Each perspective contains elements of the other, and all must
be considered in order to respond effectively to the demands
of the globally competitive environment”