Strategic Management

Definition 1

Long-term goals!

Strategy is the determination of the basic long-term goals

of an enterprise, and the adoption of courses of action and
the allocation of resources necessary for carrying out
these goals.
Alfred D. Chandler, 1962

1
 Do you think so?

A definition of “strategy”:

The set of decisions and actions used to formulate and

implement strategies that will provide a competitively
superior fit between the organization and its environment
so as to achieve organizational goals

To be better? Faster? Of superior quality?

2
Definition 2

Be Different!

Strategy is the creation of a unique and valuable position,

involving a different set of activities.

-- Michael Porter, 1980s

3
Strategy VS Tactics

4
Operational Effectiveness VS Strategic Positioning

A B

C Strategy connects with

difference!
Japanese Model VS U.S. Model

• Apple
•
•
Microsoft
Intel
S.P.
• McDonald’s
• Starbucks
• …

We do some different
things that you’ve never
done or do the same things
in a different way.

6
Three Levels of Strategic
Management

7
 Key questions

• What is your business

(are your businesses)?

• What is your ideal

position or unique value
in this business, and what
are your competitive
edges against your rivals?

• How can you achieve or

strengthen that position?
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9
 Safari park in South Africa

10
Safari park in Chimelong

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 Key questions
CHIMELONG
• What is your business • Real estate vs. Entertainment
(are your businesses)? & Tourism (zoo, golf, etc.)

• What is your ideal • China’s first safari zoo in an

position or unique value urban area with circus,
in this business, and what restaurant, and hotel
are your competitive
edges against your rivals?
• Large land, expertise and
• How can you achieve or
know-how about animal
strengthen that position?
raising, training, powerful
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marketing and PR, etc.
 Levels of Strategy

• What is your business

(are your businesses)? Corporate Level

• What is your ideal

position in this business,
and what are your Business Level
competitive edges
against your rivals?

• How can you achieve and Functional and

strengthen that position? Operational Level
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1. Does a company really Yes, they do. Although
do these things? sometimes they are not aware
of doing strategic management.

1. Who should make Yes. It’s even useful for your

personal life, e.g. positioning
strategy? Is it useful for
your self in an organization
me?
Yes, with respect to the
possibility of passing test.
1. Is it easy to learn? No, with respect to all the
uncertainty and ambiguity it
relates to, as well as the insights
it needs.
 Role of Strategic Management

Guiding your organization

Strategy

Supply Chain
HR Mgt R&D

Marketing
Finance Operation

Management information System

Legal environment, cultural environment, government policy, etc.

15
Mission, Vision, and Business Model

16
 Vision

A vision can be defined as a mental picture for the future. A vision gives a road
map that an organization would like to meet in the reserved future. The
following are some of the characteristics of a vision;
i. A vision must be inspiring
ii. A vision must form a mental picture of the future
iii. A vision must be attainable and realistic.
iv. It should be original and unique.
v. A vision must be specific

“To provide the best solution and equipment to customer.”-WALTON

Chapter 2- slide 17
 Mission

The mission statement is about high level purpose. What are you
doing now and what's your intent over the next handful of years.
• It answer the questions:
• What are you doing?
• What do you intend to do near term?
• How does this differentiate you, if at all?
• Where should you focus your attention?

• “To grow and increase value by implementing advanced technologies, new

products and services to provide excellent solutions to satisfy customers’
requirements.”-WALTON
Chapter 2- slide 18
 Goals
Goals are statements of mileposts (মাইল নির্দে শক স্তম্ভ বা প্রস্তর) to achieve the
vision/mission. Goals describe – what you want to achieve through your
efforts.
• Goals are usually categorized into two categories:
Financial goals: These are associated to the profit from an investment or evolution in returns.
Strategic goals: These focus on the accomplishment of the reasonable benefit in the business.
A goal must be original and unique and it should raise a long term thinking.
• Example of Goals:
• Improve profitability
• Increase volume
• Stability

“To achieve market leadership, profitability, good corporate citizenship and a

sustainable growth.”-WALTON
Chapter 2- slide 19
 Objectives

Objective is a time-sensitive statement to achieve the goals. We

defined it in measurable terms.
Examples:
• $15k net profit as % of the sale in a year
• $ 10k net profit as % of investment in a year

Chapter 2- slide 20
 Strategies

Strategies are long term implementation plans to achieve the goals

and objectives.
• Example strategic options like:
1. Increase Market (sale in customers),
2. New Product (like product enhancement, product line extension,
and products at different quality levels) and
3. New distribution channel

Chapter 2- slide 21
 Tactics

• Tactics are short term implementation or action plan to deliver

the long-term strategy. A grass-root level action plans are defined
to ensure daily activities are in line with achieving the relevant
strategy(s).
• Example: Tactics like a sales staff member are expected to do 10
social media activity daily, could be an example to deliver a long-
term strategy

Chapter 2- slide 22
 SMART GOALS
• Specific: It is entirely job-related. In the above example, “sales” and
“investment” are related to the job.

• Measurable: Objectives are always defined in measurable terms. We can

measure the above objectives using a target of $ 10k and $ 15k profit.

• Attainable: Objectives should be attainable within the provided environment

and resources.

• Relevant: Objectives should be aligned with goals. These goals are further
aligned with the mission and vision of the organization.

• Time-Bounded: Objectives should be achievable within the provided time period

and in our example, we identified time ‘a year’.
Chapter 2- slide 23
Business Model

24
 Please list out the similarities and differences
between Starbucks’s business model and Luckin’s.

25
 Business Model

Business model design includes the

modeling and description of a
company's:

• value propositions positioning

• target customer segments
• distribution channels
• customer relationships
• value configurations Competitive
• core capabilities edge
• partner network
• cost structure
• revenue model
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26
26
 The Strategic Management Process

Analyze
Identify OT
environment
Identify mission Formulate
and vision strategies
Analyze
Identify SW
organization

Implement
strategies

Feedback

27
External Environment &
Internal Organization

28
1. The essence of an industry analysis

2929
 Compete
Relations among dynamics

the concepts
Corporation Competing or
Level complementary

5 generic
strategies
and brand
positioning
PEST Value Chain
Compete in an existing
5 Forces VRIO market
Business
Blue ocean
Level strategy and
External Internal disruptive
analysis analysis innovation
Create new market
 MINI CASE:
The Booming Car Market
in Myanmar

31
2011 “aged” Japanese car

32
2012 Chinese QQ came in!

33
 Sorts of players were attracted to this market...

German luxury cars QQ from China Tata Nano from India

Used Japanese cars New Japanese cars

34
2013 “younger” Japanese car

35
Why?
• Competition-rivals
• Demand-customers, economic conditions
• Spare parts and maintenance – suppliers
………
Strategists use a few frameworks to analyze the attractiveness of an
industry/market…

36
3. Five-forces and PEST

37
 CASE 2

Chinese Fireworks Industry

38
39
1. Apply Porter’s Five-forces Model

40
Five-forces Model

41
2. Is the fireworks industry a ‘sunset’ industry?

42
PEST Model

43
 Industry Structure!

Industry structure drives competition, not

whether an industry is emerging or mature,
high-tech or low-tech, regulated or
unregulated.
-- Michael E. Porter
44
4. Internal Organization: Core
Competence

45
Challenge: How can we know what resources
and capabilities of our organization are
valuable?

46
CASE 3

Sany

47
48
1. Why did Sany change its major business from welding
materials to construction machines?

49
2. What resources did Sany have when they made
the change in Question 1?

50
3. In Chinese market, what were the competitive
advantages of Sany and Putzmeister respectively?

51
4. How did Sany win the competition against
Putzmeister in Chinese market?

52
 IPA Matrix of Putzmeister in Europe

Quality
Economical
efficiency Delivery in time

Professional advice
Closeness to Customers
Flexibility Service
Price
Importance to
customers

“Made in
Germany”
Patent

Advertisement

Competitive advantage
against rivals
Importance-Performance Analysis of Putzmeister in China

Delivery in time Closeness to Customers

Economical
efficiency Service
Price Quality
Flexibility
Professional advice

Advertisement
Importance to
customers

Patent
“Made in
Germany”

Competitive advantage
against rivals
5. After the acquisition, what could be the
potential challenges facing Sany when it entered
the global market?

55
 VRIO Model

Competitiveness Triangle
https://www.business-to-you.com/vrio-from-firm-resources-to-competitive-advantage/

56
1. Can Guanxi be a core competence?

57
 Session III
Business Level Strategy (A)
5 Generic Strategies
1. Tasks of the business level strategy

59
 To form a competitive strategy

External
Environment
/Industry Analysis
Identify Strategic
mission/vision decision
Internal Resource
Evaluation
- What: identify the core
values
- Whom: segmentation
- How: identify the
capabilities to be created or
strengthened, and form
the business model

60
What can we offer to attract customers?

Be a dominant High price, but

player in a small different things
niche • Apple
• Evian
• Flexi
• BMW
• AfterShokz
• 7-Eleven
• …
• …

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Porter’s Three Generic Strategies

62
 1 Corporates in big
Similar things, Overall cost leadership
but lower price industries

✚ 2 Corporates in big
High price, but Differentiation industries
different things

3
✚ Focusing + Overall SMEs in niche markets
cost leadership
Focusing on a small
market to avoid ✚
4
Focusing +
competition SMEs in niche markets
differentiation

5
Best-cost provider
Actually, you got five options.
63
2. Focusing + overall cost leadership

64
CASE 4

Galanz

65
66
1. Please summarize the strategy of Galanz.

67
focusing + low-cost

68
2. How did Galanz achieve its low-cost competitive advantage?

69
 • Second hand production line
Infrastructure
• Limited management levels

HR • Modest salary
Management • Few training and personnel development

• Self-made magnetron
R&D
• Industrial design Value chain
activities of Galanz
• Free production line from components
Procurement
suppliers
Cost-saving efforts in
- Industry - Scale! - Free - Alliance - Few every corner of the
cluster - 24×365 production with service
operation line distributors
company.
- Price cut
- Few AD,
some PR

Inbound LOG Operation Marketing Outbound LOG Service

70
The Two Major Avenues for Achieving a Cost
Advantage

• Skipping distributors
• Eliminating unnecessary
work steps or low-value
added activities

1 2
71
3. What are the pros and cons of Galanz’ strategy?

72
 Risk 1 resulted from focusing: competition from giants

market share of China’s online microwave market

Others
Xiaomi
Toshiba 3%
2%
Panasonic 4%
4%

Midea
49%
Galanz
38%
Average
Price
Midea 389
Galanz 407
Panasonic 1597
Toshiba 2412
Xiaomi 375

Data source: https://zhuanlan.zhihu.com/p/346487716 73

Risk 2 resulted from focusing: limited growth potential

Billion yuan
180
161
160
140
120
100
80
Headquartered in
60 46 Zhuhai, China, GREE
40 is the world’s largest
20 residential air-
6.8 7.2
conditioner maker.
0
2001 2012
Galanz Gree
74
Risk 3 resulted from low-cost: little brand premium

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3. Focusing + differentiation

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CASE 5

Fotile

77
1. Why did Mao found Fotile and select range hoods as its
business’s product line?

78
2. How does Fotile’s business strategy compare to that of
other local range hood producers? How do you explain
Fotile’s selection of this strategy?

79
3. How do you explain the success of Fotile’s business
strategy?

80
Chinese kitchens usually
produce a lot of fumes,
which pervades the small
space.
Little fume is generated
during the cooking process
in a typical western kitchen.
2. How did Fotile achieve a differentiated competitive
advantage?

83
 • Advanced facilities
Infrastructure
• Democratic corporate culture

HR • Well paid and trained talents, e. g.,

Management engineers, designers

• State-of-the-art technology and innovative

R&D
industrial design Value chain
activities of Fotile
• High-quality material
Procurement

Value-added efforts in
- Industry - No OEM, -Large and - Self- - Excellent every corner of the
cluster producing competitiv owned after-sales
everything e sales sales team service
company.
in-house team
- Ad,
marketing
campaigns

Inbound LOG Operation Marketing Outbound LOG Service

84
4. What are the potential limitations of Fotile’s business
strategy? What solutions would you propose to address these
limitations?

85
 Risk 1 ：limited growth potential

Differentiated range hood Differentiated dish washer

86
 Risk 2: it’s hard to copy Fotile’s success in the
international market
Difficulties Fotile encountered when exploring the U.S. market

87 数据来源：洛杉矶市场实地探访
5. Can Galanz and Fotile exchange strategy with each other?

88
Same brand, similar price, similar size... Different brand, 5 times price, double airflow...

Best-selling microwave in China Best-selling hood in China

- Brand: Galanz - Brand: Robam (Chinese brand)

- Price: RMB 329 (USD 52.2) - Price: RMB 4999 (USD 793)
- Size:452*365*262 (mm) - Airflow replacement: 21 m3/min

Best-selling microwave in the U.S. Best-selling hood in the U.S.

- Brand: Galanz - Brand: Broan-NuTone (U.S. brand)

- Price: RMB 440 (USD 69.8) - Price: RMB 963 (USD 153)
- Size: 455*351*262 (mm) - Airflow replacement: 10.5 m3/min
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 Brand positioning!
The battlefield is in your customers’ mind

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Al Ries and Jack Trout

91
How many brands you can remember in
a certain product category?

• Juice
• Mineral water

• no
Usually Instant 7
• Distilled spirit (白酒)
morenoodles
• T-shirt
than
• Super market
…

92
93
You are competing with your rivals in your
customer’s mind!

94
Strategic positioning is to establish a position
in your customer’s mind and stay there!

95
Features of a consumer’s “mind”

• Very limited space

• Hate complexities
• Bandwagon effects
• Resist to change

96
 Rule No.1: to be outstanding or
different
Limited space • The first Emperor and second emperor
Rule No.2: to be as simple as possible
• BMW = driving
Hate complexities • Pepsi = youth

Rule No.3: Provide proofs of popularity

• Since 1896…
Bandwagon Effects • Best selling in this country…
• Global leader of …
• Authentic fomula

Rule No.4: Strengthen an existing

Resistance to change advantage rather than create a new one
• OPPO: always music and photo

97
People always try to categorize a comprehensive market and remember the most
significant and unique value of each important brand within the category .

Founded by Karl Benz, inventor of the automobile.

The best car in the world. Big and comfortable.

Ultimate driving machine. Smaller and better

driving experience.

Why Volvo?
Safest car in the world. Best for family.

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 CASE 6

Himalaya

100
101
1. Which brands should be considered as the major competitors
of Himalaya? Why?

102
103
2. According to the surveys, what functional benefit do you think should
be the key customer value for Himalaya to build its brand position on?

104
105
106
3. If Himalaya wants to make a more confident decision on its brand
positioning, what information do you think needs to be added?

107
Individual Assignment, Topic A:

Create a brand positioning for your country/city as a tourism

destination.

108
 5 steps to create a brand position
1. Category: Ask your customers how they categorize the market, which category
they put you in, and who your major competitors are in this category
2. Concerns: Ask your customer, in this category, what their most significant
concerns are and how they evaluate your brand and your rivals’ in each concern.
3. Create a position: find out a brand position based on a perspective (concern) that
you outperform all the rivals in this category.
4. Concrete proofs: provide concrete proofs supporting this position
5. Communicate: repeatedly tell your customers your position and the proofs

109
 Session V
Business Level Strategy (C)
Disruptive Innovation
 When technology meets market
high overall
performance
II I

Continuous innovation Revolutionary innovation

(smart phone) (electrolysis of aluminum)

high cost low cost

III Backup technology

(3D printing)
Disruptive innovation
(digital camera)
IV
low overall
performance
 A disruptive innovation is an
innovation that helps create a new
market and value network, and
eventually disrupts an existing market
and value network (over a few years or
decades), displacing an earlier
technology.

-- The Innovator’s Dilemma：When

New Technologies Cause Great Firm
to Fail
Clayton Christensen

112
CASE 6

Netflix

113
1. Initially, what were the advantages and disadvantages of
Netflix’s DVD-by-mail business compared with Blockbuster’s
video stores?

114
115
116
2. What changes in the environment helped Netflix to win
the contest against Blockbuster?

117
3. Initially, what were the advantages and disadvantages of
digital delivery, downloading/streaming, compared with
the DVD-by-mail service?

118
4. What changes in the environment helped the digital
delivery become a disruptive innovation against DVD-by-
mail?

119
5. What lessons can Netflix learn from Blockbuster’s failure
when making decisions in the digital downloading/streaming
competition?

120
121
 Julian Birkinshaw, How Incumbents
Survive and Thrive, 2022
122
123
124
Why didn’t Kodak and Fuji react effectively to the
digital transformation?

125
Market-creating innovation: targeting nonconsumption

The story of Indomie in Nigeria

In 1988, when the Indonesia instant noodle brand Indomie came to
Nigeria, it faced with two major problems. First, the country is too poor,
and the income of each person is 2 US dollars per day; Second, nobody
knew what instant noodle was. "At first, many people thought that we
were selling bugs." But Indomie believed that it might be a good
opportunity to provide convenient food with reasonable price to feed a
country with a population of 100 million.
In order to turn instant noodles from an expensive imported snack food
into an affordable national staple, it is necessary to invest in local
factories to significantly reduce costs. But there was nothing available in
Nigeria.

126
Where there is a will, there is a way
Indomie has been in Nigeria since the late 1980s. It has almost single-handedly turned a country that has never seen
instant noodles into the largest instant noodle market in Africa, with an annual sales of 2 billion packs, of which Indomie
accounts for 74%. The total revenue of the company's operations in Nigeria exceeds US$1 billion.

High cost for importing Construct 13 factories

Lack of power Build its own power station

No clean water build sewage treatment plant

Lack of qualified Build a school to train sales

distributing agents people and agent

Lack of reliable logistic 1000 trucks and warehouses

service provider all over the country
127
1. Blue Ocean Strategy

128
 Cost Leadership VS Product Differentiation
Can a firm pursue both targets simultaneously?
No Yes
• •All efforts leads to a • firms can do both
different value relates to because some bases
a higher cost of differentiation also
• use of structure, lead themselves to
management control, low cost
and compensation
• structure, controls, &
policies are opposites
policies are not opposites
 Red Ocean Blue Ocean
- A market with widely accepted - Newly defined market
definition - Almost no competition
- Fierce and bloody competition - Special value with
similar or even lower
- Value-cost trade-off
overall cost
What is blue ocean strategy?

131
2 ways to create a new market

Innovative
business model

132
132
 Value Curve
(customer perceived value)

Competitor Y

focal firm

Competitor X

Value Value Value Value Value Value Value Value

A B C D E F G H
133
 Take the hotel industry as an example

Red ocean 1: luxury hotels Red ocean 2: modest hotels

134
Hotel Industry (early 2000’s, China)

luxury hotels Modest hotels

135 (zhao dai suo)
 Hotel Industry (early 2000’s, China)

Starred hotel

costly efforts

economic
hotel

Hostels
(zhao dai suo)

Outlook Room Lobby Facilities Bedding Cleanliness Decoration Location

size
136
 Cost structure of Homeinn

Cost Percentage
Rental 30.68%
Labor 17.76%
Depreciation 10.83%
Consumable supplies, food,
6.63%
and beverage
Others 10.58%
Gross profit

137
Homeinn
Since 2002
“+ − × ÷”to create a blue ocean

Eliminate Raise

Luxury facilities, like Cleanliness, bedding,

swimming pool, gym, location, etc.
meeting room, etc.

Reduce Create

Lobby, restaurant, ?
decoration, room size,
etc.

139
After 10 to 15 years, a blue ocean will
finally become a red ocean. Can we
always stay “blue”?
No. But you can create new blue
oceans.

140
 Designed by the Institute of Acoustics,
Tsinghua University. Reducing noise by
up to 60 decibel.

141
New blue ocean created by the
Orange Hotel

Eliminate Raise

Luxury facilities, like Cleanliness, bedding,

swimming pool, gym, location, etc.
meeting room, etc.

Reduce Create

Lobby, restaurant, QUIET!

decoration, room size,
etc.

142
 Value curve of the Orange Hotel

starred hotel

Orange Hotel

economic
hotel

hostels
(zhao dai suo)

Outlook Room Lobby Facilities Bedding Cleanliness Quiet Location

size
143
Principle of creating a blue ocean
Be extremely strong at 1 or 2 attributes that your target group
are extremely concerned about, be good at those necessary,
and be modest at the rest that they don’t really care very much.

144
 Six paths to find a blue ocean opportunity

Data source:
https://www.blueoceanstrategy.com/tools/six-
paths-framework/
145
 Can we combine the best parts of
these two alternative industries
together and eliminate the else?

Why do people choose circus? Why do people choose theaters and shows?
- For fun and thrills - For artistry, music, dance and story line
146
2. Competitive Rivalry

147147
Should Hong Kong close the Ocean Park to embrace
Disneyland?

Ocean Park Hong Kong Hong Kong Disneyland

 Questions to Ocean Park

1. To be or not to be?

2. Strategic or tactic?
Mr. Dong Jianhua Zeman

3. Outdo or complement?

149
 Competitive Rivalry
competitor-focused analysis

What type of competitors you are?

High

HI II I

Market Commonality
LO

III IV

Low
Low LO HI High
Resources Similarity
150
Walmart Target

151
Walmart Amazon.com

152
Walmart Amazon.com

153
Walmart Vanguard

154
What should the Hong Kong government do to the Ocean
Park when the landing of Disneyland was confirmed?

155
The smartest competition

156
3. Competitive Dynamics

157157
Companies competing in the same industry behavior in similar
ways, because they are facing the same industry life cycle.

158
 Slow-cycle market

In the slow-cycle markets,

companies are able to
produce a competitive
advantage with unique and
proprietary capabilities.
This advantage is shielded
by patents, copyrights,
brand reputation, etc.

Example: pharmaceutical
industry

159
 Fast-cycle market
•In the slow-cycle markets, companies are
able to produce a competitive advantage
with unique and proprietary capabilities.
This advantage is shielded by patents,
copyrights, brand reputation, etc.

•Example: pharmaceutical industry

160
 Standard-cycle market

Partially shielded

Example: FMCG and

retailing industry

161
 Session VII
Diversification

162
 Case 11
Yunnan Baiyao

163
164
 YB Bondage
YB toothpaste

YB Plaster

165
Evaluate the pros and cons of each product/market diversification move. If
10 points means “recommend without reservation”, and 0 means “never
recommend”, how many points you’ll give to this project?
Group 1: the industrialization of herbal resources
Group 2: the 3M project (transdermal products)
Group 3: the healthcare department (toothpaste)
Group 4: internationalization

166
 Pros Cons
1. Potentially new growth. Product 1. All the efforts are costly
life cycle: Many of YB’s products 2. YB is already vertically integrated and
have reached or are reaching product-diversified, and it has been
maturity trying to internationalize. In addition,
2. YB’ s capability building: In the the company achieved these changes
past several years, YB has in a very short time. Further
substantially restructured its diversification will spread the firm
organization too thin.
3. YB’s core competence: Even 3. Threat of losing focus on its core
though YB has been highly businesses and existing markets
diversified, all diversified 4. Threat of brand dilution
products hinge on its core 5. Constraints in resources and
competence. Capabilities
4. Enhance YB’s reputation in China 6. If market diversification is to be
pursued, YB will face a drastically
different environment
2. Does it make more sense to focus market diversification
(geographically) or product diversification or both?

168
Ansoff Matrix by Igor Ansoff, 1960

169
 Strategy Strength Weakness

A. Product 1. Stable profit 1. Added corporate

diversify only 2. Stable Growth: product overhead costs:
life cycle 2. Integration costs:
3. Economies of scope 3. Lack of understanding of
and/or economies of scale too many businesses

B. Market 1. Stable profit 1. Entry barrier:

diversification 2. Economies of scale 2. Added costs.
(geographicall 3 . Easy to duplicate 3. Resource strain:
y expanding) 4. Growth opportunity experience, HR, etc.
only 4. distribution channels
5. High risk

A+B A+B A+B

170
What’s meaning of “herbal resource
industrialization”?

Integration/Vertical Diversification

Backward Forward

171
What’s meaning of the expanding towards
“healthcare products” ?

Horizontal Diversification
Other Current Other
Businesses Businesses Businesses

No Unrelated Related Many

Links Links

172
 Product/Market Growth Strategic Choice

Business/Products/Serv Market/Customer Growth

ice Growth Existing New

Existing Market penetration Market development

Modified / Improved Product diversification

New, but related Horizontal diversification

New and unrelated Horizontal unrelated diversification

173
 Value of diversification

Three Criteria

1) There must be some economy of scope

2) The focal firm must have a cost advantage over outside equity
holders in exploiting any economies of scope

3) Market potential of the new business field is considerable

174
 Economy of Scope

Four Types
Operational

Financial

Anticompetitive

Managerialism

175
Question 4: Will this new product be successful?

Yang Yuan Qin, an oil control shampoo.

176
 YB powders
and sprays

Hemostasis
(to stop
bleeding)
YB
YB bondage toothpaste

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BCG Matrix – to evaluate your
business units

179
 Session VIII
Globalization

180
CASE 9

Walton

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1. Why does Walton need to explore the international market?

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 Basic Benefits of Internationalization

Incentives Benefits
Extend a product‘s life Increased Market Size
cycle
Economies of scale
Gain easier access to raw and learning
materials
Location advantages
Integrate operations at a
global scale An image of export-
oriented brand
Better use rapidly
developing technologies

Gain access to new Scharf, a German leading company in the coal

mining transportation vehicle industry, successfully
market’s consumers extended it products’ life in the global market.
2. How many patterns of internationalization in terms of entry
mode do you know?

184
 Stages of the Uppsala Model

Overseas
For many EMNCs, OEM
business is a desirable start Overseas production
point of internationalization. subsidiaries
Export activities
Original Engineering via agent
Manufacture
No regular export
activities

At the start, there is no regular export. Business is concentrated in the home market. Then export begins
via independent representatives (agents), later through sales subsidiary, and eventually foreign
manufacturing may follow at the end (Johanson & Vahlne 1977)
3. What is Walton’s internationalization pattern and location
choice? Why did Walton take such a pattern and choose these
locations?

186
psychic distance

Firms prefer entering new markets

with lower psychic distance. Psychic
distance is defined in terms of
factors such as differences in
language, culture, political systems,
and others that disturb the flow of
information between the firm and
the market. Thus, firms start
internationalization by going to those
markets where the perceived market
uncertainty is relatively low
(Johanson & Vahlne 1977,1990).

187
Where are your “comfort zones”?

188
189
However, you are facing a different environment, more or less,
whenever you enter another country’s market.

190
What are the possible adjustments that Walton need to make
with its marketing mix when entering the international market?

191
 What are the differences Walton encounters when
entering the foreign markets?

Domestic market International Market

• Acceptable quality • More concern on quality

Product • Careful and comprehensive service • Less qualified service

• Wide range of price due to the • Competitive price, targeting

Price wide range of product lines price-senstive families only

• Innovative and comprehensive • Little budget, public relationship

Promotion strategy and big investment only

• Extensive distribution channels • Local traders and retail stores.

Place Delegate risk to third parties.

192
CASE 10

Feihe

194
1. Why Chinese dairy firms, including Feihe, seek for international
investment opportunities? Are these incentives similar with those
driving Walton?

195
 Basic Benefits of Internationalization

Incentives Benefits
Extend a product‘s life Increased Market Size
cycle
Economies of scale
Gain easier access to raw and learning
materials
Location advantages
Integrate operations at a
global scale An image of ”using
high quality raw
Better use rapidly material”
developing technologies

Gain access to new

market’s consumers
2. For Feihe, why Canada?

197
 Why did Feihe choose Canada as the investment
destination?

Advantages Disadvantages

Political

Economic

Social

Technological

198
3. What investment mode would be most suitable for Feihe to
when investing in Canada? Greenfield, joint venture, or
acquisition?

199
200
 Typical challenges facing a Huawei overseas manager
• Legal issues A real story in Huawei’s Chad Branch…
• Living custom
• Communication/Language
• Value
• Career experience
• Working Habits
• Religions
• View of job
• Education
• History
• Life-style
• Lack of resource
• Gangsters sometimes
• …
 Session IX
Strategy Execution

202
 Case 11
Mediolamlum Bank
- a role play case

203
 Organizational
Choose the capabilities for
right people strategy
for executing execution
the strategy

Strategy
Exercise strong supportive
leadership to organizational
push the staff structure
The Action Agenda
forward
for Executing
Strategy Allocate
Corporate sufficient
culture that resouces to the
promotes S.E.
good S.E.
Rewards and Adopt best
incentives directly practice process
to the strategic that drive
achievement continuous
improvement

204
 Session X
Strategic Entrepreneurship & Strategic
Leadership

221
1. Strategic Entrepreneurship
 Case 12
Candi&Co South Africa

223
224
1. What was the opportunity Thurston found in the South African
hair salon industry? Why was the demand underlying this
opportunity not perfectly satisfied previously?

225
 Opportunity

Lack of high-quality ethnic hair • Growing black middle-class

service provider • Embracing natural ethnic hair

supply demand

The lack of options offered by hair care producers reflected a culture that shunned
natural black hair for decades. There were few, if any, products that nurtured
natural black hair, but countless options that offered to permanently alter it.
Lynsey Chutel

226
2. What were the resources Thurston could access when she
was planning to create a business?

227
 A large group of existing stylists
who don’t know how to
formalize their business

Candice Thurston Ian Fuhr

• Deep understanding and insights to the ethnic • Experience and expertise in this industry
hair industry • Successful business model
• Marketing skills learned from P&G and MTN • Strong organizational culture of Sorbet
• Social network, e.g., relationship with P&G • Financial resource

228
Were there any gaps between the opportunity and the
existing resources? What did she do to bridge the gaps?

229
 Lack of well-trained stylists
and qualified franchisee? Ok,
let’s found a school and a
training program!

230
Timmons Model of Entrepreneurship

The entrepreneur searches for an

opportunity, and on finding it,
shapes the opportunity into a high-
potential venture by drawing up a
team and gathering the required
resources to start a business that
capitalizes on the opportunity. the
entrepreneur risks his or her career,
personal cash flow and net worth.

231 数据来源：https://kimberlymoises.wordpress.com/2012/08/28/timmons-model-
of-the-entrepreneurial-process/
 Strategic Entrepreneurship

Strategic entrepreneurship is taking entrepreneurial action using a strategic

perspective, a combination of two concepts: entrepreneurship and strategic
management.

• Entrepreneurship: Seeking for opportunities with

innovation

• Strategic Management: vision, mission, and planning on

systematic analysis

232
5. Conduct an analysis of the South African hair salon industry,
which includes Candi&Co, using Porter’s Five Forces framework.

234
235
To sell or not to sell? What’s your suggestion to Thurston?
Why?

236
Pros

Cons

237
 2. Strategic Leadership

The ability to anticipate, envision, maintain flexibility, and empower

others to create strategic changes, as necessary.
Strategic change is change brought about as a result of selecting and
implementing a firm’s strategies.
 Kodak VS Arri: Leadership behind strategic change

“In 2001, Kodak was No. 2 in US digital camera sales (behind Sony), "In 2001, Klaus bought a Canon IXY Digital 2.11 at the supermarket and said
but lost $60 per camera sold, and there were disputes among to everyone, "This is the future". People asked him how far the future was?
employees in its digital and film divisions. Kodak’s film business, "10 years”, said he.
which enjoys high margins, declined 18 percent in 2005. The In September 2009, top leaders of ARRI announced their decision of betting
combination of these two factors resulted in disappointing overall up the digital camera business. The orders for the film machine disappeared
profits." within 5 days, and for the next 10 months, the whole company did not have
a single penny of sales revenue. Until the summer of 2010, the digital
machine ALEXA began to be sold, and the company was reborn.

240
 Case 12
Juchheim (Yūhaimu)

241
1. What is the primary issue facing Juchheim? Why has the issue
arisen? What criteria must Takeshi consider in making his decision?

242
patriarchal primogeniture

243
2. What are the constraints and opportunities surrounding the
expansion and the succession of Hideo?

244
 Confections in different retailing channels

Convenience store supermarkets department store

245
Retailing Industry in Japan
Peak year of Japan’s working age population

supermarket

convenience store
department store
by mail

246
Opportunity 1 Opportunity 2

• Healthier products: less • International expansion

sugar, less calories, no
food additives
• New products over the
the traditional ones

247
3. Is exploring the international market Juchheim’s only choice to
maintain or increase its competitiveness in the market?

248
4. What are Takeshi’s options? What are the advantages and
disadvantages of each one?

249
Option 1 Option 2 Option 3 Option 4

Hideo becomes the CEO of Takeshi remains as leader of Hideo takes control of the Juchheim creates a second
the company after Takeshi’s the company until they company and Takao company: Juchheim
retirement, and runs the have created a stable oversees the international International. Hideo
entire operation business abroad and the expansion strategy of the oversees Juchheim in Japan,
firm has gained enough company while Takao take control of
knowledge and experience Juchheim International
in international market

Pros: Pros: Pros: Pros:

• Following tradition • Maintain the stability of • The company benefited • The succession plan will
• Hideo is an experienced the company’s culture from both Hideo’s remain.
professional experience and Takao’s • Both the brothers could
international vision. contribute to the
company’s growth.
Cons: Cons: Cons: Cons:
• Hideo and Takeshi lack • Risk of missing the best • Risk of the potential • Risk of the potential
experience in timing of succession and conflicts between the conflicts between the
international expansion a strategic change brothers. brothers.

250