WHY DO STRATEGIC MANAGEMENT PRACTICES DIFFER?

2. WHY DO STRATEGIC MANAGEMENT PRACTICES DIFFER? • National context - includes national culture, the country’s available labor and other natural resources

4. SOCIAL INSTITUTIONS • Include the family, educational, economic, and the political and legal systems • Closely linked with national and business culture

5. THREE TYPES OF ISOMORPHISM • Coercive • Mimetic • Normative

6. NATIONAL AND BUSINESS CULTURE Characteristics of national and business culture influence strategic decision making both directly and indirectly

7. THE NATIONAL CONTEXT AND KEY BUSINESS PRACTICES • Explanations for the existence of companies • Capital markets/sources of funds • Government policies/legislation • Labor markets • Top management characteristics

8. EXHIBIT 7-2 WHOSE COMPANY IS IT?

9. RESOURCE POOL The resource pool represents all the human and physical resources available in a country - both from natural and induced factor conditions

10. COMPARATIVE STRATEGY FORMULATION: EXAMPLES FROM AROUND THE WORLD • US model: used as basis for comparison • Represents the attempt of a rational decision making process

11. THE US MODEL OF STRATEGY FORMULATION 1--Define the business 2--Develop a mission statement 3--Define objectives 4--Assess the company's situation: SWOT, competitors' actions 5--Craft strategy content

12. DEFINING THE BUSINESS: US/KOREA COMPARISON • US: Few limitations • Korea: More coercive institutions • Large corporations and national economic policy • A special status to engage in business

13. DEVELOPING MISSION STATEMENTS: DEFINING THE ORGANIZATIONAL DOMAIN • The mission defines the domain of the organization

14. US MISSION STATEMENTS • Often emphasize market issues closely related to key elements of success in their respective industries

16. JAPANESE MISSION STATEMENTS • Japanese managers prefer more abstract mission statements than do their US counterparts

17. FRENCH AND BRITISH MISSION STATEMENTS • British mission statements: focus on strategic issues emphasizing shareholder returns • French mission statements: reflect a national context in a social democracy

18. EX 7.4

19. DEFINING OBJECTIVES • National differences exist mostly in priorities • Financial or strategic

21. EX 7.6 U.S. AND JAPANESE FINANCIAL AND STRATEGIC OBJECTIVES Least Important Most Important

22. WHY?THE INSTITUTIONAL ENVIRONMENT • US: purpose of the corporation to maximize shareholder wealth • US stockholders: emphasize short-term transactions and dividends • US: clear link between earnings per share and stock prices

23. If managers fail to emphasize short term profits and stock prices fall, the managers loose personally • If companies are undervalued on the stock market, they are vulnerable to takeovers

24. JAPANESE SITUATION • Japanese investors: less volatile than US investors • Companies do not pay dividends as a percentage of profits • Japanese managers do not have stock options compensation plans

25. Consistent dividends reassure the Japanese stockholder of a company's health • Stockholders are not the most important stakeholders • Lack of outside directors to look out for the welfare of the stockholder

26. JAPANESE CULTURAL VALUES • A belief in substantial savings • Invest for the future • Persistence to achieve goals

27. ASSESSING THE COMPANY'S SITUATION • Management's assessment of the situation faced by their companies • US managers favor techniques such as the SWOT and competitive analyses

28. GERMAN AND BRITISH EXAMPLES • Successful companies from both countries identified the same key success factors • Differences: the organizational characteristics that managers believe achieve the key success factors

29. EX 7.9 MOST IMPORTANT PERFORMANCE CRITERIA

30. WHY? • Different resource pools • Different cultural values and norms • Different institutional biases regarding organizational strengths

31. ASSESSING THE ENVIRONMENT: US AND JAPANESE APPROACHES • Both seek information concerning environments • Japanese • More information • Use information differently • Opportunities a catalyst to action

32. CRAFTING STRATEGY CONTENT: US AND JAPANESE APPROACHS • US: Logical-deductive • Japanese: Incremental/inductive • Trial and error adjustments to environmental and competitive conditions

33. NATIONAL DIFFERENCES IN STRATEGY CONTENT: THREE EXAMPLES • Examples of "typical" strategy content or game plans of companies from various nations

34. JAPANESE STRATEGIES: GENERAL ORIENTATIONS • Compete with a high ratio of products where the company can add value with knowledge • Emphasize production to improve productivity • Use the resources of networks

35. JAPANESE PRODUCT/MARKET STRATEGIES • Carefully select product market • Gain market share/customer loyalty with low prices • Create value with better products • Move upscale and raise prices

36. Export manufacturing expertise • Reinvest profits to go global or enter new markets

37. US, JAPANESE, AND BRITISH FIRMS IN THE UK • British and US companies: • Both dominated by financial and efficiency concerns • British firms focused on cost reduction • British firms emphasized their brand recognition

38. Japanese companies: • Dominant goals: enter new and growing market segments • Entered the low end of the market, moved to the mass market, then to high value-added segment

39. EX 7.10 MARKET SHARE STRATEGIES

40. KOREAN STRATEGIES: Responses to a Changing National Context • License a foreign technology • Find ways to make the product better and cheaper • Enter the market late • Be an OEM manufacturer • Move to own brand exporting

41. CONCLUSIONS • Understanding different approaches to strategy • Helps to deal with international competitors • Helps a company become better collaborators