BUS 6320, Global Strategic Management 1
Course Learning Outcomes for Unit I Upon completion of this unit, students should be able to:
1. Compare global strategic business models. 1.1 Perform a competitive analysis of a business and at least three of its competitors. 1.2 Demonstrate the health of an industry through an industry analysis.
2. Analyze the processes for formulating sustainable corporate business strategies.
2.1 Examine how a company forms a corporate business strategy.
3. Synthesize the role of leadership in strategic business planning. 3.1 Use tools that leaders employ when conducting a strategic business plan.
Required Unit Resources Chapter 1: What is Strategy? Chapter 2: Strategic Leadership: Managing the Strategy Process MiniCase 1: Apple: What’s Next?, pp. 471–474 In order to access the following resource, click the link below. This video is an excellent introduction to the topic of strategic management from the standpoint of the importance of effective leadership. Managing a team towards goal-directed actions provides the basis for superior performance. TED (Producer). (2010). TEDTalks: Simon Sinek—How great leaders inspire action [Video]. Films on
Demand https://libraryresources.columbiasouthern.edu/login?auth=CAS&url=https://fod.infobase.com/PortalPlaylists.aspx?wID=273866&xtid=48512
The transcript for this video can be found by clicking on “Transcript” in the gray bar to the right of the video in the Films on Demand database. Unit Lesson What exactly is global strategic management? In today’s world, all sustainable competitive business has some level of globalization and/or internationalization, so what is strategic management? According to Rothaermel (2019), strategic management is the integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage. Thinking strategically enables managers to view their organization holistically and lead their organization towards a sustainable competitive advantage. Jones (2018) suggests that while operational effectiveness is necessary, it is not strategy. Operational effectiveness suggests that managers are operating the organization better or more efficiently than their competitors. This could mean that they are operating faster and with less resource allocations. Conversely, strategy suggests that managers understand the customer’s value proposition and through this have differentiated themselves from their competitors. This differentiation could be in the form of performing similar activities in different ways or simply performing different activities. In developing this strategy, managers will make trade-offs as gains in one area that might mean expenses in
UNIT I STUDY GUIDE Strategic Leadership Management
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another area. Additionally, the strategy must fit within the customers’ perceptions of the company. For instance, Walmart is perceived as a low-cost leader while Nordstrom is perceived as a high quality, high-service product leader. Both of these strategies work well within the same industry as they each clearly differentiate their business strategies targeting different customer needs. Organizational leaders make decisions within research and development, marketing, production/operations, finance, and human resources. Through decisions in each of these areas, managers differentiate their product/service offering. Several ideas for gaining a competitive advantage are as follows:
• Develop a unique competitive position that differentiates a product/service. • Understand that there are trade-offs with each business decision. • Obtain sustainability through a solid business strategy that is applied across the entire organization.
Strategic plan development begins with the development of objectives through a vision, mission, and values system. As a reminder, the mission statement is a description of what an organization actually does including the products/services it provides and the industry in which it will compete. Think of this as what is going on right now. Walmart’s mission statement is “save people money so they can live better” (Walmart, n.d.) Starbucks takes a related approach with their mission statement: “to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time” (Starbucks, n.d.). The vision statement is a description of what the organization would like to accomplish while simultaneously creating a motivational message. Think of this as what is going to happen in the future. Organizations have developed and communicated incredibly creative vision statements. For example, Nike’s vision statement is “to bring inspiration and innovation to every athlete in the world” (Nike, n.d.). Another example is Apple with “we believe that we are on the face of the earth to make great products and that’s not changing” (Tim Cook as cited in Lashinsky, 2009). Target brings forward a vision of guided commitments “to great value, the community, diversity, and the environment” (Mission Statement Academy, 2009). A final example is with Amazon: “to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online” (Amazon, n.d.). The values statement describes the principles by which the organization operates. Think of this as cultural and ethical norms for the organization. This can include ethical cultural norms both internally and externally while providing employees with guidance. The development of an effective mission, vision, and values/objectives provides the basis for effective strategic planning within an organization. Another area of importance within the umbrella of strategic plan development is that of corporate social responsibility (CSR) which suggests that organizations need to maintain a level of sustainable business practices. Kraft Foods maintains the following sustainable business practices statement: “From our quality controls to the relationships we have with our growers and suppliers, we are committed to responsible, sustainable practices extending to every facet of our business” (Kraft Heinz, n.d.). Additionally, they communicate their Corporate Social Responsibility Report detailing their progress toward “growing a better world” through improving the planet, its people, and the communities in which they work and live (Kraft Heinz, n.d.). Another aspect of their CSR effort, which is also reported on the website, is their contributions to preserving the environment by reducing greenhouse gas emissions, reducing energy consumption, reducing water consumption, and reducing solid waste sent to landfills. They also address animal welfare and human rights as well as communicate their community involvement as demonstration of their high-level of corporate service responsibility within their overall strategic plan (Kraft Heinz, n.d.).
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As leaders within an organization look to compile an effective, sustainable business strategy plan, the five competitive forces need to be examined. At the end of the day, the true essence of strategy plan builders is to understand and work around their competitors. Competitive forces consist of not only industry rivals but also customers, suppliers, potential entrants, and substitute products (Dobbs, 2012). Beginning with industry rivals, organizations need to not only look at their direct competitors but all companies within the industry and even related industries. In today’s world, the business environment is changing at lightning speed, which creates an environment where competitors are continuously moving in and out of being a threat. Customers can become a threat as they play one company against another, forcing down prices. Organizations are continually vying for the attention of customers, and price point is one of the most effective strategies. Suppliers can charge higher prices that force the organization’s profit margins downward, enabling competitors to take a stronger stance in the industry. New entrants with recent technologies and fresh insights could actually force organizations to make costly internal changes in order to remain competitive. Finally,
substitute products can offer customers another product that is theoretically of greater value and lower priced (Dobbs, 2012). Through understanding these competitive forces, leaders will be able to understand the industry’s current profitability, providing an opportunity to anticipate competition and profitability over the long run. This could be considered the starting point for developing business strategy. These forces can unveil why changes have occurred in the overall organizational financial position, leading to an understanding of the organization’s strengths, weaknesses, opportunities, and threats (SWOT). Compiling a SWOT analysis is another tool used by leaders within an organization. Strategy development could also be viewed as building a defense against these competitive forces. Rothaermel (2019) describes strategic leadership as the use of influence and power to direct the activities of others when pursuing an organization’s goals. Think of leaders you believe were or are effective strategic leaders. This might include leaders such as Steve Jobs or Tim Cook of Apple, Ellen Kullman of DuPont, Warren Buffet of Berkshire Hathaway, Susan Wojcicki of YouTube, Jeff Bezos of Amazon, Gail Kelly of Westpac, Michael Bloomberg of Bloomberg, Howard Schultz of Starbucks, or Alan Mullally of Ford Motor Company. All these individuals have had—or are having—a significant impact with respect to leading their organizations towards their strategic goals. Schoemaker et al., (2013) brought forward research done at the Wharton School of the University of Pennsylvania of more than 20,000 executives that revealed six skills that enable leaders to think strategically. These skills included the ability to anticipate, challenge, interpret, decide, align and learn. Beginning with anticipation, think of a leader that can scan the environment and work toward staying one step ahead of the competition. Notorious organizations that did not accomplish this would be Circuit City not anticipating where technology was moving, Blockbuster not foreseeing where movie viewing would evolve, or Lego not anticipating the advancement in electronic toys.
Porter’s Five Forces
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Challenge suggests that leaders continuously question the status quo and encourage outside-of-the-box thinking. This moves an organization toward innovative products/services, processes and overall trending fresh ideas. Interpret suggests that leaders are able to recognize large quantities of facts and organize them into implementable ideas. Think of this as a leader who can absorb the facts and apply them to the big picture or the entire organization. Decide centers around a leader’s ability to make decisions based on sometimes incomplete information. Through this skill, the leader considers all the alternatives and trade-offs alongside both the short-term and long-term goals of the organization. In other words, this is a leader who can make a good decision and move the organization forward to implementation. Align is one of the most difficult skills for leaders to master because it requires that the leader find common ground among conflicting viewpoints and achieve buy-in among stakeholders. This inevitably requires a strong communicator people trust and to whom they can relate. Additionally, this calls for leaders to empower their team with not only responsibility but also authority along with maintaining a high level of two-way communication. Finally, learn requires that leaders promote a culture of learning within their organization. The idea of fail fast adopted by many innovative companies suggests that employees are encouraged to try new innovative techniques /processes and bring new ideas forward. If they fail, it is considered acceptable. Fail fast, learn from the failure, and move onward. Some companies adopt a philosophy of there is no such thing as failure, which encourages risk-free innovative thinking. A good example of this was discussed in the textbook with Starbucks’ Frappuccino, which was turned down by upper-level management leaders multiple times before its current success reaching over 20% of Starbuck’s total revenues (Rothaermel, 2019). Having the ability to apply each of these skills simultaneously and react to environmental changes quickly provides the framework for an effective strategic leader. In conclusion, global strategic management requires a comprehensive strategic plan that integrates an organization’s mission, vision, values, and culture. The use of Porter’s five competitive forces will provide leaders with a tool that analyzes the external environment in which the organization is operating. Once the external and internal organizational factors are considered, leaders can effectively compile a strategic plan. Leaders need to maintain several skills including the ability to anticipate, challenge, interpret, decide, align, and learn.
References Amazon. (n.d.). Business info [Facebook About page]. Retrieved August 21, 2019, from
https://www.facebook.com/pg/Amazon/about/ Dobbs, M. E. (2012). Porter's five forces in practice: Templates for firm and case analysis. Competition
Forum, 10(1), 22-33. https://link.gale.com/apps/doc/A313159769/AONE?u=oran95108&sid=AONE&xid=42bee552
The six strategic thinking skills (Adapted from Schoemaker et al., 2013)
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Jones, P. (2018, November 5). Strategy vs operational effectiveness: Be clear of the difference. Excitant. https://www.excitant.co.uk/strategy-vs-operational-effectiveness-be-clear-of-the-difference/
Kraft Heinz. (n.d.). Growing a better world: Sustainable business practices.
https://www.kraftheinzcompany.com/sustainability.html Lashinsky, A. (2009, January 22). The Cook doctrine at Apple. Fortune. https://fortune.com/2009/01/22/the-
cook-doctrine-at-apple/ Mission Statement Academy. (2019, July 15). Target mission and vision statement analysis. http://mission-
statement.com/target/ Nike. (n.d.). About Nike. https://about.nike.com/ Rothaermel, F. T. (2019). Strategic management: Concepts (4th ed.). McGraw-Hill Education. Schoemaker, P. J. H., Krupp, S., & Howland, S. (2013). Strategic leadership: The essential skills. Harvard
Business Review, 91(1/2), 131-134. https://libraryresources.columbiasouthern.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=84424206&site=ehost-live&scope=site.
Starbucks. (n.d.). Our company: Our mission. https://www.starbucks.com/about-us/company-
information/mission-statement Walmart. (n.d.). Our history. https://corporate.walmart.com/our-story/our-history
