1 Paper Structure & Other Tips Philosophy papers.docx

1
Paper Structure & Other Tips
Philosophy papers almost always have two parts: exposition and
critical analysis. ‘To exposit’ means to
explain or describe something. You always want to begin by
explaining the issue or topic that is the
focus of your paper. The expository part of your paper can also
involve explaining what other
influential people have said about the topic of your paper. After
you’ve sufficiently explained your
topic, and what others have said about it, you then want to
provide a critical analysis. ‘Critical
analysis’ here just means providing your own critical
perspective on the topic. This critical part of
your paper will involve developing your own argument(s). In
the structure just below, sections I-III
are expository; sections IV-V involve critical analysis.
There is no single, correct way to write a philosophy paper.
Here’s how I would recommend
structuring your paper [the numbers in the brackets are roughly
how long each section should be]:
------------------------------------
I. Introduction [0.5 page]

A. Set up the topic. Describe the university’s proposed policy.
You can add some details to the
policy as you see fit—just make sure not to stray too far from
the proposal in the prompt.
B. Thesis statement. Be sure to include a thesis statement in the
Introduction. A thesis
statement is the main point you’ll be arguing in your paper. For
example, you might say: “In this
paper, I will argue that the university’s proposed policy is
completely unacceptable,” or “In this
paper, I’ll argue in support of the university’s proposal.” You
shouldn’t start discussing the details
of your view in your thesis statement—save that for later in
your essay. Just state what position
you will be taking on the proposed policy.
II. Peter Singer’s View [.75 page]
A. Explain Singer’s view on helping those in need (using his
article “The Singer
Solution
to
World Poverty”).
B. Then state explicitly whether Singer would agree with the
university’s proposed policy.

III. Garrett Hardin’s View [.75 page]
A. Explain Hardin’s view on helping those in need (using his
article “Lifeboat Ethics”).
B. Then state explicitly whether Hardin would agree with the
university’s proposed
policy.
2
IV. Your Own View [1 page]
A. Explain your own view on helping those need. Here, speak
more generally about whether
you believe that affluent people have a moral obligation to help

the less fortunate. In other
words, put aside the university’s proposed policy for a moment;
just talk about your beliefs about
helping people in need. If you think people that are well-to-do
have an obligation to help, why
and to what extent (how much)? Should the well-to-do help
because it’s necessary for a smooth,
well-functioning society? Or because wealth is often the result
of luck (such as which socio-
economic class you’re born into)? Or because helping the less
fortunate is God’s will? And
should the affluent donate a large portion of their wealth or just
a small fraction? Or perhaps you
think the well-to-do should not help those in need because
charity creates laziness, or because
helping is detrimental to society in some way?
This part of the paper is wide open. You can argue for whatever
view you want. Just remember
that your goal is to persuade others that your view is
reasonable. So be sure you’re providing
support for your claims. If you say, for instance, that charity
creates laziness, you must support the
claim with evidence. And bear in mind that anecdotal evidence
is weak. (For example: “I think

charity creates laziness because my neighbor Bob gets his food
at a food bank and he does
nothing but sit around smoking weed all day.” Whether this is
true about Bob, it doesn’t provide
much support for the general claim that charity creates laziness.
So try to avoid anecdotes like this
in your paper.)
Whatever view you take up in this section, be sure you spend
enough time defending it. One
common mistake I see students make here is a lack of detail and
support (evidence).
B. Then state explicitly whether you agree with the university’s
proposed policy. This
should be fairly easy once you’ve explained your view on
donating to charity above.
V. Objections [1 page]
A. Raise and respond to objections to your view on helping
those in need. Imagine what

your opponents will say about your view. How will they
criticize it? Carefully explain and respond
to criticisms of your view in section IV.A. It’s up to you how
many criticisms you discuss—you
might discuss one major criticism, or you might discuss two
criticisms. Whatever you do, only
discuss the strongest criticisms you can imagine. Don’t waste
your time on weak criticisms—the
paper is too short to mess around with bullsh*t. (The problem
with discussing a weak objection
in a short paper like this is that you’ll be omitting a discussion
of a stronger objection that
provides a more serious threat to your view. And this results in
a weaker overall paper.)
3
Other Tips & Advice

discussing objections in section V,
you can stop writing. A conclusion is unnecessary in such a
short paper.
-person. Philosophers normally
write using the word “I” (e.g., “I
think that blah blah blah”).
view is reasonable if it’s unclear
what your view even is!
w you do
it, but title your sections such as:
Section 1: Introduction
Section 2: Singer on Helping the Poor
And so on…
helpful. Sometimes making a
philosophical point is difficult. But using simple examples that
capture your point can be a

big help.
on Blackboard, there’s no need
for a Bibliography or Works Cited page at the end. Only include
a Bibliography if you’re
using any outside sources. But outside sources are not necessary
for this assignment.
points in your own words.
you’re being clear. It’s probably
easiest just to place a page number in parentheses at the end of
a sentence. For example:
“According to Singer, the U.S. gives less than 0.7% of its gross
national product to combat
world poverty (p. 5).”
sophy paper is one that makes a contribution to
our understanding. What I
mean by that is, a good paper will be one that doesn’t simply

repeat what others have already
said—but rather it says something new and interesting. The
place for saying something new
and interesting is in sections IV and V (critical analysis). Be
creative!
Strategic Management
Please note that you do not need to use in-text citation, nor
reference in answering the questions.
Find examples from the case studies, assignments, textbooks,
your personal working experiences, and media reports, to
illustrate your understanding.
you need to:
–describe the concepts involved in each essay question to show
your understanding of the concept (s) and/or theories;
–explain how these concepts, theories or managerial techniques
can be used in practice. You need to provide example(s)

selected from case study, assignments, personal experience,
and/or media reports, to demonstrate such practical
applications;
–provide critical comments on the pros (benefits) and cons
(limitations) in applying these concepts, theories, and/or
analytical tools to business organisations.
Please note that you do not need to use in-text citation, nor
reference in answering the questions. .
Module 1 Introducing Strategy - Knowledge Check
1.Strategy and strategic management are two fundamental
concepts in the field of business strategy study. What is the
difference between strategy and strategic management?
2. Describe the three levels of strategy and explain their
differences and relationships.
Module 2 Macro-environment analysis - Knowledge Check
1. Name one industry and identify important macro-
environmental forces that can influence its development. Assess
and elaborate their impact on the industry growth in the future
in terms of opportunities and threats.

2. The term VUCA (Volatility, Uncertainty, Complexity, and
Ambiguity) can be used for better understanding of the key
characteristics of the macro-environment. Briefly describe the
characteristics of each aspect of VUCA, provide examples and
discuss some general approaches to deal with each of them.
Module 3 Industry Analysis - Knowledge Check
1 Explain the following statement: “there are five forces that
determine an industry’s profit potential”. What are the main
benefits and limitations of the five forces framework?
2 Describe the concept of strategic group. What are the
advantages of undertaking a strategic group analysis? What
criteria can be used for grouping firms within an industry? Give
example to support this.
Module 4 Resources and capabilities -- Knowledge Check
1.
For a strategic capability in an organisation to provide
competitive advantages, it should meet four criteria. Describe
these four criteria and provide example(s) to support your
argument. Explain how such strategic capabilities can be
identified.

2.Robustness (or inimitability) of a firm’s resources and
competences is a key concept for understanding its core
competence. What is an organisation’s core competence or
strategic capability? Elaborate the three sources of robustness
and give examples to show your understanding.
3. Resource-based view is one of the two dominant strategic
perspective. Describe briefly its strategic argument
(proposition), key assumptions, and strategic implications, and
pros and cons in application.
4. Porter’s “market positioning” and Resource-based view
(RBV) have been the two most dominant strategic perspectives.
Discribe these two strategic perspectives in terms of key
assumprions and propositions, discuss their similarities and
differences. Are these two perspectives competing or
complementing in strategic management?
Module 5 Stakeholders and Governance - Knowledge Check
1. Stakeholder mapping is a useful technique for stakeholder
management. Describe the process of stakeholder mapping and
explain how its outcomes can help in managing its
relationships with stakeholders and the coalition-building
process.

2. Describe the concept of corporate social responsibility and
four possible corporate stances on social responsibility. For
each stance, explain its rationale, leadership, management, and
stakeholder relationship required for each of these four
stances.Module 6 Business Strategy - Knowledge Check
1. Singapore Airline has implemented its differentiation
strategy since its establishment. In doing so, it has offered a
high quality of customer services, maintained a very good
safety record, and procured new aircrafts, including Airbus
380. At the same time, it attempts to reduce its overall costs
through lowering its back-office costs and administrative
overhead. Do you think these activities are contradictory or
complementary in implementing Singapore Airline’s
differentiation strategy? Why? (Hint: You can address these
issues based on your understanding of the concept of value,
value chain analysis, and business strategy)
2. What is cost leadership strategy? Describe and discuss the
four drivers of costs. What are the two key requirements for
cost based strategies. Provide examples to illustrate your
understanding of these two requirements.
3. Consider Porter’s three generic strategies. In your opinion,
how differentiation-based advantages can be sustained? Give

example to support your argument.
Module 7 Corporate Strategy and Diversification - Knowledge
Check
1. There are three major types of corporate parenting role
played by the corporate headquarters to add value. Explain
these three corporate parenting roles and discuss their logic,
strategic requirements and organisational requirements. Can
more than one rationale co-exist in a particular corporation?
Why?
2. What could be the reasons for using diversification as a part
of an organization’s corporate strategy? Do you think
diversification always guarantee high performance in
organizations? Give reasons for your answer.
Module 8 International Strategy - Knowledge Check
1. Describe the four types of international strategies. Discuss
the benefits and limitations of each type of these international
strategies. Give examples to support your arguments
2. Describe four entry mode strategies for international market
expansion and resources requirement, risk and benefit of each
of them

Module 9 Mergers, acquisitions and alliances - Knowledge
check
1. Strategic alliance, acquisitions and organic development are
three different methods of strategic development. Describe
briefly these three methods. Identify and discuss the critical
factors that should be considered in choosing between
acquisitions, alliances and organic development.
2. Mergers and acquisitions (M&A) is an important method of
strategic development. Describe these two concepts, and
identify and discuss the key motives of M&A. Provide examples
to support your argument.
3. Strategic alliance is an important method of strategic
development. Describe and discuss the motives of strategic
alliances and provide examples to support your discussion
Module 10 Evaluating strategies and measuring strategy
performance - Knowledge Check
1. Describe the three SAFe criteria for strategy evaluation.
What key issues does the suitability address? How the
suitability of a strategy can be evaluated? Provide example to
show your understanding of the suitability evaluation process.

2. Describe two basic approaches to measuring organisational
performance. Elaborate the four elements/perspectives of the
balanced scorecard. Provide examples for measuring each of
these four perspectives.
Module 11 Organising and leading strategic change --
Knowledge Check
1. Explain the following statement: “The styles of managing
strategic change need to match organisational context”. Briefly
describe the change kaleidoscope. Focusing on organisational
capability and readiness, identify and discuss briefly the FOUR
most appropriate styles of change leadership based on the high
and low levels of these two organisational characteristics
(capability and readiness).
2. Turnaround (reconstruction) is an important type of strategic
change. Describe and discuss the five elements of turnaround
strategy and provide an example to support your discussion.
3. Financial control, strategic control, and strategic planning are
three ways of dividing responsibilities between corporate centre
and its business units. Discuss these three ways of control and
their links with three types of corporate role (portfolio manager,
synergy manager, and parental developer). Give examples to
support your argument.

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What the firm might do
What the firm can do
Modules 2 & 3 The Environment
The Macro-env analysis
Five Forces Analysis

Strategic group
Market and competitor
Module 5
Strategic capabilities
Sustainable
Competitive
Advantage
4School of Management 4
Opening story:
Wha nderpins D son s compe i i e ad an age?
Dyson Ltd (Formerly Dyson Appliances) was
created in 1987 by James Dyson - a British
inventor, industrial designer and founder of the
Dyson company
A small (one-person) family business in 1987
Its revenue and profit reached US$5.67 billion
and $1.42 billion in 2018 respectively, selling

bladeless hand dryers, lighting, hair dryers,
bagless vacuum cleaners
air purifiers, and even washing machines
School of Management 5
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D son s main prod c s
Wha nderpins D son s compe i i e
advantage?
The D son s s or (2 05 )
https://www.youtube.com/watch?v=3DHAnmTC
S5Q
It is:

Industry design, product innovations, and
entrepreneurship
However, Dyson scrapped a project to build
electric cars in Oct 2019, and sent 523 UK
employees home.
https://www.youtube.com/watch?v=3DHAnmTCS5Q
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Questions
On what fundamental basis has Dyson
been competing
At the early stage of its development?
At the growth stage over the last two decades?

Learning Objectives
After studying this module, you should be able to
Understand he classifica ion of an organisa ion s
resources and competences.
Identify an organisa ion s strategic capabilities using
the criteria of value, rarity, inimitability and
organisational support (VRIO).
Diagnose strategic capability by means of value chain
analysis, activity systems mapping, and benchmarking.
Manage strategic capabilities for organisations
Understand resource-base view (RBV) another
dominant strategic perspective.
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Strategic capabilities: the key issues
Resources and competences
Resources are the assets that organisations have or
can call upon (e.g. from partners or suppliers), that is,
ha e ha e , including:
Tangible (e.g., physical, financial, HR)
Intangible (e.g., patent, technological know-how, brand
name, goodwill)
Knowledge-based resources
Competences are the ways those assets are used or
deployed effectively, ha i , ha e d ell , including
Skills and ability
Dynamic capability: How quick to learn and adapt to changes
LO1

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School of Management
12
Resources Competences
Distinctive capabilities
Required to achieve
competitive advantage
Threshold capabilities
Required to be able to
compete in a market
Threshold
Resources
Threshold

Competences
Distinctive
Resources
Distinctive
Competences
Redundant capabilities
Those don genera e
valued to customers
The classification of capabilities: redundant,
threshold and distinctive capabilities
Redundant
Resources
Redundant
Competences
RMIT
University©2018
What are Threshold Capabilities?

Threshold capabilities are those needed for
an organisation to meet the necessary
requirements to compete in a given market
and achieve parity with competitors in that
market qualifiers .
For example
IT infrastructure for banks
Website for e-tailers
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What are Strategic Capabilities?
Strategic capability refers to the
resources and competences of an
organisation needed for it to achieve
competitive advantage winners .

They help an organization achieve its long-term survival
and competitive advantage
For example
Apple: Design, Mobile technology, Powerful
brandname
Samsung: Display technology
Components of strategic capabilities
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Where strategic capabilities reside?
Each operational activity or process

E.g., marketing, production, R&D
Singapore Airlines: Excellent customer service
McDonald s: fas c s omer ser ice
Apple: product innovation
Dell: Distribution
Honda: engine technologies
Linkages of operational activities and
processes
The combined effect of all these activities and
processes
For example: R&D and Marketing for Nike; 3M: culture
Diagnosing an organisation s strategic
capabilities
The four key criteria by which capabilities can be
assessed in terms of providing a basis for
achieving sustainable competitive advantage are:
Value,

Rarity,
Inimitability and
Organisational support
VRIO
LO2
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Criteria for identifying strategic
capabilities - VRIO
Value by customers (from a customer s
perspective)
delivering value for money
Rare (from a competitor s perspective)

Those resources or competence possessed by one or a few
organizations only.
Inimitability (or robustness) of competence
due to: complexity, causal ambiguity, culture and history,
and change
Supported by the organisation
Criteria used for identifying strategic
capabilities – Summary
Valuable Rare Inimitable Supported
by
organisation
Competitive
Consequences
Performance
Implications

No No No No Competitive
Disadvantage
Below
Average
Returns
Yes No No Yes/no Competitive
Parity
Average
Returns
Yes Yes No Yes/no Temporary
Competitive
Advantage
Aver/Above
Average

Returns
Yes Yes Yes Yes Sustainable
Competitive
Advantage
Above
Average
Returns
RC
TC
SC
TC
or
SC?

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Diagnosing strategic capabilities-
Valuable?
Valuable?
It is the most important criterion of VRIO
Analytical techniques for diagnosing if an
organisation's strategic capability is
valuable include:
The value chain and value network
Activity systems mapping
Benchmarking
LO3

Diagnosing competitive strategic
capability - Valuable
The value chain
Value chain can be used to diagnose which strategic
capability is valuable to customers
The concept of value chain can be used to help understand a
firm s cost position and the value each activity delivers.
It helps in identifying an (or a cluster of ) organization's
capabilities in terms of what is valuable.
What activities are most valuable to
organization?
This depends on what industry an organization
is operating
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The value chain within an organisation
The roots of competitive advantages
Product/service features
Value chain activities
and processes
Strategic
capabilities
Resources Capabilities
Strategic capability:
The roots of competitive advantages
Insourcing or
outsourcing

What customers value:
Critical success factors
23School of Management 23
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Diagnosing strategic capabilities –
valuable?: Activity systems mapping
Activity systems mapping aims to link
an organization's activities and
processes to i s ind s r s critical
success factors (CSFs), then identify
those resources and competences that
are employed to undertake them within
the organization.
CSFs are those product or service
features that are particularly valued
by a group of customers.

Diagnosing strategic capabilities – valuable?:
Activity systems mapping (cont d)
Analyzing the features of products and/or
services offered
The concept of the total product layers of products
Levels of product feature
Threshold features (survival features)
Critically successful features
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The Concept of the Total Product
Core

benefit
or
service
Installation
Packaging
Delivery
and
credit
Warranty
StylingQuality
FeaturesBrand
name After-
sale
service
Augmented product

Actual product
Core product
SUCCESS
Critical success factors
Brand Innovation
Good
service
Range
Reliable
delivery
Solving
b ers
problems

Flexibility
Main benefits to
customers – or Higher
order strategic themes
Rapid response
Good
personal
relations
with
buyers
Accepting
returned
goods
Fast turnround
of urgent orders
Staff discretion
and r le bending

Low plant
utilisation 24 hr despatch
Stock levels
Use of
subcontractors
for transport
Distribution and
logistics systems
Resources
and competences
Diagnosing strategic capability Activity
systems mapping
Activity mapping:
Linking CSF to a
fi m a egic
capability (e.g.,
its, activities
processes, and

resources) Activities and
processes
It is built on the basis of solid understanding of customers,
competitors and the organization
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Diagnosing the value of strategic capability:
Valuable? - Benchmarking
Benchmarking
Horizontal benchmarking
Best-in-class benchmarking (e.g. BA benchmarked its refuelling
operations against Formula 1)
Industry/sector benchmarking

Vertical benchmarking
Historic comparison to identify any significant changes in
relation
to previous years
Diagnosing competitive strategic
capability – the other 3 criteria
Rare?
Competitor analysis. It is often based on the
management knowledge
Criteria of inimitability (robustness)
complexity
causal ambiguity
culture and history (path dependence)
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Criteria for the inimitability of resources
and capabilities
O – Organisational support
The organisation must be suitably
organised to support the valuable, rare and
inimitable capabilities that it has. This
includes appropriate processes and
systems.
Organisational structure
Systems (e.g., IT, control, infrastructure)
Process
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From a resource/competence to a strategic capability
Managing strategic capabilities
Developing strategic capabilities
Internal capability development:
Leveraging capabilities identifying capabilities in
one part of the organisation and transferring them to
other parts (sharing best practice).
Stretching capabilities - building new products or
services out of existing capabilities.
External capability development
adding capabilities through mergers,
acquisitions or alliances.
LO4

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Managing strategic capabilities (cont d)
Protect strategic capability strategic
capabilities need to be protected from
imitation or outflowing.
Ceasing activities non-core activities can be
stopped, outsourced or reduced in cost.
Managing the capabilities of people training,
development and organisation learning.
Resource-based view (RBV)
The resource-based view (RBV) of strategy
asserts that the competitive advantage and
superior performance of an organisation is
explained by the distinctiveness of its capabilities.
Its main proposition:
An organization's performance is largely

determined by its resources and capability
(skills and capacity) that are valuable, rare,
costly to imitate, and hard to substitute.
LO5
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Resource-based view (RBV) (cont d)
A firm can be regarded as a bundle of
resource
Two basic assumptions
Resource heterogeneity
Competing firms possess different bundle of resources.
Resource immobility
These resource differences may persist

Strategic implications
Resource-picking ability
Capability development
Strategic leverage
Module summary (1/3)
Strategic capabilities comprise both
resources and competences.
Sustainability of competitive advantage is
likel o depend on an organisa ion s
capabilities being of at least threshold
value in a market but also being valuable,
relatively rare, inimitable and supported by
organisations
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19
Ways of diagnosing organisational
capabilities include:
Anal sing an organisa ion s value chain and value
network as a basis for understanding how value to a
customer is created and can be developed.
Activity mapping as a means of identifying more detailed
activities which underpin strategic capabilities.
Benchmarking as a means of understanding the relative
performance of organisations.
Managing strategic capabilities
understanding, developing, protecting, and leveraging

RBV
Main proposition: the competitive advantage and
superior performance of an organisation is explained by
the distinctiveness of its capabilities
Two key assumptions: resource heterogeneity and
immobility
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Next Week
Module 5 Stakeholder Management and
Governance
Form your group of four within the same
tutorial for Assignment 2

4/05/2020
2
Opening story: The merger of TPG Telecom with Vodafone
Australia (VHA)
On 18 August 2018 , the Australian third largest telecom
company, TPG Telcom, and the Australian fourth largest
Telecom company, Vodafone Australia, announced that
they are going to merge two telecom companies into one
new entity
The proposed merged entity will become a much larger
Australian third largest telecom company, only trailing after
Telstra and Optus Telecom, and a major player in both
mobile and Fixed line (NBN) markets.
Telstra Optus Vodafone TPG

Enterprise value
(A$bn)
51 58.5 7.5 7.5
Mobile market
share (%)
41 29 19 1
Fixed line market
share (%) (NBN)
51 17 n/a 22
The major players in the Australian telecom industry and
their market share
4/05/2020
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Why merge? - The strategic rationale
The proposed merged group will be a stronger challenger
to Telstra and Optus
Highly complementary owned network infrastructure
Complementary products and distribution channels
Significant synergy potential: Merger is expected to
achieve significant synergies due to cost reduction in
duplicated activities, economy of scale, cross-selling, and
network leverage.
The proposed merger was blocked by the ACCC
The proposed TPG-Vodafone merger was blocked by
Australian Competition & Consumer Commission (ACCC) on 9
May 2019
The ACCC considers that the proposed merger will reduce
competition and contestability in the telecommunication

industry
TPG-VHA filed legal action over ACCC proposed merger
decision on May 2019
The merger would combine their complementary assets and
create an
entity that can compete more aggressively in this highly
competitive
market than either VHA or TPG could on their own.. and will
bring very
real benefits to consumers.
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The Federal Court over-ruled the ACCC decision on Feb
2020
The proposed merger was given the green light after the
Federal Court over-ruled the Australian Competition and

Consumer Commission's decision to block the merger on
13 Feb 2020
The proposed merger will proceed and completed by 31
August 2020
Learning Objectives
After you have studied this module, you should be able to:
Understand the potential role of organic de e e ( do it
yourself ).
Identify key issues in the successful management of mergers
and acquisitions, and strategic alliances.
Identify key issues in the successful management of strategic
alliances
Determine the appropriate choices between organic
development, mergers and acquisitions and strategic alliances,
and compare key success factors in mergers, acquisitions and
alliances.

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Strategy methods
Organic (Internal) development
Organic development is where a strategy is pursued by
b i di g a d de e i g a ga i a i
ca abi i ie . Thi i e e ia he d i e f e h d.
LO1
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Advantages of organic development
Knowledge and learning can be enhanced.
e.g., Qantas set up its low-fare division: Jetstar

Spreading investment over time easier to finance.
e.g., Teltra to roll out its 5G network
No availability constraints no need to search for suitable
partners or acquisition targets.
e.g., Tesla built its Gigafactory in Shanghai
Strategic independence less need to make compromises or
accept strategic constraints.
Culture management allowing new activities to be created in
the existing environment, thus reducing the risk of culture
clash.
Mergers and acquisitions
Types of M&A
A merger is the combination of two previously separate
organisations in order to form a new company.
e.g., TPG and Vodafone to be merged in 2020
An acquisition involves one firm taking over the
e hi ( e i ) f another company through share

purchase
E.g., Mengniu, a Chinese dairy producers, acquired Bellamy, an
Australian baby formula milk powder assembler in 2019 for
$1.5 bn
Sometimes acquisitions can be hostile, where target
management
ef e he ac i e offer.
LO2
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Motives for M&A (1/4)
Three types of motives for M&A
Strategic
Financial
Managerial

Three motives of M&A: Strategic motives (2/4)
Strategic motives involve improving the competitive
advantage of the organisation and can be categorised in
three ways:
Extension of scope in terms of geography, products or
markets. (e.g., Faceb k ac i i i f WhatApp)
Consolidation increasing scale, efficiency and market power.
(e.g., TPG and VHA)
Capabilities enhancing technological know-how (or other
competences)
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Financial motives for M&A (3/4)
Financial motives concern the optimal use of financial
resources.

There are three main financial motives:
Financial efficiency a company with a strong balance sheet
(cash rich) may acquire/merge with a company with a weak
balance sheet (high debt).
Tax efficiency reducing the combined tax burden.
Asset stripping or unbundling selling off bits of the acquired
company to maximise asset values.
Managerial motives for M&A (4/4)
M&A may serve managerial self-interest for two reasons:
Personal ambition financial incentives tied to short-term growth
or share-
price targets; boosting personal reputations; giving friends and
colleagues
greater responsibility or better jobs.
Bandwagon effects managers may be branded as conservative if
they
d f a M&A e d; ha eh de e e e ge ac i e; he
company may itself become a takeover target.
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9
The M&A Process
M&A processes
Step 1: Target choice in M&A
Two main criteria apply:
Strategic fit does the target firm strengthen or complement the
acquiring
fi a eg ? (N.B. I i ea e -estimate this potential synergy).
Organisational fit is there a match between the management
practices,
cultural practices and staff characteristics of the target and the
acquiring
firm?
4/05/2020
10

M&A processes (2/3)
Step 2: Negotiations in M&A
Getting the offer price correct is essential:
Offer the target too little, and the bid will be unsuccessful.
Pay too much and the acquisition is unlikely to make a profit
net of the original
acquisition price. ( he i e c e ).
Acquirers do not simply pay the current market value of the
target, but also pay
a e i f c .
Financial and non-financial evaluation
NPV, DCF, Internal return rate, payback period
risk, uncertainty, shareholder structure, etc.
M&A processes (3/3):
Step 3: Integration in M&A
4/05/2020
11

Integration in M&A
Approaches to integration:
Absorption strong strategic interdependence and little need for
ga i a i a a . Ra id adj e f he ac i ed c a
strategies, culture and systems.
e.g., We fa e ac i i i f C e
Preservation little interdependence and a high need for
autonomy. Old
strategies, cultures and systems can be continued much as
before.
e.g., Chi a Minmetal C a i ac i i i f a e f OZ
Minerals
A ache i eg a i (c d)
Symbiosis strong strategic interdependence, but a high need for
autonomy. Both the acquired firm and acquiring firm learn and
adopt the
best qualities from each other.

e.g., BHP and Billiton
Holding a residual category with little to gain by integration.
The
ac i i i i be he d e a i bef e bei g d , he ac i ed
unit is left largely alone.
TPG acquisition of Myer
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Strategic alliances
A strategic alliance is where two or more organisations
share resources and activities to pursue a strategy.
M&A bring together companies through complete changes in
ownership.
Strategic appliances involve collaboration with only partial

changes in ownership or no ownership change at all as the
parent companies remain distinct.
LO3
Types of strategic alliance (1/3)
There are two main kinds of ownership in strategic alliances:
Equity alliances involve the creation of a new entity that is
owned separately by the partners involved, such as JV (two
partners) or consortium (more than two partners).
Non-equity alliances are typically looser alliances, without
ownership and often based on contracts e.g. franchising,
licensing or subcontracting.
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13
- Equity alliances

The most common form of equity alliance is the joint
venture, where two organisations remain independent but
set up a new organisation jointly owned by the parents.
A consortium alliance involves several partners setting up
a venture together.
- Non-equity alliances
Non-equity alliances are often based on contracts.
Three common forms of non-equity alliance:
Franchising.
Licensing.
Long-term subcontracting.
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14
Motives for alliances

Scale alliances lower costs, more bargaining power and
sharing risks. (e.g., oil & gas industry)
Access alliances partners provide needed capabilities (e.g.
distribution outlets or licenses to brands) (e.g., JVs in China)
Complementary alliances – bringing together complementary
e g h ff e he he a e ea e e . (e.g., JV
in China: technology and distribution)
Collusive alliances – to increase market power. Usually kept
secret to evade competition regulations.
S a egic a ia ce i e (c d)
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15
Strategic alliance processes

Two themes are vital to success in alliances:
Co-evolution the need for flexibility and change as the
environment, competition and strategies of the partners
evolve.
Trust partners need to behave in a trustworthy fashion
throughout the alliance.
Alliance evolution
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16
Comparing acquisitions, alliances and organic
development – the buy, ally or DIY matrix LO4
Comparing acquisitions, alliances
and organic development (1/2)
Four key factors in choosing the method of strategy
development :
Urgency internal development may be too slow, alliances

can accelerate the process but acquisitions are quickest.
Uncertainty an alliance means risks are shared and thus
a failure does not mean the full cost is lost.
Where there is high uncertainty in terms of market and tech
involved,
alliance could be the best option.
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17
Comparing acquisitions, alliances and organic
development (2/2)
Type of capabilities (to be sough-after)
Acquisitions be i h ha d e ce (e.g. d c i i ) a he
ha f e ce (e.g. e e).
Culture clash is the big issue.
Modularity of capabilities

If the needed capabilities can be clearly separated from the rest
of the
organisation, an alliance may be best.
Key success factors
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There are three broad methods for pursuing strategy: mergers
and acquisitions, strategic alliances and organic development.
Organic development can be either continuous or radical.
Radical organic development is termed corporate
entrepreneurship.
Acquisitions can be hostile or friendly. Motives for mergers and

acquisitions can be strategic, financial or managerial.
Module Summary (2/2)
The acquisition process includes target choice, valuation and
integration.
Strategic alliances can be equity or non-equity. Key motives for
strategic alliances include scale, access, complementarity and
collusion.
The strategic alliance process relies on co-evolution and trust.
The choice between acquisition, alliance and organic methods is
influenced by four key factors: urgency, uncertainty, type of
capabilities and modularity of capabilities.
4/05/2020
19
Next Week

Read Chapter 12 Evaluating strategies
Working on the Tasks 4 & 6 of Assignment 2: Strategy
evaluation and measurement
21/04/2020
2
Opening story: How corporations create value?
- Wesfarmers
It is an Australian conglomerate, headquartered in
Perth, WA, covers business in retail, chemicals,
fertilisers, coal mining and industrial and safety
products.
It is widely regarded as the Australian version of General
Electric (GE)

3
Meet the CEO - Wesfarmers
Former CEO of Wesfarmers Richard Goyder talking about
Wesfarmers
https://www.youtube.com/watch?v=bhdgxEQxuG0
4
https://www.youtube.com/watch?v=bhdgxEQxuG0
21/04/2020
3
Learning objectives
After you have studied this module, you should be able to:
Understand the potential directions for corporate
development (Scope: the Growth Matrix)
Identify alternative strategy options

Assess the relative benefits of each option.
Describe the three roles of corporate parenting
regarding how it can add value to its business units.
Portfolio Managers
Synergy Managers
Parental Developer
What is a corporation?
A corporation refers to an organisation that has multiple
businesses (or multiple strategic business units (SBUs)).
Thus, an corporation serves multiple distinctive markets
6
21/04/2020
4

What is corporate strategy?
Corporate (level) strategy
It is concerned the overall purpose and scope of the
organisation and
how to create value for the corporation as a whole.
Business (level) strategy (competitive strategy)
How to create competitive advantage in each business in which
the
company competes,
Corporate
Business
Function (e.g., marketing, HR)
LO1
What is a corporate parent (headquarters)?

The corporate parent refers to the levels of management
above that of the business units, and therefore without
direct interaction with buyers and competitors.
21/04/2020
5
The Multi-Business Organisation
BHP Billion
Group headquarters: Melbourne
Four divisions:
Petroleum and Potash; Copper; Iron Ore; and Coal.
The Operating Model has been designed to ensure that decision-
making

remains as close to the Businesses as possible.
Group Functions:
Group (HQ) Functions support the Businesses and operate under
a defined
set of accountabilities authorised by the Group Management
Committee
(GMC).
E.g., marketing, legal, HR
10
21/04/2020
6
Why need a corporation?
-- The golden rules for corporate strategy
Value (A+B) > Value (A) + Value (B) + Coordination costs
(A+B)

The value created by the corporation should be larger than
the sum of value created by two individual businesses and
their coordination costs when incorporating them into a
corporation
11
Scope: Corporate strategy directions
21/04/2020
7
Direction 1: Market penetration and consolidation
Market penetration refers to a strategy of increasing share
of current markets with the current product range.
E.g., Medibank to grow its current business

Consolidation refers to a strategy by which an organisation
focuses defensively on their current markets with current
products.
e.g., Telstra to maintain its leading positon in Australia
Direction 2: Product development
Product development refers to a strategy by which an
organisation delivers modified or new products to
existing markets.
e.g., Apple s iPod, iPhone, and iPad; Google developed its
mobile
phone business.
This strategy option:
involves varying degrees of related diversification (in terms of
products);
can be an expensive and high risk,
may require new strategic capabilities

21/04/2020
8
Direction 3: Market development
Market development refers to a strategy by which an
organisation offers existing products to new markets
e.g., new geographical location: Amazon opened its new
branch in Australia; Bank of China set up its branches in
Australia.
New users: stainless steel for cutleries
Direction 4: Diversification
Diversification involves increasing the range of products or
markets served by an organisation.
Conglomerate (unrelated) diversification involves diversifying

into products/services or markets with no relationships to the
existing businesses.
TPG bought Myers in 2007
Related diversification involves diversifying into
products/services
or market with relationships to the existing business.
e. g., Wesfarmers bought Coles in 2008 and sold in 2017
(Horizontal
diversification)
21/04/2020
9
Drivers for diversification
Exploiting economies of scope efficiency gains through
appl ing the organisation s existing resources or competences to

new markets or services.
e.g., BHPB has its central marketing department in Singapore
for selling all its
minerals to their customers
Stretching corporate management competences.
e.g., Wesfarmers financial management
Exploiting superior internal processes.
e.g., IBM project management process
Increasing market power
Conglomerate or (unrelated) diversification
Conglomerate (or unrelated) diversification takes the
organisation beyond both its existing markets and its existing
products and radicall increases the organisation s scope.
e.g., Wesfarmers, GE, Berkshire Hathaway (US), Virgin
Corporation, and Temasek Holding (Singapore)
Private equity: Blackstone (US), Texas Pacific Group

(TPG, Luxemburg)
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10
Related diversification
Vertical integration
Vertical integration describes entering activities where the
organisation is its own supplier or customer.
Backward integration refers to development into activities
concerned with
the inputs into the compan s current business.
e.g., OneSteel (Now Arrium) acquired an iron ore mine from

WPR
Forward integration refers to development into activities
concerned with
the outputs of a compan s current business.
21/04/2020
11
How can corporate headquarters create or destroy activities?
Value-adding activities
Envisioning
Coaching and facilitating
Providing central services and resources
Intervening
Value-destroying activities
Adding management costs
Adding bureaucratic complexity

Obscuring financial performance
Indirect
Direct
How corporate parent can create value?
-- Three corporate rationales
The portfolio manager operates as an active investor in a way
that shareholders in the stock market are either too dispersed or
too inexpert to be able to do. In short, they are
Agents for financial market (TPG)
The synergy manager is a corporate parent seeking to enhance
value for business units by managing synergies across business
units.
E.g., CBA, Qantas, Telstra, BHP, etc
The parental developer seeks to employ its own central
capabilities to add value to its businesses.

e.g., Wesfarmers
21/04/2020
12
Portfolio manager
Logic
Agent for financial market
Strategic requirement
Identifying and acquiring undervalued asset
Divesting low-performing SBUs quickly and good performers at
a premium
Organizational requirement
Small low-cost corporate staff
Autonomous SBUs
Incentives based on SBU results

It is appropriate for unrelated diversification
For example, GE, Virgin Corp, and many private equity
companies, such as TPG.
TPG Capital, a global private investment firm, has a
portfolio of more than 200 businesses (companies) invested
Including
Financial services
Consumer and retail
Healthcare
Example: It acquired Myer in 2006, and sold it in 2009 for a
profit of
$1.4billion
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13
The synergy manager (1/4)
Logic
The achievement of synergetic benefits
Synergy refers to the benefits gained where activities or
assets complement each other so that their combined effect
is greater than the sum of the parts.
Synergy is often referred to as the
1 + 1 > 2 e ec .
Corporate examples
BHP, Qantas, Commonwealth Bank of Australia, Telstra
The synergy manager - Sharing activity (2/4)
Sharing activities often lowers costs or raises
differentiation

Sharing activities can lower costs if it:
Achieves economies of scale;
Boosts efficiency of utilisation;
Means more rapid movement through learning curve
Sharing activities can enhance potential for or reduce the cost
of
differentiation.
Sharing activities must involve activities that are crucial
to competitive advantage
21/04/2020
14
The synergy manager-
Transferring core competences (3/4)
Exploits interrelationships among divisions:

Identify ability to transfer skills or expertise among similar
value
chains.
Exploit ability to share activities
Two firms can share the same sales force, logistics network or
distribution channels
Example: Transferring Bunnings retailing capability to
OfficeWork,
Wesfarmers
Degree of synergy ake b ? (4/4)
Synergy can reside as different levels
At SBU level or corporate level
e.g., BHPBilliton and RioTinto, CBA and NAB,
At functional level
e.g., Distribution, marketing, R&D
At modular level

e.g., customer service (call centre)
Thus, in considering M&A, the synergetic benefit should
outweigh the costs of coordination.
21/04/2020
15
The parental developer
Logic
Central competences can be used to create value in SBUs
Example: Wesfarmers, Virgin Corporation
Strategic requirements
SBUs not fulfilling their potential
The center has clear and relevant resource or capabilities to
enhance
SBU potential

The portfolio is suited to Center s expertise
The a e al de el e (C d)
Organizational requirements
Center managers understand SBUs
Effective structural and control linkage from Centre to SBUs
SBUs may be autonomous unless collaboration is required
Incentives based on SBU performance
Former Coles managing director, Ian McLeod, gathered up
$10.74 million 2012-2013 for his
turnaround of Coles
Mr McLeod's long-term payments over the five years of the
package total $34.5 million - all paid in
cash
31
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16
Three corporate rationales summary
Portfolio managers, synergy managers
and parental developers
21/04/2020
17
Challenges in corporate parenting
Which rationale of corporate parenting is dominant?
Can multiple rationales work simultaneously? If they can, how
to manage them?
How should corporate headquarters clarify and communicate
its parenting rationale to its stakeholders?

Module summary
A corporation is an multi-business organisation
Corporate strategy is concerned with the overall purpose and
scope of the organisation and how to create value for the
corporation as a whole.
Two major tasks for developing a corporate strategy
Deciding on the strategic directions
understanding how corporate parent can add value to its
business
Ansoff s growth matrix
Market penetration, market development, product development,
and diversification
35
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18
M d le a (C d)
Three types of role played by corporate parent
Portfolio managers
Synergy managers
Parental developers
36
Prepare for next week
Module 8 International Strategy
Read Chapter 9 of the textbook
Read Assignment 2 Guide and form your group of FOUR (4).
Start preparing for proposing ONE strategic initiative
37
3/04/2020

2
Strategic position and analysis
Strategic
position/
analysis
The environment
Strategic
capability
Purposes and
expectations
Modules 2-3
Module 4
Module 5

Opening Case The Australian Grand Prix Corporation and
Grand Prix Melbourne 2020
The 2020 Australian Formula 1 Grand Prix was abruptly
cancelled on 13 March, the day that was scheduled to be
officially opened
https://www.abc.net.au/news/2020-03-13/australian-
formula-1-grand-prix-cancelled-over-coronavirus/12052142
https://www.abc.net.au/news/2020-03-13/australian-formula-1-
grand-prix-cancelled-over-coronavirus/12052142
3/04/2020
3
Opening case The Australian Grand Prix Corporation and
Grand Prix Melbourne 2020
It was expected to attract about 320,000 fans and
generated $1.5 billion for the national economy.

While the Australian GP Corporation was very adamant
about the opening of this event, the public was very
concerned with the mass gathering that can accelerate the
spread of COVID-19.
Opening Case Melbourne Grand Prix
Internal and External Stakeholders
External Stakeholders
Funding Bodies
Sponsors
State Government
Suppliers/Value Chain Partners
Catering
-Ticketing
Regulators
State Government
Department of Health

Media Broadcasting and TV
Customers
Sports Fans, Spectators
General public
Internal Stakeholders
Employees
F1 Teams
Coaches
Managers
6
3/04/2020
4
Key questions to be addressed

Who are the stakeholders for this event?
Which stakeholders are powerful?
Which stakeholders have motivation/interest to be
involved?
How should these stakeholders be managed?
Learning objectives
On successful completion of this Module, students will
be able to
Undertake a stakeholder analysis to identify their power and
interest and manage them accordingly
understand corporate governance, key mechanisms, and the
role of board of directors
Describe corporate social responsibility and link it to
stakeholder
management
8

3/04/2020
5
Three factors influence on strategic purpose
Who are stakeholders?
Stakeholders are those individuals or groups who depend
on an organisation to fulfil their own goals and on whom, in
turn, the organisation depends.
Stakeholders are often project- or issue-specific.
Different projects or issues usually have a different set of
stakeholders
10
LO1

3/04/2020
6
What are key stakeholders to organisations?
11
Stakeholders can be grouped in several ways
Stakeholders can be grouped by the type or nature of the
relationship they have with the organisation and how they
affect success and failure
Economic: managers, owners, banks, suppliers, customers
Social: Communities, public
Environmental: Community, government
Most commonly grouped as internal and external
stakeholders
12

3/04/2020
7
Internal and external stakeholders
13
Internal
Employees
Manager
Owners
Founders
External
SocietySupplier
Customer

Government
Creditors
Investors
Advisors
How stakeholders influence strategy?
Stakeholders influence the
Purpose of the organisation ( Vision, Mission, Values,
Objectives),
Formal governance mechanisms
Ethical considerations (and CSR)
Which will influence the purpose of the organisation and its
strategy
14
3/04/2020

8
How to manage stakeholders?
Stakeholder Mapping (1/2)
Stakeholder mapping identifies stakeholder power and
interest and helps in understanding political priorities.
Power is the ability of individuals or groups to persuade,
induce or coerce others into following certain courses of
action.
Coercive (regulatory), utilitarian (resources), and normative
power
Sources of power
16
3/04/2020

9
How to manage stakeholders?
Stakeholder Mapping (2/2)
Interest is often related to the level of effect by the
project/issue, financially, environmental or psychologically
Stakeholder interest/motivation includes:
Financial stake/interest
Environmental interest
Emotional interest
Who are the strongest supporters, who are the biggest
naysayers?
Attitude: Positive vs negative effect
Stakeholder mapping: the power/attention
(level of interest) matrix
19

3/04/2020
10
Stakeholder Mapping More managerial implications
Who are the key blockers or facilitators of strategy?
Do the actual levels of Power and Interest reflect the
corporate governance framework?
Is it desirable to try to reposition certain stakeholders?
Corporate governance
Corporate governance is concerned with the structures
and systems of control by which managers are held
accountable to those who have a legitimate stake in an
organisation.

The growing importance of governance
The separation of ownership and management control
Corporate failures and scandals (e.g. AMP)
Increased accountability to wider stakeholder interests and the
need for
corporate social responsibility (e.g. green issues)
21
LO2
3/04/2020
11
The governance chain
The governance chain shows the roles and relationships
between different groups involved in governance of an
organisation.
22

The principal-agent model
Governance can be seen in terms of the principal agent
model
Principals pay agents to act on their behalf (e.g.
beneficiaries/trustees pay investment managers to
manage funds, Boards of Directors pay executives to run
a company).
Agents may act in their own self interest Agency theory.
3/04/2020
12
Main governance mechanisms
Three internal governance mechanism
Ownership concentration

Large block shareholders have a high level of motivation to
monitor managers behaviour
Executive compensation
Linking e ecutives remuneration package (salar , bonus, share
options)
to the stakeholder s objectives.
Board of directors
External governance mechanism
Market for corporate control
The role of boards
O e a e inde enden l of the management the role of non-
executives is crucial.
Be competent to
Monitor and control the activities of managers.
Offer advice to CEOs
Help provide resources to the organisation due to their
interlocking

directorate
Have time to do their job properly.
Behave appropriately given expectations for trust, role fluidity,
collective responsibility, and performance.
3/04/2020
13
Corporate social responsibility
Corporate social responsibility (CSR) is the commitment by
organisations to behave ethicall and contribute to economic
development while improving the quality of life of the
workforce and their families as well as the local community
and societ at large .
CSR is concerned with the ways in which an organisation
exceeds its minimum obligations to stakeholders specified

through regulations.
LO3
Key aspects of CSR
Narrow CSR perspective
Environmental
Social
Economic
Broader CSR perspective
Social
Environmental
Economic
Governance
3/04/2020

14
Questions of CSR
Should organizations be
responsible for the following
internal aspects
Employee welfare?
Working conditions?
Job design?
Intellectual property?
Should organizations be
responsible for the following
external aspects
Environmental issues?
Products?
Markets and marketing?
Suppliers?
Employment?
Community activity?
Human rights?

28
CSR stances and stakeholder relationships
Laissez- Stance
Unilateral
Enlightened Self Interest
Interactive
Forum for Social Interaction
Partnership
Shaper of Society
Multi- 0rganisation Alliances
29
3/04/2020
15
Corporate social responsibility stances

Module Summary (1)
The purpose of an organisation will be influenced by the
expectations of its stakeholders.
Stakeholders are those individuals or groups who
depend on an organisation to fulfil their own goals and on
whom, in turn, the organisation depends.
Stakeholder relationship can be managed using
stakeholder mapping
3/04/2020
16
Module Summary (2)

Corporate social responsibility (CSR) is the commitment by
organisations to behave ethicall and contribute to economic
development while improving the quality of life of the
workforce
and their families as well as the local community and society at
large .
Organisations adopt different stances on corporate social
responsibility
depending on how they perceive their role in society. Individual
managers may face ethical dilemmas relating to the purpose of
their
organisation or actions it takes.
Next Week
Module 6 Business Strategy
Read Textbook Chapter 7
Relevant Assignment 2 task
Task 2: Strategy identification
Approach 1: Using value chain analysis emerging strategy
Approach 2: Locating organisation s strateg statement intended

strategy
8/05/2020
2
O e : Ne M e S a e
Myer in 2015
Performance was deteriorating
Share price continued decline
Online retailing increased rapidly and Amazon was poised to
enter Australian market
Several new international specialized (Uniqlo, Zara. H&M)
stores opened in Australia
CEO, B e, B , Ma c 2015; R c a d U be a
promoted from CIO to CEO
A $10.4 million of strategy review

was undertaken in 2015
3
O e : Ne M e S a e
Faced with the deteriorating performance, Myer
announced its new strategy in Sep 2015. They are
Enhanced customer led offer
Wonderful experiences
Omni-channel shopping
Productivity step change
Organisational capability
4
8/05/2020
3
O e : Ne M e S a e (c d)

Key stakeholders, including institutional investors,
shareholders, board of directors, and employees, were
concerned with the success of these new strategic
initiatives, particularly how to evaluate them.
Moreover, what strategy could be more effective to the
e e M e a c a e a ce?
5
Learning Objectives
After you have studied this module, you should be able to
Employ three success criteria for evaluating strategic options:
Suitability: whether a strategy addresses the key issues relating
to the
opportunities and constraints an organisation faces.
Acceptability: whether a strategy meets the expectations of
stakeholders.
Feasibility: whether a strategy could work in practice.
Describe the four aspects of balance scorecard (BSC) and

strategy map and apply them in measuring strategy
8/05/2020
4
EVALUATING STRATEGY
1. How do we use the SAFe framework to evaluate strategy?
7
Strategy evaluation-
The SAFe criteria
Table 11.1 The SAFe criteria and techniques of evaluation
8
8/05/2020

5
Suitability
Suitability is concerned with assessing which proposed
strategies
address the key opportunities & constraints an organisation
faces,
through an understanding of the strategic position of an
organisation.
It is concerned with the overall rationale of the strategy:
Does it exploit the opportunities in the environment and avoid
the
threats?
D e ca a e e a a strengths and strategic
capabilities and avoid or remedy the weaknesses?
9
Strategic fit (suitability): Combining both positioning and
RBV

Organization's strategic capability
Environment
attractiveness
Strategic fit
How should organizations develop to achieve their
sustainable competitive advantage?
8/05/2020
6
Suitability of strategic options in relation to strategic
position (1/2)
Concept Help with understanding Suitable strategies address
issues such as
PESTEL (Module 2) Opportunities and threats; Keu

environmental drivers;
Industry growth rate
Major environmental changes;
Industry cycle; Industry
convergence
Five force model (Model
3)
Industry attractiveness;
Competitive forces.
Reducing competitive intensity;
Development of new barriers to
new entrants
Strategic groups
(Module 3)
Group attractiveness;
Mobility barriers;
Strategic spaces.
Need to position a more attractive

group or to a available strategic
space.
11
Suitability of strategic options in relation to strategic
position (2/2)
Concept Help with understanding Suitable strategies address
issues such as
Strategic capabilities
(Module 5)
Industry threshold capabilities; Base
of competitive advantage
Eliminating weakness;
Exploiting strengths (strategic
capabilities)
Value chain (Module 5) Opportunities for vertical integration
or outsourcing;
Extent of vertical integration and

outsourcing
12
8/05/2020
7
Suitability – screening techniques
There are several useful techniques:
¾ Ranking.
¾ Decision trees.
¾ Using scenarios.
¾ Screening for competitive advantage.
¾ Life cycle analysis.
Ranking for selecting the most suitable

strategic option
Strategic
options/initiatives
PESTEL analysis 5 force analysis Strategic capabilities
Oppor-
tunities
Threats
(avoid)
Oppor-
tunities
Threats
(avoid)
Strengths Weaknes
ses
OP1 Op2 T1 T2 OP3 OP4 T3 T4 S1 S2 W1 W2
Strategic option 1 /

Initiative 1 (5-1)
? ? ? ? ? ?
Strategic option 2 /
Initiative 2 (4-2)
? ? ? ? ? ?
Strategic options3
/initiative 3
14
= Fa ab e; = a ab e ; ? = ce a
A = Most favorable; B = Possible; C = Unsuitable
8/05/2020
8
Selecting the most suitable strategic option through ranking

Strategic options
Key Strategic Factors
Ranking
Slowing
market
growth rate
High
developing
country
growth
Creation of
AB InBev
SABMillier
giant
Consumer
shifting to
craft beers
in mature
market

Fit with
technical
competence
s
Fits with
sector know-
how
Builds on
reputation
for corporate
sustainability
Grow Heineken
Premium beer
? 4-2 (B)
Introduce cider
and Weiss beer
? ? ? ? 3-0 (A)

Merge with
Carlsberg
? 5-1 (A)
Merge with Daigeo ? ? 4-1 (A)
Acquire Moulson
Coors (US
? 4-2 (B)
Fund local craft
beers
? ? ? ? 1-2 (C)
15
= Fa ab e; = a ab e ; ? = ce a
A = Most favorable; B = Possible; C = Unsuitable
An illustrative example Strategic options for Myer and
their suitability evaluation

PESTEL analysis
Changes in technology (Internet) and social culture (online
shopping)
Opportunities or threat for retailers?
Five force analysis
New entrant, e.g., Amazon
What can be done? M&As? Government lobby?
Strategic group
What new strategic spaces are available?
Brick and click as a new strategic group?
Strategic capability
Exploit/leverage current SC: 63 store nationwide, rich
experience in retailing
Develop new SC: online retailing or e-commence
16
8/05/2020
9

An overview of strategic options (initiatives)
with some examples
Directions and
methods
Internal development Acquire/merger Joint development
Market penetration Operational
productivity
improvement (brand
mgt; customer
services, etc);
Acquire new brands,
new outlets;
Joint development of
e-tailing
Product (service)
development
Develop e-commerce

(e.g., click and pick;
new services);
Acquire new service
providers;
Joint new
product/service
development with
partners.
Market development
Diversification
17
A strategic decision tree for a law firm
8/05/2020
10

Acceptability
Acceptability is concerned with whether the expected
performance measures/outcomes of a proposed strategy meet
the expectations of stakeholders.
There are three key aspects of acceptability - e 3 R :
Risk
Sensitivity analysis, financial ratio (gearing and liquidity),
breakeven analysis
Return
Financial analysis (ROCE, payback period, DCF); shareholder
value analysis
(TSR, EVA), cost benefits, real options.
Reactions (of stakeholders)
Key shareholders: bankers, regulators, employees, the local
community,
customers.
21
Feasibility

Feasibility is concerned with whether a strategy could work
in practice i.e. whether an organisation has the capabilities
to deliver a strategy
Two key questions:
Do the resources and competences currently exist to
implement the strategy effectively?
If not, can they be obtained?
22
8/05/2020
11
MEASURING PERFORMANCE
How do we use the Balanced Scorecard to measure
performance?
The balanced scorecard approach

It was developed by David Kaplan and Robert Norton in 1992
Involves the measurement of four critical perspectives of
organisational performance:
financial
customer
internal, and
learning and growth
I a e acc e e e e e a a
stakeholders
RMIT University©2017 24
8/05/2020
12
Four distinctive perspectives of Balanced Scorecard
Financial T cceed a c a d e a ea
our shareholders?

Customer To achieve our vision, how should we appear to
our customers?
Internal business process To satisfy our shareholders and
customers, at what business process must we excel?
Learning and growth To achieve our vision, how will we
sustain our ability to change and improve?
W ca ed ba a ced ?
It balanced measures of
Short- and long-term objectives
Financial and non-financial measures
Leading and lagging indicators
Internal and external perspectives
https://hbr.org/2007/07/using-the-balanced-scorecard-as-a-
strategic-
management-system
https://hbr.org/2007/07/using-the-balanced-scorecard-as-a-
strategic-management-system

8/05/2020
13
Example of a balanced scorecard
Financial Perspective
•Shareholder return
•Cash flow
•Major customer profitability
•Profit forecast reliability
•Sales backlog
Customer perspective
•Relative pricing index
•Customer ranking survey
•Customer satisfaction index
•Market share
Innovation and Learning
Perspective
•% revenue from new
services

•Rate of improvement index
•Staff attitude survey
•No. of employee
suggestions
Internal Business
Perspective
•Hours with customers on
new work
•Revenue per employee
•Returns
•Safety incident index
•Order-delivery cycle
27
Strategy map
A Strategy Map is a diagram that describes
how an organisation creates value by connecting strategic
objectives in
explicit cause-and-effect relationship with each other in the four
Balanced
Scorecard (BSC) objectives (financial, customer, processes, and

learning
and growth).
It shows the causes and effect models of relationships
between the key strategic aspects and variables.
RMIT University©2017
28
8/05/2020
14
Why drawing a strategy map?
Through connecting four distinctive perspectives with one
another in one graphical representation, strategy mapping
can help in describing the strategy and communicate the
strategy among executives and employees involved
Thus, alignment can be created around strategy, which
help successful implementation of the strategy developed

29
30
Some examples of strategic maps
8/05/2020
15
32
How to draw a strategy map?
Developed within a top-down process
Strategy map development is a top-down process beginning with

the
a c a ( a e) e ec e a d e d e ea a d ( e
orientation) perspective.
Financial and customer perspectives represent the expected
outcomes of
strategy (i.e., make money and have happy customers).
The internal process and learning and growth perspectives
represent the
drivers of those outcomes.
34
8/05/2020
16
Proposed strategies may be evaluated using the three SAFe
criteria:

¾Suitability is concerned with assessing which proposed
strategies address the
key opportunities and constraints an organisation faces. It is
about the
rationale of a strategy.
¾The acceptability of a strategy relates to three issues: the level
of risk of a
strategy, the expected return from a strategy and the likely
reaction of
stakeholders.
¾Feasibility is concerned with whether an organisation has or
can obtain the
capabilities to deliver a strategy.
Module Summary (2/2)
Balanced scorecard can be used to measure strategic
performance in four distinctive perspectives
Financial measures

Customer measures
Internal process
Learning and growth
A strategy map can logically and hierarchically link these four
distinctive perspective together.
Strategy mapping can help in describing the strategy and
communicate the
strategy among executives and employees involved.
36
8/05/2020
17
Next week
Strategy implementation
Read Chapters 14 Organising and strategy

Read Chapter 15 Leadership and strategic change
Assignment 2: Task 5
37
15/04/2020
1
Module 6 Business Strategy
Dr Xueli (Charlie) Huang
Senior Lecturer
A roadmap of strategic management

2
Strategic
Analysis
Strategy
formation
Strategy
implementation
• Macro environment
analysis
• Industry environment
analysis
• Internal environment

analysis
• Stakeholder analysis
• Business strategy
(Module 6)
• Corporate
strategy (M7)
• International
strategy (M8)
• M&A (M9)
• Strategy Evaluation &
Measurement (Module
10)
• Strategy implementation

(module 11)
• Course Summary
15/04/2020
2
Opening story: Apple and Aldi
- Apple: One of the world’s most innovative companies
• Its market value is currently over $1 trillion 2020
• Major new products developed and launched
– iPhone 12 Pro, iPod Pro, Apple Watch 5, and New Apple TV+
content
.

3
How Apple is competing?
• Apple’s products are different and very expensive.
• How Apple is competing?
–https://www.youtube.com/watch?v=uPo_wmR4a68&t=353s
• Tim Cook- Apple’s CEO
– “Stock price is a result, not an achievement by itself. For me,
it’s
about products and people”.
• Product differentiation (quality and industry design) has
been the most important competitive advantage for Apple
4
https://www.youtube.com/watch?v=uPo_wmR4a68&t=353s

15/04/2020
3
Learning Objectives
• To learn the concept of Strategic Business Unit (SBU)
• To understand and critically analyse three generic business
strategies
–Cost leadership
–Differentiation
–Focus
• Business Model Innovation
• The comparison of two dominant strategic perspectives:
– Market positioning vs resource based view (RBV)
– Strategic fit: integrating market position with firms’ strategic

capability
6
What is Business Strategy?
• What is strategy?
– Strategy is the long-term direction of the organisation
• Three levels of strategy
– Corporate strategy
– Business strategy
– Functional strategy
• Business strategy is usually made at the Strategic Business
Unit (SBU) level.
–A SBU is an organizational unit for strategy-making purpose.
–Business strategy is about how to compete successfully in the
markets.
7

Corporate
Business
Function (e.g., marketing, HR)
15/04/2020
4
Porter’s three generic business strategies
• Three generic business strategies
– Proposed by Michael Porter
– It is based on two fundamental ways of competition (cost
and differentiation) and the scope of competition
– Competitive advantage: Cost vs differentiation
– Competitive scope: Large vs small (market segments)

8
Porter’s three generic strategies
15/04/2020
5
Costs, prices and profits for generic strategies
Competitive advantage and value chain (Porter, 2012)
11
These activities
need to be

consistent
These activities
need to be
reinforced
15/04/2020
6
12
The relationship
between business
strategy and value
chain activities
Strategic

leaders
Functional
managers
Cost-leadership
• Cost-leadership strategy involves becoming the lowest-cost
organisation in a
domain of activity.
– e.g., Toyota, Coles, Bunnings
–It is about low cost, rather than low price (Low cost ≠ Low
price)
• Four key cost drivers that can help deliver cost leadership:
• Lower input costs, e.g., labour or raw materials
• Economies of scale

• Experience.
• Product and process design.
Fixed costs
Unit of production
T
o
ta
l
c
o
s
ts
15/04/2020
7

Cost-leadership
– Implementation considerations
• Strategic requirements
–Tight cost and overhead control
–Avoidance of marginal customer accounts
–Cost minimization in all activities in the firm’s value chains
–This “cost leadership” strategy should be used to direct
cross-functional, organization-wide activities to LOWER
costs
• Example: Toyota
Primary Activities

S
u
p
p
o
r
t
A
c
ti
v
it
ie
s
Cost Effective
MIS Systems
Relatively Few

Management Layers to
Reduce Overhead
Simplified Planning
Practices to Reduce
Planning Costs
Consistent Policies to
Reduce Turnover Costs
Effective Training Programs
to Improve Worker
Efficiency and Effectiveness
Highly Efficient
Systems to Link

Suppliers’
Products with the
Firm’s Production
Processes Timing of Asset
Purchases
Efficient Plant
Scale to Minimize
Manufacturing
Costs
Selection of Low
Cost Transport
Carriers
Delivery Schedule

that Reduces
Costs
National Scale
Advertising
Products Priced to
Generate Sales
Volume
Small, Highly
Trained Sales
Force
Effective Product
Installations to
Reduce Frequency

and Severity
of Recalls
Easy-to-Use Manufacturing
Technologies
Investments in Technology in order
to Reduce Costs Associated with
Manufacturing Processes
Systems and Procedures to find the
Lowest Cost Products to Purchase
Raw Materials
Frequent Evaluation Processes to
Monitor Suppliers’ Performances

Located in Close
Proximity with
Suppliers
Policy Choice of
Plant Technology
Organizational
Learning
Efficient Order
Sizes
Interrelationships
with Sister Units
Value creating activities common to cost leadership
business level strategy

16School of Management
These activities should
be consistent
These activities
should be reinforced
each other
Functional
strategy –
Marketing strategy
Functional
strategy –
Technology

strategy
15/04/2020
8
Differentiation strategies
• Differentiation involves uniqueness along some dimension
that is sufficiently valued by customers to allow a price
premium.
• Three primary differentiation drivers
– Product and service attributes
– Dyson, Ikea, Apple Computer, Singapore Airlines
– Customer relationship
– Customization of product and services
–Smart technology
– Complements

– E.g., iTune and Apple store
A companywide
emphasis on producing
high quality products
Highly Developed Information
Systems to better understand
customers’ purchasing preferences
Compensation programs
intended to encourage worker
creativity and productivity
Extensive use of subjective
rather than objective

performance measures
Superior
handling of
incoming raw
materials to
minimize
damage and
improve the
quality of the
final product
Rapid responses
to customers

unique
manufacturing
specifications
Consistent
manufacturing of
attractive
products
Accurate and
responsive order
processing
procedures
Complete field
stocking of

replacement parts
Strong
capability in
basic research
Investments in technologies that will
allow the firm to consistently produce
highly differentiated products
Systems and procedures used to find
the highest quality raw materials
Purchase of highest quality
replacement parts
Rapid and timely

product deliveries
to customers
Superior
personnel
training
Coordination among R&D,
product development and
marketing
Extensive
personal
relationships
with buyers
Strong Coordin-

ation among
functions in R&D,
Marketing and
Product
Development
Premium
Pricing
Primary Activities
S
u
p
p
o
r

t
A
c
ti
v
it
ie
s
Value creating activities common to differentiation
business level strategy – implementation considerations
18
These activities
should be
consistent
These activities

should be reinforced
each other
15/04/2020
9
Focus strategies
A focus strategy targets a narrow segment of domain of an
activity and tailors its products or services to the needs of that
specific segment to the exclusion of others.
Two types of focus strategy:
• cost-focus strategy (e.g. Aldi, Jetstar, Ryanair).
• differentiation focus strategy (e.g. Miele, BMW, Dyson).

Limitations of Porter’s three generic strategies
•How much focus is enough?
– How many segments of market are we going to serve?
–What opportunities present in other market segments?
–Do we have enough resources and competences to serve these
markets?
–Can we serve these market segments better than our
competitors?
• How can we organise our value chain activities to gain the
competitive advantage offered by differentiation and cost?
15/04/2020

10
‘Stuck in the middle’?
Porter’s argues:
• It is best to choose which generic strategy to adopt and then
stick rigorously to it.
• Failure to do this leads to a danger of being ‘stuck in the
middle’ i.e. doing no strategy well ( such as Virgin Australia).
• The argument for pure generic strategies is controversial.
Even Porter acknowledges that the strategies can be
combined (e.g. if being unique costs nothing).
Integrated low-cost/differentiation strategy (1/3)

Cost
leadership
Differentiation
Focused
low cost
Cost Uniqueness
Broad
Narrow
Bases (sources) of competitive advantages
Breadth of competitive scope
Focused
differentiation
Integrated low cost/differentiation

15/04/2020
11
Combining generic strategies (2/3)
• Integrated low-cost/differentiation strategy as a
combing generic strategy
• Firms using an integrated strategy may:
–Utilise flexible manufacturing systems (FMS, CAD, CAM) to
create differentiated products at low cost
–Leverage core competencies through information networks
across multiple business units (e.g., ERP)
–Utilise total quality management (TQM) to create high-quality
differentiated products while simultaneously driving down costs
–Examples: Toyota

Combining generic strategies (3/3)
• A company can create separate strategic business units each
pursuing different generic strategies and with different cost
structures (Qantas and Jetstar).
• Technological or managerial innovations where both cost
efficiency and quality are improved, such as 3D printing, AI,
and IoT.
15/04/2020
12

What is a business model?
A business model describes a value proposition for
customers and other participants, an arrangement of
activities that produces this value and associated
revenue and cost structures.
New entrants with new business models can radically
change the dynamics and competition in a market and
establish superior positions.
(e.g. Uber, Airbnb, Spotify).
29
What are the key elements of a business model?
There are three essential elements in a business model:
• Value creation – a proposition that addresses a

customer segment’s needs.
• Value configuration – the way resources and activities
are organised to produce this value.
• Value capture – the way the cost structures and
revenue streams create added value for stakeholders.
30
15/04/2020
13
Business model components
31
The business model of Afterpay – How it works?

32
AfterPay
Retailers
Service
Providers, such
as flight
organisations
Customers
https://www.youtube.com/watch?v=u7IK7pSuBME
15/04/2020
14
Some patterns of new business model

Three typical business model patterns are:
• Razor and blade – named after the classic Gillette strategy of
selling
razors cheaply and profiting from sales of high priced blades
(mobile
phones, ink-jet printers).
• Freemium – named by combining ‘free’ and ‘premium’. Basic
services
are free to attract customers who then upgrade to expensive
premium
services (Zoom, Spotify).
• Multi-sided platforms – bringing together two or more distinct
but
interdependent groups of customers (Uber, video games,
Alibaba,
AfterPay).

34
Two dominant strategic perspective:
Market positioning vs RBV (competitive vs competence
approach)
Resources-based
view (core
competence or
competence
strategy)
Positioning
strategy (or
competitive
strategy)

Organization’s
performance
Positioning school:
an outside-in
approachCompetence
perspective:
Inside-out
approach
35
15/04/2020
15
The dynamic duo or trio?

• Position in the industry structure shapes a firm’s access to
strategic
resources and capability
• The access to resources help shape a firm’s position in the
industry structure.
• Questions
–How stakeholder help shape a firm’s position in the industry
structure and its access to key resources?
–How a firm’s position and access to key resources help shape
its
relationships with key stakeholders?
36
A dynamic duo or trio –
the concept of strategic fit

M
a
rk
e
t
p
o
s
it
io
n
a
tt
ra
c
ti
v

e
n
e
s
s
High
Low
Resource and competence
Weak Strong
37
15/04/2020
16
Module summary (1)

• Business strategy is concerned with seeking competitive
advantage in
markets at the business rather than corporate level.
• Business strategy needs to be considered and defined in terms
of
strategic business units (SBUs).
• Different generic strategies can be defined in terms of cost-
leadership,
differentiation and focus.
• Managers need to consider how business strategies can be
sustained
through strategic capabilities.
Module summary (2)
• Implementing a business strategy needs to coordinate
organisation-
wide value chian activities

• Low cost and differentiation can be combined. However, it
risks
“stuck in the middle”
• Cost reduction is necessary to every business.
– The biggest challenge to many managers is which activities
should
be directed to low cost, which to differentiation
• Business model has three components: value, creation,
value configuration, and value capture
15/04/2020
17
Module summary (3)
• There are two dominant strategic perspectives in guiding

business strategy development
– Competitive (positioning) approach
– Resource-Base View (RBV) approach
–These two perspectives can be skillfully combined to develop
an
organization's strategy
40
Prepare for next week
• Read Chapter 8 Corporate strategy and diversification
• Assignment 2 development
– Task 2: Identifying the current business strategy of the
organization under analysis
41

28/04/2020
2
Opening story:
Why Tesla Is Betting Big in China With a Shanghai
'Gigafactory'
https://www.youtube.com/watch?v=rHO-ctMgygc&t=18s
Internationals expansion for Australian firms: A bless or a curse
Successful Australian companies in their international
expansion
BHPBilliton, Rio Tinto, CSL
Cochlear, ResMed
A2 Milk,

Australian companies with heavy losses in their
international expansion
ABC learning (Bankrupted)
Centro Properties (Almost Bankrupted)
AMP in UK (Withdrawn)
Wesfarmers in UK
https://www.youtube.com/watch?v=rHO-ctMgygc&t=18s
28/04/2020
3
A2 Mi : A hi e g d e e
The a2 Milk Company is an ASX public listed company.
It manufactures intellectual property relating to a2 milk, as
well as the milk and related products like infant formula.
Over 30% of its products are exported, including China,

UK and USA
Wesfarmers: Bunnings UK & Ireland
- Success recipe at home does not work overseas
It acquired acquisition UK H eba e in Jan 2016 and
became Bunning UK
Writing down for Bunnings UK in 2017 reached $1.3 billion
The UK market had struggled with the move to everyday low
pric
ing (EDLP) model, which has proved a winner for
Bunnings in Australia.
28/04/2020
4
Learning Objectives

After you have studied this module, you should be
able to
Understand the drivers for internationalisation
Why go international?
Understand P e Dia d a d ca i a ad a age
Distinguish between four main types of international
strategy:
Global, transnational, multidomestic, and export
The strengths and limits of each of these international
strategies
Modes of international market entry
Ke e i add e ed i da ec e
1. What drives internationalisation expansion
2. Wha i P e Dia d a d h d e i he e ai
location advantage?

3. What are 4 international Choices
(and how and when should they be used?)
4. What are the market entry modes available to companies
(And how do managers choose which is between the
methods?
[email protected] School of Management 8
28/04/2020
5
1. WHAT DRIVES
INTERNATIONALISATION
Yi de f i e a i a i a i
The global economy: A brief overview
Globalization

the increase in international exchange, including trade in goods
and
services as well as exchange of money, ideas, and information.
the growing similarity of laws, rules, norms, values, and ideas
across
countries.
For many industries, globalization has become a necessity for
survival
28/04/2020
6
Internationalisation drivers
Why go international? (Yip)
LO1

Market drivers
A critical facilitation of internationalization is standardization
of market
characteristics
Similar customer needs and tastes: OZ and NZ
Global customers: car part manufacturers
Transferable marketing: Brands
Cost drivers
Costs can be reduced internationally
Scale economies: large volume of operations
Country specific differences: Production and R&D
Favorable logistics: Iron ore shipment to China
28/04/2020

7
Government drivers
Reduction of barriers to trade and investment
WTO, regional economic integration partnership (EU, ASEAN,
TPP,
NAFTA, EAC), Bilateral trade agreement (FTA)
Technology standardization
Competitive drivers
Increase in interdependence between country operations
globalized competitors
2.WHAT IS PORTER S DIAMOND
AND HOW DOES IT HELP EXPLAIN
LOCATION ADVANTAGE
LO2

28/04/2020
8
L ca i ad a age : P e diam d
Por er Diamond explains why some locations tend to
produce firms with sustained competitive advantages in some
industries more than others.
The fo r dri er in Por er Diamond stem from:
local factor conditions
local demand conditions
local related and supporting industries
local firm strategy structure and rivalry.
L ca i ad a age : P e diam d

28/04/2020
9
Fac affec i g a a i c e i i e e
Factor endowments
The a i i i i fac f d c i , ch a i ed ab
infrastructure, necessary to compete in a given industry.
E.g., Mining technologies in Australia, skilled and cheap labor
in China.
Demand conditions
The nature of home- a e de a d f he i d d c e ice.
E.g., the demand of foreign customers makes Chinese white-
goods
manufacturers more competitive
Fac affec i g a a i c m e i i e e (c d)
Related and supporting industries

The presence or absence in the nation of supplier industries and
other related
industries that are internationally competitive.
E.g., industry clusters, Silicon valley in US, Japanese
electronics, Italian shoes
and leather
Firm strategy, structure, and rivalry
The conditions in the nation governing how companies are
created, organized,
and managed, as well as the nature of domestic rivalry
E.g., the Australian banking industry and wine industry
28/04/2020
10
3. WHAT ARE THE FOUR
INTERNATIONAL STRATEGY
CHOICES

LO3
International strategies
Key considerations
The global local dilemma relates to the extent to
which products and services may be standardised
across national boundaries or need to be adapted to
meet the requirements of specific national markets.
28/04/2020
11
Four international strategies

Pressure for local adaptation/
responsiveness
Low High
Low
High
Multidomestic:
Country-centred strategy
with a number of
domestic firms operating
in only one country
Transnational:
High foreign investment
with extensive
coordination among
subsidiaries
Global strategy
Same/similar product
sold in all countries

Pressure for
cost reductions
(Global
integration)
Export strategy:
Export-based strategy
with decentralized
marketing
Export strategy
Export strategy (or International strategy)
a a eg ba ed fi diff i a d ada a i f he a e c a ie edge a d
expertise to foreign markets, used in industries where the
pressures for both local adaptation
and lowering costs are low.
Example: Google, Wine, Infant formula
Strengths and Limitation
Strengths
Le e age a d diff i f a a e fi edge a d c e c e e cie

Lower costs because of less need to tailor products and services
Limitations
Limited ability to adapt to local markets
Inability to take advantage of new ideas and innovations
occurring in local
markets
28/04/2020
12
Global strategy
I i ba ed a fi ce a i a i a d c b he
corporate office
Same/similar product sold in all countries
Industries such as aerospace, automobiles, telecommunications,
metals, computers, chemicals, and industrial equipment e.g.,
Dell, Caterpillar, American Standard

Formulating and implementing strategy is more critical for
global
industries than multi-domestic industries.
Gl bal a eg (c d)
Strengths
strong integration across various businesses
standardization leads to higher economies of scale, which lower
costs.
Help create uniform standards of quality throughout the world
Limitations
Limited ability to adapt to local markets
Increased dependence on a single facility
Single location may lead to higher tariffs and transportation
costs.
http://trendsupdates.com/dell-supports-ubuntu/dell-logo-2/

28/04/2020
13
Multi-domestic strategy
It refers to country-centred strategy with a number of domestic
firms operating in only one country.
Emphasis is differentiating products and services to adapt to
local markets
Authority is more decentralized
It is suitable for those firms with their primary activities in
downstream of
value chains, such as services industry, such as: Carrefour, IT
firms.
E.g., Companies in the food and beverage, consumer products,
and clothing
and fashion industries, particularly in European markets
Multi-d e ic a eg (c d)

Strengths
can adapt products and services to local market conditions
can detect potential opportunities for attractive niches in a
given
market, enhance revenue.
e.g., ANZ Bank
Limitations
Decreased ability to realise cost savings through scale economy
Greater difficulties in transferring knowledge across countries
May lead to over-adaptation as conditions change
28/04/2020
14
Transnational Strategy
Optimization of tradeoffs associated with efficiency, local

adaptation, and learning
Fi a e a d ca abi i ie a e di e ed acc di g
the most beneficial location for a specific activity
Examples: Airbus, Apple: Toyota, Ikea, Starbucks;
T a a i al S a eg (c d)
Strengths
Ability to adapt to local markets
Ability to attain economies of scale
Ability to locate activities in optimal locations
Ability to increase knowledge flows and learning
Limitations
Unique challenges in determining optimal locations of activities
to ensure
cost and quality
Unique managerial challenges in fostering knowledge transfer

28/04/2020
15
30
How IKEA implements its transnational strategy
More than 90% of the product line at Ikea is identical in its
global
markets with some minor modifications in several countries.
The overall marketing strategy is centrally developed at its
HQs.
However, the strategy is executed with adjustments to local
context.
Many strategic decisions, such as advertisement contents, are
made by its national managers.
4. WHAT ARE THE MARKET
ENTRY MODES AVAILABLE TO
COMPANIES?

And how do we choose which is between the methods?
LO4
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16
Modes of international market entry
LO3
Exporting
Advantages
No need for operational
facilities in host country

Economies of scale in the
home country
Internet can facilitate exporting
marketing opportunities
Disadvantages
Lose any location
advantages in the host
country
Dependence on export
intermediaries
Exposure to trade barriers
Transportation costs
28/04/2020

17
Licensing
Advantages
Contractual source of
income
Limited economic and
financial exposure
Disadvantages
Difficult to identify good
partner
Loss of competitive
advantage
Limited benefits from host
nation
Joint ventures and alliances

Advantages
Shared investment risk
Complementary
resources
Maybe required for
market entry
Disadvantages
Difficult to find good partner
Relationship management
Loss of competitive
advantage
Difficult to integrate and
coordinate

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18
Foreign direct investment (Wholly owned subsidiaries
(WOS)
Advantages
Full control
Integration and coordination
possible
Rapid market entry through
acquisitions
Greenfield investments are
possible and may be subsidised
Disadvantages
Substantial investment and

commitment
Acquisitions may create
integration/ coordination
issues
Greenfield investments are
time consuming and
unpredictable
Entry modes of international expansion
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19
Ke e i add e ed i da ec e
1. What drives internationalisation expansion

2. Wha i P e Dia d a d h d e i he e ai
location advantage?
3. What are 4 international Choices
4. What are the market entry modes available to companies
(And how do managers choose which is between the
methods?_
[email protected] School of Management 38
Module Summary
Internationalisation potential in any particular market is
determined by
Yip fo r dri er : a e , c , g e e a d c e i
strategies.
There are four main types of international strategy, varying
according
to extent of coordination and geographical configuration:
export,
transnational, multi-domestic and global.

1 Paper Structure & Other Tips Philosophy papers.docx

1 Paper Structure & Other Tips Philosophy papers.docx

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