Scribd
Upload
11 views

global strategy management

part 3

Uploaded by

xoson56666
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
11 views

global strategy management

part 3

Uploaded by

xoson56666
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 13

Opening Case

One Rock Formation 2 Countries


• North Mexico shares many similarities with south Texas.
• Landscape, weather, people, food, culture … and rock formation
beneath the land.
• South Texas hit the jackpot. Sits on top of Eagle Ford shale which
contains significant shale gas deposits.
• Thousands of shale wells have appeared a cross Texas but this
entrepreneurial boom was not evident in Mexico, less than 25 in 2014.
• Why? Oil is BIG business
• Mexico has a predominance of small firms. 95% of firms have 10
employees or less. Peter Pan syndrome- desire to stay small.
• Only 8% of bank loans go to SMEs.
• Bank loans carry higher interest rates than for larger firms.
• Lack of incentives for fracking- private land ownership excludes
anything below the land surface.
Institution-Based View of Strategy
• How certain decisions are made – a function
of industry, firm-specific as well as societal
conditions.

• Institutions- “rules of the game” affect firm


strategy.
Understanding Institutions
Institutions: “the humanly devised constraints that structure
human interaction.”
• Formal Institutions- supported by regulatory & coercive power
of government
– Laws
– Regulations
– Rules
• Informal Institutions- supported by norms & value systems
internal & external.
– Culture
– Taste
– Ethics
Role of Institutions

Key function - Reduce uncertainty


– Signal what conduct is acceptable and which is not & so
Constrain the range of acceptable actions
– Reduce opportunism and transaction costs

How Do Institutions Reduce Uncertainty?


– Relational contracting: informal, relationship-based, personalized
exchanges
– Arm‘s length transaction - formal, rule-based, impersonal exchange
with third part enforcement
– Institutional transitions - fundamental and comprehensive changes to
the rules that affect all organizations
Institution-Based View of Business Strategy
Porter’s Diamond of National Competitiveness
explains the competitive advantage of globally
successful firms in different countries.
Porter’s Diamond of National Advantage
Institutions, Firms & Strategic Choices
Strategic Role of Culture
• Culture is the collective programming of the mind that
distinguishes members of one group or category of people
from another (Hofstede).
• 5 Dimensions of Culture
1. Power Distance- degree of social inequity.
2. Individualism vs Collectivism -
3. Masculinity vs Feminity- sex role differentiation
4. Uncertainty avoidance- extent to which people
accept ambiguous situations and tolerate uncertainty
5. Long-term orientation - perseverance and savings for
future betterment
Strategic Role of Ethics
• Ethics are the norms, principles and standards
of conduct governing individual and firm
behavior.

• Code of conduct – written policies and


standards for corporate conduct and ethics
What motivates a Firm to be Ethical?

• Negative View- ethics bandwagon due to


social pressure

• Positive View- self-motivation to “do it right”


• Instrumental View- good ethics = good profits
Managing Ethics abroad
– Ethical relativism
– Ethical imperialism

– Donaldson’s guiding principles


• Respect human dignity and basic rights
• Respect local traditions, show cultural sensitivity
• Respect for institutional context
Strategic Responses to Ethical Challenges
Strategic Responses Strategic Behaviour Examples

Reactive Deny responsibility, do Ford Pinto


less than required

Defensive Admit responsibility, but Nike (1990s)


fight it, do the least that
is required

Accommodative Accept responsibility, do Ford Explorer


all that is required

Proactive Anticipate responsibility, BMW


do more than is required
The Savvy Strategist
• Institution –Based Response to 4 Questions
1. Why do firms differ?
2. How do firms behave?
3. What determines the scope of the firm?
4. What determines the international success
and failure of firms?

You might also like