Global and Transnational Business Strategy and Management

by Stonehouse, George; Campbell, David; Hamill, Jim; Purdie, Tony

• ISBN13: 9780470851265
• ISBN10: 0470851260
• Edition: 2nd
• Format: Paperback
• Copyright: 2004-10-08
• Publisher: WILEY

Summary

In this new edition of a successful textbook the authors assess the turbulent environment in which international businesses operate and the approaches to strategy formulation and implementation which can be adopted. They also examine the functional and operational management of companies and fuse together the theoretical and empirical aspects of international management. New material includes coverage of leadership in transnational companies, cultural issues in international management, entrepreneurship and SMEs in global business, the impact of e-commerce, and the anti-globalization movement.

Author Biography

George Stonehouse is Professor of International Strategic Management and Associate Dean of Newcastle Business School. He is also an Honorary Professor of the State University of Management, Moscow, Russia, and Visiting Professor at the University of International Business and Economics, Beijing, and Zhengzhou University, People’s Republic of China. His research interests are in globalization, knowledge and organizational learning.

Dr. Jim Hamill is Reader in the Department of Marketing at University of Strathclyde. Jim is a Visiting Lecturer at a number of Business Schools in Europe and is widely published in International Marketing, E-business and International Human Resources Management.

Dr. David Campbell is Senior Lecturer in Strategic Management at Newcastle Business School. David’s research interests are in the areas of Strategic Management and Corporate Governance.

Dr. Tony Purdie is Principal Lecturer in Strategic Management and MBA Programme Director at Newcastle Business School. Tony is a Visiting Lecturer at several Business Schools in Europe.

Table of Contents

Preface to the second edition	xix
Acknowledgements	xxi
PART I	1	(36)
Strategic and Management Issues in Global and Transnational Business	3	(34)
Learning objectives	3	(1)
Global and transnational business -- an introduction	3	(16)
Some important definitions	3	(2)
Definitions of globalization	5	(1)
GATT and the WTO	6	(2)
Globalization -- is it a blessing or a curse?	8	(8)
Global and transnational strategy	16	(1)
Structure of the book	16	(2)
Increasing global co-ordination in Philips Electronics	18	(1)
Global and transnational strategies and management -- the issues	19	(1)
A framework for global and transnational strategic management	20	(6)
The controversies in strategic management	20	(2)
The prescriptive or deliberate approach to strategy	22	(1)
The emergent or learning approach to strategy	23	(1)
The competitive positioning approach to strategy	23	(1)
The resource, competence and capability approach to strategy	24	(2)
The knowledge-based approach to strategy	26	(1)
The approach to global strategy in this book	26	(3)
Assumption 1 Competitive advantage arises from new and superior knowledge	27	(1)
Assumption 2 Organizational learning and knowledge management are vital to creating and sustaining competitive advantage	27	(1)
Assumption 3 Strategy is both planned and emergent	27	(1)
Assumption 4 Competitive advantage results from both internal knowledge-based core competence development and from changing conditions in the business environment	28	(1)
Assumption 5 It is important to distinguish between industries and markets	29	(1)
Assumption 6 Competitive advantage results from both competitive and collaborative behaviour	29	(1)
A summary of the frameworks	29	(1)
The global and transnational strategic management process	29	(4)
The management process matrix	29	(1)
The major elements in the process matrix	30	(3)
Conclusion	33	(4)
Review and discussion questions	33	(1)
References and further reading	34	(3)
PART II	37	(118)
From National Culture to Global Vision	39	(34)
Learning objectives	39	(1)
Introduction	39	(1)
The concept of globalization	40	(2)
Industries and markets	40	(2)
Causes of market and industry globalization	42	(5)
Overview	42	(1)
Technological forces	43	(1)
Social forces	44	(1)
Political and legal forces	45	(1)
Economic forces	45	(1)
The extent of globalization	46	(1)
Globalization and environmental turbulence	47	(2)
The example of the South Korean economy	47	(1)
Tariffs and quotas	47	(1)
Currents and cross currents	48	(1)
Global mission, objectives and strategy	49	(3)
Strategy, purpose and objectives	49	(1)
Global vision	50	(1)
Vision, philosophy and global strategy	50	(1)
Nokia's global vision	51	(1)
Culture and global business	52	(4)
Levels of culture	52	(2)
EuroDisney -- a European or American cultural identity?	54	(1)
Characteristics of culture	55	(1)
Hofstede's cultural dimensions framework	56	(3)
Elements of Hofstede's framework	56	(1)
Power distance	56	(1)
Uncertainty avoidance	57	(1)
Individualism/collectivism	57	(1)
Masculinity/femininity	57	(1)
Long-term orientation	58	(1)
Trompenaars' dimensions of culture framework	59	(3)
Elements of Trompenaars' framework	59	(1)
Relationships with people	60	(1)
Time	61	(1)
Relating to nature	61	(1)
Tayeb -- major cultural characteristics observed in various nations	62	(1)
The importance and determinants of culture in transnational business	62	(4)
The importance of culture	62	(2)
Culture and the success of mergers in the automobile industry	64	(1)
Organizational culture	65	(1)
Determinants of organizational culture	66	(1)
Analysing organizational culture -- the cultural web	66	(7)
Sources of culture -- an example of the influences on a country's culture	69	(1)
Review and discussion questions	70	(1)
References and further reading	70	(2)
Web links	72	(1)
Analysis of the Global Business	73	(30)
Learning objectives	73	(1)
Introduction	73	(1)
Analysis of the global organization	74	(1)
Internal analysis	74	(1)
Competences, resources and capabilities	74	(6)
Understanding global competences	74	(1)
Definitions of resources, capabilities and competences	75	(1)
Resources	76	(1)
General competences/capabilities	77	(1)
Core competences/distinctive capabilities	77	(3)
Global value chain analysis	80	(6)
Organizations as systems	80	(1)
The value chain	80	(2)
Primary activities	82	(1)
Support activities	83	(1)
Using the value chain framework	83	(1)
The value system	84	(1)
Co-ordinating activities and linkages	85	(1)
The `global' value chain	86	(1)
A more complex value chain	86	(1)
Configuration	86	(1)
Co-ordination	87	(1)
Global organizational culture and structure	87	(4)
The importance of culture and structure	87	(1)
Structure	88	(1)
BP Amoco and global structure	89	(1)
Culture	90	(1)
Products, performance and portfolio analysis	91	(8)
The concept of portfolio	91	(1)
The BCG matrix	92	(1)
Using the BCG matrix	93	(1)
Limitations of the BCG matrix	94	(1)
BAT in the 1970s and 1980s -- managing an international portfolio	95	(2)
Global products and services	97	(1)
Performance analysis	98	(1)
Benchmarking	98	(1)
Outside in or inside out?	99	(4)
`Outside in' strategy	99	(1)
`Inside out' strategy	100	(1)
The two approaches and internal analysis	100	(1)
Review and discussion questions	100	(1)
References and further reading	101	(2)
Analysis of the Competitive Environment	103	(36)
Learning objectives	103	(1)
Introduction	103	(1)
The nature of the business environment	104	(2)
The importance of environmental analysis	104	(1)
The macroenvironment	105	(1)
The microenvironment	105	(1)
Industries and markets	106	(3)
Identifying industries and markets	106	(1)
The industry	106	(1)
The market	107	(1)
The importance of the distinction between industry and market	108	(1)
Globalization of industries and markets	109	(1)
Yip's globalization drivers	109	(9)
The four categories of drivers	109	(1)
Market globalization drivers	110	(2)
Cost globalization drivers	112	(2)
Government globalization drivers	114	(1)
Competitive globalization drivers	115	(1)
A summary of the drivers	116	(1)
The influence of government globalization drivers in the airline industry	116	(2)
Industry analysis	118	(5)
Porter's five-forces framework	118	(2)
Force 1: the threat of new entrants	120	(1)
Force 2: the threat of substitute products	120	(1)
Force 3: the bargaining power of buyers (customers)	121	(1)
Force 4: the bargaining power of suppliers	121	(1)
Force 5: the rivalry among existing competitors in the industry	122	(1)
Use of the five-forces framework	122	(1)
Globalization drivers and the five forces	123	(2)
Synthesizing the two frameworks	123	(1)
Ulcer treatments and the international development of Glaxo	123	(2)
Market analysis	125	(3)
Market identification	125	(1)
Customers and their needs	126	(2)
Strategic group and competitor analysis	128	(3)
What are strategic groups?	128	(1)
Globalization trends in the pharmaceuticals industry	129	(2)
A resource-based approach to environmental analysis	131	(3)
Limitations of traditional frameworks	131	(1)
Understanding the framework	132	(2)
Critical success factors (CSFs) and core competences	134	(5)
What are CSFs	134	(1)
Review and discussion questions	135	(1)
References and further reading	135	(4)
Analysis of the Global Macroenvironment	139	(16)
Learning objectives	139	(1)
Introduction	139	(1)
Change in the business environment	140	(2)
The nature of environmental change	140	(1)
Change and prescriptive strategy	141	(1)
The macroenvironment	142	(3)
STEP analysis	142	(2)
Global and national macroenvironments	144	(1)
The relationship between global and national macroenvironments	144	(1)
The role of national circumstances in international business	145	(3)
Determinants of national competitive advantage	145	(2)
Prudential: factor conditions in Reading, UK and Bombay, India	147	(1)
Porter's Diamond	148	(1)
The analytical process	148	(3)
Stages in the process	148	(1)
Information gathering	149	(1)
Information processing	149	(1)
Knowledge generation	150	(1)
Summary -- analysis of the global macroenvironment	151	(4)
The links between the micro and macroenvironments	151	(1)
Review of the key stages	152	(1)
Discussion and review questions	153	(1)
References and further reading	153	(2)
PART III	155	(92)
Global and Transnational Strategy	157	(40)
Learning objectives	157	(1)
Introduction	157	(1)
Transnational strategies and global competitiveness	158	(3)
Sustainability and competitive advantage	158	(2)
Transnational, global and international business strategies	160	(1)
Strategies -- the choice	161	(2)
Competitive positioning	161	(1)
Knowledge and competence-based strategy	161	(1)
Global strategy	162	(1)
Knowledge and competence-based strategy	163	(12)
The emphasis on the organization itself	163	(1)
The components of core competences	163	(2)
Core competences and distinctive capabilities	165	(1)
Knowledge, core competences and global competitive advantage	166	(1)
Knowledge	167	(1)
Knowledge creation and management	168	(1)
Sharp Corporation -- a knowledge-centric organization	169	(1)
Organizational learning	169	(1)
Knowledge creation and management in transnationals	170	(1)
Competence building and leveraging	170	(2)
Summary of knowledge and competence-based strategy	172	(1)
Alternative approaches to resource-based strategy	172	(1)
Distinctive capabilities	173	(1)
Manchester United and superior performance	173	(2)
Competitive positioning -- Porter's generic strategies	175	(4)
The generic strategy framework	175	(1)
Cost leadership strategy	176	(1)
Differentiation strategy	177	(1)
Focus strategy	177	(1)
Hybrid strategies	178	(1)
Knowledge, core competence and generic strategy -- a synthesis	179	(2)
Drawing the threads together	179	(2)
Global and transnational strategy	181	(6)
Porter's model of global strategy -- the value system	182	(1)
Configuration	182	(1)
Co-ordination	183	(1)
Integration and responsiveness	184	(1)
Pressures for and against increased global co-ordination	185	(1)
Regional strategies	186	(1)
Total global strategy	187	(10)
Development of total global strategy	187	(2)
Transnational organizations	189	(1)
Global and localized elements of transnational strategy	190	(2)
McDonald's Inc. -- an example of transnational strategy	192	(1)
Discussion and review questions	193	(1)
References and further reading	194	(3)
Global and Transnational Market-servicing Strategies	197	(30)
Learning objectives	197	(1)
Introduction	197	(1)
Alternative foreign market-servicing strategies	198	(11)
What is market servicing?	198	(1)
Market-servicing options	199	(2)
International expansion through franchising -- Holiday Inn	201	(6)
A summary of the modes of entry	207	(2)
Selection of mode of entry	209	(1)
Choosing the most appropriate mode of entry	209	(1)
Criteria for choosing mode of entry	210	(1)
Global market-servicing strategies	210	(2)
Literature summary	210	(2)
Three key variables	212	(1)
Collaborative arrangements	212	(5)
Collaboration rather than competition	212	(2)
The nature and rationale of collaboration	214	(1)
Horizonal and vertical collaboration	215	(1)
Alliances	216	(1)
Summary -- advantages of collaborative arrangements as modes of entry	217	(1)
Appendix 7.1 Some additional notes on foreign market-servicing strategies	217	(10)
Exporting	217	(1)
Contractual agreements	218	(1)
Foreign direct investment	219	(1)
Toyota -- FDI greenfield development in the UK	219	(1)
Philip Morris -- foreign acquisitions in the former communist states of central and eastern Europe	220	(1)
Review and discussion questions	221	(1)
References and further reading	221	(6)
Global Production and Logistics Management	227	(20)
Learning objectives	227	(1)
Introduction	227	(1)
Production strategy and competitive advantage	228	(1)
The critical success factors in operations	228	(1)
Global production strategies	229	(2)
The `big' decisions in production strategy	229	(1)
Plant roles and inter-plant relationships	230	(1)
Research in global productions strategy	231	(5)
Doz -- opportunities from relaxations in trade restrictions	231	(2)
Starr's network	233	(1)
Dicken and international value adding	233	(1)
Dicken's four production strategies	234	(2)
Plant location decision making	236	(4)
Decision criteria	236	(2)
The most frequently used criteria	238	(1)
The location decision	239	(1)
Procurement and transnational business	240	(2)
Procurement policy	240	(1)
Types of purchasing policy	241	(1)
Global logistics	242	(5)
The `flow' of materials	242	(1)
Logistics and strategy	243	(1)
Managing logistics	244	(1)
Discussion and review questions	244	(1)
References and further reading	244	(3)
PART IV	247	(184)
Global Leadership and Strategic Human Resource Management	249	(20)
Learning objectives	249	(1)
Introduction	249	(1)
Leadership and management in transnationals	250	(7)
Definitions	250	(1)
The nature of leadership	251	(2)
GE -- the new leadership paradigm	253	(1)
Leadership and cultural issues	254	(1)
Body Shop: embracing a new management `ethos'	254	(1)
Leading and managing cultural diversity in transnational organizations	255	(1)
Shaping culture in transnational organizations	256	(1)
Strategic human resource management	257	(5)
The importance of human resources	257	(1)
Features of HR strategy	258	(1)
HR strategy, core competences and organizational learning	259	(1)
Integration of HRM with corporate strategy and functional strategies	259	(3)
Criticisms of the concept of strategic HRM	262	(1)
European and American approaches to HRM	262	(1)
A transnational model of HRM	263	(1)
Porter's global strategy and HR strategy	264	(5)
Congruence between HR and corporate strategy	264	(2)
Review and discussion questions	266	(1)
References and further reading	266	(3)
Global Technology Management	269	(28)
Learning objectives	269	(1)
Introduction	269	(1)
Technology and strategy	270	(1)
The impact of technology on strategy	270	(1)
Technology as a strategic asset	271	(6)
Defining technology	271	(1)
Technology and products	272	(1)
Technology and production	273	(1)
Patterns of technological innovation	274	(1)
Differences between technology and other assets	275	(1)
Technology and global competitiveness	276	(1)
Technology strategy	277	(8)
The components of a technology strategy	277	(1)
Technology audit	277	(1)
Sourcing new technology	278	(3)
Exploiting new technology	281	(2)
Protecting the competitive advantage	283	(1)
When patents expire	284	(1)
Comparisons of transnational technological performance	285	(2)
Comparing US and Japanese performance	285	(2)
Learning good practice	287	(1)
Information and communication technologies	287	(10)
The effects of ICT	287	(1)
Developments in ICT	288	(2)
ICT and transnational strategy	290	(1)
Configuring ICT for transnational business	291	(1)
Discussion and review questions	292	(1)
References and further reading	292	(5)
Global and Transnational Marketing Management	297	(42)
Learning objectives	297	(1)
Introduction	297	(1)
The role of marketing in global and transnational strategy	298	(3)
Marketing and strategy	298	(2)
Marketing and competitive advantage	300	(1)
Ohmae's (1989) view of marketing	300	(1)
Globalization of markets and marketing research	301	(1)
Global marketing strategies	302	(6)
Different perspectives	302	(1)
Douglas and Craig's (1989) typology	303	(1)
Leontiades' (1986) perspective	304	(1)
Four stages in a global marketing strategy	305	(3)
Global market segmentation and positioning strategies	308	(2)
Segmentation bases	308	(1)
Market positioning	309	(1)
Global marketing management	310	(3)
Marketing mix strategy	310	(1)
McDonald's -- globally homogeneous?	311	(2)
Global products	313	(5)
The importance of product decisions	313	(1)
Decisions on product strategy	314	(1)
Global branding	315	(3)
Global pricing	318	(6)
Pricing decisions	318	(5)
Transfer pricing	323	(1)
Pricing decisions -- a summary	324	(1)
Global promotion	324	(7)
Marketing communications	324	(1)
Standardization of global promotion	325	(1)
Organization and control of promotions	325	(4)
The management of global promotional campaigns	329	(1)
Choosing an advertising agency	330	(1)
ICT and global marketing	331	(8)
Axis Communications Inc. -- the Internet and global marketing	333	(1)
Review and discussion questions	334	(1)
References and further reading	335	(4)
Global Financial Management	339	(22)
Learning objectives	339	(1)
Introduction	339	(1)
Finance management and the global enterprise	340	(3)
The key issues in international financing	340	(1)
Foreign exchange risk management at British Airways (BA)	341	(2)
Centralization versus decentralization of the finance function	343	(1)
Different approaches to decentralization	343	(1)
Decision area 1: financing foreign operations	344	(4)
The options	344	(2)
Equity capital	346	(1)
Debt (or loan) capital	346	(2)
Decision area 2: resource allocation and capital budgeting	348	(3)
Uncertainties constraining the certainty of choice	348	(1)
Political risk	349	(1)
Assessing and forecasting political risk	349	(1)
Dealing with political risk	350	(1)
Decision area 3: operational policies	351	(4)
Working capital and cash flow management	351	(2)
Foreign exchange exposure	353	(1)
Reducing exposure	354	(1)
Decision area 4: remittance strategy	355	(6)
Types of funds transfer	355	(1)
Problems with transferring funds	355	(1)
Blocked funds	356	(2)
Discussion and review questions	358	(1)
References and further reading	358	(3)
Organizational Structure and Control in Global and Transnational Business	361	(30)
Learning objectives	361	(1)
Introduction	361	(1)
Some essentials of organizational structure	362	(2)
Key variables	362	(1)
`Height' and `width' of structures	362	(2)
Hierarchical configuration of structures	364	(1)
Determinants of organizational structure	364	(5)
Mintzberg's determinants	364	(1)
The contingency approach	365	(3)
The configuration approach to organizational design	368	(1)
Types of international organizational structure	369	(5)
International structures	370	(1)
Global structures	371	(3)
The development of global and transnational matrix structures	374	(2)
Stimuli to matrix development	374	(1)
Global matrix structures	374	(2)
The development of the transnational organizational structure	376	(6)
National influences on structural form	376	(1)
`Anatomy' and `physiology'	377	(1)
Features of transnational structures	378	(1)
The transnational model	379	(3)
Decision making and control in international business	382	(3)
Decentralization and control	382	(1)
Empirical studies	383	(1)
Evaluating performance	384	(1)
Global and transnational strategies, organization and control	385	(6)
The influence of strategy on structure and control systems	385	(1)
Discussion and review questions	386	(1)
References and further reading	387	(4)
Managing Global Mergers, Acquisitions and Alliances	391	(28)
Learning objectives	391	(1)
Introduction	391	(1)
An overview of integrations and alliances	392	(3)
Perspectives on external growth	392	(1)
Types of integrations and alliances	393	(2)
Transnational mergers and acquisitions	395	(8)
The key definitions	395	(1)
Motivations for transnational M&As	396	(1)
Hoechst and Rhone-Poulenc merge to form Aventis, a new global leader in life sciences	397	(1)
Problems with integration	398	(1)
Successful M&As	399	(3)
DaimlerChrysler	402	(1)
Collaborative ventures and strategic alliances	403	(2)
What are collaborative ventures and strategic alliances?	403	(2)
Motivations for forming strategic alliances	405	(1)
Types of strategic alliance and collaborative venture	405	(6)
Directions of alliances	405	(2)
The extent and timescale of collaboration	407	(1)
Choosing the most appropriate type of alliance	408	(1)
Collaborative strategy in the international airline industry	409	(2)
Successful alliances	411	(1)
The strategic management of networks and alliances	412	(7)
The concept of the `focal' business	412	(1)
Discussion and review questions	413	(1)
References and further reading	414	(5)
Global Business -- Present and Future Trends	419	(12)
Learning objectives	419	(1)
Introduction	419	(1)
The global business environment -- limits of globalization	420	(2)
The real state of homogenization	420	(1)
Physioeconomic theory	420	(1)
Challenging the presuppositions	421	(1)
A global approach to strategy and management?	422	(1)
Global competitive advantage in the future	423	(8)
Knowledge-based strategy: the intelligent organization	424	(3)
The `virtual' corporation	427	(1)
Discussion and review questions	428	(1)
References and further reading	429	(2)
Appendix 1 McDonald's and Its International Expansion	431	(8)
A brief history	431	(3)
McDonald's and franchising	434	(1)
International growth	435	(4)
Appendix 2 Nike Inc.	439	(10)
Company development	439	(1)
The Nike product concept	440	(1)
Vertical linkages and outsourcing	441	(2)
Promotions and endorsements	443	(1)
Markets and structure	444	(1)
Changes in the 1990s	445	(1)
Nike at the end of the 1990s	446	(3)
References and further reading	447	(2)
Index	449