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Strategic Positioning
Figure 11.3: Strategic Choice in the International Hotel Industry
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Operations: The Firm As A Value Chain
A firm’s operations can be thought of a value chain composed of a series of value creation activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure. Value creation activities can be categorized as 1. Primary Activities (R&D, production, marketing and sales, customer service) 2. Support Activities (information systems, logistics, human resources)
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In Sum: Strategic Fit
Figure 11.6: Strategic Fit
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Classroom Performance System
What is the rate of return the firm makes on its invested capital? a) Profit growth b) Profitability c) Net return d) Value created
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In Sum: Strategic Fit
So, to attain superior performance and earn a high return on capital, a firm’s strategy must make sense given market conditions. The operations of the firm must support the firm’s strategy. The organizational architecture of the firm must match the firm’s operations and strategy. If market conditions shift, so must the firm’s strategy, operations, and organization.
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Operations: The Firm As A Value Chain
Figure 1Hale Waihona Puke .4: The Value Chain
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Organization: The Implementation of Strategy
Organization Architecture - the totality of a firm’s organization - formal organizational structure, control systems and incentives, organizational culture, processes, and people. (see Figure11.5) Organizational Structure the formal division of the organization into subunits the location of decision-making responsibilities within that structure (e.g., centralized or decentralized) the establishment of integrating mechanisms to coordinate the activities of subunits including cross functional teams and or pan-regional committees
International Business 7e
by Charles W.L. Hill
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 11
The Strategy of International Business
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Organization: The Implementation of Strategy
Figure 11.5: Organization Architecture
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Organization: The Implementation of Strategy
Controls - the metrics (度量) used to measure the performance of subunits and make judgments about how well the subunits are run Incentives - the devices used to reward appropriate managerial behavior Processes - the manner in which decisions are made and work is performed Organizational Culture - the norms and value systems that are shared among the employees People - employees and the strategy used to recruit, compensate, and retain those individuals
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Strategy and the Firm
Figure 11.1: Determinants of Enterprise Value
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Value Creation
To increase profitability, value must be created for the consumer. The value created by a firm is measured by the difference between its costs of production (C) and the value that consumers perceive in its product (V). The more value customers place on a firm’s products, the higher the price the firm can charge for those products, and the greater the profitability the firm can get.
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I. Strategy And The Firm
A firm’s strategy refers to the actions that managers take to attain the goals of the firm. For most firms, the goal is to maximize the value of the firm for its owners, its shareholders. Typically, strategies focus on profitability and profit growth. Profitability (利润率) can be defined as the rate of return the firm makes on its invested capital. (net profits divided by total invested capital) Profit growth is the percentage increase in net profits over time. Expanding internationally can boost profitability and profit growth.
Outline
I. Strategy and the Firm II. Global Expansion, Profitability, and Profit Growth III. Cost Pressures and Pressures for Local Responsiveness IV. Choosing a Strategy V. Strategic Alliances
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Value Creation
Figure 11.2: Value Creation
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Value Creation
Profits can be increased by: adding value to a product so that customers are willing to pay more for it – a differentiation strategy; (making the product more attractive through superior design, functionality, reliability, etc.) lowering costs – a low cost strategy. Michael Porter argues that superior profitability goes to firms which create superior value by lowering the cost structure of the business and/or differentiating the product so that a premium price (高价；溢价) can be charged.
