Business & Management;Global Strategy
Order Instructions:
Department of Business & Management
Subject: Global Strategy
You are expected to discuss different types of strategic capabilities that influence the success of overseas expansions for a firm.
Credit will be given for:
• Discussions of key issues and their context.
• Reference to literature.
• Case discussions.
• Conclusions and recommendations.
• Overall coherence and consistency.
An introduction (about 10%) to an essay should address itself directly to the question or topic you have been asked to discuss. The analysis section (about 80%) of the essay should describe your response to an essay question. You need to cite and discuss a few relevant literature on your chosen topic in the analysis section. You also need to discuss relevant cases in the analysis. The conclusion (about 10%) of an essay should summarize the main findings.
. (!!!) The essay needs to demonstrate the understanding of Global Strategy lectures, and should include some cases discussed in seminars on the Global Strategy module.
I will attach it on the site.
Students are required to show evidence of an extensive use of various well established and
reputable literature sources (i.e. journal articles, books and other sources of information). You are expected to include at least 15 useful literature sources in this essay.
Main sources for the essay:
• Consult the following journal articles, and also see the Extended Reading List for more references.
• Contractor, F. J., Kundu, S. K., & Hsu, C. C. (2003). A three-stage theory of international expansion: The link between multinationality and performance in the service sector. Journal of International Business Studies, 34(1): 5-18.
• Frost, T. S., Birkinshaw, J. M., & Ensign, P. C. (2002). Centers of excellence in multinational corporations. Strategic Management Journal, 23(11): 997-1018.
• Kolev, K. D. (2016). To Divest or not to Divest: A Meta?Analysis of the Antecedents of Corporate Divestitures. British Journal of Management, 27(1): 179-196.
. Reading: Strategic Capabilities
. Johnson et al (2014). Exploring strategy: text & cases. (Pages 68–105)
. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic management
journal, 5(2), 171-180.
. Chang, S. J., & Singh, H. (1999). The impact of modes of entry and resource fit on
modes of exit by multibusiness firms. Strategic Management Journal, 20(11), 1019-
1035
. Berry, H. (2010). Why do firms divest?. Organization science, 21(2), 380-396.
. Strange, R. (2011). ‘The outsourcing of primary activities: theoretical analysis and propositions.’ Journal of Management & Governance, 15(2): 249-269.
. Meyer, K. E., Wright, M., & Pruthi, S. (2009). Research notes and commentaries managing knowledge in foreign entry strategies: A resource-based analysis. Strategic management journal, 30(6), 557-574.
. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.
. Salomon, R., & Jin, B. (2010). Do leading or lagging firms learn more from exporting?. Strategic Management Journal, 31(10), 1088-1113.
. Helpman, E., Melitz, M. J., & Yeaple, S. R. (2004). Export versus FDI with heterogeneous firms. American Economic Review, 94(1): 300-316.
Journals
Strategic Management Journal
Journal of International Business Studies Journal of World Business
Management International Review International Business Review
Newspaper/Magazines
The Financial Times The Week
The Economist
Websites
World Bank IMF Eurostat WTO UNCTAD
http://www.worldbank.org http://www.imf.org http://europa.eu.int/en/comm/eurostat http://www.wto.org http://www.unctad.org
SAMPLE ANSWER
Do strategic capabilities of a firm influence its overseas operations?
Introduction
Thriving in the highly competitive overseas business world, calls for firms to amass a considerable level of strategic capabilities. These ensure that a firm is capable of countering threats and seizing opportunities in the overseas market to elevate its portfolio. According to (Sea Jin, & Singh, 1999), international business is exceedingly volatile and organizations must be in a position to successfully identify, interpret and respond to potential opportunities and threats. In this relation, strategic capabilities are imperative for ensuring effective strategic direction; because they define an organization’s aptitude towards emerging market conditions. This paper is a discussion of strategic capabilities and how they influence a firm’s overseas expansion.
Discussion
Strategic capabilities denote an organisation’s proficiencies, essential for ensuring its competitive advantage and long-term survival. These capabilities may be in the form of resources or competencies. While resources consist of what the organisation possesses such as assets, finances, human resources and stakeholders, competencies refer to the organisation’s strengths including efficiency, flexibility, cash flow management, marketing, relationships and employee performance. Strategic capabilities can be considered as insurance against market uncertainties and catalysts of firm survival. Accordingly, a firm’s strategic capabilities define its propensity for overseas expansion.
Strategic capabilities are categorized into two main groups. The first category is the dynamic capabilities, which refer to the ability of a firm to respond to changing environmental needs by recreating its strategic capabilities. The types of dynamic capabilities include sensing capabilities to constantly explore opportunities, such as market research and R&D; seizing capabilities which refer to the ability to respond to opportunities by means of new processes, products and activities; and re-configuring capabilities (Mudambi, 2008; Johnson et al, 2014). The other category is the threshold and distinctive capabilities. Threshold capabilities are necessary for the firm to compete effectively while distinct capabilities are those that provide unique ability and are often difficult to imitate.
Strategic capabilities harness a firm’s competitive advantage, a key prerequisite for survival in overseas markets (Barney, 1991). The resource-based view affirms that the distinctiveness of a firm’s capabilities determines its level of performance and competitive advantage (Johnson et al, 2014). This is re-emphasized by Frost, Birkinshaw & Ensign (2002) who note that international organisations that have developed unique niches such as centres of excellence to promote the performance of their international subsidiaries. Cognizant of this proposition, it can be appropriately asserted that a firm that seeks to survive in the volatile and extremely competitive overseas market must exhibit high level performance and possess discrete competitive advantages (Barry, 2010). Therefore, a firm that lacks strong strategic capabilities is likely to capitulate to competition and other market forces (Contractor, Kundu & Hsu, 2003).
Strategic capabilities ensure that a firm can effectively meet the needs of its customers. This is achieved through production of quality products, affordability and product accessibility. H&M’s capabilities such as convenient location, supply chain management, design and culture for example ensure that their customers are satisfied and this has contributed to its massive international growth. By combining affordable prices with unique designs, H&M is a business leader in fashion.
Strategic capabilities determine success in operations. This means that in order for a firm to effectively execute its business in the international market, it requires a combination of strategic capabilities that will influence performance (Kolev, 2016). Firstly, venturing overseas is significantly expensive and the firm must therefore possess adequate finances to fund its venture. In addition, effective funds management would ensure that return on investment is achieved. Secondly, having a dedicated and well qualified team is also vital in promoting business success (Meyer, Wright & Pruthi, 2009)
Strategic capabilities determine the firm’s reach. In essence, the strategic capabilities determine how much can be invested in overseas expansion and the number of regions that the firm will operate in. Strong strategic capabilities ensure that a business grows its international business rapidly, thus expanding its reach (Goodman & Dingli, 2013).
Strategic capabilities create opportunities for firms to expand their overseas business further. Berry (2010) notes that whenever new opportunities emerge in the market, organisations with robust strategic capabilities are more likely to take up the opportunities. Furthermore, seizing opportunities depends on whether a firm possesses dynamic capabilities to enable it respond to the changes in the business environment. An example is Google, an internet based company which has grown rapidly due to its ability to meet customer needs through robust and innovative technology solutions. Google is highly dynamic and responsive to new opportunities, attributable to its team of tech-savvy employees and huge investment in technology, research and development (Jonathan et al, 2015). Google’s success can be compared to Yahoo’s slow response to rapid technology changes, which led to the company’s downfall. Despite being a pace-setter in internet-based business, Yahoo lacked strategic capabilities to embrace technology advancement and therefore ended up being overtaken by the robust Google which is now a market leader (Bhatia, Deep & Sachdeva, 2012).
A firm’s ability to expand overseas is influenced by various factors including resource fit, market share and sales growth (Sea Jin & Singh, 1999). Strategic capabilities determine a company’s probability of survival in foreign markets. A company with strong strategic capabilities is more likely to survive the harsh conditions of foreign markets. According to Shaver, Mitchell and Yeung (1997), overseas business survival is enhanced by a firm’s experience in the host country. Consequently, repeat overseas investors are more likely to be successful than first-timers; a factor that can be attributed to greater information on the host country and the accompanying experience. In addition, companies with exceptional strategic capabilities create better partnerships and collaborations, thus enhancing their chances of success in the overseas markets. It is notable that a majority of organisations that venture overseas do so in collaboration with local companies which already have a stable footing in the host country (Grant, 2016). Such companies would be interested in the international company’s strategic capabilities in order to ensure that they will derive considerable benefits from the partnership. This proves that strategic capabilities indeed impact a firm’s overseas operations.
Strategic capabilities can influence resource accessibility necessary to expand a firm’s operations overseas. In order to gain credibility, financial organizations consider a variety of factors, among them the firm’s financial position, asset base, cash flow management and productivity (Grant, 2012. This insinuates that a company that is well endowed in terms of strategic capabilities is likely to have greater chances of expanding its overseas business due to its access to capital.
Conclusion
This discussion establishes that strategic capabilities are a basic prerequisite for firms that seek to survive in overseas markets. Strategic capabilities ensure that firms can counter threats and take up opportunities in the host country. They also ensure that the firm can effectively meet customer needs, that it has the capability to form valuable partnerships, and that can effectively compete in the markets. In conclusion, strategic capabilities have an influence on a firm’s overseas business.
References
Barney, J 1991, ‘Firm resources and sustained competitive advantage’, Journal of management, 17(1), 99-120.
Berry, H 2010, ‘Why Do Firms Divest?’, Organization Science, 21, 2, pp. 380-396, Business Source Complete, EBSCOhost, viewed 26 October 2016. Retrieved from web.a.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=4&sid=dc96fa0e-9e64-4b3a-adc8-e374324a12d4%40sessionmgr4010&hid=4107
Bhatia, A., Deep, G. & Sachdeva, A 2012, Strategic Analysis Of Search Engine Giant: A
Case Study Of Google Inc., International Journal of Computing & Business, ISSN Online), 2229-6166. Retrieved from Researchwww.researchmanuscripts.com/isociety2012/55.pdf
Contractor, F. J., Kundu, S. K., & Hsu, C. C 2003, ‘A three-stage theory of international expansion: The link between multinationality and performance in the service sector’, Journal of International of Business Studies, 34(1): 5-18.
Frost, T. S., Birkinshaw, J. M., & Ensign, P. C 2002, Centers of excellence in multinational corporations, Strategic Management Journal, 23(11): 997-1018.
Goodman, M., & Dingli, SM 2013, Creativity and Strategic Innovation Management, New York, Routledge.
Grant R 2012, Contemporary Strategy Analysis: Concepts, techniques, applications, 8th Ed, London, Blackwell.
Grant, R. M 2016, Contemporary Strategy Analysis: text and cases, 9th edn. Chichester,Wiley & Sons.
Johnson, G., Whittington, R., Scholes, K., Angwin, D. & Regnér, P 2014, Exploring strategy: text & case, Tenth edition, Harlow, Pearson.
Jonathan et al 2015, Yahoo: Failures, Retrieved from
http://scholar.harvard.edu/files/jonathanxc/files/Yahoo_Failures.pdf
Kolev, K. D 2016, To Divest or not to Divest: A Meta?Analysis of the Antecedents of Corporate Divestitures, British Journal of Management, 27(1): 179-196.
Meyer, K. E., Wright, M., & Pruthi, S 2009, ‘Research notes and commentaries managing knowledge in foreign entry strategies: A resource-based analysis’, Strategic management journal, 30(6), 557-574.
Mudambi, R 2008, ‘Location, control and innovation in knowledge intensive industries’,Journal of economic Geography, 8(5): 699-725
Sea Jin, C, & Singh, H 1999, ‘the impact of modes of entry and resource fit on modes of exit by multibusiness firms’, Strategic Management Journal, 20, 11, pp. 1019-1035, Business Source Complete, EBSCOhost, viewed 27 October 2016.
Shaver, J. M., Mitchell, W., & Yeung, B 1997, ‘The effect of own‐firm and other‐firm
experience on foreign direct investment survival in the United States, 1987–92’, Strategic Management Journal, 18(10): 811-824.
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