Honda Corporate Strategy

							DEFINING THE GLOBAL FIRM

   Chapter 3 Lecture 1
       From Local to Global

 Domestic
  – Local firms
      Individual

      Organizational

 International
 Multinational
 Partially to   almost or fully global
 Global Business is Important
  to Economic Development
About 1/3 of world GDP is generated by
 business activities.
Growth also is generated by business
 activities.
Characteristics of the Global
        Enterprise
1. DRAWS RESOURCES FROM A GLOBAL POOL
    capital, labor, materials
2. VIEWS THE WORLD AS ITS HOME
3. ESTABLISHES A WORLDWIDE PRESENCE IN
   ONE OR MORE BUSINESSES
    but may go global by chance or design
4. PURSUES A GLOBAL BUSINESS STRATEGY
5. TRANSCENDS EXTERNAL AND INTERNAL
   BOUNDARIES
Let’s Look at
Some Global
    Firms
  Web Links to Explore These
 Coca-Cola  www.coca-cola.com
 Benetton   www.benetton.com
 Doc Martens www.drmarten.com
     Global Enterprise
     Characteristic 1
– DRAWS RESOURCES FROM A
  GLOBAL POOL
   capital, labor, materials
        Global Enterprise
        Characteristic 2
VIEWS THE WORLD AS HOME
– Reduces existing links
    Moves its headquarters for all or some functions,
     e.g., Boeing, Alcatel to be ―stateless‖
    Creates a perception that it is not place bound,
     e.g., a name that has no meaning or an ad
     campaign that makes it more ―local‖
    Goes virtual so it has no fixed ―place‖

– Undertakes activities that make it a world
  citizen, e.g., Royal Dutch Shell
     Global Enterprise
     Characteristic 3
– ESTABLISHES A WORLDWIDE
  PRESENCE IN ONE OR MORE
  BUSINESSES
   but may go global by chance or
    design
    Global Enterprise
    Characteristic 4
– PURSUES A GLOBAL
  STRATEGY via an
  INTEGRATIVE APPROACH
       Global Enterprise
       Characteristic 5
– TRANSCENDS EXTERNAL AND
  INTERNAL BOUNDARIES
    VERTICAL/HORIZONTAL

      – Vertical—customers, suppliers
      – Horizontal—competitors
    TANGIBLE/INTANGIBLE

      – Tangible—something we can measure
      – Intangible—how people think or
        perceive
         Five Levels of Strategy
   Enterprise Strategy—why do we exist as an
    organization?
   Corporate Strategy—what businesses should we be in
    now and in the future?
   Business Strategy—what is the source of our
    advantage?
     – Dependent on existing competencies
     – And on the nature of the industry in deciding
     – How shall we position ourselves in the industries
       and businesses where we choose to operate?
   Operational Strategy—how shall we coordinate among
    PPS to meet enterprise, corporate, and business level
    strategies?
   Individual Strategy—what must each individual do
    daily at work to meet organizational goals consistent
    with other levels of strategy?
            Enterprise Strategy
   usually is articulated by top management
   often is vague or abstract; can be described as vision,
    mission, values, etc.
   varies from country to country and from organization
    to organization within the same country
   can change over time, e.g.,
     – Boeing 1990 Mission: to be the number one
        aerospace company in the world and among the
        premier industrial concerns of quality, profitability,
        and growth
     – Boeing Vision 2016: people working together as one
        global company for aerospace leadership
   informs (or should inform) all other strategy levels
Compare These Statements of
    Enterprise Strategy
 The objective  of the enterprise is to make money
  and to have fun doing so. WL Gore and Associates
 Our goal is to provide superior returns to our
  shareholders. Profitability is critical to achieving
  superior returns, building our capital, and
  attracting and keeping our best people. Goldman
  Sachs
 It is our mission to improve the lives of customers
  and communities where we all live, work and play.
  Honda
Corporate Strategy Defines What’s
    in the Corporate Portfolio:
 Businesses to be in Now and Into
            the Future
  Corporate   strategy is reflected by portfolio
   decisions
   – Expansion, bottled water for Pepsi
   – Contraction or exchange, sell off a unit, e.g., Corus sold
     its aluminum holdings
   – Exchange, Boeing exchanges for Internet services.
  Corporate strategy is a view of the overall
   corporate portfolio of businesses
    Business Strategies are (Almost
     Always) Industry Specific and
        Answer Two Questions:
   What are sources of distinctive advantage?
     – This can be based on many attributes or a combination of
         physical, human or capital advantages
         financial, physical, legal, human, organizational, information,
          or relational
     – Usually concentrate on 3–5 core competencies
         Examples are price advantage, product advantage, innovation,
          quality, ease of access
   How shall we position in the industry?
     – Competition on a head-to-head basis
     – Collaboration
     – Coopetition
   May be articulated for the business or for a single subunit, e.g.,
    commercial airlines
Operational Strategy Decisions
which  people, processes, and
 structures are needed to satisfy
 enterprise, corporate, and business
 strategies
  Decisions About Enterprise,
   Corporate, Business and
 Operational Strategies Define
 individual objectives, job assignments,
  employee activities
 And they are interconnected with
  organizational culture, efficiency, and other
  activities
 So we return to this point: Organizations are
  interconnected internally, so action begins with
  enterprise strategy: why do we exist as an
  organization?
Ford’s Global Strategy
  Video: Making Globalization
           Succeed
 be looking for vision/statement of values
 and how these values are embedded in
  people, processes, and structures for
  Levi, Motorola, and Sony
       Argus Computers--India
 Asyou watch this, be looking for these
 points:
 what is the founder’s purpose?
 how are people developed?
 how is the organization structured?