Transcript Document 7119377

Marketing for MOST
Module 12 – Strategic Management in the Asia-Pacific
技術経営コンソーシアム
開発担当者 ：Ritsumeikan Asia Pacific University 教授: Takamoto, Akihiro
更新日 October, 2003
Module 12: Strategic Management in the Asia-Pacific
Module 12: Strategic Management in the AsiaPacific
1.
The Strategic Importance of
the Asia Pacific
2.
Managing Strategic Alliance
3.
Portfolio Management
4.
Game Theory
5.
Value and Supply Chain
Management
6.
Balanced Scorecard
1.
The Strategic Importance
of the
Asia Pacific
Module 12: Strategic Management in the Asia-Pacific
The Region
Module 12: Strategic Management in the Asia-Pacific
Profile of Asia Pacific Region
• The Asia Pacific region covers 25 countries from Mongolia in
the north to New Zealand in the south, and from Pakistan in the
west to Kiribati in the east.
• With 1835 million inhabitants, the region represents 32 percent
of the world’s population and 25 percents of the world’s output.
Module 12: Strategic Management in the Asia-Pacific
Status of Economy
Module 12: Strategic Management in the Asia-Pacific
GDP Growth Rate in the AP
Module 12: Strategic Management in the Asia-Pacific
Asia Pacific Market
 Widely diversified market
– Different status of economic development
– Expectation for quality and service varies
– Market price also varies
– Different cultures and customs
Different approaches required
– - How to manage each market is a critical challenge
Module 12: Strategic Management in the Asia-Pacific
Four Major Blocks
• Japan
• Newly Industrialized Economies (NIEs)
(Korea, Taiwan, Hong Kong, and Singapore)
• Association of South East Asian Nations
(ASEAN)
• China
Module 12: Strategic Management in the Asia-Pacific
The Players in the Asia Pacific Arena
•
Global
Korean chaebol
Taiwanese
Scope of Operation
Regional
Japan kaisha
American MNCs
European MNCs
Regional Overseas
Chinese
Domestic Overseas
Chinese
Local Small or
Medium Sized Firms
Government Owned
Firms
Local
Low Cost
Differentiation
Basis of Competitive Advantages
Module 12: Strategic Management in the Asia-Pacific
The Simplest Way to View AP: Groups
of Countries on a classic growth curve
Module 12: Strategic Management in the Asia-Pacific
A Strategic Framework for the Asia
Pacific
Ambition
Mission, Vision, Objectives
Positioning
Choice of:
Businesses
Choice of:
Segments
Organization
Way to Compete
Investment and
Priority for
Countries
Choice of:
Investment
Strategy
Resource Development
Structure
Assets Building
System
Competence Creation
Process
Module 12: Strategic Management in the Asia-Pacific
The importance of the AP as a
Resource Base
Sourcing
Raw Materials
Cost
Labor
Customer
Adaptation
Flexibility
Service
Market
Speed
Technology
New Materials
Intelligence
Contact
Components
Indonesia
Logistics
Korean
China
Malaysia
Philippines
Thailand
Taiwan
Financing
New Processes
Singapore
Japan
Hong Kong
Module 12: Strategic Management in the Asia-Pacific
Country Attractiveness in Asia Pacific Region
Inflation
Unemployment
Political Stability
Investment Flow
Ease of Licenses
Management Control
Tax Law
Skilled Labor
Cost of Labor
Cost of Premises
Most Attractive
Least Attractive
Japan
Thailand
Korea
Philippines
Hong Kong
Indonesia
Singapore
Taiwan
Malaysia
China
GDP size
Module 12: Strategic Management in the Asia-Pacific
Entry Modes in Asia Pacific Region
Established
Markets
Japan
Maturing
Markets
Taiwan
Growth
Markets
Korea
Integrate into
Joint
Venture
Expand
global
regional
Joint Venture
Expand
operations
Local Operation
Initiate several
China
Thailand
Joint Venture
Local
business
activities
Indonesia
Subsidiary
Multiple
presence
Malaysia
Rationalization
India
Emerging
Markets
Philippines
Establish initial
Vietnam
Agents
Myanmar
Representative
Investment
through
Laos,Cambodia
offices
Joint venture or
Platform
Local subsidiary
Singapore
Hong Kong
Establish a base
Regional offices
to learn, collect
Set up a regional
Information and
Office to coordinate
set up contacts
efforts
Entry
Development
For administration
of synergies
Consolidation
Module 12: Strategic Management in the Asia-Pacific
Strategic Capabilities in the AP Region
Mind Set
Visibility & support
Flexibility
Markets &
Competitive
Intelligence
Access to Resources
Social, Cultural,
Developing
Political know how
Regional
Competences
Building Assets
. Logistics
. Local human resources
. Suppliers and sub-contractors
. Contactors
. Partners
. Distribution networks
. Product development
. Brand reputation
Module 12: Strategic Management in the Asia-Pacific
Module 12: Strategic Management in the Asia-Pacific
How Did The Financial Crisis Affect
Asia Pacific Strategies
 Strategies were revised but long-term goals of presence in
the region were maintained
 Resources needed to be readjusted and expansion plans
temporarily delayed, but not abandoned
 Flexibility and adaptability remained key competences and
could be preserved or enhanced
Module 12: Strategic Management in the Asia-Pacific
Prospects for Asia Pacific
(Beyond The Crisis)
The regional market growth is still prominent
The regional trade liberalization and the gradual
reduction of investment restrictions that started well
before the crisis and that are all expected to prevail in
the long-term.
With increased regionalization and increased number
of countries competing for FDI
Module 12: Strategic Management in the Asia-Pacific
Economic Cooperation in the Asia
Pacific Region
 Several regional integration programs – sub-regional,
regional, bilateral and multilateral approach.
 Regional integration schemes of East Asia, mainly AsiaPacific Economic Cooperation (APEC), the Association of
South-East Asia Nations (ASEAN), ASEAN+3, ASEAN
Regional Forum (ARF), and other bilateral cooperation,
have strongly impact on recent economic position.
 With the Impact of single European Union (EU) and NAFTA
concept of trade liberalization, Asia Pacific Economic
Cooperation (APEC) was established in 1989 and United
States is supporting the APEC initiatives.
 The prospect of APEC Common Currency Unit is the next
challenge of Asia Pacific Region for the 21st century.
2. Managing Strategic Alliance
Strategic Alliance
• Partnership between two or more entities that allow an
exchange of resources for mutual benefit
Module 12: Strategic Management in the Asia-Pacific
Why Form Strategic Alliance
Open new market and territories
Gain greater speed to market
Enhance company’s creditability and value
Increase revenue opportunity
Maintain focus on core strengths
Access new products and technologies
Module 12: Strategic Management in the Asia-Pacific
Firm A
Strategic Alliances
Partnerships between firms
Firm B
where their
Resources
Capabilities
are combined to pursue
mutual interests to
Develop
Manufactur
e
Distribute
Core
Competencies
Goods
Services
Module 12: Strategic Management in the Asia-Pacific
Strategic Alliance
Firm A
Resources
Capabilities
Core Competencies
Firm B
Resources
Capabilities
Core Competencies
Combined
Resources
Capabilities
Core Competencies
Mutual interests in designing, manufacturing,
or distributing goods or services
Module 12: Strategic Management in the Asia-Pacific
Types of Strategic Alliances
 Equity Strategic Alliance
Equal Partners (50 – 50 %)
Not Equal Partners (30 – 70 %)
Multiple Partners (More Than Two)
 Non-Equity Strategic Alliance
 Contract is given to supply, produce or distribute a firm’s goods
or services
(without equity sharing)
Module 12: Strategic Management in the Asia-Pacific
Types of Alliances
STRATEGIC
IMPORTANCE
Acquisition
Minority Interest
High
Joint Venture
Joint Marketing
Joint Development Projects
Medium
Licensing Agreements
Commercial Contract
Low
Technology Trials
Low
LEVEL OF COMMITMENT
High
Module 12: Strategic Management in the Asia-Pacific
Reasons for Alliances
by Market Type
Slow
Cycle
Market
* Gain access to a restricted market
* Establish franchise in a new market
* Maintain market stability
* Gain market power
Standard
Cycle
Market
* Gain access to complementary resources
* Pool resources for large projects
* Learn new business practices
* Overcome trade and non-tariff barriers
* Meet competitive challenge
Fast
Cycle
Market
* Speed-up product, service or market entry
* Maintain market leadership
* Form industry technology standards
* Share risky R&D expenses
* Overcome uncertainty
Module 12: Strategic Management in the Asia-Pacific
Types of Strategic Alliances
Complementary Alliances
BusinessLevel
Competition Reduction Alliances
Competition Response Alliances
Uncertainty Reduction Alliances
Diversification Alliances
CorporateLevel
Synergistic Alliances
Franchising
Module 12: Strategic Management in the Asia-Pacific
Complementary Strategic Alliances
Supplier Value Chain
Buyer Value Chain
Partnerships that build on the
complementarities among firms
that make each more competitive
Include distribution, supplier or
outsourcing alliances where
firms rely on upstream partners
Vertical or downstream partners
Alliance to build competitive advantage
Japanese manufacturers rely on close
relationships with and among suppliers to
implement Just-In-Time inventory systems
Module 12: Strategic Management in the Asia-Pacific
Complementary Strategic Alliances
Used to increase the strategic
competitiveness of the partners
Buyer Value Chain
Horizontal
Alliance
Buyer Value Chain
For example:
Marketing agreements between Various Airlines
Module 12: Strategic Management in the Asia-Pacific
Types of Business-Level Strategic Alliances
Competition Reduction Strategies
Avoiding competition by using tacit collusion such
as price fixing
OPEC petroleum cartel
Competition Response Strategies
Firms join forces to respond to a strategic action of
another competitor
Many of the airline alliances
Uncertainty Reduction Strategies
Alliances can be used to hedge against risk & uncertainty
Yahoo’s 50% interest in the Overture
Module 12: Strategic Management in the Asia-Pacific
Types of Corporate-Level Strategic Alliances
Diversifying Alliances
Allows a firm to expand into a new
product or market area with an acquisition
Samsung Group’s moves into a range of industries
Synergistic Strategic Alliances
synergy across multiple businesses between firms
Sony shares development with many small firms
Franchising
Allows firms to grow and relatively strong centralized
control without significant capital investments
McDonald’s or KFC
Module 12: Strategic Management in the Asia-Pacific
International Cooperative Strategies
Cross-border strategic alliance
 an international cooperative strategy in which firms with
headquarters in different nations combine some of their
resources and capabilities to create a competitive advantage
 a firm may form cross-border strategic alliances to leverage
core competencies that are the foundation of its domestic
success to expand into international markets
Module 12: Strategic Management in the Asia-Pacific
International Cooperative Strategies
• Allows risk sharing by reducing financial investment
• Host partner knows local market and customs
• International alliances can be difficult to manage due
to differences in management styles, cultures or
regulatory constraints
• Must gauge partner’s strategic intent so they do not
gain access to important technology and become a
competitor
Alliance Success Factors
Have a clear strategic purpose
Find a fitting partner
Allocate task and responsibility
Create incentive for cooperation
Minimize conflicts between partners
Share information
Exchange personnel
Operate with long time horizon
Develop multiple joint projects
Module 12: Strategic Management in the Asia-Pacific
References
Hitt Michael. A (1995). “Strategic Management: Competitiveness and
Globalization”, West
Publishing Company.
Ramu Shiva. S (1997). “Strategic Alliances:
Building Network
Relationships For Mutual Gain”, A Division of Sage Publications.
Harvard Business Review (2002). “Strategic
Business School Press.
Alliances”, Harvard
3. Portfolio Management
Module 12: Strategic Management in the Asia-Pacific
Portfolio Models
• Portfolio Models: History
– McKinsey sells GE on the idea of Strategic
Business Units (SBUs)
– BCG attacks McKinsey with the Growth-Share
Matrix and the Portfolio model
– McKinsey responds with its own Portfolio
model, the Business Attractiveness Matrix
Module 12: Strategic Management in the Asia-Pacific
Portfolio Models
• Boston Consulting
Group Matrix
– (BCG Matrix)
• General Electric Grid
– GE Grid
Module 12: Strategic Management in the Asia-Pacific
Strategic Business Units (SBUs)
• Most firms consist of multiple units producing
numerous products.
• The mission, objectives, strategies, and
tactics will be different for each unit.
• For efficiency, a multiproduct organization
should be divided according to its major
markets or products
• These divisions are called Strategic Business
Units (SBUs)
Module 12: Strategic Management in the Asia-Pacific
Characteristics of a Strategic Business Unit
(SBU)
 It is a single business or collection of related businesses that
can be planned for separately from the rest of the company.
 It has its own set of competitors.
 It has a manager who is responsible for strategic planning and
profit performance and who controls most of the factors
affecting profits.
Module 12: Strategic Management in the Asia-Pacific
Assigning Resources to Each SBU
Analytical tools are needed for classifying businesses by
profit potential, for decisions on whether to build,
maintain, harvest, or divest individual SBUs.
Two well-known business portfolio evaluation models
are the Boston Consulting Group (BCG) growth/share
matrix and the General Electric multi-factor portfolio
matrix
Module 12: Strategic Management in the Asia-Pacific
Boston Consulting Group Matrix
Business portfolio matrix that uses market growth
rate and relative market share as the indicators of
the firm’s strategic position
• Market growth rate
– A measure of the annual growth percentage of the
market in which the business operates.
• Relative market share
– The firm’s market share divided by the market share
of its largest competitor.
Module 12: Strategic Management in the Asia-Pacific
BCG Growth/Share Matrix
This model classifies SBUs into either:
Question marks (high growth + low market share).
Stars
(high growth + high market share).
Cash cows
(low growth + high market share).
Dogs
(low growth + low market share).
Module 12: Strategic Management in the Asia-Pacific
BCG Growth/Share Matrix
Once classified, four alternative objectives can be pursued for each SBU:
 Build: increase market share.
 Maintain/hold: preserve market share.
 Harvest: increase short-term cash flow.
 Divest: sell or liquidate.
Module 12: Strategic Management in the Asia-Pacific
BCG MATRIX: COMPANY’S MARKET SHARE
High
Low
INDUSTRY
GROWTH RATE
High
Stars
Question marks
Cash cows
Dogs
Low
Module 12: Strategic Management in the Asia-Pacific
Portfolio Planning Models: The BCG
Growth-Share Matrix
Annual real rate of market growth (%)
HIGH
Earnings:
low, unstable, growing
Cash flow:
negative
Earnings:
high stable, growing
Cash flow:
neutral
Strategy:
invest for growth
Earnings:
high stable
Earnings:
Cash flow:
high stable
Cash flow:
neutral or negative
Strategy:
milk
Strategy:
divest
Strategy:
analyze to determine
whether business can
be grown into a
star, or
will degenerate
into a dog
?
low, unstable
$$$$$$
LOW
HIGH
Relative market share
LOW
Module 12: Strategic Management in the Asia-Pacific
BCG Growth-Share Matrix
22
Stars
Question Marks
Cash Cows
Dogs
20
18
16
14
12
10
8
6
4
2
0
Relative Competitive Position
Source: B. Hedley, “Strategy and the
Business Portfolio,” Long Range Planning
(February 1997), p. 12. Reprinted with
permission.
Boston Consulting Group’s
Four Cell Business Portfolio Matrix
Module 12: Strategic Management in the Asia-Pacific
• Question Marks/Problem Children
– Rapid Market Growth
– Cash Needs are High (Cash Hog)
– Options
• Aggressive Grow-and-Build
(Overall and Reposition) or
• Divest
Module 12: Strategic Management in the Asia-Pacific
Characteristics of Cash Hogs
•
A business is a cash hog when its internal
cash flows are inadequate to fully fund its
need for working capital and new capital
investment
the parent company has to
continually pump in capital to “feed the hog”
•
Strategic options
–
Aggressively invest in
attractive cash hogs
–
Divest cash hogs lacking
long-term potential
Module 12: Strategic Management in the Asia-Pacific
Boston Consulting Group’s Four Cell Business Portfolio
Matrix
• Stars
– Market Leaders in High
Growth Industry
– Young Stars or Cash
Hogs
– Mature Stars or Cash
Cows
– Aggressive Growth
Module 12: Strategic Management in the Asia-Pacific
Characteristics of Cash Cows
•
A cash cow business generates cash surpluses over and
above what is needed to sustain its present market
position
•
Such businesses are valuable because surplus cash can
be used to
•
–
Pay corporate dividends
–
Finance new acquisitions
–
Invest in promising cash hogs
Strategic objective: Aggressive Growth or Fortify and
defend present market position--keep the business
healthy!!!
Module 12: Strategic Management in the Asia-Pacific
Boston Consulting Group’s Four Cell
Business Portfolio Matrix
•
Dogs
– Low Growth Market with
Low Market Share
– Weak Competitive
Position and Low Profit
Potential
– Strategy is to:
•
Harvesting - if
profitable
•
Divestiture
•
Liquidation
Module 12: Strategic Management in the Asia-Pacific
10
8
Health foods
division
2
4
6
Frozen food
division
0
Fruit juices
division
Bakery division
-2
Annual real rate of market growth (%)
Portfolio Planning Models:
Applying the BCG Matrix to BM Foods Inc.
2
1.5
1
0.5
0.1
Relative market share
Current position
Previous position. Area of circle proportional to $ sales.
Module 12: Strategic Management in the Asia-Pacific
GE Multi-factor Matrix
Matrix uses business
strength compared to
market attractiveness
 Business strength (strong,
average, or weak).
 Market attractiveness
(high, medium, low).
MARKET ATTRACTIVENESS
The GE
Business Screen
High
Medium
Low
Module 12: Strategic Management in the Asia-Pacific
BUSINESS POSITION
High
Medium
Low
INVEST
INVEST
PROTECT
INVEST
PROTECT
HARVEST
PROTECT
HARVEST
DIVEST
Module 12: Strategic Management in the Asia-Pacific
Market Attractiveness Matrix (GE)
BUSINESS POSITON
HIGH
MEDIUM
MEDIUM
WEAK
High Attractiveness
Medium Attractiveness
Low Attractiveness
LOW
MARKET ATTRACTIVENESS
STRONG
Module 12: Strategic Management in the Asia-Pacific
GE Nine Cell
Attractiveness/Strength Matrix
•
Use quantitative measures of industry
attractiveness and business strength to plot
location of each business in matrix
• Each business unit appears as a circle
•
area of circle can represent relative size of
industry with pie slice showing the company’s
market share
Module 12: Strategic Management in the Asia-Pacific
McKinsey GE Stoplight Matrix
Industry (Product-Market) Attractiveness
Business Strength-Competitive Position
Strong
Winners
Average
Weak
Winners
High
Question
marks
Winners
Medium
Average
Business
Losers
Low
Profit
Producers
Losers
Losers
Module 12: Strategic Management in the Asia-Pacific
Industry Attractiveness Factors
•
•
•
•
•
•
•
•
•
Market size and projected growth
Intensity of competition
Emerging opportunities and threats
Seasonal and cyclical factors
Resource requirements
Strategic fits and resource fits with present
businesses
Industry profitability
Social, political, regulatory, and environmental factors
Degree of risk and uncertainty
Module 12: Strategic Management in the Asia-Pacific
Example:
Rating Industry Attractiveness
Weight
Attractiveness
Rating
Weighted
Industry Rating
Market size and projected growth
0.15
5
0.75
Intensity of competition
0.30
8
2.40
0.05
2
0.10
0.05
6
0.30
Seasonality and cyclical influences
0.05
4
0.20
Resource requirements
0.15
7
1.05
Industry profitability
0.15
4
0.60
Degree of risk and uncertainty
0.10
5
0.50
Industry Attractiveness Factor
Emerging industry opportunities and
threats
Social, political, regulatory, and
environmental factors
Sum of weights
1.00
Industry attractiveness rating
Rating Scale: 1 = Unattractive; 10 = Very attractive
5.90
Module 12: Strategic Management in the Asia-Pacific
Evaluate Each Business
Unit’s Competitive Strength
Objectives
–
Determine how well each business is
positioned in its industry relative to
rivals
–
Evaluate whether it is or can be
competitively strong enough to contend
for
market leadership
#1!
Module 12: Strategic Management in the Asia-Pacific
Factors to Use in Evaluating Competitive Strength
•
Relative market share
•
Ability to compete on cost
•
Ability to match rivals on quality and/or service
•
Ability to exercise bargaining leverage with key suppliers
or customers
•
Technology and innovation capabilities
•
How well business unit’s competitive assets and
competencies match industry KSFs
•
Brand name recognition and reputation
•
Profitability relative to competitors
Module 12: Strategic Management in the Asia-Pacific
Example: Rating a Business Unit’s Competitive Strength
Weight
Strength Rating
Weighted
Strength Rating
Relative market share
0.20
5
1.00
Ability to compete on cost
0.25
8
2.00
Ability to match rivals on quality or
service
0.05
2
0.10
Bargaining leverage
0.10
6
0.60
Technology/innovation capabilities
0.05
4
0.20
How well resources match KSFs
0.15
7
1.05
Brand name reputation/image
0.10
4
0.40
Degree of profit relative to rivals
0.10
5
0.50
Competitive Strength Measure
Sum of weights
1.00
Competitive strength rating
Rating Scale: 1 = Weak ; 10 = Strong
5.85
Module 12: Strategic Management in the Asia-Pacific
Strategy Implications of GE Attractiveness/Strength Matrix
•
•
•
Businesses in upper left corner
–
Accorded top investment priority
–
Strategic prescription is grow and build
Businesses in three diagonal cells
–
Given medium investment priority
–
Invest to maintain position
Businesses in lower right corner
–
Candidates for harvesting or divestiture
–
May be candidates for an overhaul and reposition
strategy
Module 12: Strategic Management in the Asia-Pacific
Advantages of Portfolio Analyses
• Encourages top management to evaluate each
business individually; to set objectives; and
consider resources.
• It stimulates use of external data to supplement
management’s judgment.
• Its graphic representation makes interpretation
and communication easier.
Module 12: Strategic Management in the Asia-Pacific
Limits of Portfolio Analysis
• All the portfolio models still remain a set of
very primitive tools to deal with the real world
of business – which is very complex
characterized by multi-dimensional variables.
• The portfolio model should be regarded as a
tool to sharpen and deepen our strategic
thinking rather than an executive summary of
strategic analysis.
4. A COGENT GAME THEORY
Module 12: Strategic Management in the Asia-Pacific
A GAME
• A form of recreation constituted by a set of
rules that specify an object to be attained and
the permissible means of attaining it
• Win or Lose
• Business = Win or Lose?
• Win-Win, Lose-Lose, Win-Lose
• Everything is fair in Love, War, and Business
Module 12: Strategic Management in the Asia-Pacific
GAME THEORY
• Started by a book “Theory of Games and
Economic Behavior” by John Von
Neumann and Oskar Morgenstern
• Rule based games
• Free-wheeling games
Module 12: Strategic Management in the Asia-Pacific
QUINTESSENCE OF GAME THEORY
• Added values
• Allocentrism: focusing on others
• Look forward and reason backward
• Shape the game according to your strategies
Module 12: Strategic Management in the Asia-Pacific
CO-OPETITION
• Cooperative competition
• Win-Win and Win-Lose strategies
• Lose-Lose scenario
• General Motors: GM credit card (Win-Lose
strategy)
• Imitation by Ford and Volkswagen
• Win-Win strategy: Imitation by others is beneficial
for you
Module 12: Strategic Management in the Asia-Pacific
COMPANYS’ VALUE NET
Customers
Substitutors
Company
Suppliers
Complementors
Module 12: Strategic Management in the Asia-Pacific
INTERACTIONS IN THE VALUE NET
• Resources flow from the suppliers to the
company whereas, Products and services
flow from the company to its customers
• Money flows from customers to the company
and from the company to its suppliers
• Substitutors: Coca-Cola and Pepsi
• Complementors: Hardware and Software
Module 12: Strategic Management in the Asia-Pacific
PARTS
Added
Values
Players
Scope
Elements
of the
game
Tactics
Rules
Module 12: Strategic Management in the Asia-Pacific
• Players are customers, suppliers, substitutors,
and complementors
• Added values are what players bring to the game
• Rules give structure to the game
• Tactics are the ways to play the game
• Scope describes the boundaries of the game
Module 12: Strategic Management in the Asia-Pacific
CHANGING PARTS
• P: It’s beneficial to change a player but find a
strong player with branded and superior products
• As substitutors are usually seen only as enemies,
complementors are seen only as friends
• A: Raise your own added value or lower that of
others (example: Trans World Air-lines’, Nintendo,
and softsoap)
• Meet the customers’ demands, use your
resources efficiently, implement ways to lower
the costs
Module 12: Strategic Management in the Asia-Pacific
• R: “One price to all” and “Look forward
and reason backward” rules make a new
players’ entry profitable
• Judo economics: stay small and turn the
previous players’ larger size to your own
benefit
• Meet-the-Competition Clause (MCC): A
classic case of coopetition. A producer
can capture more than its added value
Module 12: Strategic Management in the Asia-Pacific
• T: Changing perceptions
• Lifting the fog: reducing misperceptions
• Thickening the fog: creating uncertainty
• S: A game in one place can affect games
elsewhere, and a game today can influence
games tomorrow
Module 12: Strategic Management in the Asia-Pacific
Accept the
game you find
yourself in
Fail to think
methodically
about
changing the
game
THE TRAPS OF
STRATEGY
What you don’t
see, you can’t
change
Changing the
game must
come at the
expense of
others
You have to find
something to do
that others can’t
Module 12: Strategic Management in the Asia-Pacific
MIXED STRATEGY
• By randomize move, you can surprise the opponent
• Mixed Strategy: Specifies that an actual move be
chosen randomly from the set of pure strategies
with some specific probabilities
• Nash Equilibrium in Mixed Strategies: A probability
distribution for each player
• The distributions are mutual best responses to one
another in the sense of expectations
Module 12: Strategic Management in the Asia-Pacific
PRISONERS’ DILEMMA
• Companies spend a large sum of money on
publicity of their products
• To leave a long lasting impact on the viewers, you
need to have something extraordinary
• Click on this link and have a look at this
commercial: E*Trade
• Does it leave some impact on you?
Module 12: Strategic Management in the Asia-Pacific
SONY VS. MICROSOFT
Players
Microsoft (Xbox)
PLAYERS
Moves
No
Publicity
Sony (PS)
No publicity
Publicity
5 , 5
2 , 6
6 , 2
3 , 3
Publicity
Payoffs
Module 12: Strategic Management in the Asia-Pacific
STRATEGIES AND PAYOFFS
• If Microsoft publicizes its Xbox, the best move
for Sony is to publicize its PS
• If Microsoft does not publicize, still the best
move for Sony is to publicize
• It means Sony has a dominant strategy of
publicizing regardless of Microsoft's moves
• Microsoft has same dominant strategy to
publicize regardless of Sony’s moves
Module 12: Strategic Management in the Asia-Pacific
• Nash equilibrium: An outcome from which no
player has an incentive to deviate unilaterally
(John Nash: Nobel prize, Economics 1994)
• Nash equilibriums are self-enforcing
• Involvement and commitment: The difference
between these two is like eggs and ham. The
chicken is involved but the pig was
committed.
Module 12: Strategic Management in the Asia-Pacific
USE OF THE GAME THEORY
When to
compete
When to
co-operate
Firm
When you are increasing the size of the pie: Co-operate
When you are dividing the pie: Compete
Module 12: Strategic Management in the Asia-Pacific
CONCLUSION
• Game theory will keep on growing
because of the importance of added
values in business
• Firms should stop thinking that “business
is a war and they must beat the
competition”
5. Value and Supply Chain
Management
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
helps to identify which resources and capabilities can add value
Firm Infrastructure
Human Resource Management
Technological Development
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Procurement
Inbound
Logistics
Support
Activities
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
Service
Marketing and Sales
{
in the Value Chain
Procurement
Outbound Logistics
Support Activities
Technological Development
Operations
Primary and
Human Resource Management
Inbound Logistics
{
Support
Activities
Firm Infrastructure
Primary Activities
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
Assessing the PRIMARY Activities in the Value Chain
Inbound Logistics
• Materials control system
• Inventory control system
• Raw material handling and warehousing
Operations
•
•
•
•
Equipment comparison to competitors
Plant layout
Production control system
Level of automation in production processes
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
Assessing the PRIMARY Activities in the Value Chain
Outbound Logistics
• Timeliness and efficiency of finished products delivery
• Warehousing of finished products
Marketing and Sales
•
•
•
•
•
•
•
•
Marketing research
Sales promotions and advertising
Alternative distribution channels
Competency and motivation of sales force
Organization’s image of quality
Organization’s reputation
Brand loyalty of customers
Domination of various market segments
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
Assessing the PRIMARY Activities in the Value Chain
Customer Service
•
•
•
•
•
Customer input for product improvements
Handling of customer complaints
Warranty and guarantee policies
Employee training in customer education & service issues
Replacement parts and services
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
Assessing the SUPPORT Activities in the Value Chain
Procurement
•
•
•
•
•
Alternate sources for obtaining needed resources
Timeliness of resources procurement
Procurement of large capital expenditure resources
Lease-versus-purchase decisions
Long-term relationships with reliable suppliers
Technological Development
•
•
•
•
•
•
R&D activities in product and process innovations
Relationship between R&D and other departments
Meeting deadlines in technological development activities
Quality of labs and other research facilities
Qualifications of lab technicians and scientists
Creativity and innovation in organizational culture
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
Assessing the SUPPORT Activities in the Value Chain
Human Resource Management
•
•
•
•
•
•
•
Recruiting, selecting, orienting, and training employees
Employee promotion policies
Reward systems to motivate and challenge employees
Absenteeism and turnover
Union-organization relations
Employee participation in professional organizations
Employee motivation, job commitment, and satisfaction
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis
Assessing the SUPPORT Activities in the Value Chain
Firm Infrastructure
• Identification of external opportunities and threats
• Accomplishing goals with strategic planning system
• Coordination and integration of value chain activities
• Low-cost capital expenditures & working capital funds
• IS support for strategic and operational decisions
• Relationships with stakeholders
• Public image as a responsible corporate citizen
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis: A Pizza Restaurant
PRIMARY ACTIVITIES
• Inbound Logistics
– Transport foodstuffs (e.g. dough, cheese, etc) from suppliers
to restaurant
• Operations
– Cook pizzas, salads, wings, other menu items
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis: A Pizza Restaurant
• Outbound Logistics
– No distribution channels just customers
• Marketing/Sales
– Develop advertising
• Customer Service
– Serve food to restaurant customers
(on-site or logistics with delivery)
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis: A Pizza Restaurant
• SUPPORT ACTIVITIES
– Procurement
– Inbound Logistics: Buy trucks; lease warehouse space
(identify supplier offerings/negotiate terms)
– Operations: Buy dough, cheese, ovens, and other supplies
– Marketing/Sales: Buy TV time, promotional materials/
mailings, etc.
– Service: Buy/maintain tables, chairs, silverware to equip
restaurant; buy/maintain automobiles/insurance, etc. for
delivery
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis: A Pizza Restaurant
• Technology Development
– Inbound Logistics: Improve truck routing and warehouse
methods
– Operations: Develop new menu items; improve oven/kitchen
design
– Marketing/Sales: Discover new promotional
materials/methods
– Service: Improve restaurant layout / routing of deliveries
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis: A Pizza Restaurant
– Human Resource Management
• Inbound logistics: Supervise drivers and warehouse personnel
• Operations: Supervise/train kitchen personnel
• Marketing: Supervise advertising personnel
• Service: Supervise waiters and drivers
Module 12: Strategic Management in the Asia-Pacific
Value Chain Analysis: A Pizza Restaurant
– Infrastructure
• Obtain funds, carry out accounting and payroll functions, and
perform other administrative tasks for each primary activity area
Module 12: Strategic Management in the Asia-Pacific
Supply Chain Management
• Supply-chain is a term that describes how
organizations (suppliers, manufacturers, distributors,
and customers) are linked together.
• Supply-chain management is a total system
approach managing the entire flow of information,
materials, and services from raw-material suppliers
through factories and warehouses to the end customer.
Module 12: Strategic Management in the Asia-Pacific
Supply Chain Management
Apply a total systems approach to managing the
entire flow of:
Materials
Services
Information
Raw
material
suppliers
Factories &
warehouses
End
customer
3
Module 12: Strategic Management in the Asia-Pacific
Supply Chain Management
Supply Chain management
Sophistication
???
Competition
Competition through IT
Competition through Quality
Competition through Cost
Logistics as
1960
1970
1980
1990
2000
Time
Module 12: Strategic Management in the Asia-Pacific
Supply Chain Management
Supply
Customer
Supply
Management
Manufacturing
Management
Satisfaction
Management
Decision Processes
And Systems
Supplier
Customer
Demand
Procurement
Planning
Production
Demand
Planning
Planning
6. Balanced Scorecard
Module 12: Strategic Management in the Asia-Pacific
What is a Balanced Scorecard?
• "Corporate Dashboard" for a balanced presentation of both
financial and operational measures for making decisions.
• Developed in the early 1990's by Drs. Robert Kaplan
(Harvard Business School) and David Norton.
• The balanced scorecard is a management system (not only a
measurement system) that enables organizations to clarify
their vision and strategy and translate them into action.
Module 12: Strategic Management in the Asia-Pacific
What the innovator’s thought.
•
"The balanced scorecard retains traditional financial measures. But
financial measures tell the story of past events, an adequate story
for industrial age companies for which investments in long-term
capabilities and customer relationships were not critical for success.
These financial measures are inadequate, however, for guiding and
evaluating the journey that information age companies must make
to create future value through investment in customers, suppliers,
employees, processes, technology, and innovation.“ -Kaplan and
Norton.
Module 12: Strategic Management in the Asia-Pacific
Why do we really need a Balanced
Scorecard?
• To Succeed in business it is important to measure what you
manage.
• The Balanced Scorecard helps us to measure what can’t be
measured in business.
• It provides us with feedback and measurements of both
internal processes and external outcomes.
• It helps us to continuously update our management
strategies and strategic performance.
Module 12: Strategic Management in the Asia-Pacific
Source: thebalancedscorecard.org
Module 12: Strategic Management in the Asia-Pacific
Four Perspectives
1.
2.
The customer perspective:
•
Uses measures of the value delivered to customers.
•
These measures are evaluated in four different areas
namely: time, quality, performance and service, and
cost.
The internal perspective:
•
Measuring company’s satisfaction of customer needs
through internal processes.
Module 12: Strategic Management in the Asia-Pacific
Four Perspectives
3.
The innovation and learning perspective
= the growth perspective:
•
4.
Measuring continuous improvement through new
product innovation and gradual innovation of existing
products.
The financial perspective:
=Measure of finances. Income, Share value,
growth of sales, etc.
Module 12: Strategic Management in the Asia-Pacific
Scorecard Benefits
• Obtain information to update its strategy on a continuous
basis.
• Balance long-term and short-term measures and evaluate
every part of the firm and how each contributes toward
accomplishing selected goals.
• It helps firms emphasize their relationship between internal
and external partners.
• Creates a long-term perspective for company sustainability.
Module 12: Strategic Management in the Asia-Pacific
Scorecard Benefits
• A great communication tool between employees as they can
use the scorecard as a guide to coordinate their efforts.
• Support employee evaluation in that individual performance
can be tied to successful outcomes on the metrics.
• A way to measure the value of the company apart from
measuring its tangible assets.