ISB-4 Internal triggerISB-4 Internal trigger 11

INTERNAL TRIGGERSINTERNAL TRIGGERS

•Internal triggers to the internatiomalization process

•Shaping an international vision and mindset

•Organisational dynamics

•Managing organisational change

•Assessing and changing corporate culture

•Resource capability and competitive advantage

•Managing organisational change to improve

business performance

•Internal triggers to the internatiomalization process

•Shaping an international vision and mindset

•Organisational dynamics

•Managing organisational change

•Assessing and changing corporate culture

•Resource capability and competitive advantage

•Managing organisational change to improve

business performance

ISB-4 Internal triggerISB-4 Internal trigger 22

External triggersExternal triggers

INTERNATIONALISATIONINTERNATIONALISATIONMarket

penetration

Geographical expansion

Product development

Organizational dynamics

Vision mindset

Meta trendsIndustry

competition

RETRENCHMENT*RETRENCHMENT*

Internal triggersInternal triggers

Product extension

Restricted

national market scope

Figure 2.1. Developing an international business strategy

Intern’l business

development

ISB-4 Internal triggerISB-4 Internal trigger 33

Firms Firms in the same industry in the same industry in the same environmentin the same environment commonly follow differing strategiescommonly follow differing strategies

Why?Why? Different managerial beliefs about sources, Different managerial beliefs about sources,

competitive advantagescompetitive advantages Different way of managementDifferent way of management

ImplementationImplementation:: „„Doing the right things” (Doing the right things” (effectivityeffectivity)) „„Doing the things right” (Doing the things right” (efficiencyefficiency))

ISB-4 Internal triggerISB-4 Internal trigger 44

Internal context:Internal context: What are the tangible and intangible reources?What are the tangible and intangible reources? How core skills and capabilities are developed?How core skills and capabilities are developed?

These are firm specific => strategic answer dependent These are firm specific => strategic answer dependent on organizational dynamicson organizational dynamics

ResultResult: sustainable competitive advantage: sustainable competitive advantage

Organizational changeOrganizational change (discontinuity) (discontinuity) Creating a shared mindset Creating a shared mindset Building competenciesBuilding competencies Changing corporate valuesChanging corporate values

ISB-4 Internal triggerISB-4 Internal trigger 55

External and internal triggers to a External and internal triggers to a stage changestage change

External triggersExternal triggers

Internal triggersInternal triggersInternal triggersInternal triggers

Current phase Next phaseDiscontinuityDiscontinuity

new internationalstrategic thrust

ISB-4 Internal triggerISB-4 Internal trigger 66

Components of internal contextComponents of internal context Vision/mindset:Vision/mindset:

geographic scope, strategic development geographic scope, strategic development driven through the firm’s mindset driven through the firm’s mindset role of senior managementrole of senior management

Organisational dynamics:Organisational dynamics: ability and ability and willingness to implement strategywillingness to implement strategy

Vital people and processes to implement visionVital people and processes to implement vision Unique skills, technologies (core competences)Unique skills, technologies (core competences) Ability to adopt and innovate (organizational Ability to adopt and innovate (organizational

learning)learning) Administrative heritageAdministrative heritage

ISB-4 Internal triggerISB-4 Internal trigger 77

Vision / mindset

Organizational dynamics

Match?

Generate forces for changes

Dampened Sustained

Balancedy

n

ISB-4 Internal triggerISB-4 Internal trigger 88

Internal triggers

Succession Succession eventsevents

Succession Succession eventsevents

Vision/Vision/mindsetmindset

Internal context

Organisational Organisational dynamicsdynamics

Internal triggers to change

ISB-4 Internal triggerISB-4 Internal trigger 99

Succession eventsSuccession events PlannedPlanned: : retirementretirement

natural event, easier to managenatural event, easier to manage minor or fundamental changes to strategyminor or fundamental changes to strategy

Not planned: Not planned: in time of dificoultiesin time of dificoulties Occure abruptly, forcedOccure abruptly, forced Internal appointment or a „new” personInternal appointment or a „new” person Setting visionSetting vision Style of implementation can be unacceptableStyle of implementation can be unacceptable

Changes in style, strategy, vision, mindsetChanges in style, strategy, vision, mindset ( (BPBP))

ISB-4 Internal triggerISB-4 Internal trigger 1010

ISB-4 Internal triggerISB-4 Internal trigger 1111

What was Horton’s vision?What was Horton’s vision? What are the actions of the project?What are the actions of the project? Were the actions accepted?Were the actions accepted? What is the directors’ point of view?*What is the directors’ point of view?*

ISB-4 Internal triggerISB-4 Internal trigger 1212

Balance:Balance: match between match between vision/mindsetvision/mindset and and organisational organisational

dynamicsdynamics

MismatchMismatch: tensions: tensions

AppreciateAppreciate: : whywhy and and whenwhen they change, they change, howhow an initial change is dampened or sustained an initial change is dampened or sustained

Change sustainedChange sustained: both shows in the same : both shows in the same directiondirection

ISB-4 Internal triggerISB-4 Internal trigger 1313

Volvo-Renault proposed mergerVolvo-Renault proposed merger1990: announced agreement to form strategic 1990: announced agreement to form strategic

alliancealliance1991: exchange of cross-shareholdings1991: exchange of cross-shareholdingsFull merger proposed: by 1993Full merger proposed: by 1993FailureFailure

shareholder: terms are unacceptableshareholder: terms are unacceptable CriticsCritics:: chairman Gyllenhammer (1971- , style of chairman Gyllenhammer (1971- , style of

manegement,manegement, preparations secretly, no info)preparations secretly, no info) Gyllenhammer forced resign with 4 board membersGyllenhammer forced resign with 4 board members

Volvo: uncertain future Volvo: uncertain future small domestic marketsmall domestic market little product rangelittle product range difficulties in existing Volvo-Renault alliancedifficulties in existing Volvo-Renault alliance

Importance of internal factors!*Importance of internal factors!*

ISB-4 Internal triggerISB-4 Internal trigger 1414

Changes accepted, style unaccepted => Changes accepted, style unaccepted =>

new CEO, old strategy implemented (BP)new CEO, old strategy implemented (BP) Vision changes and style not accepted =>Vision changes and style not accepted =>

new CEO, new strategy (Volvo)new CEO, new strategy (Volvo)

ISB-4 Internal triggerISB-4 Internal trigger 1515

Change of chief executiveChange of chief executive

RetirementRetirementCrisisCrisis

Vision retainedVision

retainedReappraise the position

of businessReappraise the position

of business

SystemSystem OperationOperation

PeoplePeople CultureCulture

Succession event

Vision

Organisationaldynamics

MismatchDiscontinuity

Sample - vision is changing

ISB-4 Internal triggerISB-4 Internal trigger 1616

ISB-4 Internal triggerISB-4 Internal trigger 1717

What is the so called sharpbend?What is the so called sharpbend? What is turnaround?What is turnaround? Short term corrective action – advantages, Short term corrective action – advantages,

disadvantagesdisadvantages Long term corrective actions - advantages, Long term corrective actions - advantages,

disadvantagesdisadvantages

ISB-4 Internal triggerISB-4 Internal trigger 1818

FINANCIAL PRESSURE

High adaptation

High integration

High adaptation

Low integration

Low adaptation

Low integration

High

High

Low

S T R U C T U R A L I P R E S S U R E

EquelibriumEquelibrium portfoli portfolioo

ISB-4 Internal triggerISB-4 Internal trigger 1919

Vision/mindset on international fieldVision/mindset on international field

Domestic biasDomestic bias

National specialities in operationNational specialities in operation

Cultural differencesCultural differences

ISB-4 Internal triggerISB-4 Internal trigger 2020

11 44 948

56

112

Distance from power

Smoothly working

machine

f.i.. Germany

Hungary

Pyramid

f.i. Japan

Market

f.i. USA

Family

f.i. India

Map of national culturesMap of national cultures(Hofstede)(Hofstede)

Avoidance

of

uncertainty

ISB-4 Internal triggerISB-4 Internal trigger 2121

Organisational learning

Administrative heritage

Core competence

Organisational dynamicsOrganisational dynamics

ISB-4 Internal triggerISB-4 Internal trigger 2222

CompetencCompetenciies-resourceses-resources

ThresholdThresholdcompetenccompetenciieses

CoreCorecompetenccompetenciieses

NecessaryNecessaryresourcesresources

UniqueUniqueresourcesresources

Same as competitorsor easy to imitate

Better than competitorsand

difficult to imitate

Competencies

ResourcesResources

•Market access•Integrity related•Functionally related

ISB-4 Internal triggerISB-4 Internal trigger 2323

Administrative heritageAdministrative heritage

AssetsHuman resourcesDecisionsResource configurationCultural elements

His

tory

of

the

orga

nis

atio

n

ISB-4 Internal triggerISB-4 Internal trigger 2424

Managing organisational changeManaging organisational changefundamental/incrementalfundamental/incremental

Incremental Flux Transformational

Change of the environment

Change of strategyTimeD

egre

e of

ch

ange

ISB-4 Internal triggerISB-4 Internal trigger 2525

Creating a new shared

mindset

Building competencies/

capabilities

Changing corporate culture

Improved business

performance

The components of organisationalThe components of organisationalchangechange

ISB-4 Internal triggerISB-4 Internal trigger 2626

Change RefreezingDiscontinuity

Reconfiguring

Unfreezing

Time

Discontinuity

ISB-4 Internal triggerISB-4 Internal trigger 2727

Time

Activity andself appreciation

1.Shock

2. Denial

3. Depression

4. Acceptance

5. Tryout

6. Awareness

7. Building-in*

Reactions connected to the change

ISB-4 Internal triggerISB-4 Internal trigger 2828

Resistance of change and change strategiesResistance of change and change strategies

PersonalPersonalself-interestself-interest

Lack of understandingLack of understandingand trustand trust

AlternativeAlternativeassessmentassessment

Individuals’Individuals’fears and concernsfears and concerns

Ed

uca

tion

an

d

com

mu

nic

atio

n

Ed

uca

tion

an

d

com

mu

nic

atio

n

Par

tici

pat

ion

an

din

volv

emen

t

Par

tici

pat

ion

an

din

volv

emen

t

Neg

otia

tion

an

dag

reem

ent

Neg

otia

tion

an

dag

reem

ent

Man

ipu

lati

onM

anip

ula

tion

Coe

rcio

nC

oerc

ion

ISB-4 Internal triggerISB-4 Internal trigger 2929

Stories and

myths

Symbols

Rituals and routines

Corporate mindset/

paradigm

Power structures

Control systems

Organisational structure

Web of the corporate cultureWeb of the corporate culture

ISB-4 Internal triggerISB-4 Internal trigger 3030

Scope

ORGANISATION’S INTERNAL CONTEXTORGANISATION’S INTERNAL CONTEXT

Differentiation Cost

Time Linkages

Competitive Competitive

advantageadvantage

ISB-4 Internal triggerISB-4 Internal trigger 3131

ORGANISATIONAL LEARNINGORGANISATIONAL LEARNING

Mismatch between performance & aspirations

Initial change strategies

Business performance

Revised change strategies

Continual process: re-examine match of performance & aspirations

Time