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Multinational corporations from developed and developing economies alike are aggressively expanding their global presence, particularly in emerging markets. Industry traits largely determine the winners - but that needn't always be the case, say Ghemawat, of IESE Business School, and Hout, of the University of Hong Kong. Companies can break the pattern by anticipating or creating new customer segments, managing cost convergences, or reworking the value chain. Some established MNCs are succeeding in production- and logistics-oriented businesses, where local rivals usually have an advantage. One way is by using technology and capital to accelerate segments' growth. Samsung, Sharp, and others surprised Chinese producers with vicious price competition in flat-screen TVs, which quickly collapsed the demand for conventional TVs, bottoming out Chinese profits. Another way established MNCs are beating emerging players is on costs, as home appliance companies in the United States did when Haier tried to enter the U.S. market for midsize refrigerators. Conversely, some emerging-market challengers are outperforming established MNCs in knowledge- and brand-intensive industries. Bharti Airtel has built the largest mobile-services operation in India by specializing in a limited part of the value chain (customer care and the regulatory interface) and outsourcing the rest, which freed up capital, made Bharti's cost structure more variable, and allowed the company to radically undercut advanced-market prices. Firms such as India's Suzlon Energy are also spotting opportunities to bundle ancillary services and products in which they have an advantage. The authors point to these examples and others to suggest that conditions are right for aggressive global players to move outside their industry comfort zones.

General management integrates all of the functional areas of a business with a view to making decisions that are coherent and beneficial to the entire firm. This note begins with a strategy model that provides an overview of the key elements the general manager needs to consider when making strategic decisions. Each area of the strategy is then discussed. Types of strategic choices are then presented, followed by a section on valuation. The note concludes with an overview of a strategic decision-making process.

Antrix is the marketing arm of the Indian government space agency. The company slowly established a track record for technical capability in the manufacture and launch of satellites, apart from supplying remote sensing data from its own satellites, for international clients. Seeing opportunities in the global commercial space industry, the company decided to set market share goals to pursue the segments of satellite manufacturing, satellite services and launch services globally. However, as a government-owned company that relies on a network of other government agencies for its manufacturing and services, it is not clear that the company has either picked its segments and goals carefully, or whether it has the organizational capabilities to deliver on its ambitions. The Managing Director is faced with the challenge of aligning organizational capabilities to take advantage of global opportunities.

In 2007, Dr. Mark Horton took over as the head of the new California Department of Public Health (CDPH), at time when the governor, Arnold Schwarzenegger, had already identified obesity as a prevention priority in his health care reform proposal. However, it was not immediately clear how the CDPH should prioritize the spending on obesity prevention, nor how it should measure and evaluate the success of its interventions. A wide range of possibilities were on the table, accompanied by strong advocates on each side.

Curled Metal Incorporated has declining sales, but has developed a new product (curled metal pile driver pads) that, in field tests, deliver customer benefits that are many times CMI's manufacturing costs. Joseph Fernandez and Rajiv Sanwal of CMI's Engineered Products Division are responsible for formulating a strategy for the new product. A key issue is the price to charge for the pads. The case raises issues of analyzing market potential, aligning price with business strategy, and the implications of a price on development and execution of integrated strategic options.

Many internet superstars owe much of their success to the active and passive contributions made by countless people from outside their organizations. Think, most obviously, of Facebook profiles, eBay goods, YouTube videos, Wikipedia entries, and, less obviously, of the aggregated buying behavior underlying Amazon recommendations and the donated use of personal-computer resources underpinning Skype's internet-based phone network. Cook, the founder of Intuit (maker of financial software products such as Quicken and TurboTax), challenges traditional companies to tap this emerging source of value by actively creating what he calls user contribution systems. The user can be a customer, employee, sales prospect - or someone with no previous connection to the company at all. The contribution can be actively offered work, expertise, or information, as well as passive or even unknowing contributions, such as behavioral data that are gathered automatically as a by-product of a transaction or an activity. The system is the method, usually internet based, by which contributions are aggregated and made useful to others. Such a system creates value for a business as a consequence of the value it delivers to customers. In this article, Cook describes the personal journey that led him to see the tremendous value in user contributions. He creates a taxonomy of the systems that can capture user contributions and shows the variety of ways in which companies from Honda to Procter & Gamble to Hyatt Hotels are leveraging them. And, drawing on his successes and failures in trying to put them to work at Intuit, he offers advice on how business leaders can catalyze action to create user contribution systems in their own organizations.

Redefining the terms of competition for a market sector, an industry, or an entire global ecosystem is a tall order. It means attracting thousands of participants, galvanizing their efforts, and retaining their commitment for the long haul. Hagel, Brown, and Davison, of the Deloitte Center for Edge Innovation, provide a blueprint for this daunting task of shaping strategy as technology-driven infrastructures constantly change. The authors discuss three elements that, no matter the industry, are vital in shaping strategy. A shaping view, or rallying cry to potential participants, clarifies the market opportunity, makes sense of fundamental forces, identifies rewards, and highlights the shared nature of risk. Bill Gates, of course, succeeded with his view of desktop computing, and more recently Salesforce.com's Marc Benioff has held out a new model for delivering enterprise software. A shaping platform, like that of Google's AdSense, clearly defines standards and practices that help organize and support the activities of many participants, enabling them to do more with less. Specific shaping acts and assets convince participants that the shaper has the muscle to pull off its initiatives, as Facebook has done by showcasing its relationship with Microsoft. The three elements together allow a shaper to quickly mobilize a critical mass of participants and, thereby, unleash powerful network effects that can yield big rewards during periods of rapid change. Almost any company will benefit from an attempt to shape strategy, say the authors, but they recognize that not every business is ultimately a shaper. By participating in other firms' shaping strategies, they show, a company can still find plenty of opportunities to create value.

Most corporations are not as skilled at selling off assets as they are at buying them, often divesting at the wrong time or in the wrong way. Either is a very expensive mistake. A Bain & Company study has found that over the last 20 years, corporations that took a disciplined approach to divestiture created nearly twice as much value for shareholders as the average firm. In this article, Bain partners Mankins, Harding, and Weddigen set out the four straightforward rules those effective divestors follow. First: Just as they have acquisition teams, smart divestors have full-time divestiture groups, which continually screen their companies' portfolios for likely businesses to sell off and think through the timing and implementation steps needed to maximize value in each particular case. Second: They choose their divestiture candidates objectively. Too many firms rush to sell in economic downturns, when prices are low. Thoughtful divestors will sell only those businesses that do not fit with the corporation's core and are not worth more to themselves than they are to any other company. Third: Successful divestors consider how to structure a deal and to whom they will sell as carefully as they consider what units to sell and when. And they are as meticulous about planning the implementation of a deal as savvy acquirers are about postmerger integration. Fourth: They make a compelling case for how, and how quickly, the deal will benefit the buyer, and they make sure the selling unit's employees will be motivated to stay on and realize that value. Using these four rules, companies as diverse as Textron, Weyerhaeuser, Ford, Groupe Danone, and Roche have become "divestiture ready": consistently able to sell at the right time and in the right way to create the most value for their shareholders.

If you run a big company, you might think it's nearly impossible to grow profits organically. Think again, say MacMillan, of the University of Pennsylvania's Wharton School, and Selden, of Columbia Business School. Locked inside your firm's customer records is a wealth of information about what your customers need and how to make more of them profitable to you. Tapped strategically, this information can generate enormous value for your company and give you a big leg up on potential invaders. The authors call it the incumbent's advantage. Using the hypothetical example of Mix C-Ment, based on the real experience of concrete manufacturer CEMEX, the authors walk through a step-by-step tutorial on strategic customer segmentation. They demonstrate how investing in and applying research about particular customers' needs for tailored products, marketing support, and technical services can greatly increase profits. But that requires seeing these offerings not as mere allocated costs but as deliberately invested resources. To exploit your incumbent's advantage, build a modest customer-characteristics database and rank your customers according to profitability. Then analyze in detail the needs and behavior of the most and least profitable 20% - and strategically use what you find. This customer-centric approach to your information should have as its counterpart a corporate structure in which cross-functional teams assigned to specific customer segments make smart resource investments using your evolving knowledge about each segment's needs and performance. Getting your customer information and your organization to work together in this way is the key to preserving your firm's dominance while increasing profits at every step of the process.

This is an MIT Sloan Management Review article. The way we think about strategy is woefully incomplete, the authors contend. The traditional idea of focusing on the positioning of products (or services) underplays much of what most would agree makes a company truly competitive. Not only does it give short shrift to what a company knows, it ignores completely the fact that in today's dynamic economy, organizations have to continually reinvent who they are and what they do in large and small ways. And one important means of doing so is through innovation. An effective strategy, then, is comprised of three key components: product/market, knowledge and innovation positions. But even if a company masters the three strategic positions of product/market, knowledge and innovation independently, it is still at risk. Only when all three positions are aligned and mutually reinforcing can a strategy succeed. In adopting the notion of alignment, organizations need to view each position -- product/market, knowledge and innovation -- as aspects of an organization's overall strategy. Creating an integrated strategy thus requires focusing not on each position separately, but rather on all three positions simultaneously. The authors introduce the notion of competing based not only on what an organization makes or the service it provides, but on what it knows and how it innovates. Each aspect represents a competitive position that must be evaluated relative to the capabilities of the organization and to others in the marketplace battling for the same space. And each component must not only be aligned with the other two, but it needs to be adjusted as circumstances warrant. When done correctly, organizations -- such as Buckman Laboratories, which is profiled here -- thrive. When done badly, the company can suffer, and perhaps fatally so, as the history of Polaroid points out.

Paul Maritz took the helm of VMware in July 2008, just as the company confronted a radically new competitive environment. Since its founding in 1998, VMware had been the leading provider of virtualization software. Now it faced the kind of threat that every software company dreaded most: Microsoft, the world's largest software maker, was taking direct aim at its core market. As of June 2008, buyers of Microsoft's Windows Server 2008 operating system received a free, bundled version of Hyper-V, an advanced virtualization platform product. Looming over the impending competition between these two companies was the story of the "browser wars," in which Microsoft overwhelmed browser maker Netscape Communications by bundling the Internet Explorer browser with the Windows operating system. Did a similar fate await VMware? Maritz moved quickly and boldly to respond to the Microsoft threat--by deciding to offer a version of VMware's own virtualization platform product for free. But he still had to determine whether VMware's overall strategy was the right one. The case offers an overview of virtualization technology, a brief history of VMware, including descriptions of its acquisition by computer storage giant EMC, its August 2007 IPO, and Maritz's arrival as CEO; a summary of its product lines; a discussion of the ecosystem in which the company operates; and a survey of key competitors, including not only Microsoft, but also Citrix Systems and other providers that use the Xen virtualization platform. Finally, the case offers a description and analysis of several strategic options available to VMware.

Ocean Tomo's management team sought to turn the company into the leading intermediary for intellectual property. Despite its increasingly important role in the global marketplace, IP remained a notoriously illiquid asset--difficult to value, harder to trade, and often underutilized by owners. CEO Jim Malackowski and his colleagues hoped to capitalize on this inefficiency by designing and operating innovative marketplaces for intellectual property. After a successful live IP auction in the spring of 2008 (62% of 85 offered lots were sold for a total of $19.6 million), Ocean Tomo had to decide which of its five business lines to emphasize. Indeed, from its inception, Ocean Tomo had been designed as a "one-stop shop" for IP services, with five inter-related lines of business. Which of these services provided the largest market opportunity for Ocean Tomo? How should the company allocate its scarce resources (it had not sought outside funding yet) in order to get the most leverage going forward?

World financial assets are growing faster than the world economy. Confronting that and other modern realities of global finance requires more than regulatory reform: It calls for deeper thinking about new private and public international players and markets.

If you're afraid to involve your company in the carbon-credit market, the prospect of delaying your participation should scare you more. The authors' guide to the basics about carbon assets will assuage your fears by arming you with facts.

Most companies underutilize their data assets, but sometimes they figure out how to leverage them to satisfy marketplace demands. The author outlines nine ways to create new value from your data.

What causes companies to fail spectacularly? A recent study of 750 of the biggest U.S. business disasters of the past 25 years reveals that seven popular but risky strategies are often to blame. Drawing on that extensive research, Carroll, a journalist, and Mui, a fellow at Diamond Management & Technology Consultants, describe seven sirens that lure companies onto the rocks. One is the synergy mirage-hoped-for but non-existent merger synergies. Group disability insurer Unum unwittingly pursued these when it acquired individual disability insurer Provident, assuming the units could cross-sell each other's products. It turns out they had entirely different sales models and customers. Pseudo-adjacencies also lead companies astray, as school bus operator Laidlaw learned when it spent billions on a move into ambulance services. The firm expected its logistics expertise to carry over but discovered ambulances were not a transportation business but a highly regulated health care business demanding skills it sorely lacked. Faulty financial engineering, stubbornly staying the course, bets on the wrong technology, and rushing to consolidate are all dangerous, too, as Conseco, Kodak, Motorola, and Ames can attest. And a rollup of almost any kind is a high-wire act in which a slight market downturn is all it takes to finish you off. If the executives at these companies had taken a closer look at history, they might have avoided billions in losses. But even experienced teams can fall into these traps. The best way to safeguard your company against them is to institute a formal strategy review by a devil's advocate panel not involved in strategy development. Its members must have license to ask tough questions, say the authors, who offer guidelines to help panels focus on facts, test assumptions, and bring to light flaws in the strategy that could lead to costly blunders.

The combination of the gigantic American trade deficit and the price of oil at more than $125 per barrel (at press time) has created an attendant pool of financial liquidity among oil exporters in the Gulf. And this era of petrodollar surpluses is markedly different from the last one. In the 1970s, the member states of the Gulf Cooperation Council (GCC)--Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates--outsourced the management of their petrodollars to American and UK bankers. This time around, they have adopted active investment and development strategies: They are investing heavily in large Western organizations as well as in emerging markets in Africa and India. They are spending lavishly at home to establish institutional infrastructures, to create free-trade zones for manufacturing and services, and to build recreational facilities that will attract businesses, skilled knowledge workers, and tourists. These moves are destined to have long-run effects not just on their local economies but also on regional and international trading, argue Harvard Business School's Abdelal, Khan, and Khanna. In fact, the authors say, the actions of the GCC states are pulling the Gulf closer than it has ever been to the center of the international financial system. In this article, the authors consider how oil exporters' new investment strategies and interests over the next decades will affect the economic landscape in the West, reshape nearby markets in the Middle East, and dramatically reconfigure the GCC home environment itself.

The focus on intellectual capital and other 'intangible' assets that has emerged in recent years is opening up a series of questions with profound implications for business leaders, policy makers, accounting professionals and economists. Mastering value creation in the knowledge economy demands an appreciation for the pivotal role of intangible capital and a thorough understanding of network dynamics. Around the world, people are engaged in a struggle to reframe business and economics in an environment of global interdependency, environmental concerns and larger societal responsibility. Analyzing a value network involves addressing three basic sets of questions, she says, which can allow an organization to come to terms with how intangible assets are set into motion within unique configurations of roles, relationships, interactions and resources in value conversion networks.

This case series considers the capital-investment decisions to be made by executives of a large chemicals firm in January 2008. The A case (UVA-F-1543) presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The B case reviews the same project but from one level higher, where the executives face an either/or investment decision between two mutually exclusive projects.