ba 510 international management doha 2011 class 4
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BA 510 International ManagementDoha 2011Class 4
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TODAY
Globalization Drivers Globalization vs. Localization Global vs. Multi-domestic Strategies International Strategy: Value Chain
Perspective Canada Solar Case Study – Strategic
Framing Finalize 5 minute pitches Make 5 minute pitches
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GLOBALIZATION DRIVERS
Market Drivers Cost Drivers Government Drivers Competitive Drivers
Low
Multidomestic
High
Global
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GLOBALIZATION DRIVERS
Low High
Baked Goods
Book Publishing
Retail Banking
Toothpaste
Soft Drinks
AutomobilesComputers
Aircraft
Multi-domestic Global
Strength of Market Drivers
High
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GLOBALIZATION DRIVERS
Low High
Baked Goods
Retail Banking
Toothpaste
Soft Drinks
Automobiles
Computers
Aircraft
Pharmaceuticals
Multi-domestic Global
Strength of Cost Drivers
High
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GLOBALIZATION VS. LOCALIZATION
Globalization: Operating with relative constancy in a number of
markets -- as if the entire world (or major regions of it) were a single entity; selling the same things in the same way everywhere (Levitt 1983)
Examples? Localization:
Operating in a number of countries, adjusting products and practices in each -- at a high relative cost, with a committed operating presence in the markets of other nations.
Examples?
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Managing Differences (Ghemawat) Most of modern global strategy focuses on
minimizing differences But, correctly choosing how much to adapt
a business model is important to extract full value from a business
Employ a strategy of differences (arbitrage) and exploitation of scale economies
GLOBALIZATION VS. LOCALIZATION
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Managing Differences (Ghemawat) Strategy of differences: arbitrage
Cultural Arbitrage: Exploiting of culture to gain advantage. Ex: food, clothing, US fast-food chains
Administrative Arbitrage: Exploiting legal, institutional and political differences from country to country. (ex: tax differentials)
GLOBALIZATION VS. LOCALIZATION
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Managing Differences (Ghemawat) Strategy of differences: arbitrage (cont)
Geographic Arbitrage: Not as important now due to reductions in transportation costs, but can be used in areas such as telecommunications (local vs. long-distance) and distribution networks
Economic Arbitrage Includes exploitation of differences in costs of labor and capital, variations in knowledge or availability of complementary products, technologies or infrastructure
GLOBALIZATION VS. LOCALIZATION
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Managing Differences (Ghemawat) Globalization allows for:
focus on market similarities upward spiraling of market share, leading to
greater economies of scale lower costs through greater economies of scale lower prices for consumers
GLOBALIZATION VS. LOCALIZATION
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Managing Differences (Ghemawat) Localization allows for:
winning specific buyers and maximizing sales not over-designing products for some countries
and under-designing them for others not undermining some company networks
which already exist not dampening entrepreneurial spirit
GLOBALIZATION VS. LOCALIZATION
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GLOBAL V. MULTI-DOMESTIC STRATEGIES
Slide 8-12
Global Strategies •System-wide approach to competing worldwide• Mutually interdependent subsidiaries• Centralized control and reporting of activities• Facilitates cross-subsidization policies across markets
HQHQ
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Global Strategies Standard products Global economies of scale in key
components and activities Leverage technology across many
markets Global coordination of marketing and
sales system-wide Cross-subsidization policies to
respond to competitive moves by other global strategy firms
Slide 8-13
GLOBAL V. MULTI-DOMESTIC STRATEGIES
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Slide 8-14
Multi-Domestic Strategies •Competitive advantage is built in each separate national or regional market.• Markets and subunits are treated independently from one another.• Decentralized controls of activities, reporting back to headquarters.
HQHQ
GLOBAL V. MULTI-DOMESTIC STRATEGIES
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Multi-Domestic Strategies Customization or frequent adaptation
of products for each separate market Few systemwide opportunities for
economies of scale Value-adding activities performed and
duplicated in each market Coordination of marketing and sales
within each market Quality and image across markets are
important sources of competitive advantage
Slide 8-15
GLOBAL V. MULTI-DOMESTIC STRATEGIES
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Benefits of Global Strategies Market growth and expansion
opportunities Recovery of R&D and investment
costs Creation of a distinct image Accelerated learning and transfer of
new skills
Slide 8-16
GLOBAL V. MULTI-DOMESTIC STRATEGIES
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Costs of Global Strategies Strategic Leverage
• Sustained investment required• Preserving and extending image
(In)Flexibility• High interdependence of subsidiaries (and
businesses)• Change or development affecting all markets
Cooperation• Compromise• Accountability
Slide 8-17
GLOBAL V. MULTI-DOMESTIC STRATEGIES
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Pre
ssure
s fo
r G
lob
al Effi
ciency
Pressures for Local Responsiveness
High
Low
HighLow
GLOBAL V. MULTI-DOMESTIC STRATEGIES
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INTERNATIONAL STRATEGY: VALUE CHAIN PERSPECTIVE
Infrastructure
Technology Development
Procurement
Human Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
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Infrastructure
Technology Development
Procurement
Human Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
Headquarters
INTERNATIONAL STRATEGY: VALUE CHAIN PERSPECTIVE
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Infrastructure
Technology Development
Procurement
Human Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
Upstream
Headquarters
INTERNATIONAL STRATEGY: VALUE CHAIN PERSPECTIVE
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Infrastructure
Technology Development
Procurement
Human Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
Upstream Downstream
Headquarters
INTERNATIONAL STRATEGY: VALUE CHAIN PERSPECTIVE
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Infrastructure
Technology Development
Procurement
Human Resource Management
InboundLogistics Operations
OutboundLogistics Marketing Service
ProfitMargin
Advertising Pricing Distrib. Packaging
INTERNATIONAL STRATEGY: VALUE CHAIN PERSPECTIVE
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Geographic location of value chain activities Concentrated/centralized vs.
dispersed/decentralized Decision on modes of entry into
new country markets (Class 5)
INTERNATIONAL STRATEGY: VALUE CHAIN PERSPECTIVE
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Cross-border linkages between dispersed value-creating units
Coordination = Flows of: $ Product (finished and intermediate) Technology People Information (market data, strategic
direction, etc.) Highly coordinated vs. only money
flows
INTERNATIONAL STRATEGY: VALUE CHAIN PERSPECTIVE
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CASE STUDY: CANADA SOLAR
What are the key market and cost drivers in this industry?
What arbitrage opportunities, if any, exist in this industry and, specifically, for Canada Solar?
To what extent are there tensions between globalization and localization for Canada Solar as it consider international expansion of its manufacturing?
Create a “Pressures” matrix that characterizes where Canada Solar and your target company reside.
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5 MINUTE PITCH
Preparation Cluster Assessment + “Fit-1” (Solar PV Mfg
and Qatar) 1.5 page outline plus presentation No longer than 5 minutes Three “C’s”: Concise, Clear, Contextual