This has en declining also because Of international business in the past few years. But today, growth of international service industry : growth of travel, hotels, restaurants, finance, real estate, international students. -Scenario 1 : Ford (US) establishes manufacturing facilities in China. FED = Foreign direct investment. – Scenario 2 : Australian BP exports iron ore to China. International trade (= Import/Export). -Scenario 3 : Motorola out-sources its after-sale services from India. India has a comparative advantage in IT,service-centers,… => international outsourcing. ?outsource service/resource from another entry). Many companies are outsourcing R&D to other countries, ex : Apple has 5 R&D innovation and design buildings, only 1 is in the US. – Scenario 4 : Toshiba and Phillips establish alliance in : international partnership in strategic R&D design and innovation. **Why study International business ? Expertise in global strategy is highly sought after, and needed in every functional expertise in a business. International assignments in multinational corporations => we need preparation to go internationally **HCI Online : Do Susie managers think globally enough ?
Lack of innovation and incomplete global strategies. *Takeaway : in top 10 of consulting companies Their global Business policy Council has B strategy expertise : to build international strategy strategies for companies. ** What is Strategy ? We won’t discuss functional level strategies (marketing strategy’… ). Strategic management questions : Why do some firms succeed while others fail ? (ex : Apple VS. Monika) Why some firms enjoy sustainable competitive advantage wile others don’t (ex : P) Formulation of strategy : what direction shall we take ?
And then Make it happen : how to implement a strategy ? ** What determines the International Success or Failure of firms ? Fundamental question we’ll be able to answer after this course. ** purpose of the Unit Develop understanding of the components of B strategy. ** Semester Program Module 1 : Globalization and B Module 2 : Strategy and Global Strategy Module 3 B Strategy 3 cases from Takeaway : A leading European household goods manufacturer A multinational packaged food company For an integrated international apparel retailer entry in market, recommendations for sales…
Tutorial participation (5%) & contribution (10%) : 15% Final exam : 55% Group consulting project : 30% Consulting project : Identify * Attractiveness of the country market * Competitors analysis * Evaluate competitiveness of company * Value proposition of the product * Options of entry mode * Select a location in the target country * Key operational issues Check Group project Guidelines under В« Assessment В» ! Week 2 Module 1 : Globalization, International Business and Mans 1. Globalization and implication 2. International business & motives 3. Multinational Corporations (Mans) 4. Success triangle 5.
Video Case study **Value of world exports (=international export = X-M) tripled between 1980 ad 2000. FED (foreign direct investment) grow more than twenty-fold. 51 of top 1 00 economic entities (countries or companies) are Mans. Firms without international goals may find their domestic markets under threat from foreign competition. “Globalization : Increasing integration of companies, economies, cultures, people in the world. The world is become smaller and flatter. World is interrelated and interdependence across countries and companies (ex : slow down of Chinese economy is slowing down Australian economy as well). Irrespective : Australia doesn’t have comparative advantage in manufacturing but in natural sources. * *Age of globalization characteristics to have : Be international, flexible, open and on the other hand also have a very local insight. This mixture advantage is valuable for companies. Think global, act local. Capture the opportunities. Take advantage of opportunities while minimizing the stress. **GAP (estimates of Gross domestic products) : China 1. 3 trillion to S trillion from 2003 to 2020 ; while E. U (9. 5 trillion to 19 trillion) US(10. To 21 trillion) and Japan(4 to 8) will double. Australia very *Implication of interested in emerging markets like India and China. Elaboration : more choices, lower prices, blurred national identity for products and services, career choices and progression In globalization age, come global opportunities and we must search for Our global competitive advantage. Where to find global opportunities and grow our global advantage ? **Gibbon integration : Companies can put different activities in different locations and reintegrate these activities on a global basis. *Len the context of globalization : need of capacity to live with challenges of globalization, requires confidence and competence to live, work, study anywhere in the world. *COO : Country of origin Ex : Airbus – engine = KICK, wing = France, seats = China. COO France = Assembles elements from all over the world. Which location is best for which activity. **Top 20 global countries : Based on economic integration, personal contact, technology, political engagement. 1. Ireland 2. Switzerland 3. Singapore Australia is 21st. It is not so stable at the moment. China, Brasilia, India, South Africa : 53, 58, 49, 54…. Re going to become more international in the future. **Drivers of globalization : economic drivers, technological drivers (Ex : internet, e-mails, transport), political drivers (most Mounties nowadays support globalization), cultural drivers (global thinking for clothing for example, cultures are converging but they are still diverse). **Globalization : for & against Brings benefit especially to developed countries at the cost of poorer nations. The real issue shouldn’t be if globalization is good or bad, but be how to allocate the benefits of this globalization across the countries, making it a fair game.
Some countries high among the G-7 are low on globalization (ex : Japan) Some emerging economies are quite high (Ex : Czech Republic) Developing countries exceeding the global average growth Hurts the environment (Relocate to escape tough pollution rules at home) Some firms adhere to strict corporate policy, strict codes of environmental protection and bring these with them when they relocate, enhancing the country environmental protection Stress : Exposes national economies to the uncertainties of the global economy Opportunities Could offer advantages to participation economies Harvard recommended books : В« the world is flat В» and В« the world is not flat В», World 3. 0, redefining global strategy Globalization infrastructure . Institutional frameworks and market efficiency that support fair and reentrant transactions of products or services. Streamlines flows of commodities, capital, labor, knowledge, and information. E.
IS : create regional integration to compete against US, Japan. There are still some barriers in global expansion : distances still matter. Globalization does not mean the advance off homogeneous civilization and uniform business system. The is no global strategies, there are regional strategies because world is not completely globalizes. Growing interaction makes people more aware of the differences among them Semi-globalization ? = World is not flat from Dry Panky Somewhat ; Global integration, local responses. = World is not totally isolated but is not total integrated. Key challenge for firms : Keep balance between international and national. Less euphoria at how close to total globalization we are. *Aeration between international and domestic business Traditional model = Stage model : we have our domestic business, we build up our competitive advantage there and then go abroad, first to close countries (similar in terms of economic development or in culture or in distance) then expand to distant countries. International business is the outgrowth of domestic business. S International entrepreneurs = homeless companies : might go to many countries at the same time, or directly to a distant country. Differences between domestic and international business : environmental dynamics : going to another country, there are a number of differences between host country and old one regulation policies, customers, competitors, suppliers, currency, interest… Ability to deal with differences builds your global advantage. Operational nature cross-cultural communication challenges in the same company between 2 offices ; coordination, motivation, differences in management philosophies ND principles. Dynamics increasing cost of doing international business Business = Reduce stress by understanding complexity. Week 3 Motives to expand internationally . ** Market motive Offensive motive – grow, capture market opportunities Defensive motive ? go abroad to protect your own country (ex Honda protects market share by building cars in the US) Short term strategy VS. Long term strategy : To meet customers need or to create money in the future = demand ? Ex. Of long term strategy : Cutbacks US business model : create market Office away from office. Go to cutbacks not only for coffee.
Business model based on experience. They are opening 50 coffee shops/month in China even though they are not making any money : basing their strategy on potential demand rather than existing demand. What is the company comparative advantage when it enters the country ? Has the company clearly defined its customers ? ** Strategic motive : Core competency = because no opportunity to leverage it in our home country = capitalize on distinctive resources already developed at home. First mover strategy in a foreign market (ex : Cutbacks in China), more interested in the future Vertical integration = import of natural resources, innovation/design, manufacturing…. To output.
We enter different countries to PU our different activities and then reintegrate everything (ex : R&D in Singapore, Manufacturing in China, Call center in India, design in the US) Follow the company major customers abroad : Follow company major customers abroad : Network competitive advantage move as a team – not only Toyota company but its suppliers move too- from home county to foreign country. Silicon Valley : many Indian/Chinese NC : to have the knowledge access strategic **Economic motive : Lower costs (to increase profit), by taking advantage from differences in countries **Success Trip-angle 3 critical components to succeed : IQ (Intelligence quotient : general intelligence) : captured by tests We focused too much in our IQ in the past years, it is important but it can only explain our success up to 20%. It is not the most important factor to explain success.
CEQ (emotional intelligence) : Empathic with others, ability to understand yourself and others, manage emotions in positive ways to relieve stress, communicate effectively, overcome challenges, leadership skills, motivate others. Global leadership : ICQ (cultural intelligence) : ability to understand, manage and use cross- cultural difference to our advantage. Strategic thinking (ask and thank as a strategist *manager) Global perspective think global Other critical dimensions : Mindset = have some empathy and curiosity, find a way to learn from the new country, respect people, show you are listening and learning, wanting to make a difference Case study : 20 years ago, Renault & Ionians were almost bankrupt. A global leader saved both. He is now CEO of Ionians and Renault : Carols Shown Diverse team is a more creative team.
Better solutions. Tragedy . Levels of strategy 2. Evolution 3. Issues 4. Perspective 1. What is strategy : Vision, how to make it happen, what to do and not to do. Business strategy finds its origins in military strategy behavior of military chief. The Art of War : Sun TTS = first military strategy book Strategy is not about planning, it is about action, risk taking flexibility, innovation ; because everything is changing: Planning and action. Sometimes it is not necessary to have a plan in a fast changing context. Strategy is theory. We need theory to explain (why Some companies are successful and others are not) and predict. But we also need action plans.
Replications and experimentations Once our strategy is set, it can be very difficult to change it. What makes a strategy successful ? Long-term, simple, agreed objectives Deep understanding of the competitive environment (external environment analysis) Objective appraisal of resources : Understand yourself, your resources, your competitive advantage (internal analysis) Strategy is in the middle between intern and extern. If there is no balance between these too, the strategy will be a misfit. Case study : Japanese mobile phone brands. All completely dead in 15 years time : Motorola, Monika, Toshiba. They were too slow to adapt to external environment.
Their strategy is misfit with the external environment. Motorola : first-mover. They invented the mobile phone technology. Focuses on high-tech knowledge of the mobile phone itself, but no one uses mobile phones to make phone calls anymore, it is used as a platform for the different applications. Monika : too slow, too conservative to transform itself comparing to the external environment. Case study of misfit shih the internal environment : Handmaid’s ambitious plan to enter luxury automobile segment (compete against BMW). Is this strategy too ambitious, dangerous ? Dangerous if can’t fit the internal environment, if don’t have necessary resources and capabilities.
Best technologies, strong branding, perfect quality. Do the resources used until now in the mass market still apply for the luxury market or do you need to acquire new resources ? Premium price to buy brand – image ? reputation. Do you have the capabilities to build this ? COO : chief operations officer Evolution of strategy . Financial budgeting -> corporate planning -> external aspect (industry analysis, competition, priorities in location and establishing market dervish)-> internal (advantage, resources, network, dynamic companies) week 5 **SOOT analysis : strength and weaknesses internal assessment of the firm leading to management decisions.