international business environment & strategy drivers of globalisation april 2014 slides based...
TRANSCRIPT
International Business Environment & Strategy
Drivers of GlobalisationApril 2014
Slides based on Yip, G. (1995):- Johnson, Scholes & Whittington (2011)
“Exploring Corporate Strategy”, 9th edition
[email protected]://cambridgemba.wordpress.com/strategy
Robert Jones © 2010-2013
What is globalisation?
Causes?
Effects?
Pros & cons?
Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice HallBased on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
Drivers of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Globalstrategies
• Similar customer needs• Global customers• Transferable marketing
Drivers of globalisation
Other examples of global market convergence?
1.
2.
3.
4.
5.
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
Drivers of globalisation
Global market convergence
Cost advantagesScale economies
Larger, more efficient factoriesSmaller factories closing
Country-specific costsOff-shoring to lower cost nationsLow or High salary costsBUT … Low or high productivity & quality?
Sourcing efficienciesJust-in-time (Toyota production system)Large, local suppliersTime & distance & cost of 12,000 km logisticOn-shoring – we make things in the UK !
High product development costs Constant innovation Research & DevelopmentConstant improvementNew product every 3 years or every 3 months?
What are the implications of these Cost drivers?
1.
2.
3.
4.
5.
Employees at a call centre in the southernIndian city of Bangalore.
Is my Toyota Corolla a Japanese car or………?
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
Drivers of globalisation
Cost advantages
Global market convergence
Global competition
InterdependenceGlobal alliances – car industry
- airlines- electronics / digital
Competitors globalTop firms have #1 / #2 market shares in many nationsGlobal car makers
High exports / importsMany electronic products are made in ChinaShoes are made in Vietnam“Home” markets are disappearing
Airbus A-380How many nations are in the Airbus (EADS) group?How many suppliers to Airbus? How many nations supply? How many in USA?The A-380 costs $280 million. What % of that price ticket is made in UK?
A global airline alliance:-
Why do competitor firms come together in alliances / collaborations?
1.
2.
3.
4.
5.
Global brands – where next?
Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice HallBased on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
Drivers of globalisation
Cost advantages
Global market convergence
Global competition
Government influence Trade policies
Falling barriers to tradeLiberalisation & deregulationWTO / EU and trading bloc policies
Technical standards
ISO replaces national standards (BS, DIN, ASA) Computer software is internationalSafety & quality standards:-Pharmaceutical, aviation, automobile sectors
Host government policiesSensitivity is neededNational differences still exist
European Union
How many member nations?
What are the otherTrading Blocs ?
€ Euro pros and cons
How many member nations?
http://wto.http.internapcdn.net/WTO/wmv/2013_09_11_pf_teaser.wmv
ArgentinaAustraliaBrazilCanadaChinaFranceGermanyIndiaIndonesiaItalyJapanMexicoRussiaSaudi ArabiaSouth AfricaRepublic of KoreaTurkeyUnited KingdomUnited States of America
Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice HallBased on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
Drivers of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
How do these Drivers of Globalisation affect us?
Think of the 4 Cs:-
Competition is increasing
Costs must be reduced constantly
Customers are ever more demanding
Country differences are still important
R Jones (2006) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
The 4 Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
But is this the full picture of globalisation ?
What else is important in business ?
Sources of Culture
Language/sNationalityEducationProfessionEthnic groupReligionFamilySexSocial classCorporate or organisational culture
Culture
Based on Usunier (2000) Marketing Across Cultures, Pearson Education Ltd
Sources of Culture
A famous (infamous) Benetton advertisement
A famous (infamous) Benetton advertisement
A famous (infamous) Benetton advertisement
A famous (infamous) Benetton advertisement
R Jones (2006) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
The 5 Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
Culture
What factors are we seeing here?
R Jones (2006) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
The 6 Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
Culture Converging technologies,E-business
R Jones (2006) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
The 6 Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
Culture Converging technologies,E-business
Other factors
http://www.bankofengland.co.uk/monetarypolicy/assetpurchases.htm
The Credit Crunch
Quantitative easing
Where are we now with the financial crisis?
How is the economy doing?
How are conditions for business?
It depends on the nation and the region
It depends on the industry
Currency exchange rate fluctuations
http://uk.reuters.com/business/currencies
© R Jones (2009) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
More Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
Culture Converging technologies,E-business
Creditcrunch Currency
Is competition between companies “pure” or ………..
Common platform(Collaboration)Where is this car built ?
Competition or collaboration or collusion ?
British Airways fined £58.5m for fuel price-fixingBritish Airways is to pay a reduced £58.5m fine for colluding with rival Virgin Atlantic on fuel surcharges, finally putting to bed an investigation that has lasted more than five years.
(c) Robert Jones 2013
The Competition Commission takes action against anti-competitive behaviour
http://www.competition-commission.org.uk/(c) Robert Jones 2013
http://ec.europa.eu/competition/index_en.html(c) Robert Jones 2013
Agreements between two or more independent market operators which restrict competition are prohibited by Article 101 of the European Treaty. The most flagrant example of illegal conduct infringing Article 101 is the creation of a cartel between competitors (which may involve price-fixing and/or market sharing).
Article 102 of the Treaty prohibits firms holding a dominant position on a determined market to abuse that position, for example by charging unfair prices, by limiting production, or by refusing to innovate to the prejudice of consumers.
http://ec.europa.eu/competition/antitrust/overview_en.html(c) Robert Jones 2013
United States Antitrust Division
http://www.justice.gov/atr/about/index.html(c) Robert Jones 2013
© R Jones (2009) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
More Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
Culture Converging technologies,E-business
Creditcrunch Currency
Collaborationor collusion?
Commonplatform
http://unfccc.int/essential_background/feeling_the_heat/items/3157.php
© R Jones (2009) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
More Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
Culture Converging technologies,E-business
Creditcrunch Currency
Climate change CO2
Collaboration
Commonplatform
© R Jones (2009) - Based on Johnson, Scholes & Whittington (2006) Exploring Corporate Strategy, FT Prentice Hall
Based on G. Yip, Total Global Strategy, Prentice Hall, 1995, chapter 2
• Trade policies• Technical standards• Host government
policies
Globalstrategies
• Scale economies• Sourcing efficiencies• Country-specific costs• High product
development costs
• Similar customer needs• Global customers• Transferable marketing
• Interdependence• Competitors global• High exports /
imports
More Cs of globalisation
Government influence
Cost advantages
Global market convergence
Global competition
Country
Customer
Cost
Competition
Culture Converging technologies,E-business
Creditcrunch Currency
Climate change CO2
Collaboration
Commonplatform
ConferenceUNCCC
More Cs:
Consolidation e.g. pharmaceuticals
Connectedness
Communication / Crowd
Corruption – is it a gift? Is it ever right to pay a bribe? Lobbying?
Capital – FDI foreign direct investment
Control (and Governance) / Coordination
Complexity
Centralization <-> decentralization e.g. Unilever, MacDonalds
Copying (and IP protection)
Cluster – regional or global ?
More Cs
Is this the full picture?
How do these factors affect your company?
How will you adapt your strategies to survive / succeed?
Any questions?