Global Enterprise and Competition 66.511.202 Fall 2007 Ashwin Mehta, Visiting Faculty. Microsoft launches Vista worldwide After five years of marketing blitz, the largest software maker unveils the new computer operating system Tuesday. January 30 2007: 9:21 AM EST
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Ashwin Mehta, Visiting Faculty
After five years of marketing blitz, the largest software maker unveils the new computer operating system Tuesday.
January 30 2007: 9:21 AM EST
NEW YORK (Reuters) -- Microsoft Corp. rolled out Windows Vista at retailers in 70 countries Tuesday, delivering a new computer operating system that aims to better manage the explosion of digital media and protect users from the dangers of the Internet.
What are key planning elements?
The Forbes Global 2000, April 2006
markets and operations in global terms,
more diverse organization in terms of culture,
few core values that are its major unifying force.
It has a headquarters but is often managed from diverse locations
Business entity, profit motivation, growth, any size, any industry, B2B and B2C
Local, National, International and Global
TESCO - #3 retailer in the World
2X Wal-Mart in the UK
Entering the US market
To be taken as last course in foundation core.
Is an integrated investigation of global competitive issues to help students understand the processes of organization and technological innovation which permit businesses to achieve competitive advantages in a global environment.
This course also deals with the nature and techniques of industry analysis necessary to the formulation of effective global strategy for the firm.
Group Projects: Each student will be assigned to a group to develop a strategic analysis of a company .
a written case analysis for three(3) cases, to be submitted via email as attachments.
3 – 5 students will present their assignments in the class.
Students are expected to participate in class discussions. You are expected to arrive at class fully prepared to discuss the material assigned for that day.
Focused on Enterprise-wise objectives, not local initiatives/priorities
Aligning subsidiaries around a common strategic vision
Managing from Center
Integration of operations globally
Sharing local innovations around the world
Common Corporate culture, while managing sub cultures
Fortune, February 2006
Own, JV’s, Partnering,
Market-specific, Regional, Global
Cultures, Institutional, Ethics
Local, National, Regional, Global
Functional, Divisional, Matrix
Local, Global, Mixed
Strategy & Integration
Corp, Business, Functional
What is being
How are customer needs being satisfied
The beginning …
Required to maintain Leadership
How do we make money
Making the Difference
*: Peter Drucker
Assumptions about Environment, Mission and Core Competencies Must Fit Reality
The assumptions in all Three Areas Have to Fit One Another
The Theory of the Business Must be Known and Understood Throughout the Organization
The Theory of the Business has to be Tested Constantly
*: Peter Drucker
Change in “money making model” impacts all of these ---
Dell selling through retailers Vs Direct only
*: The Basics of Moneymaking, Ram Charan, http://finance.yahoo.com/expert/article/companyknow/35703
Recognize changes and patterns (lifestyle, technology, competition
Failures have consequences
Build External Perspective
Decision making process
*: See Your Business Outside In, Ram Charan, http://finance.yahoo.com/expert/article/companyknow/30421
**: When – and How – to Reposition Your Business, ram Charanhttp://finance.yahoo.com/expert/article/companyknow/31627
Use of scarce resource to achieve vision/mission and objectives
Collection of actions:
Corporate (what business/industry)
Business (how to compete)
Organization/function (where to allocate resources)
At IBM, we strive to lead in the invention, development and manufacture of the industry's most advanced information technologies, including computer systems, software, storage systems and microelectronics.We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide.
IBM’s strategy is
to pursue an innovation agenda with its clients, partners and in other relationships, and
to continue refining its portfolio to achieve higher value.
Through its understanding of where technology, client requirements and global business are headed,
the company continually makes strategic decisions to maintain its leadership of this rapidly changingbusiness by focusing on high-value innovation-based solutions and services while consistently generating high returns on invested capital for its shareholders.
The company utilizes its entire portfolio — hardware, software, services, technology and research to maintain its leadership.
Always point to Strategy
Strategy and Strategic Positioning
© Professor Daniel F. Spulber
The global challenge
The global mosaic
The global strategy “Star Analysis”Global CompetitiveStrategy
Globalization changes nature of competition
-- Competitors can be very different!
Innovative entrants, including emerging market firms
Global 500 Companies*: 2005 2006 2007
US 176 170 162
Japan 81 70 67
France/Germany/UK 111 111 108
China 15 20 24
Canada 13 14 14
India 5 6 6Global CompetitiveStrategy
The Global Challenge
To serve large-scale global market
To address market differences across countriesGlobal CompetitiveStrategy
• World GDP: $ 41.3 trillion
(Gross Domestic Product)
US: $ 11.7 trillion
EU (25): $ 12 trillion
Japan $ 4.6 trillion
Latin America and Caribbean $ 2 trillion
Middle East and Africa $ 1 trillion
India $ 0.7 trillion
China $ 1.9 trillion
High growth rate of emerging marketsSize of Global BusinessCurrent $ (Source: World Bank)
Merchandise $9 trillion
Agriculture, fuels and mining, manufactured goods
Services $2 trillion
Transportation, travel, commercial servicesSize of International BusinessTotal exports of goods and services
transactions per day!
63,000 multinational corporations
Major source of economic growth and investment for developed and developing countries
Source of global technological innovation
Earnings growth for many companies (Wal-Mart, GE, Carrefour, Nestlé, Unilever, Cemex, Toyota, Samsung)Size of International Business
Why did Daimler-Chrysler have problems?
Vast economic differences across countries
GDP per capita, prices, wages
Underlying geographic differences
– Geography matters
Large “economic distances” between countries
“Sticky borders” preserve these differences
The arbitrage principle – economic differences evidence of sticky borders, many strategic opportunities remainGlobal CompetitiveStrategy
The world is bumpy!
Culture, customs, and history
Demographic differences: health, education
Legal and regulatory systems
TechnologyBusiness must bridge critical differences between countries
Tariff and non-tariff barriers
Time costsGlobal CompetitiveStrategy
Borders are “sticky”
Caribbean Basin Initiative
Business strategy must account for changes in political relationships and trade deals between countries
Country borders: relationships and trade deals between countries
Restrict movement of inputs – capital, labor, technology, resources
Limit trade in goods and services
Create persistent differences in technology and information
Preserve economic differences -- prices and wages
Arbitrage reduces economic differences
Innovative transactions find arbitrage opportunitiesThe Arbitrage Principle
Country borders provide opportunities and competitive advantage to international business
Trade costs are high resulting in economic differences between countries
The global mosaic offers opportunities for generating gains from trade
The successful global business develops innovative international transactions to gain global competitive advantage
Global competitive advantage
4T’s, GATT, WTO, Technology, …
Analysis and Strategy
Traditional (home country-based) to Global
Global Added Value
Platform, Network, Intermediary,
Assignment 1 way
Due November 15, 2007
GO TO THIS LINK (http://knowledge.wharton.upenn.edu/createpdf.cfm?articleid=719&CFID=2411127&CFTOKEN=34070626),
REVIEW THE ARTICLE, DO A WEB RESEARCH ON COMPANIES DISCUSSED IN THE ARTICLE, AND ADDRESS THESE QUESTIONS:
(YOU SHOULD WRITE AN INTRODUCTION/CONTEXT BEFORE ADDRESSING THESE QUESTIONS)
How many stores do Wal-Mart, Home Depot and IKEA have in various countries/regions?
Describe Wal-Mart and Home Depot’s International expansion strategies (i.e. acquisition, JV’s, organic growth) and comment on their results (successes/failures/challenges)
Review Wal-Mart and Home Depot’s revenues over the last five years and analyze revenues from US Vs International.
What has been the main thrust of IKEA’s International expansion strategy and how has it performed (review their financial and other data of past few years)?
YOUR REPORT MUST BE BETWEEN 1000 AND 1500 WORDS AND MUST INCLUDE SOURCES REFERENCED.
Group Projects way
1. Company Financials
(see Excel spreadsheet in “Group Project and Assignments Files”). Summarize key financial data (growth rates, major ratios, etc.)