Global Enterprise and Competition
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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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Global Enterprise and Competition

66.511.202

Fall 2007

Ashwin Mehta, Visiting Faculty


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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

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?



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Global Enterprise and Competition

Global

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

Enterprise

Business entity, profit motivation, growth, any size, any industry, B2B and B2C

Competition

Local, National, International and Global


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TESCO - #3 retailer in the World

2X Wal-Mart in the UK

Entering the US market



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Reasons for success?

Leadership

Clubcard

Employees

Culture

Supply chain

Innovation

Global markets


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CATALOG DESCRIPTION:

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. 


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Course Objectives:

  • understand challenges and issues in operating across national boundaries

  • develop analytical ability to formulate strategic options

  • understand integration of key functional areas, including marketing, manufacturing, R&D and customer support

  • use “strategy analysis” tools to develop scenarios, impact and select appropriate set of strategies

  • improve research capability to gather and interpret key environmental data that define critical parameters for a global strategy


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  • COURSE REQUIREMENTS:

  • Text Book: Global Competitive Strategy, by Daniel Spulber, Cambridge University Press ISBN: 978-0-521-88081-7

  • 2. Instructor’s Notes

  • You can download class notes as shown in Class Schedule.

  • 3. Other reading materials

  • See Syllabus


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4. Assignments.

Group Projects:

Group Projects: Each student will be assigned to a group to develop a strategic analysis of a company .

Assigned cases:

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.



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Syllabus:

http://faculty.uml.edu/amehta


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What is a Modern Global Enterprise?*

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



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Operating Mode

Own, JV’s, Partnering,

Transactional

Adaptation

Other Issues

Market-specific, Regional, Global

Control, Management/skills,

Cultures, Institutional, Ethics

Coverage

Organization

Local, National, Regional, Global

Functional, Divisional, Matrix

Business Processes

Internationalization

Local, Global, Mixed

Strategy & Integration

Corp, Business, Functional

Organic, M&A’s


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Who is being

Satisfied

What is being

Satisfied?

How are customer needs being satisfied

The beginning …

Business

Definition

Vision/Mission


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The Theory of the Business*

Required to maintain Leadership

How do we make money

Competencies

Environment

Assumptions

Mission

Making the Difference

*: Peter Drucker


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The Theory of the Business*

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

Session 1


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Moneymaking Basics*

Cash

Margin

Velocity

Return

Growth

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


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Outside In* --- External Environment

Recognize changes and patterns (lifestyle, technology, competition

Failures have consequences

Build External Perspective

Opportunities

Threats

Repositioning Business**

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


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What is Strategy?

Strategy

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)


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Example IBM Vision/Mission

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.

Session 1


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Example: IBM Strategies

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.

Session 1


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Business successes and failures

Always point to Strategy

Strategy and Strategic Positioning

Sustainable

Session 1


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Introduction to Global Competitive Strategy

© Professor Daniel F. Spulber



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Outline of introduction

The global challenge

The global mosaic

The global strategy “Star Analysis”

Global CompetitiveStrategy


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The Global Challenge

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 6

Global CompetitiveStrategy

*: Fortune


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Global CompetitiveStrategy

The Global Challenge

  • Global competitive advantage

    • Best sources of products, global brands

    • World-class cost efficiencies

    • Global pool of innovations

    • Global mix of transactions


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The Global Challenge

To serve large-scale global market

To address market differences across countries

Global CompetitiveStrategy


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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 markets

Size of Global BusinessCurrent $ (Source: World Bank)


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World Trade $ 11 trillion

Merchandise $9 trillion

Agriculture, fuels and mining, manufactured goods

Services $2 trillion

Transportation, travel, commercial services

Size of International BusinessTotal exports of goods and services


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Growing importance of trade to US economy

Increases in:

Exports:

  • Capital goods (mainly semiconductors, computer accessories)

  • Industrial supplies

  • Consumer goods

    Imports:

  • Industrial supplies and crude oil

  • Auto industry

  • Capital goods


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$1.5 trillion in international currency

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


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Why was Nokia so successful?

Why did Daimler-Chrysler have problems?


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The Global Mosaic

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 remain

Global CompetitiveStrategy

The world is bumpy!


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Language

Culture, customs, and history

Social institutions

Demographic differences: health, education

Public policies

Legal and regulatory systems

Business practices

Currencies

Technology

Business must bridge critical differences between countries


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The costs of trade: The Four T’s

Transaction costs

Tariff and non-tariff barriers

Transportation costs

Time costs

Global CompetitiveStrategy

Borders are “sticky”


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Business must navigate the World Trade System

Proposed

Caribbean Basin Initiative

NAFTA


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Business strategy must account for changes in political relationships and trade deals between countries


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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 opportunities

The Arbitrage Principle

Country borders provide opportunities and competitive advantage to international business


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Globalization challenges business strategy in a fundamental way

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

NEXT SESSION:

Analytical framework!

Global competitive advantage


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Recap … Introduction to Global Business way

Competition

Globalization

4T’s, GATT, WTO, Technology, …

Opportunities

Markets, Resources

Analysis and Strategy

Traditional (home country-based) to Global

STAR Analysis

Global Added Value

Value Connection

G5 Strategies

Platform, Network, Intermediary,

Entrepreneur, Investment


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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.


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Group Projects way

Group Formation

Company Assignments

Templates Review


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Group Project Template way

1. Company Financials

(see Excel spreadsheet in “Group Project and Assignments Files”). Summarize key financial data (growth rates, major ratios, etc.)


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