BA 510 International Management Doha 2011 Class 4

1. BA 510 International Management Doha 2011 Class 4

2. 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 Today

3. Market Drivers Cost Drivers Government Drivers Competitive Drivers Globalization Drivers Low Multidomestic High Global

4. Globalization drivers Aircraft High Computers Automobiles Strength of Market Drivers Soft Drinks Toothpaste Retail Banking Book Publishing Baked Goods Low High Multi-domestic Global

5. Globalization drivers Pharmaceuticals High Aircraft Computers Strength of Cost Drivers Automobiles Toothpaste Retail Banking Baked Goods Soft Drinks Low High Multi-domestic Global

6. 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? Globalization vs. Localization

7. Globalization vs. Localization • 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

8. Globalization vs. Localization • 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)

9. Globalization vs. Localization • 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

10. Globalization vs. Localization • 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

11. Globalization vs. Localization • Managing Differences (Ghemawat) • Localizationallows 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

12. Global v. multi-domestic strategies HQ • Global Strategies • System-wide approach to competing worldwide • Mutually interdependent subsidiaries • Centralized control and reporting of activities • Facilitates cross-subsidization policies across markets

13. 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 Global v. multi-domestic strategies

14. Global v. multi-domestic strategies HQ • 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.

15. 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 Global v. multi-domestic strategies

16. 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 Global v. multi-domestic strategies

17. 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 Global v. multi-domestic strategies

18. Global v. multi-domestic strategies High Pressures for Global Efficiency Low Low High Pressures for Local Responsiveness

19. International Strategy: Value Chain Perspective Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Service Operations Marketing

20. International Strategy: Value Chain Perspective Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service

21. International Strategy: Value Chain Perspective Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream

22. International Strategy: Value Chain Perspective Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream Downstream

23. International Strategy: Value Chain Perspective Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Advertising Distrib. Packaging Pricing

24. 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

25. 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

26. What are the key market and costdrivers 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. Case study: canada solar

27. 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 5 minute pitch