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Global Business (Chap 2). Dept of Technology Management for Innovation (TMI), Graduate School of Engineering Professor Kazuyuki Motohashi 工学系研究科 技術経営戦略学専攻教授 元橋一之 http://www.mo.t.u-tokyo.ac.jp. Today’s class. What is business strategy? What is global business strategy ( CAGE )
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Global Business(Chap 2) Dept of Technology Management for Innovation (TMI), Graduate School of Engineering Professor Kazuyuki Motohashi 工学系研究科 技術経営戦略学専攻教授 元橋一之 http://www.mo.t.u-tokyo.ac.jp
Today’s class • What is business strategy? • What is global business strategy(CAGE) • AAAframework
Business Strategy • Mid or long term direction of business to achieve sustainable economic returns (corporate value) • Strategy: military terms, back to Sun’s “The Art of War” • MOST • Mission:like “Sony is pioneer”, • Objective: More concrete goal of business, corporate • Strategy: Short description of how to achieve goals • Tactics: Business unit level activities (often not documented) • know your enemy, know thyself, and you shall not fear a hundred battles • External competition and internal competitiveness • 3C of corporate management :Competitor, Customer, Company
Business Strategy Analysis: SWOT Positioning School (by M. Porter): External competition focus RBV(Resource Based View) School: Internal competitiveness focus V(Value), R(Rarity), I(Imitability), O(Organization)
Strategic Planning Ex. creating new customer value Conducting logic tests (3C, SWOT analysis) Needs change? ex. low cost strategy? Pitfall: picking up bits and pieces
China is market or factory? Local for local (地産地消) Off-shore production Export (traditionalglobalbusiness)
Why global strategy is different?(CAGE) • Cultural Distance: language, customs, religion, cultures etc. • Administrative Distance: regional integration administration (FTAs), currency, common suzerain state, political dispute • Geographic Distance: physical distance, time zone, • Economic Distance: per capital GDP, wages, living costs Value Creation by combining Adaptation, Aggregation, Arbitrage
India vs China from US viewpoint Ghemawat(2007)
AAA: How to manage “distance”? Adaptation:Customization of product or services to local market: McDonald’s vegi-burger in India, soundless and compact fridge in China (by Panasonic)… Aggregation:Globally (or regionally) standardized product and services: Toyota’s pickup tracks for SE Asia, Apple i-phone… Arbitrage:Making profit out of distance:Infosys, UNIQLO….
AAAmapping into P-M Grid Adaptation or Aggregation Adaptation +Arbitrage Aggregation + Arbitrage
Shift of global strategies Ghemawat(2007)
Global Strategy Making • Factory or Market?: Supply side story or demand side story or both? • Arbitration is not only for manufacturing process but for various kinds of activities called off-shoring • Aggregation or Adaptation: • Marketing concept: market segmentation and targeting (or global market?)
AAA and value chain Arbitrage Production Off shore site Sales, services for local customers Local for local Off-shore R&D HQ for local HQ for global Adaptation for local customer Aggregation for global customer R&D Mother factory HR, marketing and technology strategy, procurement
Customer type and global strategy TBD Basically, adaptation to the customer Some arbitrage, but some not
Case material: China and India • India: factory or market? Please provide at least one example in each Quadrant of factory or market matrix. • Pick up one industry of your favorite. Discuss attractiveness in India over China by CAGE framework. • Then develop your global strategy plan based on AAA framework (which “A” should you put your focus on?)