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sagar sadhwani mba ib
Strategies for success
Global Competitive Environment
Rapid pace of change Pervasive shift towards markets
Broad and fast diffusion of capabilities
Emerging markets New global competitors
Excess capacity and slow growth
Regionalization of trade
New rules of global competition
Investment in education Aneel Karnani 4 . High savings rate.Global Competition Causes of Past Growth Pro-business. pro-market policies Prudent monetary and fiscal policies Secure property rights Openness to trade and foreign technology Physical capital growth.
Global Competition Potential Problems in Emerging Economies Political instability and succession Too much government intervention Unequal income distribution Infrastructure bottlenecks Overheated economies (inflation. current a/c deficits) Shortage of skilled labor Legal environment (corruption. intellectual property) Inefficient financial systems Overcapacity Aneel Karnani 5 .
Global Competition Emerging Markets Emerging markets are larger than what the ‘per capita income’ numbers would lead you to believe. – Purchasing power vs. exchange rates – Unequal income distribution – Regional inequalities – ‘Parallel’ economy Aneel Karnani 6 .
fast food) Giodarno (Hong Kong. paints) Nirma (India. fast food) Jollibee (Philippines. detergents) Pollo Compere (Central America. personal computers) Haier (China. cement) Aneel Karnani 7 . appliances) Asian Paints (India.Global Competition Strong Local Competitors Lenovo (China. personal computers) Cemex (Mexico. garments) Acer (Taiwan.
Global Competition Spectrum of Industries Country centered Global Separate markets Linked markets Continuum Portfolio of subsidiaries Integrated system across countries Aneel Karnani 8 .
distribution Arbitrage – Comparative advantage – Scanning and learning from environment – Institutional incentives – Exchange rate volatility – Cross-subsidization Aneel Karnani 9 .Global Competition Advantages of global firms Scale related – Manufacturing – Learning curve – Sourcing – R&D – Marketing.
About half of expatriates quit within three years of their return.Global Competition Expatriates in US Firms 56% of companies planned to increase the number of overseas assignments. Only 38% of the companies guaranteed expatriates a position upon their return. At 60% of the companies. For 97% of companies. fewer than a quarter of the expatriates knew their new assignments four months before their repatriation. the cost of overseas posting equals at least twice the expatriate’s salary. Source: Survey of 152 companies. Conference Board Aneel Karnani 10 . 77% of expatriates returned to jobs with less responsibility than the overseas position. the cost was three to five times the salary. 87% of companies said that most expatriates were not promoted when they returned. for 68%.
Global Competition Advantages of Localization Close to customer Adapt to local supply conditions Governmental preferences Organizational speed Lower overhead 11 Aneel Karnani .
Global Competition Continuum Global Consumer Electronics Auto Multi-domestic Packaged foods Industry Honda GM Fiat Firm Research Manufacturing Marketing Service Function Aneel Karnani 12 .
Global Competition The Challenge Winning locally Converting global capability into local advantage Enriching global capability from local knowhow 13 Aneel Karnani .
Global Competition Effective Global Manager Develop and use global strategic skills Manage change and transition Manage cultural diversity Design and function in flexible organizational structures Ability to work with others and in teams Ability to communicate Learn and transfer knowledge in an organization Aneel Karnani 14 .
Global Competition Aneel Karnani 15 .
Global Competition Organizational Initiatives Use of cross-border task forces (91%) Globally integrated MIS (81%) Global electronic networking capabilities (79%) International business units (77%) Centers of excellence (74%) Shift power from country subsidiaries to global divisions (60%) Aneel Karnani 16 .
Global Competition Aneel Karnani 17 .
Global Competition HR Initiatives Worldwide management development program International experience a condition for promotion to top management Multi-national management group 18 Aneel Karnani .
Global Competition MNCs in Emerging Countries Objective: Sell to local market Sell to regional market Export platform for the world market Aneel Karnani 19 .
‘flag planter’) Local adaptation Aneel Karnani 20 . target the lower and middle segments Invest in distribution and marketing Heterogeneous regions Develop local managerial and technical talent Global strategy (vs.Global Competition MNCs: Strategic Challenges Local competitors getting stronger Nature and role of alliances Expand the market.
Global Competition Mode of Entry Trade Contractual Investment Indirect Agent/distributor Licensing Joint venture Franchising Technical agreements Service contracts Management contracts Construction/turnkey contracts Contract manufacture Sole venture Aneel Karnani 21 .
Grow the market. Real Opportunity Not a market Aneel Karnani 22 .Global Competition Expand the Market Most MNCs target this tip only. Grow with the customer.
invest in relationships and brand equity Aneel Karnani 23 .Global Competition Key Success Factors Distribution – Fragmented – Poor physical infrastructure – Geographically fragmented – Too many tiers Service infrastructure: poor Marketing.
risk-taking leadership. Centralized decision making structure. capital. social networks and personal relations are sources of opportunity and resources Conglomerate with multiple diverse business units/enterprises Cross-subsidization. technology. and information Aneel Karnani 24 . and sharing of risk. Authority determined by relationship with founder Entrepreneurial. focused on opportunistic deal-making Political/government connections.Global Competition Typical Local Enterprise Individual/family owned and managed. Firm objective may not be solely financial.
risk taking. nimble – Flexible. fast moving. trust Competitive Weaknesses – Dependence on patriarch. etc. – Lack of synergy in disparate businesses – Management and capital constraints Aneel Karnani 25 . marketing. adaptive – Entrepreneurial. opportunistic – Relationship building. single individual – Vulnerable to changing family dynamics – Lack of competence in technology.Global Competition Typical Local Enterprise Competitive Strengths – Speed.
or virtual monopolies Family controlled conglomerates Vertically integrated Paternalistic management style Aneel Karnani 26 .Global Competition Past Success Entrepreneurial management Rapid economic growth Constantly rising property prices Large pools of cheap labor Political connections Personal connections Inefficient markets (specially capital markets) Monopolies.
privatization. globalization Increasing competition.Global Competition Changing Environment Economic liberalization: deregulation. winners and losers More ‘efficient’ markets Growing ‘consumer’ class Increasing customer sophistication Changing ‘value chain’ New rules of the game Limits to past success ‘Guanxi’ ‘Competitive advantage’ Aneel Karnani 27 .
Global Competition Future Challenges Develop competitive advantage Establish regional (or even global) presence Move to higher value added activities Move into services and consumer goods Expand the market Aneel Karnani 28 .
Global Competition Strategic Imperatives Family managed Hierarchical organization Family owned Professionally managed Empowered organization Publicly owned Conglomerate Local country Vertically integrated Alliances for technology Alliances for brand image Export abroad OEM supplier Focused company Regional (even global) Outsourcing Own technology Marketing oriented Market abroad Higher value added activities Aneel Karnani 29 .
Global Competition Growth Strategies Organizational excellence Critical mass Technology Marketing sophistication Capital Strategic alliances Aneel Karnani 30 .
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