Globalisation 4

8/13/2019 Globalisation 4

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International Business activitiesstrategic analyses

Lecture 4

David Litteljohn

Events in a Globalising World


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REFERENCES

Abdela, R and Tedlow, 2003, R Theodore Levitt's 'The Globalization of Markets': An Evaluation

after Two Decades,Harvard NOM Working Paper No. 03-20; Harvard Business School Working Paper No.03-082. The paper can be downloaded free of charge from:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=383242

Segal-Horn S, 2002, Global firmsheroes or villains? How and why companies

globalize?,European Business Journal, 14: 1 pp 8-19http://find.galegroup.com/itx/retrieve.do?contentSet=IAC-Documents&resultListType=RESULT_LIST&qrySerId=Locale%28en%2C%2C%29%3AFQE%3D%28au%2CNone%2C10%29Segal+Horn%3AAnd%3AFQE%3D%28ke%2CNone%2C6%29Global%3AAnd%3ALQE%3D%28DA%2CNone%2C10%29%3E+20020101%24&sgHitCountType=None&inPS=true&sort=DateDescend&searchType=AdvancedSearchForm&tabID=T002&prodId=SPJ.SP00&searchId=R1&currentPosition=1&userGroupName=gcal_itc&docId=A85103346&docTyp

e=IAC(NB a synopsis will be posted on the BB site)

Rugman A and Verbeke A, 2004, A perspective on regional and global strategies ofmultinational enterprises,Journal of International Business Studies, Vol 35 pp 3-18

http://proquest.umi.com/pqdweb?RQT=572&TS=1202461288&clientId=6297&VType=PQD&VName=PQD&VInst=PROD&PMID=22140&PCID=9090061&SrtM=0&SrchMode=3&aid=2
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=383242http://proquest.umi.com/pqdweb?RQT=572&TS=1202461288&clientId=6297&VType=PQD&VName=PQD&VInst=PROD&PMID=22140&PCID=9090061&SrtM=0&SrchMode=3&aid=2http://proquest.umi.com/pqdweb?RQT=572&TS=1202461288&clientId=6297&VType=PQD&VName=PQD&VInst=PROD&PMID=22140&PCID=9090061&SrtM=0&SrchMode=3&aid=2http://proquest.umi.com/pqdweb?RQT=572&TS=1202461288&clientId=6297&VType=PQD&VName=PQD&VInst=PROD&PMID=22140&PCID=9090061&SrtM=0&SrchMode=3&aid=2http://proquest.umi.com/pqdweb?RQT=572&TS=1202461288&clientId=6297&VType=PQD&VName=PQD&VInst=PROD&PMID=22140&PCID=9090061&SrtM=0&SrchMode=3&aid=2http://papers.ssrn.com/sol3/papers.cfm?abstract_id=383242


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Aims of the session

To ground notions of international businessand globalisation within a strategic a set ofbusiness frameworks:

Generic (Levitt)

Industry (Segal-Horn)

National competitiveness (Porter)

International business and concentrated flowsIn order a start a debate on the application ofbusiness market globalisation for events


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Levitts (1983) globalisation

strategies

From

Home/(foreign) adaptationTo

Mass-market/ Specialisation/niche

HOME MKT GLOBAL MKTS


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What did Levitt (1983) say ..?

Levitt approached the need to ensure that companieswere efficient and developed their competitiveadvantage

He saw the main drivers for global, homogenisedmarkets coming from communications andtechnological development

He says at one point: do w e give customers whatthey say they want rather than try ing to

understand exact ly what they wou ld l ike ?


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Consumer Homogenisation; Implication

Consumer standardisation

Coca Cola

TV

Cigarettes Digital watches

Electronic goods

Rock music

Pizza

Chinese food Cosmetics

Companies


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Segal Horn 2002 - corporate issues

globalisation Not all globalisation is successful

IBM - problems in the past and currently

Japanese investment in Hotels (1980s) BMW/Rover

Big is not always beautiful!

Need to ensure there is asustainable strategy


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GLOBAL

INDUSTRIES

NATIONAL/LOCAL

INDUSTRIES

Low High

Low

High

Source: Segal Horn, 2002

Strong Local Tastes and Preferences

Local regulation, high transport costs

Scale economies, homogeneous tastes,

deregulation


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GLOBAL

NATIONAL/LOCAL

Low High

Low

High

Corrugated cardboard Food Drink

Utilities

Insurance

Razor

blades

Batteries

Consumer electronics

Telecommunications

Construction

Source: Segal Horn, 2002


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Porters firm value chain


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Michael Porters FIVE FORCES model

Source: M. Porter, 1985, Competitive Advantage, New York, Free Press

and M. Porter, 1980 Competitive strategy : techniques for analyzing industries

and competitors, New York : Free Press


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Michael Porters Diamond - determinants

of nationaladvantage

Firm strategy,

structure &

rivalry

Demand

conditions

Related &

supportingindustries

Factorconditions

Factors:

Physical resources

Knowledge resources

Capital resources

Infrastructure resources

CHANCE

ROLE OF GOVT


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Stopford & Wells (1972) international

structure stage model

Foreign sales as a %

of total sales

International

Division

Alternate

paths of

Development

Worldwideproducts division

Area

Division

Global or grid

Matrix


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Organisational types

ethnocentric

polycentric

geocentric

Regiocentric


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What is a firm in a globalised world?

Franchise

Management Contract

Alliance Joint venture

In addition to subsidiaries, crossnational investments (sovereigninvestment companies)


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Rugman and Verbeke, 2004

Triad nations (TNs) rather than

individual companies

Uses a mass of secondary details at

firm (not subsidiary) level


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Triad areas (Ohmae, 1985)

Low economic growth

Similar technological base

Presence of large, capital and knowledgeintensive firms

Homogenisation of demand (convergencerequired by key product attributes)

Proctectionism (N.B. Role of WTO)


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Rugman and Verbeke, 2004

Concentrated on large companies -Fortune 500 (430 of these have HQs in

TNs, 2000) The had detailed information on 380 -

365 companies inter-regional sales

Wanted to test Ohmaes observationthat there were few companies with anyreal global reach


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Rugman and Verbeke

conclusions re Top 500 Home region orientated (50% and + sales) in

home region - 325 MNEs

Bi-regional (at least 20% in each region, butless than 50% in any one region) - 25 MNEs

Host region orientated (50% of sales in a triadmarket other than home region) - 11 MNEs

Global (20% or more in each region, but lessthan 50% in any one region) - 9 MNEs


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TRIAD Economics

Flows of FDI


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Rugman and Verbeke

conclusions - top 500Global companies include

Coca-Cola

LVMH

Bi-regional Diageo

McDonalds

i.e. few tourism/travel companies in this analysis and noglobal (but airlines and methods may have understatedinternational money flows)


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But below the 500

Different trends

E.g. Nike - outsourcing of production

Other different types of companies - non

capital intensive


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Question

To what extent do you feel that the

business approaches discussed in the

lecture either Reflect general attitudes to the nature or

process of globalisation

OR Shape attitudes of executives and societies

to the nature of globalisation

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Globalisation 4

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