INTRODUCTION: WHAT IS INTERNATIONAL BUSINESS?

Transcription

1 INTRODUCTION: WHAT IS INTERNATIONAL BUSINESS? International Business = Interplay between the competitive advantage of firms and the comparative advantage of countries How can firms exploit it s strengths globally? How can firms take advantage of differences between countries? How can firms overcome the added complexity? BUSINESS CULTURAL DIMENSIONS 1. Cross cultural competence Motivation, open to unfamiliar 2. Metacognition Cognitive awareness, preparation and learning 3. General knowledge MC DONALDS EXAMPLE

2 GLOBALIZATION OF MARKETS AND COMPETITION : SUMMARY How do we define globalization? What are globalization and what are the drivers? What are the implications for firm strategies? GLOBALISATION Flows move freely across borders globalisation = The process by which people, products, information and money moves freely across borders THE MACRO DRIVERS OF GLOBALIZATION: POLITICAL: Liberalization of trade and financial flows Opening of new markets (China, India, central and Eastern Europe) TECHNOLOGICAL: Increased efficiency of transportation and logistics: air; cargos; containers Increased efficiency of telecommunication and information technology

3 SOCIAL: Some convergence of middle class consumer behavior Wider access to information, movies, TV series, internet macro-driver - liberalisation of trade Falling costs of international business Today it costs less than Euros to submit a container from Asia to Europe There was not much new technology involved in the idea of moving a truck body off its wheels and onto a cargo vessel...but...without it, the tremendous expansion of world trade in the last forty years the fastest growth in any major economic activity ever recorded, could not possibly have taken place. - Peter Drucker Technological advances in communications Internet Video-conferences Knowledge transfer tools Tools for codification and standardization FACTORS FOR AND AGAINST GLOBALISATION FACTORS PUSHING FOR GLOBALALISAITON FACTORS AGAINST GLOBALISATION Freer trade and lower entry barriers Cultural differences Technology Customer proximity Convergence of consumption Transport costs Legal requirements

4 HOW IS FIRM STRATEGIES AFFECTED BY ALL THIS? LOCAL INDISTRIES Local industries are industries in which firms can sustain competitive advantages within the boundaries of countries. GLOBAL INDUSTRIES Global industries are industries in which firms can sustain competitive advantages only if they integrate and coordinate their activities across the world in a centralized manner CHARACTERISTICS OF LOCAL INDISTRIES Similar needs and customer behavior Standardized products CHARACTERISTICS OF GLOBAL INDUSTRIES Different needs and customer behaviour Customized products/services Beyond country economies of scale Low economies of scale Speed of innovation Complex distribution Global customers Local customers Global competitors High transport costs KEY TAKEAWAYS The world has surely become more global However, we are far from living in a global village Firms needs to access their environment and manage between this duality of global and local forces

5 DESIGNING A GLOBAL STRATEGY: WHAT IS STRATEGY? Is strategy about being the best? Is it about being different? Is it about setting goals? About planning? Or something else? STRATEGY = Strategy is the overall plan for exploiting the firm s unique strengths globally in order to achieve its goals? CHARACTERISTICS OF STRATEGIC DECISIONS: Important. Involve a significant commitment of resources. Not easily reversible. STRATEGY: THE LINK BETWEEN THE FIRM AND ITS ENVIRONMENT Global Strategy: Its different elements

6 An illustrative example: a sport team Ambition: The goal is to be no.? Positioning: Which players are needed and what are the value proposition to the customers Business system: How to play the games (offensive or defensive etc.) Organization: The responsibility of the coach and the supporting team 1. GLOBAL AMBITION - market/ resource driven - relative importance of region and key countries in corporate portfolio one issue you face - do you want to go to the big markets or do you want to go to the dynamic markets? competition is settled in the bigger markets 2. GLOBAL POSITIONING - geographical positioning - competitive positioning - degree of standardisation GLOBAL POSITION: - draw on Porter here - depends on what kind of products you're in! - 3 dimensions of competitive positioning - compete on cost> produce the cheapest products (typically the global standardised products)