Global Business #1 April 9, 2012

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

http://www.mo.t.u-tokyo.ac.jp/

Today’s Class

• Introduction of this course – The world is flat? Yes, but…. – Growing importance of global business for

Japanese economy and firms – Changing the rule of the global business game.

• Introduction to global business studies – Example: China is your “market” or “factory”? – CAGE and AAA framework in global strategic

making

Some features of this course

• Globalization studies for Japanese firms to invest in emerging economies (C and I)

• Combination of theory (international business management) and practices: Teaching method: lecture and case studies (active class participation is encouraged!)

• International business plan competition: international student team will compete for the best international business plan.

What is this?

Galapagos islands Infosys：Bangalore

Japan as Galapagos Islands? • 1990, in “Competitive Advantage of Nations” by prof.

Michael Porter, describes Japan as “a country where you can find the most sophisticated customers in the world”

• 200X, Japanese mobile phones are called as “Gala Kei”, stands for Galapagos Keitai (mobile phone)

• 2010, Sharp introduced multi media terminal called “Galapagos”

• 2012, Samsung hits the profit record by “Galaxy” • 201X, What happened in Japanese mobile producer in the

international market?

From Sharp’s website

Is the world really flat?

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ラジャスタン州

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UP州

CAGE framework

• 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, etc.

• Economic Distance： per capital GDP, wages, living costs

Redefining Global Strategy: Crossing Boarders in a World Where Differences Still Matter by Pankaj Ghemawat (Harvard Business School Press)

“The World is Flat” by Thomas Friedman

• 1st Globalization Era: 1492: Columbus found the American continent.

• 2nd Globalization Era: Around 1800: Industrial revolution (by steam engine) drove down transportation costs significantly.

• 3rd Globalization Era: Around 2000: Internet and information technology revolution -> Globally flat business emerges (like Infosys)

Sources of Economic Growth?

9

1900/ 1950/ 1900/ 1950/ 1900/ 1950/1950 2000 1950 2000 1950 2000

China 1.1 17.6 1.4 2.3 0.8 7.6India 1.3 8.5 1.3 2.8 1.0 3.1Japan 3.1 16.3 1.9 1.5 1.6 10.8UK 1.9 3.5 1.2 1.2 1.5 2.9US 4.7 5.5 2.0 1.9 2.3 3.0

GDP per CapitaPolupationGDP (PPP)

Changes in the world population

Financial Times

GDP size comparison

Population projection 0 500 000 1 000 000 1 500 000 2 000 000

China

India

USA

Indonesia

Brazil

Pakistan

Nigeria

Bangladesh

Russia

Japan

2010

2015

2020

2025

2030

What is Globalization and why?

Japan

US/Europe

China

India

US/Europe

Japan

China

India

Infosys Toyota Motors

Microsoft

Toyota Motors IBM

What is competitiveness? (Japan, 1995=1.00)

China Korea Taiwan USOutput Price 0.29 0.68 0.47 0.68Capital Price 0.69 1.07 0.81 1.29Labor Price 0.02 0.21 0.30 0.68Energy Price 0.27 0.53 0.50 0.53Material Price 0.30 0.57 0.37 0.60TFP 0.64 0.77 0.91 1.07

“Productivity in Asia” (Jorgenson, Kuroda and Motohashi)

2007, Edgar Elgar

Catching up of Korea and China (TFP in electronics industry)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

ChinaKoreaTaiwanJapan

RIETI-ICPA Project, Motohashi (2006b)

But, what happened? （PV module production)

Driving forces

Size of value added

Level of complexity (difficulty in imitation)

Aircraft (CoPS)

Auto-motives EV?

PC

Scientific approach for innovation (digitalization, modularization..) and technological catching up

Gro

win

g “G

ood

Enou

gh M

arke

t”

Protection of propriety technology (IPR), increasing complexity, strategic

investment in complex system innvation

PV panel

Development in emerging economies Such as China and India

New competitors

New markets

Global Business Strategy • Shift to “good enough market” and

improvement in cost competitiveness • Business model re-organization by

service dominant design

World in not so flat,

understanding distance

Consistency with corporate

strategy

Global Business　#1�April 9, 2012Today’s ClassSome features of this courseWhat is this?Japan as Galapagos Islands?Is the world really flat?CAGE framework“The World is Flat” �by Thomas FriedmanSources of Economic Growth?Changes in the world populationGDP size comparisonPopulation projectionWhat is Globalization and why?What is competitiveness?�(Japan, 1995=1.00)Catching up of Korea and China�(TFP in electronics industry)But, what happened? �（PV module production)Driving forcesスライド番号 18