part 8: Global entrepreneurship class
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Transcript of part 8: Global entrepreneurship class
Global Entrepreneurship
Developing Global Mindset for Entrepreneurs
Global Entrepreneurship developing the global mindset for entrepreneurs
Class 8Saturday May 29th 2010
Brian David Butler
Professor of international finance and global entrepreneurship with Forum-Nexus Study Abroad Guest lecturer with the IQS Business School of the Ramon Llull University in Barcelona and the Catholic University of Milan Previously Brian taught finance economics and global trade courses at Thunderbirdrsquos Global MBA program in Miami and worked as a research analyst at the Columbia University Business School in New York City
A global citizen Brian was born in Canada raised in Switzerland (where he attended international British school) educated through university in the US started his career with a Japanese company moved to New York to work as an analyst married a Brazilian and has traveled extensively in Latin America Asia Europe and North America Brian currently lives in Recife Brazil where he is teaching classes on ldquoGlobal Entrepreneurshiprdquo at the university FBV
briandbutlergmailcom
LinkedInbriandbutler
Skype briandbutler
wwwKookyPlancom
Schedule for today
1 Culture + Entrepreneurs2 Homework review ndash personal COI3 Exam return4 Entrepreneurship ideas5 Market entry strategy
COI amp Entrepreneurship
Entrepreneurship and culture
Question Are there any cultural aspects that lead
to entrepreneurship Are certain cultures more
ldquoentrepreneurialrdquo Can ldquostyle switchingrdquo be encouraged for
entrepreneurship
Class discussionhellip
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Global Entrepreneurship developing the global mindset for entrepreneurs
Class 8Saturday May 29th 2010
Brian David Butler
Professor of international finance and global entrepreneurship with Forum-Nexus Study Abroad Guest lecturer with the IQS Business School of the Ramon Llull University in Barcelona and the Catholic University of Milan Previously Brian taught finance economics and global trade courses at Thunderbirdrsquos Global MBA program in Miami and worked as a research analyst at the Columbia University Business School in New York City
A global citizen Brian was born in Canada raised in Switzerland (where he attended international British school) educated through university in the US started his career with a Japanese company moved to New York to work as an analyst married a Brazilian and has traveled extensively in Latin America Asia Europe and North America Brian currently lives in Recife Brazil where he is teaching classes on ldquoGlobal Entrepreneurshiprdquo at the university FBV
briandbutlergmailcom
LinkedInbriandbutler
Skype briandbutler
wwwKookyPlancom
Schedule for today
1 Culture + Entrepreneurs2 Homework review ndash personal COI3 Exam return4 Entrepreneurship ideas5 Market entry strategy
COI amp Entrepreneurship
Entrepreneurship and culture
Question Are there any cultural aspects that lead
to entrepreneurship Are certain cultures more
ldquoentrepreneurialrdquo Can ldquostyle switchingrdquo be encouraged for
entrepreneurship
Class discussionhellip
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Brian David Butler
Professor of international finance and global entrepreneurship with Forum-Nexus Study Abroad Guest lecturer with the IQS Business School of the Ramon Llull University in Barcelona and the Catholic University of Milan Previously Brian taught finance economics and global trade courses at Thunderbirdrsquos Global MBA program in Miami and worked as a research analyst at the Columbia University Business School in New York City
A global citizen Brian was born in Canada raised in Switzerland (where he attended international British school) educated through university in the US started his career with a Japanese company moved to New York to work as an analyst married a Brazilian and has traveled extensively in Latin America Asia Europe and North America Brian currently lives in Recife Brazil where he is teaching classes on ldquoGlobal Entrepreneurshiprdquo at the university FBV
briandbutlergmailcom
LinkedInbriandbutler
Skype briandbutler
wwwKookyPlancom
Schedule for today
1 Culture + Entrepreneurs2 Homework review ndash personal COI3 Exam return4 Entrepreneurship ideas5 Market entry strategy
COI amp Entrepreneurship
Entrepreneurship and culture
Question Are there any cultural aspects that lead
to entrepreneurship Are certain cultures more
ldquoentrepreneurialrdquo Can ldquostyle switchingrdquo be encouraged for
entrepreneurship
Class discussionhellip
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
wwwKookyPlancom
Schedule for today
1 Culture + Entrepreneurs2 Homework review ndash personal COI3 Exam return4 Entrepreneurship ideas5 Market entry strategy
COI amp Entrepreneurship
Entrepreneurship and culture
Question Are there any cultural aspects that lead
to entrepreneurship Are certain cultures more
ldquoentrepreneurialrdquo Can ldquostyle switchingrdquo be encouraged for
entrepreneurship
Class discussionhellip
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Schedule for today
1 Culture + Entrepreneurs2 Homework review ndash personal COI3 Exam return4 Entrepreneurship ideas5 Market entry strategy
COI amp Entrepreneurship
Entrepreneurship and culture
Question Are there any cultural aspects that lead
to entrepreneurship Are certain cultures more
ldquoentrepreneurialrdquo Can ldquostyle switchingrdquo be encouraged for
entrepreneurship
Class discussionhellip
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
COI amp Entrepreneurship
Entrepreneurship and culture
Question Are there any cultural aspects that lead
to entrepreneurship Are certain cultures more
ldquoentrepreneurialrdquo Can ldquostyle switchingrdquo be encouraged for
entrepreneurship
Class discussionhellip
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and culture
Question Are there any cultural aspects that lead
to entrepreneurship Are certain cultures more
ldquoentrepreneurialrdquo Can ldquostyle switchingrdquo be encouraged for
entrepreneurship
Class discussionhellip
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and culture
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and culture
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and COI
1 Development issue Which cultural traits probably lead to more
entrepreneurship hence more economic development
Which factors are most important for entrepreneurship + level of entrepreneurship in different places
2 Personal issue What style switching should you do to
promote entrepreneurship
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and culture
What COI factors are concentrated in entrepreneurs
Any guesses
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Hierarchy vs Equality
Why not me attitude in cultures with ldquoEqualityrdquo culture
people think that everyone is equal and that anyone can achieve great success
The legend of kids creating multinational corporation from their garageshellipfuels this optimism that anyone can achieve greatness
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and COI
1 Environment Control
World can be changed to fit ldquomerdquo Not ldquoharmonyrdquo or ldquoconstraintrdquo
2 Individualism Particularistic
ldquorules donrsquot apply to merdquo (not constrained)
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and COI
4 Competitiveness Are you comfortable with competition Desire for self-recognition Wiling to leave the group loyal to the group
(thinking)5 Structure ndash
Flexibility Not ldquoorderrdquo focused Better if likes flexibility innovation adaptation Comfortable with risks Dynamic goals (changing) Problem solving needs flexibility Tolerate unpredictable dissent (Israel)
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and COI
6 Thinking Inductive vs Deductive Slight advantage to deductive thought ndash
not constrained by ldquofactrdquo but instead gravitate to grand theories and ldquovisionsrdquo (visionary)
Inductive is better for big-company (systematic process) innovations
Deductive is better for entrepreneurs and big changes
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Entrepreneurship and COI
7 Time Future orientation Multi-focused (to wear ldquoall hatsrdquo during
startup phase)
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Homework Review
Personal COI
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Homework - personal COI analysis
Compare yourself with this hypothetical German person
Deductive linear doing low-context direct fluid time single focus competitive equality
See next slide
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Cultural Orientations Indicator- COI
bull Deductive
bull Linear
bull doing
bull low-context
bull direct
bull fluid time
bull single focus
bull competitive
bull equality
Gap Analysis
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Homework - personal COI analysis
Gap analysis
Questions Which areas do you have the greatest
gaps (areas of potential conflict) What could you do (style switching) to
lesson the potential problems
Class discusshellip
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Exam Review
Review ndash grades
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Need Exams Back
Keep for 1 week Need to return next week to me
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
GradingComponents of Final Grade
Exam a- 20 Exam b- 30 Team project 25 Assignments 15 Class participation 10
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Good news Bad news
This exam was only 20 of your final grade
So if you didnrsquot do wellhellip Or if you did do wellhellip
there is still time
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Upcoming Schedule
4 more classes Today June 5th
June 12th
June 19th ndashExamOne week later ndash team project due June 26th -
25 of your grade
Attendance + Homework = 25 of your grade
30 of your grade
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Still timehellip
Homework assignments I f you missed any homeworkhellip you may
still submit them How Review slides from previous
lectures Look for homework assignments If you didnrsquot do anyhellip DO THEM NOW
Group Project Get together and start working today Donrsquot wait till the last second
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Group Project ReviewWho are the teams - one group of 5 - or two smaller groups
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
New Ideas
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
What new business ideas Discusshellip
+1 point for participation grade for students with original ideas (not previously discussed in class)
Include 3-questions analysis of idea What problem What trend What
transferrable (so start with idea then use 3 questions to evaluate)
Mine water cup ndash airports ndash transfer from Brazil Problem is price size Trend is economic crisis
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Going global
Market entry strategies for Entrepreneurs
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Deciding HOW to go global
Deciding to go global is not enoughhellip
Next you need to decide HOW to go global
Export license franchise create a subsidiary foreign direct investment acquire a company abroad etchellip
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Approaches to Foreign Market Entry
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to
foreign marketBartlett amp Ghoshal
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
How to go global
Exports (a) direct (b) through a distributor (c) through a trading
company Contracting
Examples (a) licensing technology (b) franchising (c) management contracting (d) turnkey venture (e) joint marketing agreement
Partially owned Direct investment Examples (a) joint venture with local company (b) joint
venture with foreign company (c) joint venture with government
Fully owned Direct investment Examples (a) assembly plant for local sales (b) basic
manufacturing (c) raw materials extraction (d) offshore assembly plant
Professor Robert Grosse Thunderbird
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Methods for Exploiting Core Competencies through Foreign Involvement
Decision Criteria
Form of Foreign Involvement
Added Income
Capital
Commitment
Management Commitment
Technology Commitment
Political Risk
Flexibility
Impact on
Rivals
Exportsdagger Low Low Low Low High
ContractingDagger Low Possibly high Possibly high Low
Partially owned direct investmentsect
Possibly high High Medium Low
Wholly owned direct investmentII
High High Low High
Each column represents a dimension for decision-making that should be considered when choosing a method to use in exploiting a core competency The rankings will differ from company to company and also across countries
Professor Robert Grosse Thunderbird
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Deciding HOW to go global
But how do you decide which is right for you
1 You could see what others in your INDUSTRY are doing
How does the typical firm in your industry go abroad
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Globalization vs Localization of Industries
HIGH
LOW
LOW HIGH
Pre
ssu
res T
ow
ard
Glo
bal
Inte
gra
tion
AircraftCamerasConsumer ElectronicsComputers
Cement
Synthetic Fibers
Global Strategy
Automobiles
Aerospace
Telecommunications
Steel
Clothing
Multi-domestic Strategy
Packaged Foods
Pharmaceuticals
Pressures Toward Localization Source Professor Robert Grosse Thunderbird
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Global vs Local (review)
We have covered this before but its worth reviewinghellip
1 Global strategies Pressures toward globalization include economies
of scale and benefits from centralized decision-making
2 Local strategies Pressures toward localization (adaptation) include
cultural differences government regulation benefits from decentralized decision-making
Bartlett amp Ghoshal slides from Professor Robert Grosse Thunderbird
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
When FDI is appropriate
When should you choose to invest in FDI abroad
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
FDI ndash Foreign Direct Investment
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Demand Side ndash looking for customers
1 To explore new markets and to serve a ldquoportfoliordquo of markets
2 Because an export market was closed by a prohibitive tariff or quota
Reasons for Foreign Direct InvestmentSupply Side ndash
looking for raw materials
1To lower production costs
2To lower delivery costs (costs of transportation insurance tariffs etc)
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Demand Side ndash looking for customers
3 To establish a local presence with service and product availability
4 To meet ldquobuy nationalrdquo rules or preferences in the host country
Reasons for Foreign Direct Investment
Supply Side ndash looking for raw materials
3 To acquire a necessary raw material
4 To do offshore assembly
5 To establish a ldquoportfoliordquo of production sources
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Demand Side5 To gain visibility
as a ldquolocalrdquo firm employing local people paying local taxes
6 To respond to rivalsrsquo threats
Reasons for Foreign Direct InvestmentSupply Side6To obtain
technology and skills
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Foreign Direct Investment
Deciding YESNO
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Dunningrsquos eclectic view ndash OLI FDI decision should be made on the
grounds of these three factors
1 Ownership advantages (competitive advantages)
the companyrsquos competitive advantages such as proprietary technology management skills goodwill and economies of scale
a company should use foreign direct investment when it has competitive advantages such as proprietary technology or marketing skills that differentiate it from competitors Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Dunningrsquos eclectic view ndash OLI 2 Location advantages (comparative advantage)
the relevant cost risk and regulatory conditions in the countries under consideration These include national production costs tariffs taxes international transportation costs and political risks
a company should use foreign direct investment when the location factors favor local production over importing from the home country Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Dunningrsquos eclectic view ndash OLI 3 Internalization advantages (advantages of horizontal and vertical
integration) the benefits that the firm would realize by itself
operating in the host country versus the benefits of operating through a local distributor licensee or other contractee
a company should use foreign direct investment hellipand when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production) Professor Robert Grosse
Thunderbird
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Dunningrsquos eclectic view
If all three conditions do not hold then another strategy would be better
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Dunningrsquos eclectic view
the eclectic theory says that a company should use foreign direct investment whena) it has competitive advantages such as
proprietary technology or marketing skills that differentiate it from competitors
b) when the location factors favor local production over importing from the home country
c) and when it is more profitable for the firm to produce for itself rather than to contract out with another firm to produce for it (for example under a licensing agreement or for contract production)
Professor Robert Grosse Thunderbird
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Dunningrsquos eclectic view ndash OLI To decide whether to invest overseas
there is a useful model
OLI Ownership advantagesLocation advantages Internalization advantages
Need all 3 ndash or else donrsquot invest in FDI Instead ndash choose other method ndash
export license franchise etcProfessor Robert Grosse Thunderbird
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
When to Export (instead of FDI)
If company has 2 out of 3 competitive advantages (O) and finds that producing for itself (I)
would be more profitable than contracting out to another firm under license
but costs in foreign country (L) are higher
than costs in the home country then should export its products
Professor Robert Grosse Thunderbird
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Export (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
When to license
If company has other 2 out of 3 (O) competitive advantages (L) and lower costs in foreign country than
elsewhere but
(i) finds that contracting out to another manufacturer would be more profitable than producing for itself
then company should license its products to the other
company for sale or should contract out the manufacturing and keep
the distribution and marketing business for itselfProfessor Robert Grosse Thunderbird
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Licensing (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
When to ldquojoint venturerdquo
If company (L) finds foreign country to be a cost-competitive
place to manufacture (i) and company finds that it would be more profitable
to manufacture for itself rather than contracting out But (O) no superior products or marketing skills
(competitive advantages)
then the possible solutions would be a joint venture with another firm that does have competitive
advantages or the purchase of product lines that are differentiated and
competitive to give company a competitive base in foreign country
Professor Robert Grosse Thunderbird
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Joint Venture (rather than FDI)
HIGH
LOW
LOW HIGH
Level of
CO
NTR
OL o
ver
fore
ign
acti
vit
ies
Indirect Export
Export through agent or distributor
Commitment Amount of Resources committed to foreign market
Joint Venture with local partner
FDI Wholly owned subsidiary
Franchising
Licensing
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
When you shouldnt go Global Three questions to ask
Are there potential benefits for our company Donrsquot just follow competitors Donrsquot overestimate the benefits
Do we have the necessary management skills (do you REALLY have the skills)
Will the costs outweigh the benefits (extra coordination costs setup costs etc)
httpglobotrendspbworkscominternational+expansion
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
When you shouldnt go Global Examples of failed globalization strategies
ABN AMRO AES - (US power company) Daimler- Chrysler merger BTR - industrial conglomerate TCL - Chinese maker of electronics Kelda - a UK water utility Deutsche Telekom (T-mobile) Deutsche Post - overpaid for DHL and Airborne AXA - French insurance group BenQ- acquisition of Siemens mobile device
business httpglobotrendspbworkscominternational+expansion
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Do you have the skills
new management requirements for companies attempting to internationalize
Companies that are lacking in organizational strength may want to consider selling or licensing technology or brand name exporting or franchising as less- risky ways of going abroad
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Do you have the skills
Once a firm internationalizes they typically run into the dilemma of trying to achieve global scale and local responsiveness at the same time
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Need for International IQ
A global manager also has to be on the lookout for macroeconomic changes and to be aware that countries (and individual states) have their own objectives and that there is a risk that those objectives might change over time
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Need for International IQ
You need to monitor changes in elections and policies to see if country strategy and yours become misaligned This could result in serious risk (or opportunities) for your company
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Strategies for going global
Market entry strategies for Entrepreneurs
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Different types of Strategies1 International - typical USA
2 Multi-National - typical Europeanldquomulti-domesticrdquo
3 Global - typical Japanese
Transnational - tries to combine best of all 3
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
International Mentality
ldquointernationalrdquo strategy ndash classic US based companies strategy
ldquoInternational Product cyclerdquo
Products first developed for home market only later sold abroad
Foreign subsidiaries as ldquooutpostsrdquo - marketing and sales appendages
Innovations developed at home transferred abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
International Mentality
Managers assigned are often domestic ldquomisfitsrdquo who happen to know a foreign language or previously lived abroad
Bartlett amp Ghoshal interpreted by Prof Brian Butler
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
International
Weakness lacked the corporate structure for
capturing worldwide innovation and learning
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Multi-National
The classic ldquomultinationalrdquo model is seen in abundance with European firms
manage a portfolio of relatively independent national subsidiaries
With a long history of protectionism and wars European companies became very adept at managing a decentralized federation running subsidiaries with a high level of autonomy
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Multi-National
Emphasize differences among national markets
Flexible approach
Modify products strategies country-by-country
Multiple-nationally responsive strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Multi-National
Managers of foreign operations Highly independent entrepreneurs
Often nationals of foreign markets
Use local market knowledge
Seek local growth using investment from parent company
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Multi-National
One of the drawbacks however is that they have given up global scale
efficiency and may be redundant in many of their tasks
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Global
The ldquoglobalrdquo model which is epitomized by companies such as Toyota focused on centralizing efforts and gaining efficiency for exports
Centralized control
Assume tastes globally are similar
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Global
Weakness lack of local responsiveness and flexibility
Management central coordination central control
Research amp Development ndash from home country
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Transnational
Transnational companies are complex organizations that attempt to extract the benefits of ldquointernationalrdquo ldquoglobalrdquo or ldquomultinationalrdquo firms but at the same time they try to mitigate the drawbacks from each
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Transnational
A transnational firm is a very sophisticated and complex one that requires a very subtle management as it is attempting to eliminate the inherent drawbacks of each of the traditional structures and strategies
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Transnational
The transnational company is one that attempts to capture all of the strengths of these three global strategies and attempts to avoid any of the weaknesses
HIGHEST LEVEL OF SOPHISTICATION
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Transnational
decentralizing decision making power and to increase the local responsiveness to local market conditions
transnational mindset of brand management where winning brands can be developed anywhere
local flexibility global efficiency or worldwide learning
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
VALUE CHAIN
transnational companies locate each of these activities in an area that gives them the largest competitive advantage and lowest costs for each individual function operations RampD sales marketing
customer service and purchasing
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
VALUE CHAIN
Manufacturing for example might be placed in the location with the lowest factor input costs related to labor
but RampD might be located in a place which has advanced education a history of innovation or a developed and highly competitive consumer market
Bartlett amp Ghoshal interpreted by Prof Brian Butler
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
VALUE CHAIN
For example the USA might be selected for design China for manufacturing UK for research and India for call center outsourcing or
software design creating many ldquocenters of excellencerdquo
across the globe which are all globally linked together through the value chain
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Innovation Models
Where should innovation come from
Just the USA Just big multi-nationals
NO
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Innovation Models
Two models center-for-global innovation model
All innovation at home RampD center Innovations developed at home are later sent to the field
locally-leveraged but then globally-linked innovation models Innovation can come from anywhere Companies try to ldquocatchrdquo innovation from the field Share innovation from one emerging market to
another
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Innovation Models
The global market for knowledge is changing and it is common to find centers for innovation in many non-traditional market locations around the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Innovation Models
The old thinking USA was the best location for developing
innovation which directly led to the strategy of ldquointernationalrdquo that many US based companies followed
The idea was that the USA had the most sophisticated consumer market the most developed technology and the highest level of competition which were all of the ingredients for development of innovations that could be exported in the product life cycle to the rest of the world
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Innovation Models
New Thinking Assumption challenged as other markets
have developed in their ability to produce global innovations
As an example ldquoSkyperdquo a revolutionary VoIP telephone service that was developed in Estonia (not in Silicon Valley)
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Innovation Models
New Thinking Based on this new understanding of how
innovations can come from anywhere companies are attempting to capture worldwide knowledge like never before
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Innovation Models
New challenges The challenge for transnational
companies is to figure out how to capture and leverage this worldwide knowledge base
If they can do this effectively this is one of the main sources of competitive advantage that a transnational company will have over its international global or multinational competitors
Bartlett amp Ghoshal interpreted by Prof Brian Butler
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Homework
Sorry
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Homework
In your own words tell me 5 reasons that international experience is important for your career
(ldquointernational experiencerdquo could be = travel or internships or study abroad etc)
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Homework
Read this article httpepocanegociosglobocomRevistaComm
on0EMI131166-1638000-O+TRABALHO+E+PLANOhtml
ldquoO trabalho eacute planordquo Cada vez mais cedo jovens executivos constroem sua carreira em diferentes paiacuteses dos cinco continentes para conquistar vivecircncia em outros mercados e culturas Entenda essa nova geraccedilatildeo global e o que as
empresas tecircm a ganhar com ela Por Ivan Padilla e Marcos Todeschini
Homework read and then think In your own words tell me 5 reasons that international experience is important for your career
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-
Listen to Global Leaders
httpwwwyoutubecomwatchv=UF8uR6Z6KLc
- Global Entrepreneurship
- Global Entrepreneurship developing the global mindset for ent
- Brian David Butler
- wwwKookyPlancom
- Schedule for today
- COI amp Entrepreneurship
- Entrepreneurship and culture
- Entrepreneurship and culture (2)
- Entrepreneurship and culture (3)
- Entrepreneurship and COI
- Entrepreneurship and culture (4)
- Hierarchy vs Equality
- Entrepreneurship and COI (2)
- Entrepreneurship and COI (3)
- Entrepreneurship and COI (4)
- Entrepreneurship and COI (5)
- Homework Review
- Homework - personal COI analysis
- Cultural Orientations Indicator- COI
- Homework - personal COI analysis (2)
- Exam Review
- Need Exams Back
- Grading
- Good news Bad news
- Upcoming Schedule
- Still timehellip
- Group Project Review
- New Ideas
- What new business ideas
- Going global
- Deciding HOW to go global
- Approaches to Foreign Market Entry
- How to go global
- Methods for Exploiting Core Competencies through Foreign Involv
- Deciding HOW to go global (2)
- Globalization vs Localization of Industries
- Global vs Local (review)
- When FDI is appropriate
- FDI ndash Foreign Direct Investment
- Reasons for Foreign Direct Investment
- Reasons for Foreign Direct Investment (2)
- Reasons for Foreign Direct Investment (3)
- Foreign Direct Investment
- Dunningrsquos eclectic view ndash OLI
- Dunningrsquos eclectic view ndash OLI (2)
- Dunningrsquos eclectic view ndash OLI (3)
- Dunningrsquos eclectic view ndash OLI (4)
- Dunningrsquos eclectic view
- Dunningrsquos eclectic view (2)
- Dunningrsquos eclectic view ndash OLI (5)
- When to Export (instead of FDI)
- Export (rather than FDI)
- When to license
- Licensing (rather than FDI)
- When to ldquojoint venturerdquo
- Joint Venture (rather than FDI)
- When you shouldnt go Global
- When you shouldnt go Global (2)
- Do you have the skills
- Do you have the skills (2)
- Need for International IQ
- Need for International IQ (2)
- Strategies for going global
- Different types of Strategies
- International Mentality
- International Mentality (2)
- International
- Multi-National
- Multi-National (2)
- Multi-National (3)
- Multi-National (4)
- Global
- Global (2)
- Transnational
- Transnational (2)
- Transnational
- Transnational (2)
- VALUE CHAIN
- VALUE CHAIN (2)
- VALUE CHAIN (3)
- Innovation Models
- Innovation Models (2)
- Innovation Models (3)
- Innovation Models (4)
- Innovation Models (5)
- Innovation Models (6)
- Innovation Models (7)
- Homework
- Homework
- Homework (2)
- Listen to Global Leaders
-