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Global Business (Chap 2)
Dept of Technology Management for Innovation (TMI), Graduate School of Engineering
Professor Kazuyuki Motohashi
工学系研究科 技術経営戦略学専攻教授
元橋一之http://www.mo.t.u-tokyo.ac.jp
Today’s class
• What is business strategy?
• What is global business strategy ( CAGE)
• AAA framework
Business Strategy
• Mid or long term direction of business to achieve sustainable economic returns (corporate value)– Strategy: military terms, back to Sun’s “The Art of War”– MOST
• Mission: like “Sony is pioneer”, • Objective: More concrete goal of business, corporate• Strategy : Short description of how to achieve goals• Tactics : Business unit level activities (often not documented)
• know your enemy, know thyself, and you shall not fear a hundred battles– External competition and internal competitiveness – 3C of corporate management : Competitor, Customer, Company
Business Strategy Analysis: SWOT
Positioning School (by M. Porter): External competition focusRBV(Resource Based View) School: Internal competitiveness focus V(Value), R(Rarity), I(Imitability), O(Organization)
Strategic Planning
Ex. creating new customer value
Conducting logic tests(3C, SWOT analysis)
Needs change? ex. low cost strategy?
Pitfall: picking up bits and pieces
China is market or factory?
China is market or factory?
Local for local( 地産地消)
Export (traditional global business)
Off-shore production
Why global strategy is different?(CAGE)
• Cultural Distance: language, customs, religion, cultures etc.
• Administrative Distance: regional integration administration (FTAs), currency, common suzerain state, political dispute
• Geographic Distance : physical distance, time zone,
• Economic Distance : per capital GDP, wages, living costs
Value Creation by combining Adaptation, Aggregation, Arbitrage
India vs China from US viewpoint
Ghemawat(2007)
AAA: How to manage “distance”?
Adaptation : Customization of product or services to local market: McDonald’s vegi-burger in India, soundless and compact fridge in China (by Panasonic)…
Aggregation : Globally (or regionally) standardized product and services: Toyota’s pickup tracks for SE Asia, Apple i-phone…
Arbitrage : Making profit out of distance :Infosys, UNIQLO….
AAA mapping into P-M Grid
Adaptation + Arbitrage
Aggregation +Arbitrage
Adaptation orAggregation
AAA Triangle by P. Ghemawat
Shift of global strategies
Ghemawat(2007)
Global Strategy Making
• Factory or Market?: Supply side story or demand side story or both?– Arbitration is not only for manufacturing
process but for various kinds of activities called off-shoring
• Aggregation or Adaptation:– Marketing concept: market segmentation and
targeting (or global market?)
Value Chain by M.E. Porter
Value Chain and Global Strategy
Local for local Off-shore R&D
HQ for local HQ for global
AAA and value chainArbitrage
ProductionOff shore site
Aggregation for global customerAdaptation for local customer
Motherfactory
Sales, services for local customers
R&D
HR, marketing and technology strategy, procurement
Customer type and global strategy
B2C B2B B2G2C
Goods AutomobileTVs,
cosmetics
PartsInd. Robots
Steel
Services Financial Retail
HR serviceBPO
Package(system
integrator)
IT System integrator
Subway, Water
Basically, adaptation to the customerSome arbitrage, but some not
TBD
Case material: China and India
• India: factory or market? Please provide at least one example in each Quadrant of factory or market matrix.
• Pick up one industry of your favorite. Discuss attractiveness in India over China by CAGE framework.
• Then develop your global strategy plan based on AAA framework (which “A” should you put your focus on?)
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