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Global Business #1 April 8, 2012
Dept of Technology Management for Innovation (TMI), Graduate School of Engineering
Professor Kazuyuki Motohashi 工学系研究科 技術経営戦略学専攻教授
元橋一之 http://www.mo.t.u-tokyo.ac.jp
http://www.mo.t.u-tokyo.ac.jp/
Today’s Class
• Introduction of this course – The world is flat? Yes, but…. – Growing importance of global business for
Japanese economy and firms – Changing the rule of the global business game.
• Introduction to global business studies – Example: China is your “market” or “factory”? – CAGE and AAA framework in global strategic
making
Some features of this course • Globalization studies for Japanese firms to
invest in emerging economies, importance of partnership with government. (C and I)
• Combination of theory (international business management) and practices: Teaching method: lecture and case studies (active class participation is encouraged!)
• International business plan: Evaluation will be made with cooperation of Hitachi Co. Ltd.
• International study tour will be planned. • Bilingual teaching will be tried, this year.
“The World is Flat” by Thomas Friedman
• 1st Globalization Era: 1492: Columbus found the American continent.
• 2nd Globalization Era: Around 1800: Industrial revolution (by steam engine) drove down transportation costs significantly.
• 3rd Globalization Era: Around 2000: Internet and information technology revolution -> Globally flat business emerges (like Infosys)
What is this?
Galapagos islands Infosys:Bangalore
Japan as Galapagos Islands? • 1990, in “Competitive Advantage of Nations” by prof.
Michael Porter, describes Japan as “a country where you can find the most sophisticated customers in the world”
• 200X, Japanese mobile phones are called as “Gala Kei”, stands for Galapagos Keitai (mobile phone)
• 2010, Sharp introduced multi media terminal called “Galapagos”
• 2012, Samsung hits the profit record by “Galaxy” • 201X, What happened in Japanese mobile producer in the
international market?
From Sharp’s website
Is the world really flat?
ハリヤナ州
ラジャスタン州
デリー市
ニムラナ
スズキ
スズキ
ホンダ
ホンダ
ホンダ
ムンバイ市
UP州
CAGE framework
• Cultural Distance: language, customs, religion, cultures etc.
• Administrative Distance: regional integration administration (FTAs), currency, common suzerain state, political dispute
• Geographic Distance: physical distance, time zone, etc.
• Economic Distance: per capital GDP, wages, living costs
Redefining Global Strategy: Crossing Boarders in a World Where Differences Still Matter by Pankaj Ghemawat (Harvard Business School Press)
Wall at the national boarder and economics of fragmented labor market
Price=wage
Quantity Japan China
Pj
Pc
What happened if this wall is lowered?
Sources of Economic Growth?
11
1900/ 1950/ 1900/ 1950/ 1900/ 1950/1950 2000 1950 2000 1950 2000
China 1.1 17.6 1.4 2.3 0.8 7.6India 1.3 8.5 1.3 2.8 1.0 3.1Japan 3.1 16.3 1.9 1.5 1.6 10.8UK 1.9 3.5 1.2 1.2 1.5 2.9US 4.7 5.5 2.0 1.9 2.3 3.0
GDP per CapitaPolupationGDP (PPP)
Changes in the world population
Financial Times
GDP size comparison
What is Globalization and why?
Japan
US/Europe
China
India
US/Europe
Japan
China
India
Infosys Toyota Motors
Microsoft
Toyota Motors IBM
What is competitiveness? (Japan, 1995=1.00)
China Korea Taiwan USOutput Price 0.29 0.68 0.47 0.68Capital Price 0.69 1.07 0.81 1.29Labor Price 0.02 0.21 0.30 0.68Energy Price 0.27 0.53 0.50 0.53Material Price 0.30 0.57 0.37 0.60TFP 0.64 0.77 0.91 1.07
“Productivity in Asia” (Jorgenson, Kuroda and Motohashi)
2007, Edgar Elgar
Catching up of Korea and China (TFP in electronics industry)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
ChinaKoreaTaiwanJapan
RIETI-ICPA Project, Motohashi (2006b)
What happened in PV module production?
Driving forces
Size of value added
Level of complexity (difficulty in imitation)
Aircraft (CoPS)
Auto-motives EV?
PC
Scientific approach for innovation (digitalization, modularization..) and technological catching up
Gro
win
g “G
ood
Enou
gh M
arke
t”
Protection of propriety technology (IPR), increasing complexity, strategic
investment in complex system innvation
PV panel
Development in emerging economies Such as China and India
New competitors
New markets
Global Business Strategy • Shift to “good enough market” and
improvement in cost competitiveness • Business model re-organization by
service dominant design
World in not so flat,
understanding distance
Consistency with corporate
strategy
Global Business #1�April 8, 2012Today’s ClassSome features of this course“The World is Flat” �by Thomas FriedmanWhat is this?Japan as Galapagos Islands?Is the world really flat?CAGE frameworkスライド番号 9スライド番号 10Sources of Economic Growth?Changes in the world populationGDP size comparisonスライド番号 14What is Globalization and why?What is competitiveness?�(Japan, 1995=1.00)Catching up of Korea and China�(TFP in electronics industry)What happened in PV module production? Driving forcesスライド番号 20