ก ธ. 322 กลยุทธ์...

กธ. 322 กลยุ�ทธ� และการดำ าเนิ�นิธ�รก�จระดำ�บโลกBI. 322 Global Business and Strategy

Mr. Gavintorn Atthakor

Email: [email protected]

Integrated Bachelor’s and Master’s Degree Program

In Accounting and Business Management (IBMP)

Faculty of Commerce and Accountancy, Thammasat University

BI 322 Global Business & Strategy – Class 1 2

Strategy?


A Global View…

0%

20%

40%

60%

80%

100%

Area # of Countries Population

Comparison of Various Continents

44.6

(Million Sq. Km.)

Asia

Africa

North America

South America

Antarctica

%

Europe

Australia/Oceania

(Million)

192

30.0

24.3

17.8

13.2

9.97.7

147.5 Bn

Note: As of 2006Source: WorldAtlas.com

44

53

23

12

13.246

14

3,879

380

878

501

727

Australia/Ociania 326,397


Largest and Most Populous Countries of the World

Rank Country Population

(Mil.)

1 China 1,306

2 India 1,080

3 USA 296

4 Indonesia 242

5 Brazil 186

Top 5 Countries By Population

Note: As of 2006Source: WorldAtlas.com

Rank Country Area

(Mil. Sq. Km)

1 Russia 17.0

2 Canada 9.9

3 USA 9.6

4 China 9.5

5 Brazil 8.5

19 Thailand 65 49 Thailand 0.5

Top 5 Countries By Area


Who Cares About Ranking by Population and Area?

Who’s the RICHEST Country??

So how do we define WEALTH??

GDP (Gross Domestic Product)


What is GDP?

The gross domestic product (GDP) or gross domestic income (GDI) is one of the measures of national income and output for a given country's economy. GDP is defined as the total market value of all final goods and services produced within the country in a given period of time

GDP = C + I + G + (X-M)

Where

C = Consumption

I = Investment

G = Government Spending

X = Export

M = Imports


So “Who is The Richest?”

Note: As of 2007Source: World Bank

7,055

4,284

3,0922,728

2,062 1,8341,405 1,199 922 841 777 733 622 602 554 523 519 463 410 404 370 366 355 334

1,1781,3461,7772,047

2,088

13,811

0

2,500

5,000

7,500

10,000

12,500

15,000

Country

GDP (PPP) By Country (Top 30)“International Dollar”

$ Billion

#23 Thailand

But USA and China has a lot of productive units (people),What’s the GDP per Capita?

But USA and China has a lot of productive units (people),What’s the GDP per Capita?


GDP per Capita

5350

4643

38 37 36 35 34 34 34 33 33 33 31 31 3027 27 26 26 25 23 23

3436363840

79

0

10

20

30

40

50

60

70

80

90

Th

ou

sa

nd

s

Country

GDP (PPP) Per Capita By Country (Top 30)“International Dollar”

$’000

#69 Thailand$8,138



Purchasing Power Parity (PPP)

Purchasing power parity is an economic technique used when attempting to determine the relative values of two currencies.

• PPP takes into account this lower cost of living and adjusts for it as though all income was spent locally.

• The PPP exchange rate (“real exchange rate”) equalizes the purchasing power of different currencies in their home countries for a given basket of goods.

• PPP is based on the assumption that in an ideally efficient market, identical goods should have only one price.

E.g. The Big Max Index and the iPod Index


Big Mac Index

Source: Economist July 2008


A Pictorial View of PPP



PLUS, Russia = “Group of Eight” (G8)“Group of Seven” (G7)

Developed Markets

Greece

Hong Kong

Ireland

Italy

Japan

Netherlands

New Zealand

Norway

Portugal

Singapore

Spain

Sweden

Switzerland

United Kingdom

United States

Source: Morgan Stanley’s EM Index (May 2008)

Australia

Austria

Belgium

Canada

Denmark

Finland

France

Germany


G8 Countries Dominates The World’s Economy

4%13%

29%

47%

69%

96%87%

71%

53%

32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

# Countries Population Area GDP (PPP) # Co's inForbes

Global 1000

G8 Countries

Rest of the World

% of Total


27 Countries In the European Union (EU)Making It the Second Largest Economy

Austria

Belgium

Cyprus

Finland

France

Germany

Greece

Ireland

Italy

Luxembourg

Malta

Netherlands

Portugal

Slovenia

Spain

Bulgaria

Czech Republic

Denmark

Estonia

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Sweden

UK

15 Countries Adopted Single Currency (€)

12 Other Countries Retained their Own Currencies

EU Statistics

Population: ~500 mil (#3)

Area: ~4 mil. Sq. Km (#6)

GDP_PPP: $10.3 trillion (#2)


Emerging Markets

Argentina

Brazil(2)

Chile

China(2)

Colombia

Czech Republic

Egypt(2)

Hungary

India(2)

Indonesia(2)

Iran

Israel(1)

Jordan

Malaysia

Mexico(2)

Morocco

Pakistan

Peru

Philippines

Poland(2)

Russia(2)

South Africa(2)

South Korea(1)

Taiwan(1)

Thailand

Tunisia

Turkey(2)

Vietnam

(1) More than EM but maintained in index for continuity(2) Big Emerging MarketsSource: Morgan Stanley’s EM Index (June 2006)

Emerging Market is a term used to describe countries that are between “developing” and “developed” status and are going through rapid industrialization.

BRIC

2. Rapidly Growing Markets


BRIC Countries Accounts for 22%% of the World’s GDP

2%

42%29%

22%

5%

98%

58%71%

78%

95%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

# Countries Population Area GDP (PPP) # Co's inForbes

Global 1000

BRIC Countries

Rest of the World

% of Total



The Other Emerging Markets Group Sounds More Like Charity

Argentina

Brazil(2)

Chile

China(2)

Colombia

Czech Republic

Egypt(2)

Hungary

India(2)

Indonesia(2)

Iran

Israel(1)

Jordan

Malaysia

Mexico(2)

Morocco

Pakistan

Peru

Philippines

Poland(2)

Russia(2)

South Africa(2)

South Korea(1)

Taiwan(1)

Thailand

Tunisia

Turkey(2)

Vietnam



“Outreach Five” (O5)


Most of Large Corporations are Global Firms (1)

Note: As of 2007 Source: Forbes

The ranking is based on a mix of four metrics: Sales, Profit, Assets and Market value.

Rank Company Country Industry Sales ($Bil)

Profits ($Bil)

Assets ($Bil)

Market Vaue ($Bil)

1 Citigroup United States Banking 146.56 21.54 1,884.32 247.42 2 Bank of America United States Banking 116.57 21.13 1,459.74 226.61 3 HSBC Holdings United Kingdom Banking 121.51 16.63 1,860.76 202.29 4 General Electric United States Conglomerates 163.39 20.83 697.24 358.98 5 JPMorgan Chase United States Banking 99.30 14.44 1,351.52 170.97 6 American Intl Group United States Insurance 113.19 14.01 979.41 174.47 7 ExxonMobil United States Oil & Gas Operations 335.09 39.50 223.95 410.65 8 Royal Dutch Shell Netherlands Oil & Gas Operations 318.85 25.44 232.31 208.25 9 UBS Switzerland Diversified Financials 105.59 9.78 1,776.89 116.84

10 ING Group Netherlands Insurance 153.44 9.65 1,615.05 93.99 11 BP United Kingdom Oil & Gas Operations 265.91 22.29 217.60 198.14 12 Toyota Motor Japan Consumer Durables 179.02 11.68 243.60 217.69 13 Royal Bank of Scotland United Kingdom Banking 77.41 12.51 1,705.35 124.13 14 BNP Paribas France Banking 89.16 9.64 1,898.19 97.03 15 Allianz Germany Insurance 125.33 8.81 1,380.88 87.22 16 Berkshire Hathaway United States Diversified Financials 98.54 11.02 248.44 163.79 17 Wal-Mart Stores United States Retailing 348.65 11.29 151.19 201.36 18 Barclays United Kingdom Banking 67.71 8.95 1,949.17 94.79 19 Chevron United States Oil & Gas Operations 195.34 17.14 132.63 149.37 19 Total France Oil & Gas Operations 175.05 15.53 138.82 152.62 21 HBOS United Kingdom Banking 84.28 7.59 1,156.61 79.83 22 ConocoPhillips United States Oil & Gas Operations 167.58 15.55 164.78 107.39 23 AXA Group France Insurance 98.85 6.38 666.47 87.64 24 Société Générale Group France Banking 84.47 6.55 1,259.32 77.62 25 Goldman Sachs Group United States Diversified Financials 69.35 9.54 838.20 83.31 25 Morgan Stanley United States Diversified Financials 76.55 7.47 1,120.65 79.76

354 PTT Public Company Thailand Oil & Gas Operations 22.63 2.08 15.77 17.18 863 Siam Cement Thailand Construction 7.26 0.83 6.10 8.20


Most of Large Corporations are Global Firms (2)

Note: As of 2007Source: World Bank, Company Websites

• ~356,000 staffs• Over 200 million customer accounts in over

100 countries• Diversified financial services firm

- Consumer Group (Citicards, Citifinancial, CitiBank)

- Wealth management Group- Institutional Client Gtroup

• Over 50% of revenue from international businesses

• 82,000 staffs worldwide• Operate in over 40 countries in 6 continents• Multiple businesses and brands

- Upstream (oil exploration, extraction, shipping, and wholesale operations)

- Downstream (marketing, refining, and retail operations)

- Brands; Esso, Exxon, Mobil

• 138,000 staffs in 80 countries• ~100 Brands in over 20 product catagories

- Pantene, Head & Shoulders, Vicks, CoverGirl, Olay, Oral-B, Duracell, Pringles etc..


What is Strategy??

A company’s STRATEGY is its action plan for running the business and conducing operations

These action plans are in place in order to…• Grow the business• Attract and please customers• Compete successfully• Conduct operations• Improve company’s financial/market performances


5 Generic Competitive Strategies

Overall Low-Cost Provider

Strategy

BroadDifferentiated

Strategy

Focused Low-Cost Provider

Strategy

Focused Differentiated

Strategy

Best-CostProviderStrategy

Lower Cost Differentiation

Type of Competitive Advantage Being Pursued

Mar

ket

Tar

get

BroadCross-Section

of Buyers

NarrowBuyer

Segment(Niche)

1 2

3

4

5


How to Achieve Low – Cost Advantage?Examples

1. Low-Cost

• Economies of Scale– Operate to full capacity– Bargaining power

• Learning Curve• Boost sales to spread Fixed/Overhead costs

– R&D, advertising, SG&A expenses (selling, general, Admin)• Improving supply chain efficiency• Substitute with low cost components/materials• Online/IT software • Labour-saving methods• Outsourcing vs Vertical integration• Cutting out the “middle man” and going directly to customers• Streamlining operations• Redesign products

– Offering frills-free product– Limiting product line


When Low-Cost Provider Strategy Works Best

• Vigorous price competition among rival sellers/competitors

• Products are essentially identical and supplies are readily available

• There are few ways to achieve product differentiation

• Most buyers use product in the same way

• Low switching costs for customers to change brands

• A “buyers’ market” and bargain down prices

• Industry newcomers use low introductory prices to gain customer base

1. Low-Cost


How to Differentiate?Examples

Types of Differentiations

• Unique tastes• Multiple features• Wide selection in one place• Superior service• Spare parts availability• Engineering design and performance• Product reliability• Prestige and distinctiveness• Quality manufacture• Technological leadership• Full range of services• Complete line of products• Superior image/reputations

Examples

Dr. Pepper

Microsoft Windows

Tesco Lotus

FedEx

Toyota

Mercedes Benz

IBM

Rolex

Honda

3M

SCB

P&G

Starbucks

Key Success of Differentiation• Differentiation must be difficult or expensive to copy• Buyers must value the differentiation (either Actual vs Perceived Value)

Key Success of Differentiation• Differentiation must be difficult or expensive to copy• Buyers must value the differentiation (either Actual vs Perceived Value)

2. Differentiated


When Differentiation Strategy Works Best

• Buyers needs and uses of product are diverse

• There are many ways to differentiate the product (and buyers value these

differentiations)

• Few rival firms are not able or willing to follow the differentiated approach

• Industry is dynamic and evolves around evolving product

2. Differentiated


Focused (“Niche”) Market Strategy

Focused Strategies concentrates on a narrow piece of the total market

Companies can choose to focus on a variety of niche markets…• By geographic areas• By customer segments

– E.g. Gender, Age, Occupation• By specific product category

– E.g. High-end goods• By product usage/attributes

– E.g. Online, Direct sales

3. “Niche”


When Focused (Niche) Strategy Works Best

• Target market niche is large enough to be profitable (with growth potential)

• Industry leaders do not have presence in the market

• Customer needs in market is specialized

• Few rivals are attempting to specialized in same segment

• Company has a loyal customer base

3. “Niche”


Broad Strategy Appeals to Large Spectrum of Buyers

The strategy does not focus on a particular market/customer, but appeals to broad spectrum of buyers

But still needs to have a competitive advantage • Through Lower Cost, Differentiation…• …or stronger Brand

Examples,• McDonalds• Coca-Cola

4. Broad


What is Best-Cost Strategy?

Also known as “hybrid” strategy • Include up-scale attributes…• …At lower cost than rivals

Target market: Value-conscious buyers (Appealing extras at appealing low price)

Value Quality/Price

Best-Cost Strategy works best when…• Buyers and products are diverse• Buyers are sensitive to price and value• Company has resources, know-how and capabilities to execute strategy

5. Best-Cost


Best-Cost Example: Toyota’s Lexus

Toyota has achieved low-cost leadership

• Efficient supply chain management

• Low-cost assembly

Used Best-Cost Strategy for Lexus

• Designing high-performance characteristics to compete in luxury market

• Leverage Toyota’s low-cost capabilities to incorporate upscale quality

• Underprice comparable models of Mercedes Benz and BMW

• Established separate (more personalized and attentive) dealers for Lexus

Illustrative

Price Low (+) High (-)

High (-)

Low (-)

Quality

Price-Quality Trade-off

Camry

IS250C-240

5. Best-Cost


Pitfalls of Each Strategy

Low-Cost Strategy

• Get carried away with cost and price cutting. (“Price War”) Ending up with lower overall profits

• Cost advantage is not sustainable and rivals are able to catch-up quickly

• Low product quality due to over-aggressive cost cutting

Differentiation Strategy

• Competitors are able to copy quickly

• Buyers see little value in the unique attribute of the product

- Buyers not willing to pay the premium of differentiation

• Overspending on differentiation.

Best-Cost Strategy

• Getting squeezed between Low-Cost and Differentiated competitors

Niche-Market Strategy

• Targeted market not big enough to be profitable

• Battle head-to-head with industry-leaders or too many other competitors

• Changes in needs of niche customers towards “mainstream”

Broad Market Strategy

• Unfocused and unable to compete (with niche players) and meet needs of customers

• High cost to serve


Homework/Reading

“Sidestepping Economies of Scale”, 5 Future Strategies You Need to Know Right Now

by George Stalk (Senior partner of The Boston Consulting Group)

“Losing its shine” (Japan’s luxury goods market), The Economist (September 20th, 2008)

“Minding the Cost Gap”, Globality: Competing with Everyone From Everywhere For Everything, HL Sirkin, JW Hemerling, AK Bhattacharya

1

2

3


Strategies for Specific Situations

3 commonly encountered situations….

1. Companies competing in emerging industries

2. Companies competing in rapidly growing markets

3. Companies competing in maturing, stagnant or declining industries


A Typical Product Life Cycle’s Divided Into 4 Stages

Hybrid Vehicles

iPods

DVD, Neon lights

CRT Television

Examples

1. Emerging Industries


BCG Matrix

Also known as “Growth-Share Matrix”

Developed by Bruce Henderson of The Boston Consulting Group (BCG) in 1970 to analyze business units or product line so that companies can better allocate their resources.

Divest Remaining

SelectA Few

Star

DogCash Cow

Question Mark

Invest

Liquidate

Relative Market Share Low (-)High (+)

High (+)

Low (-)

Growth Rate



A (Hypothetical) Example of BCG MatrixSony

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0.1110

Relative Market Share(1)

Hi-Fi

Revenue

Sony’s Portfolio (By Product Line)

BusinessGrowth Rate (%)

(1) Relative Market Share = Company’s Mkt Share/Largest Competitor’s Mkt ShareE.g. If co’s share is 20% and competitor’s share is 5%, Relative Share is 4x.

0.2x0.5x4x5x

DVDPlayer

Wii

PlasmaTV

DigitalCam.

PlayStn.

VideoDigital

VCR

VideoCam



A (Hypothetical) Example of BCG MatrixSony

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0.1110

Relative Market Share(1)

France

Revenue

Sony’s Portfolio (By Country)

BusinessGrowth Rate (%)

(1) Relative Market Share = Company’s Mkt Share/Largest Competitor’s Mkt ShareE.g. If co’s share is 20% and competitor’s share is 5%, Relative Share is 4x.

0.2x0.5x4x5x

DVDPlayer

USA

Japan

UK

China

Thailand

Singapore

India



Relative Freedom Despite Some Challenges

Challenges in Emerging Industries

• Uncertainties about how large market’s going to get (and when)

• Race to perfect the technology (which will be the “industry standard”)

• Need to overcome customer’s concerns about product attributes

• Barrier to entry are relatively low in some cases (if not protected by patent)

• Might be some problems securing raw materials (suppliers unprepared)

• Liquidity problems for small companies (to support R&D)

Strategy Options

• Push to perfect technology, improve product quality/attributes

• Consider merging or acquiring another firm to gain added expertise

- Or alliance with companies related/complementary technologies

- Alliance with key suppliers to secure distribution channels

• Try to gain first mover advantage by adopting dominant technology

• Make it easy and cheap for first-time buyers

- Followed by further prices cuts to get next layer of customers

• Create product awareness through advertising/marketing



Red vs Blue Ocean

Red Ocean:• Industry boundaries are defined and accepted• Competitive rules are known• Companies try to outperform their rivals on

contracting markets• Commoditization of products and services

Blue Ocean:• Untapped market space• Created by expanding existing industry

boundaries• Competition is irrelevant• Rules of the game are waiting to be set



Who’s in the “Emerging Markets”?




Iran

Israel(1)

Jordan

Malaysia

Mexico(2)

Morocco

Pakistan

Peru

Philippines

Poland(2)

Russia(2)

South Africa(2)

South Korea(1)

Taiwan(1)

Thailand

Tunisia

Turkey(2)

Vietnam

Argentina

Brazil(2)

Chile

China(2)

Colombia

Czech Republic

Egypt(2)

Hungary

India(2)

Indonesia(2)


Speed is Key for Growing Markets

Capture largest share as soon as possible • Driving down costs per unit to attract customers• Increase production capacities to meet growing demands• Capture key distribution channels and sales outlets• Expand geographic coverage• Expand product range/line to appeal to wider customer range



Making Cows, Not Dogs

Divest Remaining

SelectA Few

Star

DogCash Cow

Question Mark

Invest

Liquidate

Relative Market Share Low (-)High (+)

High (+)

Low (-)

Growth Rate

3. Maturing, Stagnant, Declining Industries

Maturing Industries = When nearly all the potential buyers are already users


Industry Growth Rates In Thailand (1)

44.0%

12.4% 12.2% 11.1%

4.3%2.5% 1.7% 0.5%

-6.4%-8.2%

-11.3%-14.1%

-30.5%-32.6%

4.7%2.8% 2.3%

0.6%

-1.4%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Foods

Chem

ical

Pro

ducts

Cle

anin

g Pre

paratio

n

Footw

ear

Pap

er &

Paper

Pro

ducts

Rubber

& R

ubber P

roducts

Beve

rages

Tobac

co

Pet

role

um P

roduct

s

Elec

tronic

Pro

ducts

Iro

n an

d Ste

el P

roduct

s

Const

ruct

ion M

ater

ials

Industry

Change in Industrial Production Index

%

Note: As of 2006 – 2007 (Jan)Source: BOI

Oth

ers

T

extil

es&Tex

tile

Product

s

E

lect

rical

Applia

nce

F

urnitu

re a

nd fixt

ures

T

ransp

ortatio

n Equip

men

ts

Product

s of L

eath

er

S

ettin

g Jew

elle

ry

Industry Average0.48%

GDP Growth4.5%

DecliningMaturedGrowing



Industry Growth Rates In Thailand (2)

20.0%

15.9%

13.6%12.5%

9.7%

7.9%6.8%

4.4%3.1%

1.5% 0.8%

-0.3% -1.0%

-5.5%

-8.8%

3.4%4.9%

7.6%8.3%

10.6%

-10%

0%

10%

20%

30%

Petro

chem

Packa

ging

Health

Finan

ce

Agricultu

re

Proper

tyFood

Transp

ortatio

n

Comm

erce

Indus

try M

ateria

l

Elect

ronic

s

Comm

unicat

ions

Auto

Banking

Energy

Leisu

re

Construct

ion M

ateria

l

Enterta

inm

ent

Household

Fashio

n

Industry

Change in Industrial Production Index

%

Source: Bloomberg (2006-2007) O

ther

s

Tex

tiles

&Textil

e Pro

ducts

E

lect

rical

Applia

nce

F

urnitu

re a

nd fixt

ures

T

ransp

ortatio

n Equip

men

ts

Product

s of L

eath

er

S

ettin

g Jew

elle

ry

Industry Average3.9%

GDP Growth4.5%

DecliningMaturedGrowing



“Grow It” vs “Milk It”

“Grow It”Strategies to Extend the Life of

Maturing/Stagnant Market

• Going head-to-head with competitors –

Stealing market share

• Make the product more “sticky”

- Switching (to competitor) is more difficult

- Create barrier to entry for newcomers

• Emphasize on Value

• Re-vamp brand and product to invigorate

demand

• Acquiring rival firms

• Grow internationally

“Milk It”Strategies to Fit the Maturing Market

• Streamlining operations to trim costs and

improve margins

• Build new or more flexible capabilities

• Maintain high standards of product quality

and services

• Pruning marginal products and models



“Get Rid Of It”

Strategic Options for Declining Industries

Focus on the growing segments of the industryExamples: Ben & Jerry’s and Haagen-Daz

Stress differentiationExample:P&G’s electric toothbrush and related

products

Innovative cost reductions to improve margins

End-Game Strategies

Slow exit• Generate as much cash from business for as

long as possible• Cut-expenses to rock-bottom• Sell

Fast exit• Find perspective buyer in early stage of

decline



Diversification

Diversification is a strategy that companies use grow their business by entering new market with a new product

Ansoff Product-Market Growth Matrix….

Market Development

Present

Product Development

Market Penetration Diversification

New

Present

New

Product

Market


Examples with in the Ansoff Matrix

Present

Market Development Product Development

Market Penetration Diversification

New

Present

New

Product

Market

~ 40 brands in 16 Businesses


There are Two Types of Diversification

Concentric Diversification

Diversification to a new product/market that

leverages the company’s existing product,

customer base, technology or competency.

Example:

Boonrawd Brewery

Conglomerate Diversification

Diversification to a totally new and unrelated

business.

Example:

What are the advantages & disadvantages of each type of Diversification?


Diversification Photohunt


Why Do They Choose To Be So Diversified?

ก ธ. 322 กลยุทธ์...

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