Global Business #2April 9, 2012
Dept of Technology Management for Innovation (TMI), Graduate School of Engineering
Professor Kazuyuki Motohashi
工学系研究科 技術経営戦略学専攻教授
元橋一之http://www.mo.t.u-tokyo.ac.jp
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 peaces
China: Factory or Market?
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 Triangle by P. Ghemawat
Shift of global strategies
Ghemawat(2007)
Economic valuation of global strategy
• Purpose of strategy: long term profit, valuation• Supply side story
– Local cost advantage (arbitrage)
– Scale economy by global supply chain (aggregation)
– Globalization of value chain (production, R&D)
• Demand side story– Localization of product and services (adaptation)
– Market analysis and marketing mix at local market
– Globalization of value chain (marketing, R&D)
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?)