BA 510 International Management Doha 2011 Class 4

 Globalization Drivers  Globalization vs. Localization  Global vs. Multi-domestic Strategies  International Strategy: Value Chain Perspective  Canada Solar Case Study – Strategic Framing  Finalize 5 minute pitches  Make 5 minute pitches

 Market Drivers  Cost Drivers  Government Drivers  Competitive Drivers Low Multidomestic High Global

Low High Baked Goods Book Publishing Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Multi-domesticGlobal Strength of Market Drivers High

Low High Baked Goods Retail Banking Toothpaste Soft Drinks Automobiles Computers Aircraft Pharmaceuticals Multi-domesticGlobal Strength of Cost Drivers High

 Globalization:  Operating with relative constancy in a number of markets -- as if the entire world (or major regions of it) were a single entity; selling the same things in the same way everywhere (Levitt 1983)  Examples?  Localization:  Operating in a number of countries, adjusting products and practices in each -- at a high relative cost, with a committed operating presence in the markets of other nations.  Examples?

 Managing Differences (Ghemawat)  Most of modern global strategy focuses on minimizing differences  But, correctly choosing how much to adapt a business model is important to extract full value from a business  Employ a strategy of differences (arbitrage) and exploitation of scale economies

 Managing Differences (Ghemawat)  Strategy of differences: arbitrage  Cultural Arbitrage: Exploiting of culture to gain advantage. Ex: food, clothing, US fast-food chains  Administrative Arbitrage: Exploiting legal, institutional and political differences from country to country. (ex: tax differentials)

 Managing Differences (Ghemawat)  Strategy of differences: arbitrage (cont)  Geographic Arbitrage: Not as important now due to reductions in transportation costs, but can be used in areas such as telecommunications (local vs. long-distance) and distribution networks  Economic Arbitrage Includes exploitation of differences in costs of labor and capital, variations in knowledge or availability of complementary products, technologies or infrastructure

 Managing Differences (Ghemawat)  Globalization allows for:  focus on market similarities  upward spiraling of market share, leading to greater economies of scale  lower costs through greater economies of scale  lower prices for consumers

 Managing Differences (Ghemawat)  Localization allows for:  winning specific buyers and maximizing sales  not over-designing products for some countries and under-designing them for others  not undermining some company networks which already exist  not dampening entrepreneurial spirit

Slide Global Strategies System-wide approach to competing worldwide Mutually interdependent subsidiaries Centralized control and reporting of activities Facilitates cross-subsidization policies across markets HQ

Global Strategies  Standard products  Global economies of scale in key components and activities  Leverage technology across many markets  Global coordination of marketing and sales system-wide  Cross-subsidization policies to respond to competitive moves by other global strategy firms Slide 8- 13

Slide Multi-Domestic Strategies Competitive advantage is built in each separate national or regional market. Markets and subunits are treated independently from one another. Decentralized controls of activities, reporting back to headquarters. HQ

Multi-Domestic Strategies  Customization or frequent adaptation of products for each separate market  Few systemwide opportunities for economies of scale  Value-adding activities performed and duplicated in each market  Coordination of marketing and sales within each market  Quality and image across markets are important sources of competitive advantage Slide 8- 15

Benefits of Global Strategies  Market growth and expansion opportunities  Recovery of R&D and investment costs  Creation of a distinct image  Accelerated learning and transfer of new skills Slide 8- 16

Costs of Global Strategies  Strategic Leverage Sustained investment required Preserving and extending image  (In)Flexibility High interdependence of subsidiaries (and businesses) Change or development affecting all markets  Cooperation Compromise Accountability Slide 8- 17

Pressures for Global Efficiency Pressures for Local Responsiveness High Low High Low

Infrastructure Technology Development Procurement Human Resource Management Inbound Logistics Operations Outbound Logistics Marketing Service Profit Margin

Infrastructure Technology Development Procurement Human Resource Management Inbound Logistics Operations Outbound Logistics MarketingService Profit Margin Headquarters

Infrastructure Technology Development Procurement Human Resource Management Inbound Logistics Operations Outbound Logistics MarketingService Profit Margin Upstream Headquarters

Infrastructure Technology Development Procurement Human Resource Management InboundLogistics Operations OutboundLogistics MarketingService Profit Margin UpstreamDownstream Headquarters

Infrastructure Technology Development Procurement Human Resource Management InboundLogistics Operations OutboundLogistics MarketingService Profit Margin Advertising Pricing Distrib.Packaging

 Geographic location of value chain activities  Concentrated/centralized vs. dispersed/decentralized  Decision on modes of entry into new country markets (Class 5)

 Cross-border linkages between dispersed value-creating units  Coordination = Flows of:  $  Product (finished and intermediate)  Technology  People  Information (market data, strategic direction, etc.)  Highly coordinated vs. only money flows

 What are the key market and cost drivers in this industry?  What arbitrage opportunities, if any, exist in this industry and, specifically, for Canada Solar?  To what extent are there tensions between globalization and localization for Canada Solar as it consider international expansion of its manufacturing?  Create a “Pressures” matrix that characterizes where Canada Solar and your target company reside.

 Preparation  Cluster Assessment + “Fit-1” (Solar PV Mfg and Qatar)  1.5 page outline plus presentation  No longer than 5 minutes  Three “C’s”: Concise, Clear, Contextual