1. Global Enterprise and Competition Ashwin Mehta, Visiting Faculty
Fall 2007
Ashwin Mehta, Visiting Faculty

2. Microsoft launches Vista worldwide
After five years of marketing blitz, the largest software maker unveils the new computer operating system Tuesday.
January : 9:21 AM EST
NEW YORK (Reuters) -- Microsoft Corp. rolled out Windows Vista at retailers in 70 countries Tuesday, delivering a new computer operating system that aims to better manage the explosion of digital media and protect users from the dangers of the Internet.
What are key planning elements?

4. Boeing is soaring on orders for its new 787 - Global Gamble
The Forbes Global 2000, April 2006

5. Global Enterprise and Competition
markets and operations in global terms,
more diverse organization in terms of culture,
few core values that are its major unifying force.
It has a headquarters but is often managed from diverse locations
Enterprise
Business entity, profit motivation, growth, any size, any industry, B2B and B2C
Competition
Local, National, International and Global

6. TESCO - #3 retailer in the World
2X Wal-Mart in the UK
Entering the US market

7. TESCO - A Very Successful Retailer

8. Reasons for success? Leadership Clubcard Employees Culture
Supply chain
Innovation
Global markets

9. CATALOG DESCRIPTION:
To be taken as last course in foundation core.
Is an integrated investigation of global competitive issues to help students understand the processes of organization and technological innovation which permit businesses to achieve competitive advantages in a global environment.
This course also deals with the nature and techniques of industry analysis necessary to the formulation of effective global strategy for the firm. 

10. Course Objectives:
understand challenges and issues in operating across national boundaries
develop analytical ability to formulate strategic options
understand integration of key functional areas, including marketing, manufacturing, R&D and customer support
use “strategy analysis” tools to develop scenarios, impact and select appropriate set of strategies
improve research capability to gather and interpret key environmental data that define critical parameters for a global strategy

11. COURSE REQUIREMENTS:
Text Book: Global Competitive Strategy, by Daniel Spulber, Cambridge University Press ISBN:
2. Instructor’s Notes
You can download class notes as shown in Class Schedule.
3. Other reading materials
See Syllabus

12. 4. Assignments. Group Projects:
Group Projects: Each student will be assigned to a group to develop a strategic analysis of a company .
Assigned cases:
a written case analysis for three(3) cases, to be submitted via as attachments.
3 – 5 students will present their assignments in the class.
Students are expected to participate in class discussions. You are expected to arrive at class fully prepared to discuss the material assigned for that day.

13. Assignments also include presentations

14. Syllabus:

15. What is a Modern Global Enterprise?*
Focused on Enterprise-wise objectives, not local initiatives/priorities
Aligning subsidiaries around a common strategic vision
Managing from Center
Integration of operations globally
Sharing local innovations around the world
Common Corporate culture, while managing sub cultures
Fortune, February 2006

16. Considerations

17. Internationalization Strategy & Integration
Operating Mode
Own, JV’s, Partnering,
Transactional
Adaptation
Other Issues
Control, Management/skills,
Cultures, Institutional, Ethics
Market-specific, Regional, Global
Organization
Coverage
Local, National, Regional, Global
Functional, Divisional, Matrix
Business Processes
Internationalization
Local, Global, Mixed
Organic, M&A’s
Strategy & Integration
Corp, Business, Functional

18. The beginning … Who is being What is being Satisfied Satisfied?
Business
Definition
Vision/Mission
How are customer needs being satisfied

19. Mission Environment Assumptions The Theory of the Business*
Required to maintain Leadership
How do we make money
Competencies
Environment
Assumptions
Mission
Making the Difference
*: Peter Drucker

20. The Theory of the Business*
Assumptions about Environment, Mission and Core Competencies Must Fit Reality
The assumptions in all Three Areas Have to Fit One Another
The Theory of the Business Must be Known and Understood Throughout the Organization
The Theory of the Business has to be Tested Constantly
*: Peter Drucker
Session 1

21. Moneymaking Basics* Cash Margin Velocity Return Growth
Change in “money making model” impacts all of these ---
Dell selling through retailers Vs Direct only
*: The Basics of Moneymaking, Ram Charan,

22. Outside In* --- External Environment
Recognize changes and patterns (lifestyle, technology, competition
Failures have consequences
Build External Perspective
Opportunities
Threats
Repositioning Business**
Decision making process
*: See Your Business Outside In, Ram Charan,
**: When – and How – to Reposition Your Business, ram Charan

23. What is Strategy? Strategy
Use of scarce resource to achieve vision/mission and objectives
Collection of actions:
Corporate (what business/industry)
Business (how to compete)
Organization/function (where to allocate resources)

24. Example IBM Vision/Mission
At IBM, we strive to lead in the invention, development and manufacture of the industry's most advanced information technologies, including computer systems, software, storage systems and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide.
Session 1

25. Example: IBM Strategies
IBM’s strategy is
to pursue an innovation agenda with its clients, partners and in other relationships, and
to continue refining its portfolio to achieve higher value.
Through its understanding of where technology, client requirements and global business are headed,
the company continually makes strategic decisions to maintain its leadership of this rapidly changing business by focusing on high-value innovation-based solutions and services while consistently generating high returns on invested capital for its shareholders.
The company utilizes its entire portfolio — hardware, software, services, technology and research to maintain its leadership.
Session 1

26. Business successes and failures Always point to Strategy
Strategy and Strategic Positioning
Sustainable
Session 1

27. Introduction to Global Competitive Strategy
© Professor Daniel F. Spulber

28. Global Competitive Strategy
Introduction

29. Global Competitive Strategy
Outline of introduction
The global challenge
The global mosaic
The global strategy “Star Analysis”

30. Global Competitive Strategy
The Global Challenge
Globalization changes nature of competition
-- Competitors can be very different!
Innovative entrants, including emerging market firms
Global 500 Companies*: US
Japan
France/Germany/UK
China
Canada
India
*: Fortune

31. Global Competitive Strategy
The Global Challenge
Global competitive advantage
Best sources of products, global brands
World-class cost efficiencies
Global pool of innovations
Global mix of transactions

32. Global Competitive Strategy
The Global Challenge
To serve large-scale global market
To address market differences across countries

33. Size of Global Business Current $ (Source: World Bank)
• World GDP: $ 41.3 trillion
(Gross Domestic Product)
US: $ 11.7 trillion
EU (25): $ 12 trillion
Japan $ trillion
Latin America and Caribbean $ trillion
Middle East and Africa $ trillion
India $ trillion
China $ trillion
High growth rate of emerging markets

34. Size of International Business Total exports of goods and services
World Trade $ 11 trillion
Merchandise $9 trillion
Agriculture, fuels and mining, manufactured goods
Services $2 trillion
Transportation, travel, commercial services

35. Growing importance of trade to US economy
Increases in:
Exports:
Capital goods (mainly semiconductors, computer accessories)
Industrial supplies
Consumer goods
Imports:
Industrial supplies and crude oil
Auto industry
Capital goods

36. Size of International Business
$1.5 trillion in international currency
transactions per day!
63,000 multinational corporations
Major source of economic growth and investment for developed and developing countries
Source of global technological innovation
Earnings growth for many companies (Wal-Mart, GE, Carrefour, Nestlé, Unilever, Cemex, Toyota, Samsung)

37. Why was Nokia so successful?
Why did Daimler-Chrysler have problems?
Why was Nokia so successful?

38. Global Competitive Strategy
The Global Mosaic
Vast economic differences across countries
GDP per capita, prices, wages
Underlying geographic differences
– Geography matters
Large “economic distances” between countries
“Sticky borders” preserve these differences
The arbitrage principle – economic differences evidence of sticky borders, many strategic opportunities remain
The world is bumpy!

39. Business must bridge critical differences between countries
Language
Culture, customs, and history
Social institutions
Demographic differences: health, education
Public policies
Legal and regulatory systems
Business practices
Currencies
Technology

40. Global Competitive Strategy
The costs of trade: The Four T’s
Transaction costs
Tariff and non-tariff barriers
Transportation costs
Time costs
Borders are “sticky”

41. Business must navigate the World Trade System
Proposed
Caribbean Basin Initiative
NAFTA

42. Business strategy must account for changes in political relationships and trade deals between countries

43. The Arbitrage Principle
Country borders:
Restrict movement of inputs – capital, labor, technology, resources
Limit trade in goods and services
Create persistent differences in technology and information
Preserve economic differences -- prices and wages
Arbitrage reduces economic differences
Innovative transactions find arbitrage opportunities
Country borders provide opportunities and competitive advantage to international business

44. NEXT SESSION:
Analytical framework!
Global competitive advantage
Globalization challenges business strategy in a fundamental way
Trade costs are high resulting in economic differences between countries
The global mosaic offers opportunities for generating gains from trade
The successful global business develops innovative international transactions to gain global competitive advantage

45. Recap … Introduction to Global Business Competition Globalization
4T’s, GATT, WTO, Technology, …
Opportunities
Markets, Resources
Analysis and Strategy
Traditional (home country-based) to Global
STAR Analysis
Global Added Value
Value Connection
G5 Strategies
Platform, Network, Intermediary,
Entrepreneur, Investment

46. Assignment 1
Due November 15, 2007
GO TO THIS LINK (
REVIEW THE ARTICLE, DO A WEB RESEARCH ON COMPANIES DISCUSSED IN THE ARTICLE, AND ADDRESS THESE QUESTIONS:
(YOU SHOULD WRITE AN INTRODUCTION/CONTEXT BEFORE ADDRESSING THESE QUESTIONS)
How many stores do Wal-Mart, Home Depot and IKEA have in various countries/regions?
Describe Wal-Mart and Home Depot’s International expansion strategies (i.e. acquisition, JV’s, organic growth) and comment on their results (successes/failures/challenges)
Review Wal-Mart and Home Depot’s revenues over the last five years and analyze revenues from US Vs International.
What has been the main thrust of IKEA’s International expansion strategy and how has it performed (review their financial and other data of past few years)?
YOUR REPORT MUST BE BETWEEN 1000 AND 1500 WORDS AND MUST INCLUDE SOURCES REFERENCED.

47. Group Projects
Group Formation
Company Assignments
Templates Review

48. Group Project Template
1. Company Financials
(see Excel spreadsheet in “Group Project and Assignments Files”). Summarize key financial data (growth rates, major ratios, etc.)