The Life of an Indian IT Worker - CNBC.com

The Life of an Indian IT Worker - CNBC.com

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Shopping in India - CNBC.com

Shopping in India - CNBC.com

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Spotlight on Tata Motors - CNBC.com

Spotlight on Tata Motors - CNBC.com

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HSBC Case - Comments

Examples:

"Sometimes a company can grow too fast and cause growing pains or cash flow issues. If they would slow down and master one market before moving onto another they may become more successful."

"One downfall of the traditional MNE side of HSBC is their inability of organizational adaptability, which is characterized by the failure to crack the top ten in investment banking and the abandonment of the Studizinki strategy...."

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"HSBC needs to rely on what they do best and focus on their core competencies."


"HSBC needs to continue to invest, develop, and motivate their people in China. Better developing people in China and educating them about banking and finance will not only help cut down on corruption, but also will allow HSBC to keep certain aspects of their firm in China...."

Porter's Diamond - National Competitive Advantage

Questions

• Why do countries trade the products and services they do?
• What are the advantages and disadvantages to this specialized development?
• What is the role of government in developing a national competitive advantage?
• What do you think about Porter's model? Is it still relevant?

FACTOR ENDOWMENTS OR FACTORS OF PRODUCTION

• Inputs necessary to compete in an industry
• Labor
• Land
• Natural Resources
• Capital
• Infrastructure

Factors can be
BASIC

• Natural resources
• Labor

ADVANCED

• Digital communications
• Highly educated workforce

GENERAL

• Highway system
• Supply of debt capital

SPECIALIZED

• Skilled personnel in specific industry

Questions

Which factors are more important for competitive advantage? Why?

Factors - implications

• Develop advanced and special abilities when lack the basic factors?
• Country can create own important factors - skilled labor and technology
• What factors you have are often less important than how you use them
• Disadvantages in factors often force innovation which can lead to an advantage
• Why could China's mass access to labor be a bad thing/
• Is there an advantage to the US highly skilled and highly paid workforce?

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DEMAND CONDITIONS

Nature of home demand for industry's product or service
Size - lead to scale efficient production
Efficiency - lead to domination of industry in other countries
Specialized demand - lead to carry over in other countries

• Swiss - tunneling equipment
• Japan - compact quiet air conditioners

Questions
What advantages do the US and Japan get from their home demand? Why?
What are the implications for China?

Demand Implications

• Local demand larger than others - concentration by company which leads to advantage
• Demanding local market leads to advantage
• Trend-setting local market leads to advantage - ability to anticipate global trends
• Implications for China - awakening the Dragon

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RELATED AND SUPPORTING INDUSTRIES

• Strengthen the potential for cost efficiencies and innovation
• Italy - leader in shoe because of leather-processing; leather working machinery and design
• Japan - cameras and copiers

Related - Implications

• Proximity increases range of inputs available in a single location
• Efficient economies of scare for suppliers
• Resources created from interaction - information flow, employee pooling, specialized and tacit knowledge
• Enhanced social networks - informal friendships and information flows

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FIRM STRATEGY, STRUCTURE, AND RIVALRY

• Conditions governing how companies are created, organized, and managed and the nature of domestic rivalry.
• strategies and structures influenced by country

Questions
What differences are there in strategy and structure based on country?
Why is in country rivalry helpful?

Firms - Implications

• Local conditions impact strategy and structure which impact type of firm.
• In Five Force Model industry more attractive if less rivalry. However in long run more rivalry is better because it puts pressure on forces to innovate and improve.
• Local rivalry pushes beyond basic advantage in factors
• Self-reinforcing

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GOVERNMENT ROLE

• Encourage companies to raise performance -strict product standards
• Would US government putting in place higher mpg standards have helped the US auto industry?
• Stimulate early demand for advance products
• Focus on specialized factor creation
• Stimulate local rivalry

Question
What does this suggest govt role should be in promoting "green energy"?

Ecuador Rose Industry

This video elaborates on some of the information you read in an earlier case. It also applies to the idea of national competitive advantage. It also provides information about a progressive company in the industry and will be relevant when we talk about CSR.

Managing MNEs

The American Model of the Multinational Firm and the "New" Multinationals From Emerging Economies (Guillen & Garcia-Canal, 2009)

The authors address three questions:

1. "Do these firms (new MNEs) share some common features that distinguish them from the traditional model of the MNE?"
2. "What advantages have made it possible for them to operate and compete not only in host countries a the same or lower level of economic development but also in the richest economies?"
3. "Why have they been able to expand abroad at dizzying speed, in defiance of the conventional wisdom about the virtues of a staged, incremental approach to international expansion?"

______________________________________________________________________


From the traditional viewpoint -

Why did multinational firms develop?

• What is the "liability of foreignness?"
• Vertical expansion - necessary condition? sufficient condition?
• Horizontal expansion - necessary condition? sufficient condition?

________________________________________________________________________

Main features of new MNEs.

• Speed of internationalization
• Competitive advantage
• Political capabilities
• Expansion path
• Default entry mode
• Organizational adaptability

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Motivations

• Backward linkages into raw materials
• Forward linkages into foreign markets
• Home-country government curbs
• Spreading of risk
• Movement of personal capital abroad
• Following home-country customer to foreign markets
• Investment in new markets in response to economic reforms in the home country
• Acquisition of firm-specific intangible assets
• Exploitation of firm-specific intangible assets

1. Which of the drivers identified by Yip (2003) or Hill (2008) are represented in Guillen & Garcia-Canal's (2008) list? What important ones are missing?




2. Thinking about the motivations and intangible assets of the new MNEs develop a list of capabilities and skills required for managers of these new MNEs? Provide support for your list.

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The Tortuous Evolution of the Multinational Corporation (Perlmutter, 2008)


3. Perlmutter outlines three types of orientation companies can have in conducting global business. Given the drivers and motivations for global competition what perspective/orientation would you recommend a company adopt? Why?

4. Rank the skills and capabilities you listed in the question 2 in terms of their contribution toward the perspective you recommended.

5. Outline how companies can attract people with these S & C or develop S & C within their own employees.


When You Shouldn't Go Global (Alexander & Korine, 2008)

Alexander & Korine (2008) suggest not all companies should go global. One of the questions they believe companies should ask is "Do we have the necessary management skills?'

6. Come up with 6 questions you would ask about a company's management skills if the suggestion to enter a global market was raised.

Our Experiences

Intercultural competence.
Inter cultural competence is defined in terms of the ability to use appropriate interpersonal, informational, analytical, action, and adaptive skills in intercultural situations (Yamazaki & Kayes, 2004).

Interpersonal. Cross cultural interpersonal skills would include having the ability to form and build relationships with people from other cultures.

Informational. Cross cultural informational skills include observing the host culture and responding to new and unexpected experiences.

Action. Cross cultural action skills include the ability to act even in ambiguous situations.

Adaptive. Cross cultural adaptive skills include the ability to adapt to the changing circumstances experienced in foreign countries.

Analytical. Cross cultural analytical skills include the ability to take abstract and conceptual understanding of the values and practices of a foreign country and design appropriate response to cross cultural situations.

India

INDIA

Competition in Global Markets

Hypercompetition (Harvey, Novicevic, & Kiessling, 2001)

-continuous generation of new forms of competitive advantage through neutralizing, destroying, or rendering competitors advantage obsolete. (Harvey et al 2001)
-only enduring advantage ability to create new advantage (Harvey et al 2001)

Global competition and worldwide interactions require
-major resource commitments
-development of dynamic cross-border capabilities

Competitive landscape
-greater level of uncertainty
-diverse global rivalries
-rapid technological change
-price wars
-continuous restructuring activities

Achieve competitive advantage
-acts of innovation
-reformulation of existing strategies

Rivalry
-firms leapfrog in positioning within markets
-market-based strategic resources and relationships
-competitive creation and destruction of dominants position in product or geographic mkts
-attacks and counterattacks based on size and financial differentials

Strategic market orientation
-durable
-socially complex

"The single most important thing to remember about any enterpirse is that there are no results inside its walls. The result of a business is a satisfied customer, inside an enterprise there are only cost centers. Results exist only on the outside. " (Drucker, 1993, p. 54)


What does it require to develop a strategic market orientation?
What are some methods for achieving the necessary relationships?

Oreo

Globalization - The drivers

MARKET DRIVERS

COST DRIVERS

GOVERNMENT DRIVERS

COMPETITIVE DRIVERS

OTHER DRIVERS

• Information and Communication
• Globalization of Financial Markets
• Business Travel

Traditional Motivators (Drivers)
Secure key supplies Aluminum Cos (bauxite); Tire Cos (rubber plantations)
Marketing seeking Small home markets / excess capacity for manufacturing
Access low-cost factors of production

Emerging Motivators (Drivers)
Scale economies
Ballooning R & D investments
Shortening product life cycles


Examples

Outsourcing Works, so India is Exporting Jobs

Slide Show on Thomas Friedman's Book - The World is Flat
If you haven't read Friedman's book this slide show gives overview of his early points.

The World is Flat

View more Microsoft Word documents from Isriya Paireepairit.

Globalization - The questions

What are the benefits and costs of globalization for different sectors of the society? (companies, workers, communities)

For years we have seen the benefits of globalization, what risks did we overlook?

What ramifications will the economic downturn have on the pace of globalization?

What model does globalization follow in different countries? in different organizations?

Example - China and India

Globalization

Every morning in Africa, a gazelle wakes up.

It knows it must run faster than the fastest lion or it will be killed.

Every morning a lion wakes up.

It knows it must outrun the slowest gazelle or it will starve to death.

It doesn't matter whether you are a lion or a gazelle.

When the sun comes up, you better start running.

(African proverb - from Friedman, 2007)

Definitions

- shift toward a more integrated and interdependent world economy. (Hill, 2008)

- the process of social, political, economic, cultural, and technological integration of countries around the world. (Luthans & Doh, 2009)


Historical Background

Silk Road


Examples

BRIC Nations Meet in Russia



Chinese Milk Scandal



Spreading Consumerism One India Village at a Time.

Opening

Learning Objectives

• Define globalization.
• Identify, explain, provide examples of major forces in globalization of markets and products for companies.
• Assess implications of global drivers on push for globalizaiton.
• Assess advantages and disadvantages of globalization.
• Discuss relationship to Global Economic Crisis 2008.
• Understand changing nature of competition in a global setting.

In-class assignment

1. Definition of globalization.
2. One new piece of information you gained from the readings.
3. One question you have based on the readings.