a Business strategy a Corporate strategy a Cost leadership a Differentiation
a Global business strategy a Global Capability Index a Global corporate strategy a Global positioning a Global Revenue Index a Network externalities a Time incompressibility a Value chain a Value curve a Value proposition
Learning assignments
1 The distribution of sales and assets of General Motors, the US cars and trucks manufacturer, is shown below:
What is GM’s position on a GCI/GRI mapping?
2 In your opinion, in which industry could London (UK) be a ‘key’ country – Italy? Australia?
3 What could be the benefits of positioning oneself as a standardised global niche differ- entiator (see Table 2.4, p. 46)? What kind of competitive advantages does it require? 4 What are the capabilities needed to be a broad adaptive cost leader?
5 What are the ways to sustain competitive advantage?
6 What types of competitive advantages does being a first-mover provide? 7 Can you sketch the mapping of the value chain for:
(a) A consulting firm (b) An airline (c) A trading firm
(d) A corporate and investment bank?
8 For each of the entities in Question 7 (a)–(d), can you represent a possible global distribution of their value chain, as illustrated in Figure 2.8?
Nafta Europe Asia Rest of World
Unit sales 5,874,000 1,968,000 421,000 523,000
Designing a global strategy 65
Web resources
<http://www.businessweek.com/globalbiz/index.html>Business Week – Global business
<http://www.forbes.com/forbesglobal/>
Forbes Global Magazine online, with a section on companies and strategies
<http://harvardbusinessonline.hbsp.harvard.edu/> <http://[email protected]/>
Notes
1. This section is based on the Harvard Business School case study 9–391–071, written by Thomas W. Malnight under the supervision of Michael Yoshino.
2. One should observe that the distinction between a global player and a regional player is more a function of the relative importance of each major region of the world in the company’s portfolio than the published ambition of the company in its external communications. Many companies assert that they are ‘global’, although their accounts reflect a strong concentration of their sales in one region. However, this situation may change if there is a real strategic ambition to become a real global player supported by the appropriate investments. Renault, for instance, a traditional European player, has acquired controlling positions in Nissan and Samsung automobiles, transforming the company into a European, Asian and also North American player thanks to Nissan’s operations in the United States.
3. Global sourcing applies also to some services sectors; for instance, a software company setting up a programming operation in India but limiting its sales to one country would be a global operator. Similarly, a domestic mass retailer that had purchasing offices across the world and long-term manufacturing contracts would also be a global operator. 4. A similar calculation could be done by taking the major countries, but it becomes more
complicated. However, it is perfectly possible to apply a similar methodology by taking the 10 major world markets, for instance, or applying it at the level of a region (the distribution of sales in Asia Pacific, for instance, among the key countries of the region). 5. The European case presents the particularity of being a set of countries, but also a common market, with a free movement of people, capital and goods and having endorsed a single currency (the Euro). In theory Europe, from the point of view of global players, could be considered as a ‘country’ and therefore the concept of key countries should not apply. However, cultural, structural and political differences have led global companies care- fully to assess each national context in making their global positioning and investment decisions. In the future, Europe will probably be like the United States, where foreign investors will compare the relative strategic importance of California versus Texas or Washington State.
6. Porter (1980).
7. One can find a more elaborate treatment of competitive advantage in Porter (1985, 1986). 8. The concept of the value chain was developed by Porter (1985, 1986).
9. Stopford, Wells, Doz and Prahalad (1987); Bartlett and Ghoshal (1989). 10. See Goold, Campbell and Alexander (1994).
References and further reading
Bartlett, Christopher A. and Sumantra Ghoshal, Managing Across Borders: The Transnational
Solution. Boston, MA: Harvard Business School Press, 1989.
Bartlett, Christopher A. and Sumantra Ghoshal, ‘Going Global: Lessons from Late Movers’,
66 The process of globalisation
Davidson, William H., Global Strategic Management. New York: John Wiley, 1982.
Doremus, Paul N., Louis W. Pauly, Simon Reich and William W. Keller, The Myth of the Global
Corporation. Princeton: Princeton University Press, 1999.
Doz, Yves L. and C.K. Prahalad, The Multinational Mission. New York: Free Press, 1987. Goold, Michael, Andrew Campbell and Marcus Alexander, Corporate-Level Strategy. New York:
John Wiley, 1994.
Hamel, Gary and C.K. Prahalad, ‘Do You Really Have a Global Strategy?’, Harvard Business
Review, July–August 1985, pp. 139–48.
Heenan, David and Howard Perlmutter, Multinational Organization Development. Boston, MA: Addison-Wesley, 1979.
Ohmae, Kenichi, Becoming a Triad Power. New York: McKinsey & Co., 1985.
Porter, Michael E., Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: Free Press, 1980.
Porter, Michael E., Competitive Advantage Creating and Sustaining Superior Performance. New York: Free Press, 1985.
Porter, Michael E., Competition in Global Industries. Boston, MA: Harvard Business School Press, 1986.
Prahalad, C.K. and Yves L. Doz, The Multinational Mission: Balancing Local Demands and Global
Vision, 1st edn. New York: Free Press, 1987.
Rennie, Michael W., ‘Global Competitiveness: Born Global’, McKinsey Quarterly, 4, 1993, pp. 45–52.
Stopford, John and Louis Wells, Strategy and Structure of Multinational Enterprises. New York Basic Books, 1972.
Verdin, Paul and Nick van Heck, From Local Champions to Global Masters: A Strategic Perspective
on Managing Internationalisation, London: Palgrave Macmillan, 2001.
Yip, George, Total Global Strategy: Managing for World Wide Competitive Advantage. Englewood Cliffs, NJ: Prentice-Hall, 1992.
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