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Horizontal
Diversification
Vertical
Diversification
Geographic
Diversification
Your responsespliz
What is globalization, and why is it important,
even to domestic firms?
What is Globalization?
Value of world exports in 2000 tripled
between 1980 and 2000.
Foreign investment grow more than
twenty-fold.
Firms without international goals may
find their domestic markets under threat
from foreign competition.
What is Globalization?
Standardization of products & services
Zaha na jaye bhelgari, woha jai marwari
Go to place where there is a market but
inaccessible area
Comes with a costWhy go there?
Globalization is not
about products or
services in multiple
countries but about
Your responsespliz
Finally..
International strategy is challenging and
interesting and offers degrees of
freedom..at intermediate levels
of cross-border integration.
Cant ignore barriers.
Cant ignore linkages.
CONFIGURATION AND
COORDINATION
Nokia
R&D Units
Finland
Germany
U.S.
Hungary
China
Malaysia
S. Korea
Australia
U.K.
Japan
Italy
Canada
Sweden
Denmark
Production
Finland
Germany
U.S.
Hungary
Sweden
China
Malaysia
U.K.
France
S. Korea
Australia
Brazil
U.K. Mexico
When Do You
Centralize an Activity?
Economies
versus
Diseconomies of Scale
When Do You
Centralize an Activity?
When there is a compelling advantage
to carrying out an activity in a particular
location
When the costs of customizing the
activity to different locations are not too
high
Home countrys institutions determine whether
centralizing at home is advantageous or not
New Products
Marketing
HR
IT
Localization
Information dissemination styles
and ways of assimilating
/communicating analysis differ.
Using experience in U.S./Europe to
introduce new products. Change
Japan rather than change to Japan.
Exceedingly difficult to penetrate
local relations
U.S. firm trying to create a local
face
Rely on local firms for local-local IT
and on China/India contractors for
other software
Challenges of globalization?
Standardized products and services
Co-ordination of a globally distributed
supply chain
Globalization =f(industry)
Talent
Results
Citibank
Line of business
HSBC
Worlds local bank
Geographic focus
Single B\L
Local B\L sheets
Large bets
Conservative
Hedged local positions Unhedged local
positions
Easy entry/exit
Never leave a
country
voluntarily
Centralized
Local talent
Most profits from U.S Even distribution of
profit
Faster and volatile
Slower and steadier
stock price
stock price
appreciation
appreciation
Factor Driven
economies
Efficiency
Driven
economies
Market size
Innovation &
sophistication factors
Business Sophistication
Innovation
Innovation
Driven
economies
Your responsespliz
Operational Nature
Communication, coordination, motivation,
differences in organizational principles and
management philosophies
Heterogeneity?
What is it?
Decisions-
Scale
Does scale result in CA?
Decisions
Volatility
What is it?