Strategic Analysis

and Globalization
Presented by Group 3

Globalization
Everywhere?
Standardized at the World level?
Totality of something?
It is about managing differences
Strategic objectives- efficiency, risk &
learning.
Strategic tools- exploiting differences,
economies of scale and scope.
Strike the right balance between
economies of scale and responsiveness
to local conditions.

AAA Framework
Adaptationseeks to boost revenues and market
share by maximizing a firms local relevance.
Aggregationattempts to deliver economies of scale
by creating regional or sometimes global operations.
Arbitrageis the exploitation of differences between
national or regional markets.

 CAGE Framework

Cultural Distance
Administrative Distance
Geographic Distance
Economic Distance

It makes distance visible for managers.

It helps to pinpoint the differences across
countries relative to local competitors.
It can shed light on the relative position of
multinationals from different countries.
It can be used to compare markets from
the perspective of a particular company.

P.I.T.C.H

Where it
What it is?
What it
Companys
is?
does?
Performanc
Every nation constitute a specific context or environment
e
Challenges for Global Manager: To recognise such national
context specificity
What it would result:
Help global managers understand which elements of
organisation & strategy of their company are :
Local peculiar to national context
Strictly Local valuable only in the local national context

P
Local physical environment
Geography or Nature
??????????
Island or vast continental space?
Near the sea or inland?
In the North or in the South?
With minerals or with oil?
Cold or Warm?
Focus
Relative presence of natural resources
Importance of certain needs and preferences in its
population

India
Natural Resources
Huge oil reserves are located in the Mumbai
High, upper Assam, Cambay, the KrishnaGodavari and Cauvery basins.
India possesses about seventeen trillion cubic
feet ofnatural gasin Andhra Pradesh, Gujarat
and Orissa.
Uranium is mined in Andhra Pradesh.
India is the world's biggest producer of mica
blocks.
India is the third-largest coal producer in the
world and ranks fourth in the production
ofiron ore.
Geography
India lies largely on theIndian Plate, the
northern portion of theIndo-Australian Plate,
whosecontinental crustforms theIndian
subcontinent.India can be divided into
fivephysiographic regions. They are
The Northern Mountains
Indo Gangetic Plains

I
Institutional context
Set of local institutions
??????
Government or the political system
Government: Federal
Local laws
republic, Constitutional
Judicial system
republic, Parliamentary
system
Education & Training
Judicial System:
Financial markets

Independent Judiciary
Local Laws: Municipality,
Panchayati Raj

Source of Information
Political scientists, lawyers & Economists

T
Local technological environment
?????
What the locals do?
How they do?
The proficiency with which they do?
Focus
Local craftsmanship + Technological Knowledge
Designing + Making + Services

C
Cultural context
Local or National culture
?????
As members of a nation
-what we pay attention to?
-what things mean?
-what actions to take in various situations?
-how to react emotionally to what is going on?
National culture has direct effect on organisation &
management itself
Culture is mostly invisible & it can only be inferred
Sources of information:
Anthropologists

H
Historical context or
simply history
Except recent history
-neither can we
experience nor can see it
!!
-can only hear or read
about it
Has a significant impact
on C
Also shapes T & I

Ancient India
Vedic Period
Mauryan Period
Aryabhatta
Ramayana, Mahabharata
Medieval India
Delhi Sultanate
Guru Nanak
Mughal India
Architecture
Modern India
Company Rule
Zamindari System
Mangal Pandey, 1857
British Indian Empire
Hindu Reforms
Independence Struggle
Mahatma Gandhi

Metaphors
National languages are
different everywhere so
much so that we find
ourselves lost in translation
Dysfunctional in
international communication
Highly local & context
specific; Result: Confused
foreigner !!
Examples:
The world is flat

Different Nations and Different

Geographies

Physical context matters

Physical context of each country differs
And therefore, the demand and consumption
Hence, it in turn impacts a company performance
This calls for different business systems aligned
with different national contexts

Different Nations and Different

Geographies
For example, coffee is a common beverage in all
countries
It accounts for large differences in consumption in
different countries
Climate may be attributed as a major cause
However, cultural and historical contexts impact
tastes and preferences
Different preferences by virtue of different physical,
cultural and historical contexts, lead to different
products
This gives rise to different technologies and
businesses

Different Nations and Different

Geographies
Japan has small houses and cars while American
houses and cars are much larger
Similarly, home sizes differ in various cities in
India according to space and population density
Physical context also varies within a nation
India is fifth largest producer of wind energy due
to vast extent of land

Different Nations and Different

Geographies
Garment business differs in regions with different
weather
Many regions have got vast fertile lands that
support the agro industry
Eastern Himalayas present ideal conditions for tea
plantation
India is third largest producer of hydropower and
has over 4710 dams

Different Nations, Different

Business Systems

REGULATION
S

DIFFEREN
T NATIONS

DIFFEREN
T
INSTITUTI
ONS

DIFFEREN
T
BUSINESS
SYSTEMS

CAPI
TALI
SM

COM
PETI
TIO
N

COMPAN
Y
OWNERS
HIP

MARKE
TS

ECO
NO
MIE
S

Different Nations, Different Business

Systems contd.
DEMOCRATI
C

Latin
America,
South
Korea,
China,
India

Western &
Northern
Europe,
Japan
CRONY

CAPITALI
SM

STATE

China

United
States

SOCIAL
MARKET

MERCANTIL
ISM

Different Nations, Different Business

Systems contd.
Sole
Proprietors
hip
Associatio
n

Trust

Corporatio
n

Busin
ess
Entity

Non Profit
Corporatio
n

LLP

Limited
Partnershi
p
LLC

Different Nations, Different Business

Systems contd.
Differences in how competition works in different countries
Canada
An institutionalized oligopoly among banks
Identified as the cause of stability in the recent global financial
debacle of 2008

Brazil
A company such as AmBev, created in 2000 by an authorized
merger that led to an impressive position of market dominance
Unfair and unacceptable by most other national standards.

United States
GE was a authorized by Washington to acquire Honeywell
Blocked by Brussels

Different Nations, Different Business

Systems contd.
IMD, the international business school in Lausanne, Switzerland, has issued a list of
the countries measuring how nations and enterprises manage the totality of their
competencies to achieve increased prosperity.

1. U.S.A.
2. Switzerland
3. Hong Kong
4. Sweden
5. Singapore
6. Norway
7. Canada
8. UAE
9. Germany
10. Qatar
21. China
40. India
Dependent on exports to the U.S. and Europe; so when theres a slowdown in Europe, that
affects exports

Different Nations, Different Business

Systems contd.
INSTITUTIONAL VOIDS
Many multinational corporations are struggling to develop
successful strategies in emerging markets
Absence of specialized intermediaries
Regulatory Systems
Contract-Enforcing Mechanisms
Infrastructure is often underdeveloped or absent
Few end-to-end logistics providers

Since the 1990s, American corporations have performed

better in their home environments than they have in
foreign countries, especially in emerging markets.
U.S. corporations investments in China doubled between
1992 and 2002, that amount was still less than 1% of all
their overseas assets.

Different Nations, Different

Technical performance
Different countries have different
technological environment resulting in
different technical expertise.
Eg- financial market knowledge
concentrated in New York and London, wine
brewing knowledge in France, design skills
in Italy, etc.
Germany specializes in heavy products
(mechanical elements, engines, agricultural
machines) while US leads in light products
(semiconductors, IT, biotech).

 Reasons for such difference:

National history & culture
Institutional contexts

Germany spends around 2.6% GDP on R&D.

Scientific research in the country is
supported by industry, by thenetwork of
German universitiesand by scientific stateinstitutions such as theMax Planck Society.
Germany is home to some of the world's
oldest universities
(Leipzig,Heidelberg,Freiburg,Tbingen).

 In US emphasis was on the intellectual,

scientific and cultural life, in which
reason was advocated as the primary
source for legitimacy and authority.
TheUnited States Constitutionitself
reflects the desire to encourage
scientific creativity.
Whereby creators of original art and
technology would get a government
granted monopoly.

 India has expertise in the IT sector.

Some of the worlds best developers
Proficiency in English language
Basic education system geared toward mathematics
and science at early levels
India offers a stable democracy and economic
growth
Trade Promotion and Business Advisory Councils
(EPC)

 Initially hostile environment for IT industry

Import tariffs were high like 135% on hardware

and 100% on software.

In 1984 the Government policy towards IT

sector changed.
The New Computer Policy (NCP-1984)
reduced import tariffs on hardware and
software to 60%.
The sector has increased its contribution
to India's GDP from 1.2% in 1998 to 7.5%
in 2012.

Culture
Impacts company strategy,
organization and management.
Management is a coordinated efforts of
different people.
Cultural factors- power distance,
uncertainty avoidance, individualism
etc.
Power distance
Countries having low PD, lower number of
hierarchical levels. Ex: IKEA has a flat
organizational structure.

 Individualism
the degree of interdependence a society
maintains among its members.

Uncertainty avoidance
the extent to which the members of a
culture feel threatened by ambiguous or
unknown situations and have created
beliefs and institutions that try to avoid
these.

Masculinity
how we measure success.

 Pragmatism
how every society has to maintain some
links with its own past while dealing with
the challenges of the present and future.

Indulgence
the extent to which people try to
controltheir desires and impulses.

Different Nations,
Different Customers
Differences across nations are visible in the
qualities of local demand. Local tastes and
preferences are shaped by local geography,
culture and history
The perceived and actual value of a product, good
or service in different countries is different
For example Japanese cars were not smaller
because of some grand vision but rather because
space is one of the scarcest resource in Japan.

Different Nations,
Different Customers
The local pitch effects customer, clients,
prescribers consumers and users in other relevant
ways. Two are worth noting: exigency and leaduse
Not all customers are equally demanding. It is not
cultural beliefs and values that shape but it is also
institutional practices and their effectiveness such
as local warranty regulations or consumer rights
activism
Such cultural and Institutional differences create
different expectations about the quality of goods
and level of services

Different Nations,
Different Customers
There is a detrimental difference between North
and South of the world in the level of customer
exigency, more so than technology gaps
Companies in South are often poorer in quality
and higher in relative price simply because local
customers do not demand too much or claiming
for better value is simply ineffective

Different Nations,
Different Customers
Customers across borders are not just different in
expectations and preferences on product features
and functionalities but also in their expectations
on product quality, delivery terms, pre- and after
sales service
Lead Users are the ones who tend to have today
the needs that the rest of the market has
tomorrow. They are the early adopters of a new
product for example Infosys adopted the
technology of 2014 I.e. Internet of Things much
earlier than other major players

Different Nations,
Different Customers
Italian men are lead(and demanding) users of
high-fashion. Until 60s British men are leading
the world of high fashion for men. London was the
symbol of British industry leadership in mens
clothes
Lead users of PC chips were American for long.
Companies such as IBM, HP, Compaq or dell were
the forefront of innovation in PCs and were
challenged by Intel with x86 chips

Buyers Persona

Different Nations,
Different Customers
History and Culture are good points to start the
predictions when the attributes of a Countrys
PITCH will produce demanding or advanced users
of particular product class
Japanese Women Were demanding users of
Cosmetics long ago
French Women- Advanced and knowledgeable
consumers of perfumes
Brazilian- Very demanding consumers when it
comes to entertainment ( TV soap opera)

Thank you