Given the commitment of the leaders in China and India to a widening and deepening of economic reforms, these two countries are likely to remain the most important economic stories. In any case, China and India will be just two of the many important economic stories. Major countries such as Russia, Brazil, and Mexico have embraced economic reforms and begun the process of global integration only within the last twenty years.
As these economies continue to gather momentum, they will increasingly become major contributors to the creation of new wealth on this planet. Thus it is a reasonable bet that in twenty years the economic center of gravity would not be merely shifting toward the developing countries, it may lie squarely in the middle of what we currently regard as the developing countries. As a consequence, intra-industry competition will become significantly more intense. The Financial Times year Gupta. Unlike the emergence of global competitors from Japan and South Korea during — think Toyota, Sony, and Samsung , the more recent emergence of new global champions from China and India is already showing signs of taking place at a much faster and more fearsome pace.
Virtually all Japanese and Korean giants grew organically. Capital markets, both public and private, are significantly more global today than they were two decades ago. The large size of Chinese and Indian economies also makes it more feasible for many domestic companies from these two countries to accumulate global scale before venturing abroad. It is important too that many of them are still being run by aggressive first generation entrepreneurs who are comfortable moving at great speed.
Established MNCs from the developed countries overlook the threat from these new dragons and tigers at great peril. To the list of budding powerhouses from China and India, one must also add rapidly growing players from other big emerging economies such as Russia look at Severstal in steel , Brazil look at Gupta. In short, if you think that, having witnessed the emergence of global players from Japan and South Korea over the last twenty years, you understand what intense competition really means, watch out.
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Compared to the world of , this may have been just a warm-up. Third, the ongoing technology revolution will make real-time coordination of globally dispersed operations routine. International telecommunications prices have already fallen by over 75 percent over the last ten years. According to many predictions, cost and price declines over the next ten years are likely to be even steeper. How should you build the necessary global presence? Rapid economic growth around the world, particularly in the emerging economies, will continue to create huge demand for virtually everything—be it shoes, cement, fast food, refrigerators, computer software, insurance, or management consulting services.
Explicitly or implicitly, your decisions and actions will help decide the important question of who will supply the products and services to meet this demand—your company, your current competitors, or new entrants?
Given the largely borderless nature of the Internet, many start-ups in the high-technology sector are now realizing that Gupta. For such companies, the evolutionary trajectory may well need to be something along the following lines: start-up in year one, entry into another major region in year two, and full-scale globalization by year three or four.
How should you reduce the existing suboptimalities? Countries differ in cost structures, in ways of looking at the world, and in the pool of talent and ideas being generated on an ongoing basis. Capturing the comparative advantages of countries effectively and efficiently can create significant competitive advantage for your company. Witness the case of Nike, which must constantly scout for the lowestcost manufacturing locations, and Microsoft, which must constantly scout for the best software talent wherever it may reside.
Similarly, you have no choice but to look at the world not merely as a market to exploit but also as a potential gold mine to reduce your cost structure, recruit needed talent, and tap for new ideas. How should you eliminate the existing shortcomings? As we suggested earlier, global presence does not automatically translate into global competitive advantage. In fact, without systematic analysis, purposeful thinking, and careful orchestration, widespread global presence can easily degenerate into managerial distraction, resource duplication, and inefficiency. Thus you must constantly examine whether you are indeed doing the hard work needed to transform global presence into global competitive advantage.
As the world around you changes and new opportunities open up in various corners of the world, is your company generally a leader or a laggard in identifying and exploiting these opportunities?
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- THE QUEST FOR GLOBAL DOMINANCE: Transforming Global Presence into Global Competitive Advantage.
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Managers, like all people, are the products of their origins and past experiences. It matters where you were born, what cultural environment you grew up in, where you live, whom you interact with, what media you are exposed to, and what you see and hear with your eyes and ears as you go about your daily business.
The quest for global dominance : transforming global presence into global competitive advantage
Being human, each one of us individually is and will remain at least somewhat parochial. However, collectively, in the form of an enterprise such as Cisco, IBM, Sony, or ABB, we do have the possibility of creating a truly global mindset that treats the entire world as its home, that is sensitive to important events in any corner of the world, and that has the wisdom to differentiate between value-creating, value-destroying, and value-neutral opportunities. You must constantly ask whether your company has that type of a global mindset today and take developmental action, as needed. Conclusion We conclude this chapter by focusing on the implications of globalization for individual managers.
We predict that knowledge, skills, and experience regarding how to navigate the company in a global environment will become increasingly a core requirement for promotion to leadership positions. We also believe that the need for global knowledge and skills will rapidly become crucial not just at senior levels in the company, but at all levels and in all units. A systems analyst in Stockholm may interact on a daily basis with software programmers in India. A plant manager in Detroit may have crucial dependencies on auto parts suppliers in China, Mexico, Brazil, and Germany.
Both leaders bring to their jobs in-depth capabilities and experience in both general management as well as globalization.http://yuzu-washoku.com/components/2020-05-12/3180.php
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It is a certainty that such a picture will increasingly become the norm rather than the exception for the corporate leaders of tomorrow. To sum up, notwithstanding the huge changes that we have witnessed in the last two decades, the extent and pace of change in the next two decades will almost certainly be much greater.
In our view, the inevitability of these changes implies that companies and managers today face a relatively simple, but important, choice: get on board or get left behind. But to go global, you need to be early enough. Generally in new countries you need to be the first in for the first win. When you arrive as number three or four, it is too late. The framework and set of conceptual ideas presented in this chapter can guide firms in approaching the strategic challenge of casting their business lines overseas and establishing global presence.
How should the firm choose which of its multiple product lines to use as the initial launch vehicle for the global market? What factors make some markets more strategic than others? What should companies consider in determining the right mode of entry? How should the enterprise transplant the corporate DNA as it enters new markets?
What approaches should the company use to win the local battle? And how rapidly should a company expand globally? Addressing these six issues—choice of products, choice of strategic markets, mode of entry, transplanting the corporate DNA, winning the local battle, and speed of global expansion—helps firms go about building global presence in a systematic manner. Consider the case of Marriott Corporation, which was essentially a domestic company until the early s. Within the lodging sector, four of the major product lines were full-service hotels and resorts Marriott brand , midprice hotels Courtyard brand , budget hotels Fairfield Inn brand , and extended stay hotels Residence Inn brand.
As the company embarked on its globalization venture, it had to confront the question of which one or more of these product lines should serve as the starting point for its globalization efforts. How should Marriott address this question? Global expansion forces companies to develop at least three types of capabilities: knowledge about foreign markets, skills at managing people in foreign locations, and skills at managing foreign subsidiaries. Without these capabilities, firms are likely to remain strangers in a strange land, with global expansion posing a high risk.
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Globalizing the entire portfolio of products at once compounds these risks dramatically. Often it is wiser to choose only one or a small number of product lines as the initial launch vehicle for globalization. The choice of launch vehicle should adhere to the twin goals of maximizing the returns while minimizing the risks associated with early globalization moves.
For the corporation, these initial moves represent experiments with high learning potential and it is important that these experiments succeed: success builds psychological confidence, credibility within the corporation, and last but not least, cash flow to fuel further rapid globalization. These payoffs tend to be higher when the globalization imperatives see box are stronger. In the fullservice lodging business, a worldwide presence can create significant value by using a centralized reservation system, developing and diffusing globally consistent service concepts, and leveraging a wellknown brand name on whose high quality and service customers can rely.
In contrast, none of these factors is pivotal in the retirement community business—thereby rendering the imperatives for globalization much less urgent. Figure 2. The growth imperative.
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