Prof. E. Jaffe 1

ON GLOBALIZATIONעל גלובליזציה

Corporations without roots.

תאגידים חסרי שורשים

Prof. E. Jaffe 2

GLOBALIZATION IS CHANGE גלובליזציה מסמלת שינוי

Forces that impel individuals,

groups, and institutions to engage in similar forms of

behavior. (Rosenau, Current History, 1997)

גורמים אשר דוחפים אנשים קבוצות .ומוסדות לצורות התנהגות זהות

Prof. E. Jaffe 3

FOUR TYPES OF CHANGEארבע סוגים של שינויים

Stretching of social, political & economic activities across political frontiers.

פרישה של פעולות חברתיות, פוליטיות ו - כלכליות מעבר גבולות.

Growing magnitude of interconnectedness of flows of trade, investment, etc.

הקף גובר של זרימות מתוקשרות של סחר, השקעות, וכו’.

Prof. E. Jaffe 4

Evolution of world-wide systems of transport and communication.

התפתחות של מערכות תחבורה ו- תקשורת בכלהעולם.

Increasing intensity and velocity of global interactions .

.גידול בעוצמה ובמהירות של פעולות הדדיות

Prof. E. Jaffe 5

TYPES OF GLOBALIZATIONסוגי גלובליזציה

ECONOMIC -Integration of economies, through trade and financial flows. Movement of labor and knowledge across international borders.

כלכלית - אינטגרציה של משקים באמצאותסחר ומימון. תנועות של כוח אדם ו-ידע מעבר גבולות.

Prof. E. Jaffe 6

POLITICAL - Participation in international governmental organizations (IGOs); integration with regional IG networks (e.g., EU, Organization of American States).

פוליטית - שיתוף עםIGOs אינטגרציה עם ; .IGמרקמי

Organization of American וה - EU כמו ה - States.

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CULTURAL - Flows of science, concepts of liberalism, socialism, capitalism, etc.

,תרבותית - זרמי מדע, מוסגים כגון ליבראליזםסוציאליזם, קפיטליזם, וכו’.

ENVIRONMENTAL - Global warming; ozone depletion; production and reception of cross-border pollutants (e.g. acid rain).

סביבתית

Prof. E. Jaffe 8

GROWTH OF TRADETRADE

גידול במסחר

CAPITAL FLOWS

זרימות הון

MIGRATION

הגירה (ניידות)

IT and the WEB

DIFFUSION OF TECHNOLOGY

נפיצות של טכנולוגיה

GLOBALIZATION

גלובליזציה

Prof. E. Jaffe 9

BENEFIT versus COSTתועלת לעומת מחיר

BENEFITS Economic Growth Reduction of Poverty Improved Health, Life

Expectancy Spread of Knowledge Flexibility of

Production

COSTS Inequality Worker Displacement Risks of Banking &

Currency Crises Domination of Trade &

Production by TNCs Degradation of the

Environment Loss of Authority

Prof. E. Jaffe 10

CONCEPTS OF GLOBALIZATION

GLOBAL INFRASTRUCTURE

תשתית גלובלית GLOBAL HARMONIZATION

הרמוניזציה גלובלית BORDERLESSNESS

בלי גבולות GLOBAL DIFFUSION

נפיצות גלובלית DISPERSION OF CORE COMPETENCIES

פיזור של יכולות תווך

Prof. E. Jaffe 11

ENGINES OF GLOBALIZATION

TRANSNATIONAL CORPORATIONS TRANSNATIONAL MEDIA

ORGANIZATIONS INTERGOVERNMENTAL ORGANIZATIONS NON-GOVERNMENTAL ORGANIZATIONS

Prof. E. Jaffe 12

INTERNATIONAL ACCOUNTING STANDARDSכללים חשבונאיים

International Accounting Standards Comm. ועדת הסטנדרטים החשבונאיים הבינלאומית קובץ כללים חשבונאיים בינלאומיים אחיד

Financial Accounting Standards Board (FASB)

מועצת הסטנדרטים החשבונאיים הפיננסיים

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EXAMPLE

Smith Kline Beecham (1993) $1.5 Billion Profits according to British Accounting Standards

$1.2 Billion Profits according to United States Accounting Standards

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HARMONY OF VISION?הרמוניה של חזון?

The Leaders of the world’s great business enterprises continue to differ in their most fundamental strategic visions. (Keller & Pauly, Current History, 1997)

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MULTINATIONAL STRATEGIES

AMERICAN - SHORT-TERM PAYOFFS GERMAN - FOCUS ON A NARROW

BAND OF INDUSTRIES IN WHICH THE BENEFITS OF NEW TECHNOLOGIES TEND TO BE DIFFUSED WIDELY.

JAPANESE - LONG-STANDING CORPORATE NETWORKS.

Prof. E. Jaffe 16

GLOBALIZATION - THEN AND NOW“The World is a City” Karl Meyer Rothschild (1875)

The Workforce is less mobile today then in the 19th century.

Example: There was no need for passports and most people moved freely from one country to another. 60 million Europeans migrated to North and South America, Australia. In 1900, 14% of the American population were immigrants, compared to 8% today.

In the 1860s and 1870s, many goods were traded freely.

Example: 95% of German imports were customs free. According to the “Capital Mobility Index” of the IMF, the volume of capital movements in relation to GNP is less today than in the 1880s.

Prof. E. Jaffe 17

YES, BUT...

19th Century trade was primarily in commodities, today it is primarily in goods and services.

19th Century capital movements were concentrated in the hands of small groups of wealthy people for long term investment.

Capital movements today are faster, but shorter term.

Prof. E. Jaffe 18

WHAT IS A GLOBAL INDUSTRY??מה היא תעשייה גלובלית

“An industry in which there is some competitive advantage to integrated activities on a worldwide

basis.”

כאשר פעילות משולבת

במישור הבינלאומי תתרום

ליתרון תחרותי

Michael Porter

Prof. E. Jaffe 19

THE MULTINATIONAL CORPORATION

A company with significant operations and market interests outside its home country.

Affiliated firms are linked by ties of common ownership.

The MNC draws on a common pool of resources.

Its affiliates are linked by a common strategic vision.

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GLOBAL INDUSTRY

One MNC’s entire worldwide system of product and market is positioned against a competing MNC(s).

Strategy is centralized. Response to local market needs where and

when necessary.

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TWO INDUSTRIES: TWO STRATEGIES

MULTIDOMESTIC INDUSTRY The MNC pursues separate strategies in each

of its foreign markets. Each overseas subsidiary is strategically

independent. MNC headquarters coordinates financial

controls and marketing worldwide. Each subsidiary is a profit center.

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SOME INDUSTRY EXAMPLES:

GLOBAL INDUSTRIES Caterpillar & Komatsu

(heavy construction equipment)

Timex, Seiko & Citizen (watches)

GE, Siemens & Mitsubishi (heavy electrical equipment)

MULTIDOMESTIC INDUSTRIES

P & G (household products)

Honeywell (controls) Alcoa (aluminum) General Foods

(branded foods)

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GLOBAL STRATEGY LEVERS

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GGlloobbaall SSttrraatteeggyy

MMaarrkkeett PPaarrttiicciippaattiioonn NNoo PPaarrttiiccuullaarr PPaatttteerrnn SSiiggnniiffiiccaanntt SShhaarree iinn MMaajjoorrMMaarrkkeettss

PPrroodduucctt OOffffeerriinngg FFuullllyy CCuussttoommiizzeedd FFuullllyy SSttaannddaarrddiizzeedd

LLooccaattiioonn ooff VVaalluuee--AAddddeeddAAccttiivviittiieess

AAllll AAccttiivviittiieess iinn EEaacchhCCoouunnttrryy

CCoonncceennttrraatteedd

MMaarrkkeettiinngg AApppprrooaacchh LLooccaall UUnniiffoorrmm

CCoommppeettiittiivvee MMoovveess SSttaanndd--aalloonnee bbyyCCoouunnttrryy

IInntteeggrraatteedd

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ORGANIZATION FEATURES FOR TYPES OF GEOGRAPHIC BUSINESSES

GEOGRAPHICSCOPE

ORGANIZATIONSTRUCTURE

MANAGEMENTPROCESSES

PEOPLE CULTURE

GLOBAL CENTRALIZED GLOBALAUTHORITY.NODOMESTIC-INTERNATIONALSPLIT.STRONG BUSINESSDIMENSION RELATIVE TOGEOGRAPHY AND FUNCTION.

EXTENSIVECOORDINATIONPROCESSES.GLOBAL SHARING OFTECHNOLOGY.GLOBAL STRATEGYINFORMATIONSYSTEM.GLOBAL STRATEGICPLANNING ANDCONTROL.

MULTICOUNTRYCAREERS.FOREIGNNATIONALS INHOME AND THIRDCOUNTRIES.EXTENSIVETRAVEL.

GLOBAL IDENTITY.INTERDEPENDENCE.

MULTILOCAL DISPERSED NATIONALAUTHORITY.NODOMESTIC-INTERNATIONALSPLIT.STRONG GEOGRAPHICDIMENSION RELATIVE TOBUSINESS AND FUNCTION.

TRANSFER OFTECHNOLOGY FROMHEADQUARTERS OUT.NATIONALINFORMATIONSYSTEMS.NATIONAL STRATEGICPLANNING ANDCONTROL.

PROFESSIONALEXPATRIATES.NATIONALS RUNLOCALBUSINESSES.LIMITED TRAVEL.

MULTINATIONALIDENTITY.AUTONOMY.

EXPORT-BASED

CENTRALIZED HOMECOUNTRY CONTROL.SEPARATE DOMESTIC ANDINTERNATIONAL DIVISIONS.MAY HAVE STRONGFUNCTIONAL DIMENSIONS.

DIRECTION NOTCOORDINATION.ONE-WAYINFORMATION FLOWTO HEADQUARTERS.NO TECHNOLOGYTRANSFER.

HOME COUNTRYNATIONALS RUNLOCALMARKETINGSUBSIDIARIES.

HOME COUNTRYCULTURE.

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INTEGRATION - RESPONSIVENESS GRID

High

Integrated Product Strategy,Worldwide Business Management

Product Emphasis

Multifocal Strategy,and Organization

Area Emphasis

Locally ResponsiveStrategy, AutonomousNational Subsidiaries

LowLow High

Need forIntegration

Need for Responsiveness

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Sales

increasing sales

increased market reachbroadens volume base

falling costs and prices,as a result of globalizat-

ion, improve sales

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Margins

decreasingdecreasingcostscosts

++increasingincreasing

salessaleshigherhigher

marginsmargins

expansion into “virgin markets” allows firmsexpansion into “virgin markets” allows firmsto set higher margins to take advantage ofto set higher margins to take advantage ofthe imbalance in supply and demandthe imbalance in supply and demand

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How Globalization Affects Costs, Sales and Margins

competitive pressuredrives firms to cut costs

decreasingcosts

Costs

exposure to best practices improvesproductivity

productivity gains andthe capture of R&D

spillover result fromoperating in “lead country”

scale economies via global participationspread R&D costs over large volume base

synergetic gains result from theconsolidation of acquired businessesoverseas in a globalization initiative

catering for demandingclients in differentjurisdictions

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ANALYSIS FOR STRATEGY DEVELOPMENT

Global BusinessesElectronic Components, Medical

Multifocal BusinessesTV, Ophthalmic Products

Locally ResponsiveBusinesssesCorningware, labware

High

Low

Low HighLocal

Global