Six More Weeks of Winter

Globalization Are customers culturally/nationally diverse? Large percent of foreign revenue? Large percent of foreign assets? Are competitors global? Are owners, partners, suppliers global? How big is globalization? Who’s doing it? Why?Who’s doing it? Why? What are companies actually doing? Why?What are companies actually doing? Why? Who is successful? Why?Who is successful? Why?

Reasons to Go InternationalProactive ReasonsProactive Reasons Exploit factor-cost

differences across countries

Unique product Technological advantage Economies of scale Growing foreign markets Exclusive information Attack rivals on home turf

Reactive ReasonsReactive Reasons Competitive pressure Overcapacity Declining domestic

sales Saturated home market Under attack from

foreign rivals

Going Global: Effect on Bottom Line

ROI

% Foreign Sales/Total Sales

FDI in the U.S.“The New American Challenge”

Attractiveness test? Performance test? Diagnosis of barriers to competitiveness

– Scale– Entry mode– Competitive response

FDI Modes and Choices

WOS

Ow

ners

hip

Ow

ners

hip Majority

Minority

None

OtherMNC

NoneLocalFirm

Govt.Partner Partner

TypeType

Scale Level Scale Level [Activity Type][Activity Type]

Full Scale

DistributionSales

None

Factors/Issues of Globalization

EconomicEconomic

Political Cultural

Technology

Competitive

Legal

Challenge to Global Managers

Strategy &Intelligence

Structure & Structure & ConfigurationConfiguration

Learning,Cross-Pollination,

& Change

CulturalInterpreter

Vision,Purpose,& Goals

Competitive Forces First-mover advantage eroding via local

competition in foreign markets– Great Lakes’ Juicee and MingLang juice in China– Wal-Mart/Seiyu stores in Japan

Market share dominance in U.S. under continuous attack by foreign rivals located here– Toyota, Honda, Nissan, Mercedes, BMW– Nestles, Grand Metropolitan, Unilever

“Made in America…Who’s the Enemy?”