International Business<br />To add<br />
Another View<br />
Explaining Internationalization<br />Early contribution of ‘Uppsala model’: Johanson & Wiedersheim-Paul 1975; Johanson & V...
Distinctiveness of Uppsala model<br /> ‘We do not believe that [internationalization] is the result of a strategy for opti...
Empirical basis for model: e.g.<br />PHARMACIA: <br />9 overseas affiliates at the time. <br />In the case of 8, the firm ...
Incremental pattern (1): ‘Establishment chain’<br />No regular export<br />Direct exporting, via independent agent/distrib...
Psychic distance <br />
Why these patterns? A process explanation<br />‘the firm develops knowledge when it operates in the market, <br />this kno...
The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br />...
The Uppsala model<br /><ul><li>Lack of market/operations knowledge =main obstacle to internationalization
Can only be acquired through first-hand experience
Includes i.e. getting to know customers, suppliers, government agencies
Includes firm’s internationalization knowledge: firm’s own resources and ability to develop international operations
Reduces uncertainty associated with foreign market commitment
Provides framework for perceiving and formulating business opportunities</li></ul>Johanson & Vahlne 2003, p. 10<br />STATE...
The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br />  Market <br />Knowledge<br />Commitment<br />   Decisions<b...
The Uppsala model<br /><ul><li>Largely consist of ‘everyday contact with customers, intermediaries, suppliers, authorities...
‘current activities evidently have a continuous impact on internationalisation, occasionally being interrupted by disconti...
By interacting with other firms in a market, the firm learns about their needs and situation
Interaction builds trust, which is an important element in commitment building</li></ul>(Johanson and Vahlne 2003:11)<br /...
The Uppsala model<br /><ul><li>Market commitment: i.e. not just investment, but also marketing and sales  e.g., after-sal...
Amount of commitment: i.e. level of investment
Degree of commitment: extent to which commitment cannot easily be withdrawn, and is defended by the firm
Degree of commitment dependent on firm’s resources and capabilities at home</li></ul>Johanson and Vahlne 2003, p. 12<br />...
Hall<br />
Dimensions of National Culture<br />
Multiple of Cultureor ‘interfaces’ (Saner)<br />
The Contexts ofInternational Negotiations<br />
Influence of Culture on Negotiation: Managerial Perspectives<br />Definitions of negotiation<br />Negotiation opportunity<...
Cultural Categories<br />
National Communication Patterns<br />Finland <br />                    USA<br />Germany<br />
USA<br />Germany<br />Japanese<br />Arabic<br />
Japanese Business <br />
II. Samurai’s Rule<br />III. Modern-ization<br />I. Emperor’s Rule<br />IV. Postwar<br />1603<br />X<br />WAR<br />1867<br...
Japan’s Multi-layered Identity<br />P.4<br />Pre-historic Japan<br />先史時代の日本<br />Rice cultivation<br />Buddhism, China<br...
Wartime controlled economy<br />Energy saving & lean management<br />Recovery period<br />Postwar recovery period<br />Bub...
Japanese keiretsu<br /><ul><li>Types
Horizontal keiretsu
Vertical keiretsu
Characteristics
Extensive share cross-holdings
Personnel swaps
Strategic coordination
Commercial transactions</li></li></ul><li>Yataro Iwasaki(1835-85)Mitsubishi Zaibatzu<br />PP.45-46<br />三菱<br />Seisho(政商)...
Mitsubishi Heavy Industries<br />Mitsubishi<br />Corporation<br />Bank of Tokyo-Mitsubishi<br /> Automotive<br /> Mitsubis...
	Major FDI Firms in Meiji Period<br />FDI was relatively small (cf. China, India). However, it played leading roles in tob...
Post War Keiretsu<br />Mitsubishi<br />Bank of Tokyo<br />Mitsubishi/ Bank of Mits<br />Nikon<br />Kirin<br />Sutitomo<br ...
Production Methods & Kaizen<br />
TaiichiOhno<br />
Production Methods & Kaizen<br />
Production Methods<br />
Efficiency<br />Any production method relies on efficiency – this can be viewed in different ways:<br />Productivity – a m...
Efficiency<br />Production decisions involve deciding methods for new production runs and analysis of existing methods.<br...
Production Methods<br />As technology and analysis of production methodology has improved, methods have changed dramatical...
Production Methods<br />The choice of production method and the factor inputs depends on such things as:<br /><ul><li> the...
 factor costs
 the scale of     production</li></ul>Textile factory<br />Copyright: Stock.Xchng<br />
Production Decisions<br />Market size and <br />Segment<br />One-Off Order?<br />Which method?<br />Complexity of design<b...
Production Methods<br />Job Production – One-off production -  each item might have particular specifications<br />Flow Pr...
Production Methods<br />Which is more efficient?<br />Operation 1<br />2<br />3<br />4<br />5<br />6<br />7<br />Finished ...
Production Methods<br />Or this?<br />1a<br />1b<br />1c<br />1d<br />4<br />Operation 1<br />2a<br />2b<br />2c<br />Fini...
Production Methods<br />Or this?<br />Cell 1<br />Cell 2<br />Cell 3<br />Finished Product<br />Finished Product<br />Fini...
Production Methods<br />Answer <br />It could be any of them!<br />The design of the production space can influence:<br />...
Kaizen (Continuous Improvement)<br />
Kanban<br />
Kaizen (Continuous Improvement)<br />Japanese concept – not made redundant by the decline of the Japanese economy which ma...
Kaizen<br /><ul><li>Efficient stock control methods help reduce costs and improve cash-flow
Flexible working practices and empowerment – help increase efficiency, reduce costs and improve motivation</li></ul>Fundam...
Punctuality in all aspects – delivery, supply, manufacture, etc.</li></li></ul><li>
“4 P” Model of the Toyota Way<br />Problem<br />Solving<br />(Continuous <br />Improvement and Learning)<br /><ul><li>Cont...
Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
Grow leaders who live the philosophy
Respect, develop and challenge your people and teams
Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br />Addi...
Level out the workload (Heijunka)
Stop when there is a quality problem (Jidoka)
Use pull systems to avoid overproduction
Standardize tasks for continuous improvement
Use visual control so no problems are hidden
Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br />Philosophy<br />(Long-term Th...
Contribute to the stability and well being of team members and partners (internal stakeholders)
Contribute to the overall growth of Toyota</li></li></ul><li>Principle One<br />“The most important factors for success ar...
“4 P” Model of the Toyota Way<br />Problem<br />Solving<br />(Continuous <br />Improvement and Learning)<br /><ul><li>Cont...
Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)</li></ul>Eliminate W...
Respect, develop and challenge your people and teams
Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br /><ul>...
Level out the workload (Heijunka)
Stop when there is a quality problem (Jidoka)
Use pull systems to avoid overproduction
Standardize tasks for continuous improvement
Use visual control so no problems are hidden
Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br /><ul><li>Base management decis...
Waste<br />PRODUCT<br />BUILT & SHIPPED<br />CUSTOMER<br />ORDER<br />Time<br />PRODUCT<br />BUILT & SHIPPED<br />CUSTOMER...
Product Lead Time<br /><ul><li>Value Added Time is only a very small percentage of the Lead time.
Traditional Cost Savings focused on only Value Added Items.
 LEAN FOCUSES ON NON-VALUE ADDING ITEMS.</li></li></ul><li>Before Lean:  Organization By Machine Type With Convoluted Flow...
Empties +<br />production kanban<br />Empties + withdrawal<br />kanban<br />A<br />B<br />C<br />D<br />E<br />F<br />G<br...
Why Focus on Flow?<br />“If some problem occurs in one-piece-flow manufacturing then the whole production line stops. In t...
Lean Tools to Support Flow<br />5S-Visual Workplace <br />Total Productive Maintenance<br />Quick Changeover<br />Standard...
Describe this area...<br />
Describe this area...<br />
What is TPM?<br />Total Productive Maintenance (TPM) is<br /> Productive Maintenance with EVERYONE’s participation<br />Ma...
Why Quick Change Over? <br />Difference in average inventory level with more changeovers<br />Change Over<br />Average inv...
Standardized<br />Work Chart<br />Detail of each <br />Process Step<br />Work Element Sheet<br />Detail of the Elements<br...
	Standardized tasks are the foundation for continuous improvement and employee empowerment<br />	“Today’s standardization…...
“4 P” Model of the Toyota Way<br />The heart & soul of<br />The Toyota Way<br />Problem<br />Solving<br />(Continuous <br ...
Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
Grow leaders who live the philosophy
Respect, develop and challenge your people and teams
Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br /><ul>...
Level out the workload (Heijunka)
Stop when there is a quality problem (Jidoka)
Use pull systems to avoid overproduction
Standardize tasks for continuous improvement
Use visual control so no problems are hidden
Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br /><ul><li>Base management decis...
People and Partners<br />Respect, Challenge, and Grow Them:<br />9. Grow leaders who thoroughly understand the work, live ...
One-PieceFlow Demands Team Work!<br />x<br />x<br />x<br />x<br />x<br />Traditional Western Team<br />x<br />x<br />x<br ...
Principle Five: Stop & Fix Problems<br />    Mr. Ohno used to say that no problem discovered when stopping the line should...
1<br />2<br />3<br />4<br />5<br />6<br />7<br />9<br />1<br />3<br />8<br />1<br />0<br />1<br />1<br />1<br />2<br />1<b...
Kaizen<br />Typical Toyota Organization to support Continuous Improvement<br />Team Size<br />Team Member<br />{ 5 - 8 }<b...
Bumper Trimming Job Breakdown Sheet<br />
Auditing Standardized Work <br />
Roles and Responsibilities<br />
Toyota Way Principles in 4P Model<br />The dynamic of<br />The Toyota Way<br />Problem<br />Solving<br />(Continuous <br /...
Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
Grow leaders who live the philosophy
Respect, develop and challenge your people and teams
Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br /><ul>...
Level out the workload (Heijunka)
Stop when there is a quality problem (Jidoka)
Use pull systems to avoid overproduction
Standardize tasks for continuous improvement
Use visual control so no problems are hidden
Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br />Philosophy<br />(Long-term Th...
Improvement Approaches of Typical Companies<br />
Toyota Leverages Opportunities at all Levels<br />
Principle Twelve<br />Genchi Genbutsu<br />“Observe the production floor without preconceptions and with a blank mind. Rep...
“No Problem” is problem<br />Problems are opportunities to learn<br />Hiding problems undermines the system<br />
Learning from the Toyota Way<br />
Characteristics of Effective Lean Transformation<br />Top Down Directive that this is the new way.<br />Bottom-up involvem...
Why is this hard to do?<br />Traditional organizations in fire fighting mode <br />No clear vision of the future state<br ...
REVIEW<br />
RtB<br />
Offshoring<br />
The Steroids<br />
Cool Hunter<br />
Next<br />
Forces<br />Cluster<br />Competencies<br />
Forces<br />
Genzyme <br />Founded in 1981 <br />Scientists studying genetically inherited enzyme diseases<br />Global Market<br />Orph...
Genzyme’s Focus on “Orphan Drugs”<br />
Genzyme’s Focus on “Orphan Drugs”<br />
In 1983, the FDA established the “Orphan Drug Act,” giving seven years market exclusivity to developers of drugs for rare ...
Genzyme’s Focus on “Orphan Drugs”<br />6-103<br />
Foces<br />
Assessing the Firm’s Current Position<br />Porter’s Five-Force Model <br />Whether a particular industry will be profitabl...
Assessing the Firm’s Current Position<br />Degree of existing rivalry. Determined by number of firms, relative size, degre...
Genzyme<br />
Mitigating Circumstances<br />
Clusters<br />
Salmon<br />
Salmon in Chile<br />
Salmon Cluster<br />
Salmon Cluster<br /><ul><li>Fertilization & incubation
Freshwater breeding - smelt fattening
Infrastructure of cages
Tanks & recirculation systems
Transport services
Vaccines, antibiotics and pharmaceuticals
Feed production &supply</li></li></ul><li>Salmon Clusters<br /><ul><li>Fertilization and incubation of ova
Freshwater breeding - smolt fattening
Infrastructure of cages and related services (maintenance of nets)
Tanks and recirculation systems
Transport services:
Research and production of vaccines, antibiotics and other pharmaceutical products:
Feed production and supply</li></li></ul><li>Theory of Industry Clusters<br />
What are Industry Clusters? (Porter)<br />Geographic concentrations of competing, complementary, or interdependent firms<b...
What are Industry Clusters? (Porter)<br />Porter Definition<br />Geographic concentrations<br />Common needs<br />Dynamic,...
Competencies<br />
Competency<br /> “A bundle of skills and technologies (rather than a single discrete skill or technology) that enables a c...
It provides consumer benefits <br />It is not easy for competitors to imitate <br />It can be leveraged widely to many pro...
Dunning–Kruger Effect<br />People reach erroneous conclusions and make unfortunate choices but their incompetence robs the...
Core Competencies at FedEx<br />FedEx<br />Logistics<br />management<br />Metacompetency<br />Package<br />tracking<br />B...
Levels of competition for competence<br />Levels<br />Canon<br />Develop precision mechanics,<br />fine optics, microelect...
Swatch<br />
Swatch Activity<br />Summarize<br />Look at the three theories<br />Brainstorm and try to make connections where these the...
Theories<br />CwC<br />RtB<br />International Product Life Cycle Model<br />11/9: the fall of the Berlin Wall opening Wind...
Case Study<br />
Psychographic Segmentation<br />Divides a population into groups that have similar psychological characteristics, values, ...
Western Psychographic Segmentation<br />
Swatch: Psychographic Segmentation<br />6-10: Consider it "cool", because big kids have it (42% awareness!) <br />11 –15: ...
Japan Psychographic Segmentation<br />Integrators<br />Innovators/Adopters<br />Display, daring, exciting<br />Rykoshiki<b...
Swatch<br />Positioning /  Repositoning<br />
Discussion<br />How do companies we have seen use psychographic segmentation in mix?<br />Think: Swatch, Unilever, NIN<br />
Internationalization<br />
Strategies for Operations Abroad<br />International<br />Control remains predominately with HQ in home county<br />Low pre...
Strategies for Operations Abroad<br />Global <br />Tendency to centralize main operational functions<br />Can mobilize wor...
Advantages and disadvantages of the four strategies<br />
Discussion<br />How do Swatch and Unilever employ Global Strategies?<br />
Global Strategy<br />To go global or not?<br />Compelling Reasons<br />Diversity of earnings<br />Exposure to new and emer...
Discussion<br />Why do Unilever and Swatch enter new markets? <br />How do Unilever and Unilever enter the markets?  <br /...
Global Company (2SMCG)<br />1. Standard Products and Marketing Mix<br />Core product and minimum marketing adaptations <br...
Global Company (2SMCG)<br />2. Sourcing all Assets on an Optimal Basis<br />Ability to source all assets in value chain in...
Global Company (2SMCG)<br />3. Market Access in Line with Break-Even Volume<br />Size not as important as generation of sa...
Global Company (2SMCG)<br />4. Contesting Assets<br />Ability to neutralize the assets and competencies of competitors<br />
Global Company (2SMCG)<br />5. Global Orientation of Functions<br />R&D, procurement, production, logistics, marketing, hu...
Discussion<br />	To what degree are Unilever and Swatch  global companies? <br />
Discussion<br />
Entrepreneurship<br />
Entrepreneurs solve big problems<br />
Japan<br />
Most difficult problems do not have obvious solutions<br />
<ul><li>Vision
Determination
Resourcefulness
Creativity
Willingness to change direction</li></ul>Entrepreneurs<br />Necessary Traits<br />
Entrepreneurship creates positive change<br />Entrepreneurial Efforts<br />Employees<br />Consumers<br />Shareholders<br /...
 Greater income
 New products, services
 Increased wealth</li></ul>Government<br />General Economy<br /><ul><li> Additional tax revenue
 Reduction in social benefit need
 Secondary and tertiary creation of opportunities</li></li></ul><li>Three Forms of Entrepreneurship <br />                ...
 Cattle rearing
 Tea Stall
 The area of microfinance
 Supported by small loans between USD $50 - $200
 Debt structure; short payback period
 Proven area for finance</li></ul>Small to medium businesses with scope and employment<br /><ul><li> 5-100 employees
 Relies on internal business sense to succeed
 Currently with limited financial support
 Need USD $20K to $250K
 Generally rely on personal funds, family, friends, and money lenders</li></ul>Large businesses with large scope and emplo...
 Exit markets well understood
 Significant conventional venture capital support
 Need USD millions in equity
Primarily service export or urban focused
 Proven area for finance</li></li></ul><li>
Entrepreneurial India<br />
Look at Four<br />
Entrepreneurial India- “Top Incubation Center”<br />1.	Centre for Innovation, Incubation& <br />	Entrepreneurship (CIIE) -...
Since inception CIIE has 15-odd innovations grow out of the incubation centre in varied technologies</li></ul>2.	Society f...
It currently has 16 companies under its incubation programme</li></li></ul><li>Entrepreneurial India- “Top Incubation Cent...
Organises national level competitions, ‘Breakthrough’ (general business plan competition) and ‘Genesis’ (social entreprene...
The investigator is given a seed capital for Rs 20 lakh a year for two years as soft loan for the approved plan</li></li><...
Demonstrated ability to scale numbers of individuals
Microfinance an established and growing industry
Limit to impact
Skills of great entrepreneurs not dispersed to others
Diminishing returns with market saturation</li></ul>Micro and small enterprise / informal sources<br /><ul><li>Can provide...
Only need one entrepreneur for multiple increases in income
Flexible – tailored to local market and infrastructure requirements
Hamstrung by lack of capital and business building support
Scale requirements limit flexibility
Limited understanding of rural and semi-urban India
Rural and semi-urban India unlikely to be attractive currently</li></ul>Large markets / mainstream venture capital<br /><u...
Brings most sophisticated business experience
Commercial venture capital entrenched in India</li></ul>Micro and small enterprises are key, receive least support<br />
Entrepreneurial India- “Industry-Academia Interface”<br />
Micro Credit<br />
Microfinance Institutions<br />Entrepreneurs<br />The Traditional Microfinance Lending Process<br />Banks and NGOs<br /><u...
This can be expensive, as it is often borrowed with interest
There may also be difficult application procedures to access debt capital from non-governmental organizations
Some organizations can even find themselves shut out due to the region they operate in, particularly post-conflict regions
Restrictions that microfinance institutions face ultimately affect the entrepreneurs, who rely on microfinance institution...
Kiva<br /><ul><li>Kiva.org is a website which allows you to lend to an entrepreneur in the developing world who needs a loan
Through Kiva, you loan as little as $25 to an entreprenuer at 0% interest</li></li></ul><li><ul><li>Browse
Loan requests are funded within minutes</li></li></ul><li>Size of the loan and status<br />Picture of the entrepreneur<br ...
The business page also shows you all of the other people around the world who are contributing to this loan<br />
Kiva’s Microfinance Partners<br />Kiva has 89 Microfinance Partners in 42 countries and is still growing<br />Ukraine<br /...
172<br />Kiva Introduction: What are Kiva’s benefits?<br />Internet Lender<br /><ul><li>Transparent (“I know where my mone...
 Sustainable (“If repaid, I will re-lend to someone else”)
 Affordable (“I only need $25 to change someone’s life”)
 Unique (“I love microfinance and I want to participate”)</li></ul>Microfinance Institution<br /><ul><li>0% interest USD d...
 No liability: Client loss borne by Internet Lender
Flexible repayment terms
  Exhibit your work to an international audience</li></li></ul><li>Chavez and Entrepeneurship<br />
HAARP<br />
How<br />
Silicon Valley<br />Silicon Valley is a nickname for the southern part of the San Francisco Bay Area centered roughly on S...
WWII<br />The First Electronic War<br />
British and American Air War in Europe<br />28,000 Active Combat Planes40,000 planes lost or damaged beyond repair:18,000 ...
The German Air Defense SystemThe Kammhuber Line<br />Integrated Electronic air defense network<br />Covered France, the Lo...
German Air Defense System<br />
Himmelbelt<br />Local Air Defense<br />Network<br />• Box ~30 x 20 miles<br />• Integrated network<br />of radars, flak,<b...
Flak Radar Controlled Anti Aircraft Guns<br />15,000 Flak Guns<br />400,000 soldiers in flak batteries<br />Radar-directed...
Two<br />The Electronic Shield <br />Electronic Warfare<br />
Harvard Radio Research Lab Signals Intelligence and Electronic Warfare<br />Reduce losses to fighters and flak<br />Find/u...
ELINT Understand German Air Defense<br />B-24J flights inside Germany to intercept German radar signals<br />Fitted with r...
Window/ChaffJam Wurzburg<br />Strips of aluminum foil<br />1/2 Wurzburg frequency<br />46,000 packets tossed out by hand<b...
Blind German Early Warning Radar<br />Put Jammers on Airplanes<br />Carpet” AN/APT-2 Jammer<br />Confuse Wurzburg radar<br...
Fred Terman<br />Who Ran this Secret Lab and became<br />the Father of Electronic Warfare?<br />• Harvard Radio Research L...
Fred Terman<br />Stanford Professor of engineering 1926<br />encouraged his students, William Hewlett and David Packard to...
Spook Entrepreneurship<br />
Terman Strategy<br />Focus on microwaves and electronics<br />Not going to be left out of gov’t $’s this time<br />Recruit...
Korean WarSpook Work Comes to Stanford<br />• Applied Electronics Laboratory (AEL)<br />– “Applied” and Classified Militar...
Cold War and Research<br />The Cold War battlefield moves 500 miles east<br />Fear of a “nuclear Pearl Harbor”<br />Counte...
The Cold War is an Electronic War<br />
Stanford Helps Understand theElectronic Order of Battle<br />Where are the Soviet radars?<br />Consumers; SAC, CIA.<br />D...
U-2 Sigint Platform (1956)Stanford and Silicon Valley<br />System IV<br />150 - 40,000 MHz<br />Stanford Electronics Labor...
Stanford Joins the “Black” World<br />Electronics Research Laboratory<br />“Basic” and Unclassified Research<br />Applied ...
Terman Changes the Startup/University Rules<br />Silicon Valley as We Know it Starts Here<br />Graduate students encourage...
Stanford’s Role<br />Interaction with industry (via legacy just discussed)<br />Research funding and creativity<br />Silic...
Microwave Valley - Components<br />Klystrons, Carcinotrons, & Traveling Wave Tubes<br />Eitel-McCullough (1934)<br />Varia...
1966<br />Hewlett-Packard entered the general purpose computer business with its HP-2115 for computation, offering a compu...
Spook Innovation<br />
Radio Dishes Get Funded<br />Attach ELINT receivers to Bell Labs<br />60’ radar antenna in New Jersey<br />Use “matched fi...
Project Grab 1960-1962<br />ELINT in Space<br />No more overflights<br />Collect radar emissions from<br />Soviet air defe...
Microwave Valley - Systems<br />Some Stanford Alum’s<br />Sylvania Electronics Defense Laboratory (1953)<br />Countermeasu...
Terman and the Cold WarSilicon Valley’s 1st Engine of Entrepreneurship<br />
Valley Attracts Financial Attention1st West Coast IPO’s<br />1956 Varian<br />1957 Hewlett Packard<br />1958 Ampex<br />
The Rise of Risk Capital<br />“The Group” 1950’s<br />• First Bay Area “Angels”<br />– Reid Dennis<br />– William Bryan<br...
Summary<br />• Terman/Stanford/Government responsible for<br />entrepreneurial culture of Silicon Valley<br />• Military p...
Hewlett Packard and Wozniack<br />Steven Paul Jobs, Stephen Gary Wozniak and Ronald Gerald Wayne founded Apple Computer.<b...
Japan<br />
Rice Markets And Taxes<br />Taxes<br />Jomen (fixed amount) system<br />Stabilization<br />Transport<br />Roads<br />Trade...
Rich Merchants in Edo Period (Gosho)<br />Sumitomo<br />-16c Adopt Western copper refining, copper trade (Kyoto)-17c Move ...
The Black Ships<br />
Negative Consequences<br />Comprehensive commercial treaties<br />treaties which the bakufu signed with the West were uneq...
Positive Consequences<br />New ideas, technology, industry and systems<br />Silk and tea suddenly found huge overseas mark...
Trade 1876-80<br />
Japanese Respose<br />Initially, avoid colonization by the West<br />Rapid modernization and Westernization<br />Become “f...
Konosuke Odaka: World of Craftsmen, World of Factories(NTT Publishing, 2000)<br />In Japan’s early factories, traditional ...
Monozukuri (Manufacturing) Spirit<br />Mono means “thing” and zukuri (tsukuri) means “making” in indigenous Japanese langu...
Four<br />
Steps to Managing Export Operations<br /><ul><li>Step 1 -Segment World markets
Product Quality  and Product feature segmentation
Factors influencing segmentation
Purchasing power
Consumer tastes
Weather conditions
Level and dispersion of wages and technical skills
Important factors in analysis
Emerging demand met by innovations in product technology in one country that are mirrored in other countries
Deregulation and restructuring of markets
Government policies and programs </li></ul>Slide 4-2<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANA...
Steps to Managing Export Operations (contd..)<br /><ul><li>Step 2 - Select an Entry Strategy to Promote Sustainable Compet...
Standardized product to all markets
Product- Life cycle strategy
Localized market strategy
A combination of strategies can also be followed
Step 3 - Take a long-run Perspective
Initial costs must be viewed as investments
Returns on investments will not be immediate in export markets</li></ul>Slide 4-3<br />Beamish, Morrison, Inkpen and Rosen...
Pricing in Export Markets<br /><ul><li>Strategy 1 - Requiring prices in export markets that yield higher returns than are ...
Based on the belief that export operations are more risky relative to domestic sales - can result in uncompetitive prices.
Strategy 2- Pricing to yield similar returns in domestic and export markets
Based on the viewpoint that export markets do not necessarily differ from domestic markets
Strategy 3 - Pricing to yield lower returns, or even losses, in export markets—at least in the short run
Reflects an approach that views export markets as the potential growth markets of the future  - firm vulnerable to antidum...
Strategy 4 - Pricing to sell production in excess of the needs of the domestic market so long as these sales make a contri...
View of export markets as a dumping ground for production in times of excess capacity - firms very vulnerable to anti-dump...
Stages of Export Market Involvement<br /><ul><li>Stage 1 – Unplanned entry
Unsolicited order from abroad, overproduction, declining domestic sales, pressures, “follow the leader” behavior, governme...
Stage 2 – Systematic evaluation of the impact of exports
Stage 3 - Exports become a major factor in the firm’s strategy and operations. </li></ul>Slide 4-5<br />Beamish, Morrison,...
Trade Intermediaries<br /><ul><li>Import Traders
For every export, there is an import
Pure importers are market connectors; they create value through linking producers abroad to buyers in the domestic market
Pure importers usually have an advantage such as knowledge of the domestic market and practices
Export Traders
They are also market connectors
Their advantages lie in knowledge of markets in particular countries or in knowledge of worldwide markets for particular p...
Trading Houses
Pure import operations and pure export operations are joined together in the trading houses </li></ul>Slide 4-6<br />Beami...
Vital Questions to be asked<br /><ul><li>Does our product and firm have a sustainable competitive advantage in export mark...
What are the export markets and the segments of those markets that will value our product sufficiently (relative to other ...
Should the firm export a standard product with a standard marketing mix worldwide or should it tailor its products and mar...
What natural and government-imposed trade barriers impede linking production in one country to purchase in another, and wh...
What are the most appropriate channels of distribution for our product to achieve our goals in export markets?</li></ul>Sl...
Present day export trade<br /><ul><li>Tariff and nontariff barriers to trade have fallen globally and free trade areas hav...
Firms often now analyze trade opportunities on a regional, and sometimes even broader basis
Products are often not sent directly from one home production site to an export market abroad. Inputs are sourced in a num...
Trade intricately linked with foreign investment, joint ventures, licensing, franchising, contract production, and compone...
Countertrade<br /><ul><li>A special form of exporting is countertrade, the linked exchange of goods for goods in internati...
Countertrade covers - Barter ,Counterpurchase, Compensation or buyback, Production sharing, Industrial offsets, Switches, ...
Can be complicated and costly to negotiate and execute
Important characteristics of countertrade contracts need to be attended to carefully by an exporter
Generally countertrade is an inefficient form of trade. It creates costs and risks for both importers and exporters </li><...
Major Project Development<br /><ul><li>Importance and investment increased during the 1990s –likely to continue to increas...
Generally for infrastructure development - electricity generation, telecommunications, water and sewage treatment faciliti...
Types of Major projects
Turnkey projects
Firm undertakes to construct a major project,  then turns it over to its owners when it is in full operation
Build, operate, and transfer projects (BOT)
Firms bid for the right to construct the project, the  winning firm also operates the facility after it is completed.
Ownership is limited to a certain time period, after which the project is transferred to another organization
Build, operate, and own projects (BOO)
Firms bid for the right to construct the project.
The winning firm also operates the facility after it is completed. . </li></ul>Slide 4-10<br />Beamish, Morrison, Inkpen a...
Exports, Imports, and International Finance<br /><ul><li>Important aspects for exporters/importers
Effect of the real exchange rate on competitive advantage,
Effect of variations in the nominal exchange rate on export and import profitability
Pricing of the goods in the importers currency
Countered by setting up currency hedge
Use of forward contracts
Effect of trade on financing needs and sources
Irrevocable letter of credit (LoC) used to overcome uncertainty</li></ul>Slide 4-11<br />Beamish, Morrison, Inkpen and Ros...
Six<br />Licensing<br />
What is Licensing?<br /><ul><li>Licensing is a contractual arrangement whereby the licensor (selling firm) allows its tech...
It is a strategy for technology transfer.
Franchising is an organizational form where the franchisor of a service, trademarked product, or brand name allows the fra...
When is Licensing employed?<br /><ul><li>Used both in technology intensive and non technology-intensive industries (eg. Co...
A licensor lacks the capital knowledge of foreign markets required for exporting or FDI, but wants to earn additional prof...
Host-country governments restrict imports or FDI, or both; or the risk of nationalization or foreign control is too great.
A firm wishes to test the potential for future direct investment.
The technology involved is not central to the licensor’s core business. Generally only peripheral technologies are license...
When is Licensing employed? (contd..)<br />High prospects of technology “feedback” or “flowback”<br />The licensor wishes ...
Licensing Related Issues<br />Risks<br />Dissipation of proprietary advantage<br />Tarnishing of reputation due to lack of...
Licensing Related Issues (contd..)<br />Costs of Licensing<br />Protection costs<br />License Agreement costs<br />Agreeme...
Elements of License Agreement<br />A clear and correct description of the parties to the agreement<br />A preamble or reci...
Elements of License Agreement (contd..)<br /> A description of any exclusive rights to manufacture and sell that may be gr...
Some Licensing Announcements<br />Starbucks, the U.S. coffee chain, hopes to have 500 branches in Asia by 2003 through lic...
Eight<br />Strategy<br />
The Changing World<br />Globalization is the buzzword!<br />Change in traditional approaches towards more innovative strat...
Pressures towards Globalization<br />Broad factors making global competition possible <br />Freer Trade<br />GATT, WTO agr...
Pressures towards Globalization (contd..)<br />Industry Specific Factors<br />Universal customer needs<br />Global custome...
Pressures towards Localization<br />Country specific Factors<br />Trade barriers<br />Tariffs, subsidizing domestic produc...
Pressures towards Localization (contd..)<br />MNC-Specific Pressures<br />Organizational resistance to change<br />Logisti...
Business Strategies<br />Exhibit 8-1 <br />Mapping Industries<br />High<br />Semiconductors<br />Telecommunications<br />W...
Key Recommendations for Managing the Formulation Process <br />Invest Heavily in Data Collection<br />Use multiple data so...
Twelve<br />Govt Relations<br />
Sources of Trade Regulation<br />GATT and WTO<br />Set up to deal with tariffs and non tariff barriers to trade<br />Tokyo...
Trade Agreements and Associations<br />U.S. – Canada Free Trade Agreement<br />Formed January 1988 – world’s largest free ...
Trade Agreements and Associations (contd..)<br />Asia-Pacific Economic Corporation<br />APEC established 1989, presently h...
Opportunities and Threats <br />Exhibit 12- 1<br />Opportunities and Threats from Government Actions<br />Slide 12-5<br />...
Political Strategy<br />Essential for a firm to form and implement political strategy<br />Formulation <br />Objectives<br...
Impact of International Business-Government InteractionObjectives and Motivations of MNC-SOE Alliances and Acquisitions<br...
Proactive Management of Relations<br />MNE’s Perception of Government Policy<br />Exhibit 12-4<br />MNE’s approach to <br ...
Bargaining Power<br />Discriminatory enforcement occurs due to differing characteristics of subsidiaries – Bargaining Powe...
Lockout<br />Acquiring Technology Cheaply.<br />Innovating.<br />Selling Product Below Cost.<br />Build market share.<br /...
Lockout Case: VCR<br />En los años 80, Japón demandó el mercado global del VCR para sí mismo por los competidores potencia...
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IB 2.2 Silicon valley

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  • Thomas WestcottLegal AdvisorUNCTAD
  • IB 2.2 Silicon valley

    1. 1. International Business<br />To add<br />
    2. 2.
    3. 3. Another View<br />
    4. 4. Explaining Internationalization<br />Early contribution of ‘Uppsala model’: Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977<br />Key insight: internationalization is an incremental commitment, in terms of (a) geographical sequence and (b) entry mode choice, due to the gradual accumulation of experiential knowledge of foreign markets reducing the uncertainty effect<br />interplay between knowledge and commitment the key driver<br />
    5. 5. Distinctiveness of Uppsala model<br /> ‘We do not believe that [internationalization] is the result of a strategy for optimum allocation of resources to different countries where alternative ways of exploiting foreign markets are compared and evaluated. <br />We see it rather as the consequence of a process of incremental adjustments to changing conditions of the firm and its environment.’ (Johanson and Vahlne 1977, p. 35)<br />
    6. 6. Empirical basis for model: e.g.<br />PHARMACIA: <br />9 overseas affiliates at the time. <br />In the case of 8, the firm had received orders from foreign market, then signed an agency/licensing agreement. <br />After a few years, established sales subsidiary (or made an acquisition in 1 case).<br /> In two countries began manufacturing, but only less complicated production at first. <br />In case 9, started a sales subsidiary almost immediately, but company decision-maker had prior country experience. <br /> (Johanson & Vahlne 1977)<br />
    7. 7. Incremental pattern (1): ‘Establishment chain’<br />No regular export<br />Direct exporting, via independent agent/distributor<br />Establishing foreign sales subsidiary<br />Foreign production/ manufacturing<br />Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977; cf Bilkey & Tesar 1977, Cavusgil 1980, Czinkota 1982<br />
    8. 8. Psychic distance <br />
    9. 9. Why these patterns? A process explanation<br />‘the firm develops knowledge when it operates in the market, <br />this knowledge enables the firm to better see and evaluate business opportunities, consequently, to make new market commitments. <br />In their turn, these commitments lead to learning and the ability to identify new market opportunities, and so on.’ (Johanson and Vahlne 2003, p. 9)<br />
    10. 10. The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
    11. 11. The Uppsala model<br /><ul><li>Lack of market/operations knowledge =main obstacle to internationalization
    12. 12. Can only be acquired through first-hand experience
    13. 13. Includes i.e. getting to know customers, suppliers, government agencies
    14. 14. Includes firm’s internationalization knowledge: firm’s own resources and ability to develop international operations
    15. 15. Reduces uncertainty associated with foreign market commitment
    16. 16. Provides framework for perceiving and formulating business opportunities</li></ul>Johanson & Vahlne 2003, p. 10<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
    17. 17. The Uppsala model<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market <br />Knowledge<br />Commitment<br /> Decisions<br />Result of the conception of business opportunities, which in turn are a result of market (experiential) knowledge.<br />Johanson and Vahlne 2003, p. 12<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
    18. 18. The Uppsala model<br /><ul><li>Largely consist of ‘everyday contact with customers, intermediaries, suppliers, authorities and other individuals and organisations important to their firm’
    19. 19. ‘current activities evidently have a continuous impact on internationalisation, occasionally being interrupted by discontinuities…’
    20. 20. By interacting with other firms in a market, the firm learns about their needs and situation
    21. 21. Interaction builds trust, which is an important element in commitment building</li></ul>(Johanson and Vahlne 2003:11)<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
    22. 22. The Uppsala model<br /><ul><li>Market commitment: i.e. not just investment, but also marketing and sales  e.g., after-sales service commitments
    23. 23. Amount of commitment: i.e. level of investment
    24. 24. Degree of commitment: extent to which commitment cannot easily be withdrawn, and is defended by the firm
    25. 25. Degree of commitment dependent on firm’s resources and capabilities at home</li></ul>Johanson and Vahlne 2003, p. 12<br />STATE ASPECTS<br />CHANGE ASPECTS<br /> Market (Experiential) <br />Knowledge<br />Commitment<br /> Decisions<br />Current <br />Activities<br /> Market <br />Commitment<br />Johanson & Vahlne 1977, p. 37<br />
    26. 26.
    27. 27. Hall<br />
    28. 28.
    29. 29. Dimensions of National Culture<br />
    30. 30. Multiple of Cultureor ‘interfaces’ (Saner)<br />
    31. 31. The Contexts ofInternational Negotiations<br />
    32. 32.
    33. 33. Influence of Culture on Negotiation: Managerial Perspectives<br />Definitions of negotiation<br />Negotiation opportunity<br />Selection of negotiators<br />Protocol<br />Communication<br />Time sensitivity<br />Risk propensity<br />Groups versus individuals emphasis<br />Nature of agreements<br />Emotionalism<br />
    34. 34.
    35. 35. Cultural Categories<br />
    36. 36. National Communication Patterns<br />Finland <br /> USA<br />Germany<br />
    37. 37. USA<br />Germany<br />Japanese<br />Arabic<br />
    38. 38. Japanese Business <br />
    39. 39. II. Samurai’s Rule<br />III. Modern-ization<br />I. Emperor’s Rule<br />IV. Postwar<br />1603<br />X<br />WAR<br />1867<br />Rapid recovery and growth<br />NARA<br />Centralization<br />MEIJI<br />Westernization,industrialization,militarilization<br />EDO<br />Tokugawa Shogunate<br />KAMAKURAMUROMACHISENGOKU<br />HEIAN<br />Nobles,Decentralization<br />× 645<br />Internal wars, dynamic & fluid society<br />Peace, isolation, conservative class society<br />Taika Reform<br />Clan fights<br />Hunting & gathering<br />xxxx<br />xxxx<br />xxx<br />WEST!!!<br />Chinese culture &political system<br />WEST: guns &Christianity<br />US occupation1945-52<br />Rice<br />Buddhism<br />
    40. 40. Japan’s Multi-layered Identity<br />P.4<br />Pre-historic Japan<br />先史時代の日本<br />Rice cultivation<br />Buddhism, China<br />Heian & Samurai Culture<br />Guns & Christianity<br />Edo Culture<br />Note: Colored areas indicate external impacts<br />Western influence<br />
    41. 41. Wartime controlled economy<br />Energy saving & lean management<br />Recovery period<br />Postwar recovery period<br />Bubble economy<br />High-growth period<br />Heisei recession<br />Process management methodology<br />Japanese style management<br />American style management method<br />Strategy & marketing<br />Market-based flexible manufacturing<br />American style global management<br />Productivity improvement<br />1960~<br />1970~<br />1980~<br />1990~<br />2000~<br />1950~<br />1940~<br /><Japanese Economy Trends><br /><Management Innovation History><br />Japanese Economy and Management Innovation<br />
    42. 42. Japanese keiretsu<br /><ul><li>Types
    43. 43. Horizontal keiretsu
    44. 44. Vertical keiretsu
    45. 45. Characteristics
    46. 46. Extensive share cross-holdings
    47. 47. Personnel swaps
    48. 48. Strategic coordination
    49. 49. Commercial transactions</li></li></ul><li>Yataro Iwasaki(1835-85)Mitsubishi Zaibatzu<br />PP.45-46<br />三菱<br />Seisho(政商) from Tosa, founder of Mitsubishi Zaibatsu<br />Shipping company--grew fast with government support (receiving gov’t ships, contract for military transport)<br />Established Nippon Yusen (NYK Line), fierce battle with Kyodo Unyu (anti-Mitsubushi company), 1883-85<br />Expanded to many areas: trade, banking, shipbuilding, coal, mining (later, more)<br />Mechanical factory in Nagasaki, ca 1885<br />Bakufu’s Steel Mill in Nagasaki, transferred to Mitsubishi in 1884<br />
    50. 50. Mitsubishi Heavy Industries<br />Mitsubishi<br />Corporation<br />Bank of Tokyo-Mitsubishi<br /> Automotive<br /> Mitsubishi Fuso Truck Bus<br /> Mitsubishi Motors<br /> Shin Caterpillar Mitsubishi<br /> Finance & insurance<br /> DC Card<br /> Diamond Lease<br /> Meiji Life <br /> Mitsubishi Auto Credit<br />Mitsubishi Securities <br /> Mitsubishi Trust & Banking<br /> Tokio Marine and Fire<br /> Industrial equipment<br /> Mitsubishi Electric<br /> Mitsubishi Kakoki<br /> Mitsubishi Precision<br /> Toyo Engineering Work<br /> Electronics & telecom<br /> IT Frontier<br /> Mitsubishi Research Inst<br /> Mitsubishi Space Software<br />Nikon<br /> Space Communications<br /> Industrial materials<br /> Asahi Glass<br /> Dai Nippon Toryu<br /> Mitsubishi Aluminum<br /> Mitsubishi Cable Indus<br /> Mitsubishi Materials<br /> Mitsubishi Plastics<br /> Mitsubishi Rayon<br /> Mitsubishi Shindoh<br />Mitsubishi Steel<br />Transportation & dist<br /> Mitsubishi Logistics<br /> Mitsubishi One Transport<br /> NYK Line<br />Resources & energy<br />Nippon Oil<br />Mitsubishi LPG<br />Mitsubishi Nuclear Fuel <br />Mitsubishi Paper Mills<br />Chemical & pharmaceutical<br /> Dai Nippon Toryu<br /> Mitsubishi Chemical<br /> Mitsubishi Gas Chemical<br /> Mitsubishi Petrochemical<br /> Consumer goods & foods<br /> Kirin Beverage<br />Kirin Brewery<br /> Ryoshoku<br /> Real estate & construction<br /> Mitsubishi Estate<br /> P.S. Mitsubishi<br />Mitsubishi’s Horizontal Keiretsu<br />
    51. 51. Major FDI Firms in Meiji Period<br />FDI was relatively small (cf. China, India). However, it played leading roles in tobacco, oil refining, electrical and general machinery, weapons, automobiles, glass, (aluminum). Later, zaibatsu mostly took over FDI technology and production.<br />Source: S.J.Bytheway (2005), pp.166-167<br />
    52. 52. Post War Keiretsu<br />Mitsubishi<br />Bank of Tokyo<br />Mitsubishi/ Bank of Mits<br />Nikon<br />Kirin<br />Sutitomo<br />Sutitomo Bank<br />NEC<br />Mitsui<br />Toshiba<br />Fuyo<br />Fuji Bank<br />Marubeni<br />Dai-Ichi<br />Dai-Ichi Kangyo Bank<br />Cannon<br />Nissan (part)<br />Sanwa<br />Sanwa Bank<br />Kobe Steel<br />
    53. 53. Production Methods & Kaizen<br />
    54. 54. TaiichiOhno<br />
    55. 55. Production Methods & Kaizen<br />
    56. 56. Production Methods<br />
    57. 57. Efficiency<br />Any production method relies on efficiency – this can be viewed in different ways:<br />Productivity – a measurement of output per unit of the factor used (labour, capital or land)<br />Total Output<br /> Productivity = -------------------<br /> Units of Factor<br />Technical Efficiency – output produced using the fewest possible inputs<br />Productive Efficiency – output produced at the lowest possible cost<br />
    58. 58. Efficiency<br />Production decisions involve deciding methods for new production runs and analysis of existing methods.<br />Decisions may include:<br />Substitute machinery for labour? <br />Use of new technology? <br />Organisation of the production layout? <br />Change of production method?<br />
    59. 59. Production Methods<br />As technology and analysis of production methodology has improved, methods have changed dramatically – what used to be labour intensive production methods are now capital intensive<br />
    60. 60. Production Methods<br />The choice of production method and the factor inputs depends on such things as:<br /><ul><li> the nature of the product
    61. 61. factor costs
    62. 62. the scale of production</li></ul>Textile factory<br />Copyright: Stock.Xchng<br />
    63. 63. Production Decisions<br />Market size and <br />Segment<br />One-Off Order?<br />Which method?<br />Complexity of design<br />Type of Product<br />Mass Market product?<br />Batch?<br />Factor Costs – <br />Land, Labour and <br />Capital<br />
    64. 64. Production Methods<br />Job Production – One-off production - each item might have particular specifications<br />Flow Production – suitable for mass market products that are identical<br />Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same<br />
    65. 65. Production Methods<br />Which is more efficient?<br />Operation 1<br />2<br />3<br />4<br />5<br />6<br />7<br />Finished Product<br />8<br />9<br />10<br />11<br />
    66. 66. Production Methods<br />Or this?<br />1a<br />1b<br />1c<br />1d<br />4<br />Operation 1<br />2a<br />2b<br />2c<br />Finished product<br />3a<br />3b<br />3c<br />3d<br />
    67. 67. Production Methods<br />Or this?<br />Cell 1<br />Cell 2<br />Cell 3<br />Finished Product<br />Finished Product<br />Finished Product<br />
    68. 68. Production Methods<br />Answer <br />It could be any of them!<br />The design of the production space can influence:<br />Output levels<br />Factor use<br />Efficiency<br />Cost levels<br />Quality assurance procedures<br />
    69. 69. Kaizen (Continuous Improvement)<br />
    70. 70. Kanban<br />
    71. 71. Kaizen (Continuous Improvement)<br />Japanese concept – not made redundant by the decline of the Japanese economy which may be due to other institutional factors!<br />Focus on gradual and continuous improvement<br />A whole business philosophy<br />Importance of EVERYONE buying into the concept and the vision<br />
    72. 72. Kaizen<br /><ul><li>Efficient stock control methods help reduce costs and improve cash-flow
    73. 73. Flexible working practices and empowerment – help increase efficiency, reduce costs and improve motivation</li></ul>Fundamental principles – often characterised as ‘lean production’ – reducing waste, zero defects, high quality control measures at all stages<br /><ul><li>Leadership seen as vital. Ability to communicate a clear vision, take people along with the vision and to think about where the company needs to be in 5, 10, 15 and 20 years time
    74. 74. Punctuality in all aspects – delivery, supply, manufacture, etc.</li></li></ul><li>
    75. 75. “4 P” Model of the Toyota Way<br />Problem<br />Solving<br />(Continuous <br />Improvement and Learning)<br /><ul><li>Continual organizational learning through Kaizen
    76. 76. Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
    77. 77. Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
    78. 78. Grow leaders who live the philosophy
    79. 79. Respect, develop and challenge your people and teams
    80. 80. Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br />Adding Value to Customers &<br />Society<br /><ul><li>Create process “flow” to surface problems
    81. 81. Level out the workload (Heijunka)
    82. 82. Stop when there is a quality problem (Jidoka)
    83. 83. Use pull systems to avoid overproduction
    84. 84. Standardize tasks for continuous improvement
    85. 85. Use visual control so no problems are hidden
    86. 86. Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br />Philosophy<br />(Long-term Thinking)<br /><ul><li>Base management decisions on a long-term philosophy, even at the expense of short-term financial goals</li></li></ul><li> Base management decisions on a long term philosophy, even at the expense of short-term financial goals<br />Toyota mission:<br /><ul><li>Contribute to the economic growth of the country in which it is located (external stakeholders)
    87. 87. Contribute to the stability and well being of team members and partners (internal stakeholders)
    88. 88. Contribute to the overall growth of Toyota</li></li></ul><li>Principle One<br />“The most important factors for success are patience, a focus on long term rather than short-term results, reinvestment in people, product, and plant, and an unforgiving commitment to quality.”<br />-Robert B. McCurry, former Executive V.P., Toyota Motor Sales<br />
    89. 89. “4 P” Model of the Toyota Way<br />Problem<br />Solving<br />(Continuous <br />Improvement and Learning)<br /><ul><li>Continual organizational learning through Kaizen
    90. 90. Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
    91. 91. Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)</li></ul>Eliminate Waste through Flow<br />& Standardization<br /><ul><li>Grow leaders who live the philosophy
    92. 92. Respect, develop and challenge your people and teams
    93. 93. Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br /><ul><li>Create process “flow” to surface problems
    94. 94. Level out the workload (Heijunka)
    95. 95. Stop when there is a quality problem (Jidoka)
    96. 96. Use pull systems to avoid overproduction
    97. 97. Standardize tasks for continuous improvement
    98. 98. Use visual control so no problems are hidden
    99. 99. Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br /><ul><li>Base management decisions on a long-term philosophy, even at the expense of short-term financial goals</li></ul>Philosophy<br />(Long-term Thinking)<br />
    100. 100. Waste<br />PRODUCT<br />BUILT & SHIPPED<br />CUSTOMER<br />ORDER<br />Time<br />PRODUCT<br />BUILT & SHIPPED<br />CUSTOMER<br />ORDER<br />Waste<br />Time (Shorter)<br /> is a manufacturing philosophy which shortens the time between the customer order and the product build / shipment by eliminating sources of waste.<br />Business as Usual<br />Lean Manufacturing<br />Lean Manufacturing<br />
    101. 101. Product Lead Time<br /><ul><li>Value Added Time is only a very small percentage of the Lead time.
    102. 102. Traditional Cost Savings focused on only Value Added Items.
    103. 103. LEAN FOCUSES ON NON-VALUE ADDING ITEMS.</li></li></ul><li>Before Lean: Organization By Machine Type With Convoluted Flow<br />No Organization and No Control<br />
    104. 104. Empties +<br />production kanban<br />Empties + withdrawal<br />kanban<br />A<br />B<br />C<br />D<br />E<br />F<br />G<br />H<br />Customer Plant<br />Needed<br />Components + kanban<br />Newproduct<br />Preceding processes replenish what is taken away.<br />Downstream processes withdraw what they need when they need it.<br />PULL<br />Supplier Plant<br />
    105. 105. Why Focus on Flow?<br />“If some problem occurs in one-piece-flow manufacturing then the whole production line stops. In this sense it is a very bad system of manufacturing. But when production stops everyone is forced to solve the problem immediately. So team members have to think, and through thinking team members grow and become better team members and people.”<br />Teruyuki Minoura, former President, Toyota Motor Manufacturing, <br /> North America<br />
    106. 106. Lean Tools to Support Flow<br />5S-Visual Workplace <br />Total Productive Maintenance<br />Quick Changeover<br />Standardized Work<br />Quality Methods<br />
    107. 107. Describe this area...<br />
    108. 108. Describe this area...<br />
    109. 109. What is TPM?<br />Total Productive Maintenance (TPM) is<br /> Productive Maintenance with EVERYONE’s participation<br />Maintenance=Teachers, Doctors of Equipment<br />Operators=Clean, inspect, routine repair<br />
    110. 110. Why Quick Change Over? <br />Difference in average inventory level with more changeovers<br />Change Over<br />Average inventory levels<br />Inventory level<br />Time <br />The more quickly we changeover, the more our inventory levels decrease. This helps accomplish our goal of waste elimination.<br />
    111. 111. Standardized<br />Work Chart<br />Detail of each <br />Process Step<br />Work Element Sheet<br />Detail of the Elements<br />of each Process Step<br />Takt<br />90s<br />1<br />2<br />3<br />4<br />5<br />Assembly Process #<br />StackChart<br />(Yamazumi)<br />A Visual Tool for Balancing Processes<br />Standard Work Tools<br />
    112. 112. Standardized tasks are the foundation for continuous improvement and employee empowerment<br /> “Today’s standardization…is the necessary foundation on which tomorrow’s improvement will be based. If you think of “standardization” as the best you know today, but which is to be improved tomorrow-you get somewhere. But if you think of standards as confining, then progress stops.”<br />Henry Ford, Today and Tomorrow, 1926<br />
    113. 113. “4 P” Model of the Toyota Way<br />The heart & soul of<br />The Toyota Way<br />Problem<br />Solving<br />(Continuous <br />Improvement and Learning)<br /><ul><li>Continual organizational learning through Kaizen
    114. 114. Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
    115. 115. Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
    116. 116. Grow leaders who live the philosophy
    117. 117. Respect, develop and challenge your people and teams
    118. 118. Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br /><ul><li>Create process “flow” to surface problems
    119. 119. Level out the workload (Heijunka)
    120. 120. Stop when there is a quality problem (Jidoka)
    121. 121. Use pull systems to avoid overproduction
    122. 122. Standardize tasks for continuous improvement
    123. 123. Use visual control so no problems are hidden
    124. 124. Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br /><ul><li>Base management decisions on a long-term philosophy, even at the expense of short-term financial goals</li></ul>Philosophy<br />(Long-term Thinking)<br />
    125. 125. People and Partners<br />Respect, Challenge, and Grow Them:<br />9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others <br />10. Develop exceptional people and teams who follow your company’s philosophy<br />11. Respect your extended network of partners and suppliers by challenging them and helping them improve<br />
    126. 126. One-PieceFlow Demands Team Work!<br />x<br />x<br />x<br />x<br />x<br />Traditional Western Team<br />x<br />x<br />x<br />x<br />x<br />x<br />x<br />x<br />x<br />x<br />x<br />x<br />Need <br />help?<br />Need <br />help?<br />Toyota Way Team<br />X<br />Workcell<br />
    127. 127. Principle Five: Stop & Fix Problems<br /> Mr. Ohno used to say that no problem discovered when stopping the line should wait longer than tomorrow morning to be fixed. Because when making a car every minute we know we will have the same problem again tomorrow.”<br />-Fujio Cho, President, Toyota Motor Corporation<br />
    128. 128. 1<br />2<br />3<br />4<br />5<br />6<br />7<br />9<br />1<br />3<br />8<br />1<br />0<br />1<br />1<br />1<br />2<br />1<br />4<br />S<br />T<br />O<br />P<br />B<br />U<br />T<br />T<br />O<br />N<br />S<br />T<br />O<br />P<br />B<br />U<br />T<br />T<br />O<br />N<br />(<br />S<br />T<br />O<br />P<br />T<br />H<br />E<br />L<br />I<br />N<br />E<br />A<br />U<br />T<br />H<br />O<br />R<br />I<br />T<br />Y<br />)<br />(<br />S<br />T<br />O<br />P<br />T<br />H<br />E<br />L<br />I<br />N<br />E<br />A<br />U<br />T<br />H<br />O<br />R<br />I<br />T<br />Y<br />)<br />5<br />4<br />Abnormality<br />Station 5<br />Team Leader<br />
    129. 129. Kaizen<br />Typical Toyota Organization to support Continuous Improvement<br />Team Size<br />Team Member<br />{ 5 - 8 }<br />Team Leader<br />{ 3 - 4 }<br />Group Leader<br />{ 5 - 8 }<br />Asst. Manager<br />{ 4 - 10 }<br />Manager<br />Source: Bill Costantino, former group leader, Toyota, Georgetown.<br />
    130. 130.
    131. 131. Bumper Trimming Job Breakdown Sheet<br />
    132. 132. Auditing Standardized Work <br />
    133. 133. Roles and Responsibilities<br />
    134. 134. Toyota Way Principles in 4P Model<br />The dynamic of<br />The Toyota Way<br />Problem<br />Solving<br />(Continuous <br />Improvement and Learning)<br /><ul><li>Continual organizational learning through Kaizen
    135. 135. Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
    136. 136. Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
    137. 137. Grow leaders who live the philosophy
    138. 138. Respect, develop and challenge your people and teams
    139. 139. Respect, challenge, and help your suppliers</li></ul>People and Partners<br />(Respect, Challenge and Grow Them)<br /><ul><li>Create process “flow” to surface problems
    140. 140. Level out the workload (Heijunka)
    141. 141. Stop when there is a quality problem (Jidoka)
    142. 142. Use pull systems to avoid overproduction
    143. 143. Standardize tasks for continuous improvement
    144. 144. Use visual control so no problems are hidden
    145. 145. Use only reliable, thoroughly tested technology</li></ul>Process<br />(Eliminate Waste)<br />Philosophy<br />(Long-term Thinking)<br /><ul><li>Base management decisions on a long-term philosophy, even at the expense of short-term financial goals</li></li></ul><li>Typical Improvement Opportunities Available<br />
    146. 146. Improvement Approaches of Typical Companies<br />
    147. 147. Toyota Leverages Opportunities at all Levels<br />
    148. 148. Principle Twelve<br />Genchi Genbutsu<br />“Observe the production floor without preconceptions and with a blank mind. Repeat “why” five times to every matter.”<br /> -Taiichi Ohno <br />
    149. 149. “No Problem” is problem<br />Problems are opportunities to learn<br />Hiding problems undermines the system<br />
    150. 150. Learning from the Toyota Way<br />
    151. 151. Characteristics of Effective Lean Transformation<br />Top Down Directive that this is the new way.<br />Bottom-up involvement in concrete projects with clear results.<br />Develop internal experts through learning by doing.<br />Expert sensei to guide the process and teach.<br />Learning philosophy: every project, activity, is a chance to learn.<br />Start with value stream transformation projects.<br />Build on successes to transform broader organization and culture over time---YEARS!<br />
    152. 152. Why is this hard to do?<br />Traditional organizations in fire fighting mode <br />No clear vision of the future state<br />culture change is hard<br />Organizational change is disruptive<br />Management has to change its role from managing from the office to deeply understanding processes!<br />
    153. 153. REVIEW<br />
    154. 154. RtB<br />
    155. 155. Offshoring<br />
    156. 156. The Steroids<br />
    157. 157. Cool Hunter<br />
    158. 158.
    159. 159. Next<br />
    160. 160. Forces<br />Cluster<br />Competencies<br />
    161. 161. Forces<br />
    162. 162. Genzyme <br />Founded in 1981 <br />Scientists studying genetically inherited enzyme diseases<br />Global Market<br />Orphan Drugs<br />
    163. 163. Genzyme’s Focus on “Orphan Drugs”<br />
    164. 164. Genzyme’s Focus on “Orphan Drugs”<br />
    165. 165. In 1983, the FDA established the “Orphan Drug Act,” giving seven years market exclusivity to developers of drugs for rare (<200,000 patients) diseases.<br />Also chose unusual strategy of doing its own manufacturing and sales rather than licensing to a large pharmaceutical company.<br />Diversified into side businesses to fund its R&D<br />Chemical supplies<br />Genetic counseling <br />Diagnostic testing<br />
    166. 166. Genzyme’s Focus on “Orphan Drugs”<br />6-103<br />
    167. 167.
    168. 168. Foces<br />
    169. 169. Assessing the Firm’s Current Position<br />Porter’s Five-Force Model <br />Whether a particular industry will be profitable <br />determine if an individual firm’s chances for success via a vis its competitors<br />
    170. 170. Assessing the Firm’s Current Position<br />Degree of existing rivalry. Determined by number of firms, relative size, degree of differentiation between firms, demand conditions, exit barriers (for firm to leave the market)<br />Threat of potential entrants. Determined by attractiveness of industry, height of entry barriers (e.g., start-up costs, brand loyalty, regulation, etc.)<br />Bargaining power of suppliers. Determined by number of suppliers and their degree of differentiation, the portion of a firm’s inputs obtained from a particular supplier, the portion of a supplier’s sales sold to a particular firm, switching costs, and potential for backward vertical integration - firm produce its own supplies<br />Bargaining power of buyers. Determined by number of buyers, the firm’s degree of differentiation, the portion of a firm’s inputs sold to a particular buyer, the portion of a buyer’s purchases bought from a particular firm, switching costs, and potential for forward vertical integration - supplier enters firm’s business<br />Threat of substitutes. Determined by number of potential substitutes, their closeness in function and relative price.<br />6-107<br />
    171. 171. Genzyme<br />
    172. 172. Mitigating Circumstances<br />
    173. 173. Clusters<br />
    174. 174. Salmon<br />
    175. 175. Salmon in Chile<br />
    176. 176. Salmon Cluster<br />
    177. 177. Salmon Cluster<br /><ul><li>Fertilization & incubation
    178. 178. Freshwater breeding - smelt fattening
    179. 179. Infrastructure of cages
    180. 180. Tanks & recirculation systems
    181. 181. Transport services
    182. 182. Vaccines, antibiotics and pharmaceuticals
    183. 183. Feed production &supply</li></li></ul><li>Salmon Clusters<br /><ul><li>Fertilization and incubation of ova
    184. 184. Freshwater breeding - smolt fattening
    185. 185. Infrastructure of cages and related services (maintenance of nets)
    186. 186. Tanks and recirculation systems
    187. 187. Transport services:
    188. 188. Research and production of vaccines, antibiotics and other pharmaceutical products:
    189. 189. Feed production and supply</li></li></ul><li>Theory of Industry Clusters<br />
    190. 190. What are Industry Clusters? (Porter)<br />Geographic concentrations of competing, complementary, or interdependent firms<br />Common needs for talent, technology, and infrastructure<br />Dynamic, changing as the industries themselves or external conditions change<br />Centered on firms that sell outside the local, state, national market<br />Driving forces in a national, regional, state or metropolitan economy<br />
    191. 191. What are Industry Clusters? (Porter)<br />Porter Definition<br />Geographic concentrations<br />Common needs<br />Dynamic, changing<br />Sell outside the local, state, national market<br />Driving forces economy<br />Chilean salmon<br />.<br />.<br />.<br />.<br />.<br />
    192. 192. Competencies<br />
    193. 193. Competency<br /> “A bundle of skills and technologies (rather than a single discrete skill or technology) that enables a company to provide a particular benefit to customers” - Hamel and Prahalad 1994, p. 199.<br />
    194. 194. It provides consumer benefits <br />It is not easy for competitors to imitate <br />It can be leveraged widely to many products and markets. <br />
    195. 195. Dunning–Kruger Effect<br />People reach erroneous conclusions and make unfortunate choices but their incompetence robs them of the metacognative ability to realize it<br />Illusory Superiority<br />
    196. 196. Core Competencies at FedEx<br />FedEx<br />Logistics<br />management<br />Metacompetency<br />Package<br />tracking<br />Bar-code<br />technology<br />Wireless<br />communications<br />Network<br />management<br />Linear<br />programming<br />
    197. 197. Levels of competition for competence<br />Levels<br />Canon<br />Develop precision mechanics,<br />fine optics, microelectronics,<br />and electronic imaging<br />Develop and acquire<br />constituent skills<br />and technologies<br />Bring competencies together<br />to develop laser printer engines<br />Synthesize<br />core competencies<br />Core product (engine) sold to<br />HP, Apple, etc.<br />Maximize<br />core product share<br />Maximize end <br />product share<br /> (own brand plus <br />OEM)<br />Canon printers and Canon parts<br />on competitors’ printers<br /> (own brand plus OEM)<br />
    198. 198. Swatch<br />
    199. 199. Swatch Activity<br />Summarize<br />Look at the three theories<br />Brainstorm and try to make connections where these theories apply and do not apply<br />Criticize the choices made, and/or give suggestions to the country<br />
    200. 200. Theories<br />CwC<br />RtB<br />International Product Life Cycle Model<br />11/9: the fall of the Berlin Wall opening Windows <br />8/9: Netscape goes public<br />Work flow software: <br />Forces<br />Cluster<br />Competencies<br />Open SOurce<br />Dunning Kruger Effect<br />Uploading<br />Outsourcing<br />Offshoring<br />Supply-chaining<br />In-sourcing<br />In-forming<br />Steroids<br />Triple Convergence<br />Personalization<br />Strategic Alliance<br />democtatization<br />
    201. 201. Case Study<br />
    202. 202. Psychographic Segmentation<br />Divides a population into groups that have similar psychological characteristics, values, and lifestyles<br />Lifestyle<br />people’s decisions about how to live their daily lives, including family, job, social, and consumer activities<br />The most common method for developing psychographic profiles of a population is to conduct a large-scale survey<br />AIO statements<br />VALS and VALS 2 “Values and Lifestyles”<br />
    203. 203. Western Psychographic Segmentation<br />
    204. 204. Swatch: Psychographic Segmentation<br />6-10: Consider it "cool", because big kids have it (42% awareness!) <br />11 –15: ("teeny boppers") provides sense of identity <br />11 –15: ("young rockers") high awareness, but represents t.b. lifestyle <br />11-15: ("students") Swatch too wild for them, but they might buy it to fit in <br />16 –22: ("rockers") like the price, but dislike the male model geeks <br />16 –22: ("preppies") prefer a dressier watch <br />16- 22: ("trendies") hate it; "fast food of time pieces" (73% wear no watch) <br />22 –32: ("transitionaries") like its durability, disposability, price <br />22 –43: ("older casuals") watches used to tell time (4% awareness!) <br />• 33-43: ("weekend hippies") teen image (high awareness, but 43% have never seen a Swatch in real life <br />
    205. 205. Japan Psychographic Segmentation<br />Integrators<br />Innovators/Adopters<br />Display, daring, exciting<br />Rykoshiki<br />Home, career, status<br />Traditional <br />Traditional dress, customs, cooperative<br />Pragmatics<br />Few commitments, uninformed<br />Sustainers <br />Lack money, education, sustain the past<br />
    206. 206. Swatch<br />Positioning / Repositoning<br />
    207. 207. Discussion<br />How do companies we have seen use psychographic segmentation in mix?<br />Think: Swatch, Unilever, NIN<br />
    208. 208. Internationalization<br />
    209. 209. Strategies for Operations Abroad<br />International<br />Control remains predominately with HQ in home county<br />Low pressure for local responsiveness-high pressure cost reductions <br />Multidomestic<br />Customize operations and products to each local market<br />High local responsiveness-low pressure cost reductions<br />
    210. 210. Strategies for Operations Abroad<br />Global <br />Tendency to centralize main operational functions<br />Can mobilize world-wide resources<br />High cost reductions from economies of scale and experience curve-low customization to national borders<br />Transnational<br />Looking for ‘global learning’ from HQ to subsidiaries, in reverse and between subsidiaries<br />Cost reductions and product differentiation<br />
    211. 211. Advantages and disadvantages of the four strategies<br />
    212. 212. Discussion<br />How do Swatch and Unilever employ Global Strategies?<br />
    213. 213. Global Strategy<br />To go global or not?<br />Compelling Reasons<br />Diversity of earnings<br />Exposure to new and emerging markets<br />Experience curve and access to the most demanding customers<br />
    214. 214. Discussion<br />Why do Unilever and Swatch enter new markets? <br />How do Unilever and Unilever enter the markets? <br />What is unique is unique or different about their approach? <br />
    215. 215. Global Company (2SMCG)<br />1. Standard Products and Marketing Mix<br />Core product and minimum marketing adaptations <br />Economies of scale benefits<br />Segmentation cross national borders <br />
    216. 216. Global Company (2SMCG)<br />2. Sourcing all Assets on an Optimal Basis<br />Ability to source all assets in value chain in terms of availability or cost-competitiveness<br />Importance of assets deployment<br />
    217. 217. Global Company (2SMCG)<br />3. Market Access in Line with Break-Even Volume<br />Size not as important as generation of sales to cover demands of infrastructure and investment<br />
    218. 218. Global Company (2SMCG)<br />4. Contesting Assets<br />Ability to neutralize the assets and competencies of competitors<br />
    219. 219. Global Company (2SMCG)<br />5. Global Orientation of Functions<br />R&D, procurement, production, logistics, marketing, human resources and finance functions internationalizedorganizational structure<br />
    220. 220. Discussion<br /> To what degree are Unilever and Swatch global companies? <br />
    221. 221. Discussion<br />
    222. 222.
    223. 223. Entrepreneurship<br />
    224. 224. Entrepreneurs solve big problems<br />
    225. 225. Japan<br />
    226. 226. Most difficult problems do not have obvious solutions<br />
    227. 227. <ul><li>Vision
    228. 228. Determination
    229. 229. Resourcefulness
    230. 230. Creativity
    231. 231. Willingness to change direction</li></ul>Entrepreneurs<br />Necessary Traits<br />
    232. 232. Entrepreneurship creates positive change<br />Entrepreneurial Efforts<br />Employees<br />Consumers<br />Shareholders<br /><ul><li> Great opportunities
    233. 233. Greater income
    234. 234. New products, services
    235. 235. Increased wealth</li></ul>Government<br />General Economy<br /><ul><li> Additional tax revenue
    236. 236. Reduction in social benefit need
    237. 237. Secondary and tertiary creation of opportunities</li></li></ul><li>Three Forms of Entrepreneurship <br /> Types of Entrepreneurship<br />Individual<br />Micro & Small Enterprises<br />Large Markets<br />Entrepreneurship driven by instincts to survive <br /><ul><li> Vegetable vendor
    238. 238. Cattle rearing
    239. 239. Tea Stall
    240. 240. The area of microfinance
    241. 241. Supported by small loans between USD $50 - $200
    242. 242. Debt structure; short payback period
    243. 243. Proven area for finance</li></ul>Small to medium businesses with scope and employment<br /><ul><li> 5-100 employees
    244. 244. Relies on internal business sense to succeed
    245. 245. Currently with limited financial support
    246. 246. Need USD $20K to $250K
    247. 247. Generally rely on personal funds, family, friends, and money lenders</li></ul>Large businesses with large scope and employment<br /><ul><li> Typically run by highly educated managers
    248. 248. Exit markets well understood
    249. 249. Significant conventional venture capital support
    250. 250. Need USD millions in equity
    251. 251. Primarily service export or urban focused
    252. 252. Proven area for finance</li></li></ul><li>
    253. 253. Entrepreneurial India<br />
    254. 254. Look at Four<br />
    255. 255. Entrepreneurial India- “Top Incubation Center”<br />1. Centre for Innovation, Incubation& <br /> Entrepreneurship (CIIE) - IIM Ahmedabad<br /><ul><li>Set up in 2001
    256. 256. Since inception CIIE has 15-odd innovations grow out of the incubation centre in varied technologies</li></ul>2. Society for Innovation and Entrepreneurship (SINE)- IIT Bombay<br /><ul><li>Set up in 2004
    257. 257. It currently has 16 companies under its incubation programme</li></li></ul><li>Entrepreneurial India- “Top Incubation Center”<br />3. Cell for Tech Innovation, Development & entrepreneurship support- IIT Chennai<br /><ul><li>Set up in 2000
    258. 258. Organises national level competitions, ‘Breakthrough’ (general business plan competition) and ‘Genesis’ (social entrepreneurship plan competition)</li></ul>4. Society for Innovation and Development (SID) - IISc, Bangalore<br /><ul><li>Set up in 2006
    259. 259. The investigator is given a seed capital for Rs 20 lakh a year for two years as soft loan for the approved plan</li></li></ul><li>Entrepreneurship Type<br />Synergy w/ Rural and Semi Urban India<br />Dis-synergy w/ Rural and Semi Urban India<br />Individual / Microfinance<br /><ul><li>Flexible, meets local requirements
    260. 260. Demonstrated ability to scale numbers of individuals
    261. 261. Microfinance an established and growing industry
    262. 262. Limit to impact
    263. 263. Skills of great entrepreneurs not dispersed to others
    264. 264. Diminishing returns with market saturation</li></ul>Micro and small enterprise / informal sources<br /><ul><li>Can provide value added employment to multiple people
    265. 265. Only need one entrepreneur for multiple increases in income
    266. 266. Flexible – tailored to local market and infrastructure requirements
    267. 267. Hamstrung by lack of capital and business building support
    268. 268. Scale requirements limit flexibility
    269. 269. Limited understanding of rural and semi-urban India
    270. 270. Rural and semi-urban India unlikely to be attractive currently</li></ul>Large markets / mainstream venture capital<br /><ul><li>Can mobilize Fund quickly
    271. 271. Brings most sophisticated business experience
    272. 272. Commercial venture capital entrenched in India</li></ul>Micro and small enterprises are key, receive least support<br />
    273. 273. Entrepreneurial India- “Industry-Academia Interface”<br />
    274. 274. Micro Credit<br />
    275. 275. Microfinance Institutions<br />Entrepreneurs<br />The Traditional Microfinance Lending Process<br />Banks and NGOs<br /><ul><li>Microfinance institutions typically get the money that they lend, from banks or non-governmental organizations, or both
    276. 276. This can be expensive, as it is often borrowed with interest
    277. 277. There may also be difficult application procedures to access debt capital from non-governmental organizations
    278. 278. Some organizations can even find themselves shut out due to the region they operate in, particularly post-conflict regions
    279. 279. Restrictions that microfinance institutions face ultimately affect the entrepreneurs, who rely on microfinance institutions to serve them</li></li></ul><li>You!<br />Microfinance Institutions<br />Entrepreneurs<br />The Kiva Microfinance Lending Process<br />With Kiva, you can be micro-lender<br />You can act as a banker and provide the funds to microfinance institutions that they then lend to entrepreneurs<br />
    280. 280. Kiva<br /><ul><li>Kiva.org is a website which allows you to lend to an entrepreneur in the developing world who needs a loan
    281. 281. Through Kiva, you loan as little as $25 to an entreprenuer at 0% interest</li></li></ul><li><ul><li>Browse
    282. 282. Loan requests are funded within minutes</li></li></ul><li>Size of the loan and status<br />Picture of the entrepreneur<br />Summary of the business and loan, including when it is expected to be paid back <br />Description of the business and what the loan will be used for<br />Information on the microfinance institution which is managing the loan on the ground<br />
    283. 283. The business page also shows you all of the other people around the world who are contributing to this loan<br />
    284. 284. Kiva’s Microfinance Partners<br />Kiva has 89 Microfinance Partners in 42 countries and is still growing<br />Ukraine<br />Moldova<br />Bulgaria<br />Tajikistan<br />Azerbaijan<br />Afghanistan<br />Iraq<br />Gaza<br />Pakistan<br />Haiti<br />Mexico<br />Mali<br />Vietnam<br />Dominican Republic<br />Senegal<br />Cambodia<br />Nicaragua<br />Congo<br />Ghana<br />Uganda<br />Honduras<br />Togo<br />Nigeria<br />Ecuador<br />Kenya<br />Cameroon<br />Indonesia<br />Tanzania<br />Bolivia<br />Peru<br />Mozambique<br />Paraguay<br />Samoa<br />
    285. 285. 172<br />Kiva Introduction: What are Kiva’s benefits?<br />Internet Lender<br /><ul><li>Transparent (“I know where my money is going”)
    286. 286. Sustainable (“If repaid, I will re-lend to someone else”)
    287. 287. Affordable (“I only need $25 to change someone’s life”)
    288. 288. Unique (“I love microfinance and I want to participate”)</li></ul>Microfinance Institution<br /><ul><li>0% interest USD debt capital
    289. 289. No liability: Client loss borne by Internet Lender
    290. 290. Flexible repayment terms
    291. 291. Exhibit your work to an international audience</li></li></ul><li>Chavez and Entrepeneurship<br />
    292. 292. HAARP<br />
    293. 293. How<br />
    294. 294.
    295. 295. Silicon Valley<br />Silicon Valley is a nickname for the southern part of the San Francisco Bay Area centered roughly on Sunnyvale. <br />coined by journalist Don C. Hoefler in 1971, <br />It was named "Silicon" for the high concentration of semiconductor and computer related industry in the area, and "Valley" for the Santa Clara Valley. <br />Fairchild Semiconductor really started and then fuelled it all<br />
    296. 296.
    297. 297. WWII<br />The First Electronic War<br />
    298. 298. British and American Air War in Europe<br />28,000 Active Combat Planes40,000 planes lost or damaged beyond repair:18,000 American and 22,000 British79,265 Americans and 79,281 British killed<br />
    299. 299. The German Air Defense SystemThe Kammhuber Line<br />Integrated Electronic air defense network<br />Covered France, the Low Countries, and into northern Germany<br />Protection from British/US bomber raids<br />Warn and Detect<br />Target and Aim<br />Destroy<br />
    300. 300. German Air Defense System<br />
    301. 301. Himmelbelt<br />Local Air Defense<br />Network<br />• Box ~30 x 20 miles<br />• Integrated network<br />of radars, flak,<br />fighters,<br />searchlights<br />Radars fed Himmelbett centers<br />• Operators worked from rows of<br />seats in front of a huge screen<br />• Fighters would fly orbits around<br />a radio beacon<br />– fighter controller talked it to the<br />vicinity of the target<br />• Fighters would turn on its radar,<br />acquire the target, and attack<br />
    302. 302. Flak Radar Controlled Anti Aircraft Guns<br />15,000 Flak Guns<br />400,000 soldiers in flak batteries<br />Radar-directed flak to 30,000’<br />Fused for time<br />Fragmentation rounds<br />No Proximity Fuses<br />105 mm flak<br />
    303. 303. Two<br />The Electronic Shield <br />Electronic Warfare<br />
    304. 304. Harvard Radio Research Lab Signals Intelligence and Electronic Warfare<br />Reduce losses to fighters and flak<br />Find/understand German Air Defense<br />Electronic and Signals Intelligence<br />Jam/confuse German Air Defense<br />Radar Order of Battle<br />Chaff<br />Jammers<br />Top Secret 800 person lab<br />
    305. 305. ELINT Understand German Air Defense<br />B-24J flights inside Germany to intercept German radar signals<br />Fitted with receivers & displays<br />Wire and strip recorders<br />Frequency, pulse rate, power, etc.<br />50 MHz to 3 GHz<br />
    306. 306. Window/ChaffJam Wurzburg<br />Strips of aluminum foil<br />1/2 Wurzburg frequency<br />46,000 packets tossed out by hand<br />Each packet contained 2,000 strips <br />Automatic dispensers came later<br />First used July 1943<br />Raid on Hamburg<br />Shut down German air defense<br />Used 3/4’s of Aluminum Foil in the US<br />
    307. 307. Blind German Early Warning Radar<br />Put Jammers on Airplanes<br />Carpet” AN/APT-2 Jammer<br />Confuse Wurzburg radar<br />Shut down flak<br />Shut down GCI<br />5 Watts<br />
    308. 308.
    309. 309. Fred Terman<br />Who Ran this Secret Lab and became<br />the Father of Electronic Warfare?<br />• Harvard Radio Research Lab<br />– Separate from MIT's Radiation Laboratory<br />– Ran all electronic warfare in WWII<br />– 800 people<br />– 1941-1944<br />• Director: Fredrick Terman - Stanford<br />
    310. 310.
    311. 311. Fred Terman<br />Stanford Professor of engineering 1926<br />encouraged his students, William Hewlett and David Packard to start a company<br />Dean of Engineering 1946<br />Provost 1955<br />
    312. 312. Spook Entrepreneurship<br />
    313. 313. Terman Strategy<br />Focus on microwaves and electronics<br />Not going to be left out of gov’t $’s this time<br />Recruits 11 former members of RRL as faculty<br />Set up the Electronics Research Laboratory (ERL)<br />“Basic” and Unclassified Research<br />First Office of Naval Research (ONR) contract 1946<br />By 1950 Stanford was the MIT of the West<br />
    314. 314. Korean WarSpook Work Comes to Stanford<br />• Applied Electronics Laboratory (AEL)<br />– “Applied” and Classified Military programs<br />– Doubles the size of the electronics program<br />– Separate from the unclassified Electronics<br />Research Laboratory<br />– Made the university, for the first time, a full<br />partner in the military-industrial complex<br />
    315. 315. Cold War and Research<br />The Cold War battlefield moves 500 miles east<br />Fear of a “nuclear Pearl Harbor”<br />Countermeasures, Elint and Sigint, become critical<br />Stanford becomes a center of excellence for the NSA,CIA, Navy, Air Force<br />
    316. 316. The Cold War is an Electronic War<br />
    317. 317. Stanford Helps Understand theElectronic Order of Battle<br />Where are the Soviet radars?<br />Consumers; SAC, CIA.<br />Details of the radars<br />NSA/CIA to contractors<br />Periphery of Soviet Union known<br />
    318. 318.
    319. 319.
    320. 320. U-2 Sigint Platform (1956)Stanford and Silicon Valley<br />System IV<br />150 - 40,000 MHz<br />Stanford Electronics Laboratories<br />Ramo Woolridge<br />E/F Band ELINT recorder (1956)<br />A Band ELINT recorder (1959)<br />E/F Band Jammer (1959)<br />Granger Associates<br /> Watkins Johnson<br />– QRC -192 Elint receiver<br />– 50 -14,000 MHz<br />Communications receiver<br />– 100-150 MHz/3 channel tape recorder<br />
    321. 321. Stanford Joins the “Black” World<br />Electronics Research Laboratory<br />“Basic” and Unclassified Research<br />Applied Electronics Laboratory (AEL)<br />“Applied” and Classified Military programs<br />Merge and become the Systems Engineering<br />Lab (SEL) in 1955<br />Same year Terman becomes Provost<br />
    322. 322. Terman Changes the Startup/University Rules<br />Silicon Valley as We Know it Starts Here<br />Graduate students encouraged to start companies<br />Professors encouraged to consult for companies<br />Terman and other professors take board seats<br />Technology transfer/IP licensing easy<br />Getting out in the real world was good for your academic career<br />
    323. 323. Stanford’s Role<br />Interaction with industry (via legacy just discussed)<br />Research funding and creativity<br />Silicon Valley as a nearby planting ground for ideas<br />Role of students as inventors, as disseminators, and as part of the workforce<br />Encouraging entrepreneurship …<br />
    324. 324. Microwave Valley - Components<br />Klystrons, Carcinotrons, & Traveling Wave Tubes<br />Eitel-McCullough (1934)<br />Varian Associates (1948)<br />Litton Industries (1946)<br />Huggins Laboratories (1948)<br />Stewart Engineering (1952)<br />Watkins-Johnson (1957)<br />Microwave Electronics Co. (1959)<br />
    325. 325. 1966<br />Hewlett-Packard entered the general purpose computer business with its HP-2115 for computation, offering a computational power formerly found only in much larger computers. It supported a wide variety of languages, among them BASIC, ALGOL, and FORTRAN.<br />HP-2115<br />
    326. 326. Spook Innovation<br />
    327. 327. Radio Dishes Get Funded<br />Attach ELINT receivers to Bell Labs<br />60’ radar antenna in New Jersey<br />Use “matched filter” techniques<br />Developed at Stanford<br />• Build steerable antenna at Sugar<br />Grove Virginia<br />• Pay for and build Stanford “Dish”<br />Hide relationships via “cover agencies”<br />
    328. 328. Project Grab 1960-1962<br />ELINT in Space<br />No more overflights<br />Collect radar emissions from<br />Soviet air defense radars<br />Built by the Naval Research Laboratory<br />Used by SAC for EOB then given to the NRO<br />
    329. 329. Microwave Valley - Systems<br />Some Stanford Alum’s<br />Sylvania Electronics Defense Laboratory (1953)<br />Countermeasures, search receivers, converters<br />Hired faculty as consultants, including Terman<br />GE Microwave Laboratory (1956)<br />Granger Associates (1956)<br />Electronic Systems Laboratories (ESL) (1964)<br />Sylvania EDL director William Perry founder<br />Argosystems (1969)<br />
    330. 330. Terman and the Cold WarSilicon Valley’s 1st Engine of Entrepreneurship<br />
    331. 331.
    332. 332. Valley Attracts Financial Attention1st West Coast IPO’s<br />1956 Varian<br />1957 Hewlett Packard<br />1958 Ampex<br />
    333. 333. The Rise of Risk Capital<br />“The Group” 1950’s<br />• First Bay Area “Angels”<br />– Reid Dennis<br />– William Bryan<br />– William Edwards<br />– William K. Bowes<br />– Daniel McGanney<br />~ 10 deals $75 -$300K<br />
    334. 334. Summary<br />• Terman/Stanford/Government responsible for<br />entrepreneurial culture of Silicon Valley<br />• Military primed the pump as a customer for key<br />technologies<br />– Semiconductors, computers, Internet<br />– But very little technical cross pollination<br />• Venture Capital turned the valley to volume corporate<br />and consumer applications<br />
    335. 335.
    336. 336. Hewlett Packard and Wozniack<br />Steven Paul Jobs, Stephen Gary Wozniak and Ronald Gerald Wayne founded Apple Computer.<br />In 1976, Ronald Wayne resigns from Apple Computer with only a one time payment of $80.<br />Hewlett Packard grants Gary Wozniak the permission to create the Apple I.<br />
    337. 337. Japan<br />
    338. 338. Rice Markets And Taxes<br />Taxes<br />Jomen (fixed amount) system<br />Stabilization<br />Transport<br />Roads<br />Trade Routes<br />Sekisho (passport Controls)<br />Trade Cartels<br />Futures markets<br />
    339. 339. Rich Merchants in Edo Period (Gosho)<br />Sumitomo<br />-16c Adopt Western copper refining, copper trade (Kyoto)-17c Move to Osaka<br />-Besshi Copper Mine (under Bakufu’s commission)<br /><Transition to Meiji><br />Manager: Saihei Hirose<br />-Avoiding gov’t confiscation-Introducing Western mining technology to renovate Besshi<br />-Business diversification<br />MITSUI<br />-17c From Matsuzaka<br />-Kimono trade & money exchange in Edo, Kyoto, Osaka – huge success<br /><Transition to Meiji><br />Manager: Rizaemon Minomura<br />-Cope with bakufu policy<br /> to protect Mitsui business<br />-Support and work with<br /> new government<br />-Internal reform: from gosho to zaibatsu<br />-1876 Establish Mitsui Bank & Mitsui Trading Company<br />
    340. 340. The Black Ships<br />
    341. 341. Negative Consequences<br />Comprehensive commercial treaties<br />treaties which the bakufu signed with the West were unequal treaties <br />Japan had no right to decide tariffs (set at 5%)<br />Japanese court could not judge foreign criminals in Japan.<br />Japanese Indemnification for Political Problems<br />Inflation: Samari Impoverished<br />Arms<br />
    342. 342. Positive Consequences<br />New ideas, technology, industry and systems<br />Silk and tea suddenly found huge overseas markets.<br />Western Goods<br />Yokohama merchants<br />
    343. 343. Trade 1876-80<br />
    344. 344. Japanese Respose<br />Initially, avoid colonization by the West<br />Rapid modernization and Westernization<br />Become “first-class” nation on a par with West<br />Fukoku Kyohei (富国強兵) - Rich Country, Strong MilitaryShokusan Kogyo(殖産興業) - Increase Products, Build Industries<br />
    345. 345. Konosuke Odaka: World of Craftsmen, World of Factories(NTT Publishing, 2000)<br />In Japan’s early factories, traditional shokunin (craftsmen) and modern shokko (workers) coexisted.<br />Craftsmen were proud, experienced and independent. They were the main force in initial technology absorption.<br />Workers received scientific education and functioned within an organization. Their skills and knowledge were open, global and expandable.<br />Over time, craftsmen were replaced by workers. Experience was not enough to deepen industrialization.<br />
    346. 346. Monozukuri (Manufacturing) Spirit<br />Mono means “thing” and zukuri (tsukuri) means “making” in indigenous Japanese language.<br />It describes sincere attitude toward production with pride, skill and dedication. It is a way of pursuing innovation and perfection, disregarding profit or balance sheet.<br />Many of Japan’s excellent manufacturing firms were founded by engineers full of monozukuri spirit.<br />Akio Morita (Sony’s co founder)1921-1999<br />Sakichi Toyota1867-1930<br />Konosuke Matsushita1894-1989<br />Soichiro Honda1906-1991<br />
    347. 347.
    348. 348.
    349. 349. Four<br />
    350. 350. Steps to Managing Export Operations<br /><ul><li>Step 1 -Segment World markets
    351. 351. Product Quality and Product feature segmentation
    352. 352. Factors influencing segmentation
    353. 353. Purchasing power
    354. 354. Consumer tastes
    355. 355. Weather conditions
    356. 356. Level and dispersion of wages and technical skills
    357. 357. Important factors in analysis
    358. 358. Emerging demand met by innovations in product technology in one country that are mirrored in other countries
    359. 359. Deregulation and restructuring of markets
    360. 360. Government policies and programs </li></ul>Slide 4-2<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    361. 361. Steps to Managing Export Operations (contd..)<br /><ul><li>Step 2 - Select an Entry Strategy to Promote Sustainable Competitive Advantage
    362. 362. Standardized product to all markets
    363. 363. Product- Life cycle strategy
    364. 364. Localized market strategy
    365. 365. A combination of strategies can also be followed
    366. 366. Step 3 - Take a long-run Perspective
    367. 367. Initial costs must be viewed as investments
    368. 368. Returns on investments will not be immediate in export markets</li></ul>Slide 4-3<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    369. 369. Pricing in Export Markets<br /><ul><li>Strategy 1 - Requiring prices in export markets that yield higher returns than are available in domestic markets
    370. 370. Based on the belief that export operations are more risky relative to domestic sales - can result in uncompetitive prices.
    371. 371. Strategy 2- Pricing to yield similar returns in domestic and export markets
    372. 372. Based on the viewpoint that export markets do not necessarily differ from domestic markets
    373. 373. Strategy 3 - Pricing to yield lower returns, or even losses, in export markets—at least in the short run
    374. 374. Reflects an approach that views export markets as the potential growth markets of the future - firm vulnerable to antidumping action
    375. 375. Strategy 4 - Pricing to sell production in excess of the needs of the domestic market so long as these sales make a contribution to fixed overhead and profit
    376. 376. View of export markets as a dumping ground for production in times of excess capacity - firms very vulnerable to anti-dumping actions </li></ul>Slide 4-4<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    377. 377. Stages of Export Market Involvement<br /><ul><li>Stage 1 – Unplanned entry
    378. 378. Unsolicited order from abroad, overproduction, declining domestic sales, pressures, “follow the leader” behavior, government-sponsored trade fairs, and funded export missions
    379. 379. Stage 2 – Systematic evaluation of the impact of exports
    380. 380. Stage 3 - Exports become a major factor in the firm’s strategy and operations. </li></ul>Slide 4-5<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    381. 381. Trade Intermediaries<br /><ul><li>Import Traders
    382. 382. For every export, there is an import
    383. 383. Pure importers are market connectors; they create value through linking producers abroad to buyers in the domestic market
    384. 384. Pure importers usually have an advantage such as knowledge of the domestic market and practices
    385. 385. Export Traders
    386. 386. They are also market connectors
    387. 387. Their advantages lie in knowledge of markets in particular countries or in knowledge of worldwide markets for particular products.
    388. 388. Trading Houses
    389. 389. Pure import operations and pure export operations are joined together in the trading houses </li></ul>Slide 4-6<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    390. 390. Vital Questions to be asked<br /><ul><li>Does our product and firm have a sustainable competitive advantage in export markets and, if so, why?
    391. 391. What are the export markets and the segments of those markets that will value our product sufficiently (relative to other competing products) to offset our costs of production and distribution?
    392. 392. Should the firm export a standard product with a standard marketing mix worldwide or should it tailor its products and marketing mix to individual export markets?
    393. 393. What natural and government-imposed trade barriers impede linking production in one country to purchase in another, and what factors might facilitate this linkage?
    394. 394. What are the most appropriate channels of distribution for our product to achieve our goals in export markets?</li></ul>Slide 4-7<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    395. 395. Present day export trade<br /><ul><li>Tariff and nontariff barriers to trade have fallen globally and free trade areas have developed.
    396. 396. Firms often now analyze trade opportunities on a regional, and sometimes even broader basis
    397. 397. Products are often not sent directly from one home production site to an export market abroad. Inputs are sourced in a number of countries and assembled in other countries, and the final product is sold in yet other countries
    398. 398. Trade intricately linked with foreign investment, joint ventures, licensing, franchising, contract production, and component sourcing </li></ul>Slide 4-8<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    399. 399. Countertrade<br /><ul><li>A special form of exporting is countertrade, the linked exchange of goods for goods in international trade
    400. 400. Countertrade covers - Barter ,Counterpurchase, Compensation or buyback, Production sharing, Industrial offsets, Switches, Unblocking funds and Debt for equity swaps
    401. 401. Can be complicated and costly to negotiate and execute
    402. 402. Important characteristics of countertrade contracts need to be attended to carefully by an exporter
    403. 403. Generally countertrade is an inefficient form of trade. It creates costs and risks for both importers and exporters </li></ul>Slide 4-9<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    404. 404. Major Project Development<br /><ul><li>Importance and investment increased during the 1990s –likely to continue to increase in the future.
    405. 405. Generally for infrastructure development - electricity generation, telecommunications, water and sewage treatment facilities, and even roads and ports.
    406. 406. Types of Major projects
    407. 407. Turnkey projects
    408. 408. Firm undertakes to construct a major project, then turns it over to its owners when it is in full operation
    409. 409. Build, operate, and transfer projects (BOT)
    410. 410. Firms bid for the right to construct the project, the winning firm also operates the facility after it is completed.
    411. 411. Ownership is limited to a certain time period, after which the project is transferred to another organization
    412. 412. Build, operate, and own projects (BOO)
    413. 413. Firms bid for the right to construct the project.
    414. 414. The winning firm also operates the facility after it is completed. . </li></ul>Slide 4-10<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    415. 415. Exports, Imports, and International Finance<br /><ul><li>Important aspects for exporters/importers
    416. 416. Effect of the real exchange rate on competitive advantage,
    417. 417. Effect of variations in the nominal exchange rate on export and import profitability
    418. 418. Pricing of the goods in the importers currency
    419. 419. Countered by setting up currency hedge
    420. 420. Use of forward contracts
    421. 421. Effect of trade on financing needs and sources
    422. 422. Irrevocable letter of credit (LoC) used to overcome uncertainty</li></ul>Slide 4-11<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    423. 423. Six<br />Licensing<br />
    424. 424. What is Licensing?<br /><ul><li>Licensing is a contractual arrangement whereby the licensor (selling firm) allows its technology, patents, trademarks, designs, processes, know-how, intellectual property, or other proprietary advantages to be used for a fee by the licensee (buying firm).
    425. 425. It is a strategy for technology transfer.
    426. 426. Franchising is an organizational form where the franchisor of a service, trademarked product, or brand name allows the franchisee to use the same in return for a lump sum payment and/or royalty, while conforming to required standards of quality, service, and so forth. </li></ul>Beamish, Morrison, Inkpen and Rosenzweig<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    427. 427. When is Licensing employed?<br /><ul><li>Used both in technology intensive and non technology-intensive industries (eg. Computer software, food, sport teams, publishing)
    428. 428. A licensor lacks the capital knowledge of foreign markets required for exporting or FDI, but wants to earn additional profits with minimal commitment.
    429. 429. Host-country governments restrict imports or FDI, or both; or the risk of nationalization or foreign control is too great.
    430. 430. A firm wishes to test the potential for future direct investment.
    431. 431. The technology involved is not central to the licensor’s core business. Generally only peripheral technologies are licensed.</li></ul>Slide 6-3<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    432. 432. When is Licensing employed? (contd..)<br />High prospects of technology “feedback” or “flowback”<br />The licensor wishes to exploit its technology in secondary markets that may be too small to justify larger investments; the required economies of scale may not be attainable.<br />The licensee is unlikely to become a future competitor.<br />Rapid pace of technological change such that the licensor can remain technologically superior to the licensee. If the technology may become obsolete quickly, there is pressure to exploit it fully while the opportunity exists.<br />Slide 6-4<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    433. 433. Licensing Related Issues<br />Risks<br />Dissipation of proprietary advantage<br />Tarnishing of reputation due to lack of quality<br />Profits may not be maximized<br />Difficulty in enforcement of license terms<br />Intellectual Property Rights <br />IP legislations nonexistent or not enforced<br />“Reluctant Licensing” – attempts to offset piracy<br />Slide 6-5<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    434. 434. Licensing Related Issues (contd..)<br />Costs of Licensing<br />Protection costs<br />License Agreement costs<br />Agreement Maintenance costs<br />Unattractive markets for Licensing<br />Governmental regulatory schemes<br />Restrictions imposed on duration and exclusive rights to territories<br />Foreign exchange controls and tax on royalty fees<br />Slide 6-6<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    435. 435. Elements of License Agreement<br />A clear and correct description of the parties to the agreement<br />A preamble or recitals describing the parties, their reasons for entering into the arrangement, and their respective roles.<br />A list of defined terms for the purposes of the particular contract to simplify this complex document and to eliminate ambiguity.<br />A set of schedules, in an exhibit or appendix, where necessary, to segregate lengthy detailed descriptions of any kind.<br />Explicit description of the grant that is fundamental to the agreement and the nature of the rights being granted to the licensee.<br />Description of any geographical limitations on the licensee’s manufacturing, selling, or sublicensing activities.<br />Slide 6-7<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    436. 436. Elements of License Agreement (contd..)<br /> A description of any exclusive rights to manufacture and sell that may be granted including rights to sublicense.<br />The terms relating to the duration of the agreement and its extension or review.<br />Provisions for the granting of rights to downstream refinements or improvements made by the licensor in the future.<br />Provisions for “technological flowback” agreements. <br />Details regarding the royalties or periodic payments based on the use of licensed rights.<br />Specification of minimum performance requirements and other protection clauses<br />Slide 6-8<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    437. 437. Some Licensing Announcements<br />Starbucks, the U.S. coffee chain, hopes to have 500 branches in Asia by 2003 through licensing agreements<br />Licensed properties account for nearly half of the $4 billion in home decorating retail sales sold for the Halloween season.<br />Palm makes new licensing deals with Intel, Motorola and Texas Instruments, to expand the Palm operating system into all kinds of mobile devices from handhelds to cell phones and perhaps even wristwatches.<br />On June 26, 2001, hundreds of independent record companies in Britain and Europe signed a licensing agreement with Napster to immediately make thousands of tracks available to computer-users worldwide.<br />Slide 6-9<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    438. 438. Eight<br />Strategy<br />
    439. 439. The Changing World<br />Globalization is the buzzword!<br />Change in traditional approaches towards more innovative strategies<br />Firms forced to trade off between globalization and localization<br />Transformation is slow mainly due to anti-globalization protests and the Internet<br />Slide 8-2<br />Beamish, Morrison, Inkpen and Rosenzweig <br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    440. 440. Pressures towards Globalization<br />Broad factors making global competition possible <br />Freer Trade<br />GATT, WTO agreements<br />Creation of free trade zones, regional trading blocks like EU, ASEAN<br />Global financial services and capital markets<br />Growth seen in FDIs<br />Growth of Overseas venture capitalists and trans-national banks<br />Advances in communications technology<br />Ease of organizational control<br />The Internet<br />Facilitates ease of communication<br />CRM, EDI systems are now in place in many companies<br />Internet exchanges link buyers and sellers worldwide and have opened up new markets<br />Slide 8-3<br />Beamish, Morrison, Inkpen and Rosenzweig <br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    441. 441. Pressures towards Globalization (contd..)<br />Industry Specific Factors<br />Universal customer needs<br />Global customers<br />Many MNCs sell to other MNCs and need to keep up with the international expansion of the customers<br />Global competitors<br />High investment intensity<br />High investments required for R&D, advertising due to increased competition<br />When investment intensity is high, many companies are eager to amortize expenses by selling products globally<br />Pressures for cost reduction<br />Economies of scale and learning are important in price-sensitive markets<br />Slide 8-4<br />Beamish, Morrison, Inkpen and Rosenzweig <br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    442. 442. Pressures towards Localization<br />Country specific Factors<br />Trade barriers<br />Tariffs, subsidizing domestic production, voluntary export restrictions, competing technical standards<br />Cultural differences<br />Cultural and religious beliefs, purchasing power, weak enforcement of laws<br />Nationalism<br />The Internet<br />Anti-globalization activism<br />Slide 8-5<br />Beamish, Morrison, Inkpen and Rosenzweig <br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    443. 443. Pressures towards Localization (contd..)<br />MNC-Specific Pressures<br />Organizational resistance to change<br />Logistics limitations<br />Management skills and competencies <br />Slide 8-6<br />Beamish, Morrison, Inkpen and Rosenzweig <br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    444. 444. Business Strategies<br />Exhibit 8-1 <br />Mapping Industries<br />High<br />Semiconductors<br />Telecommunications<br />Watches<br />Global Industries<br />Aerospace<br />Civil Aircraft<br />Automobiles<br />Need for Vertical Integration<br />Regional Industries<br />White Goods<br />Packaged Foods<br />Multidomestic Industries<br />Cement<br />Funeral Homes<br />Low<br />High<br />Need for Local Responsiveness<br />Slide 8-7<br />Beamish, Morrison, Inkpen and Rosenzweig <br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    445. 445. Key Recommendations for Managing the Formulation Process <br />Invest Heavily in Data Collection<br />Use multiple data sources, tap external sources and develop internal sources to overcome suspect data<br />Determine the Potential for Critical Scale Economies <br />Weigh the Value of other Globalization Benefits<br />Rotate Country Managers More Frequently to Help Them Develop a Global Vision <br />Be Prepared to Reassess your Performance Measurement System and Reward System <br />Take a Balanced Approach <br />Slide 8-8<br />Beamish, Morrison, Inkpen and Rosenzweig <br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    446. 446. Twelve<br />Govt Relations<br />
    447. 447. Sources of Trade Regulation<br />GATT and WTO<br />Set up to deal with tariffs and non tariff barriers to trade<br />Tokyo Round in mid 1970s<br />Tariff barriers reduced significantly<br />Partial success with non-tariff barrier reduction mainly due to complexity and sensitivity<br />Uruguay Round – 1986-1993<br />Challenging problems addressed – technical barriers, trade in services, intellectual property rights, trade in technology etc.<br />More member countries – 117<br />Problems of developing countries addressed<br />WTO formed – meets every 2 years<br />Slide 12-2<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    448. 448. Trade Agreements and Associations<br />U.S. – Canada Free Trade Agreement<br />Formed January 1988 – world’s largest free trade area<br />Dispute resolution mechanisms established<br />NAFTA formed with Mexican representatives<br />Association of Southeast Asian Nations<br />ASEAN formed August 1967 with 5 member states, presently has 10 members <br />Regarded as a loose economic cooperation channel but expected to change, FTA with China expected<br />Move towards ASEAN FTA<br />Slide 12-3<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    449. 449. Trade Agreements and Associations (contd..)<br />Asia-Pacific Economic Corporation<br />APEC established 1989, presently has 21 members<br />Primary vehicle for open trade and economic cooperation<br />Agreement to develop free trade yet to be reached<br />ANDEAN and MERCOSUR<br />Composed of South American nations with an objective of setting a common external tariff<br />European Union<br />Slow process of European integration<br />Founded on the principle of supranationality<br />Slide 12-4<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    450. 450. Opportunities and Threats <br />Exhibit 12- 1<br />Opportunities and Threats from Government Actions<br />Slide 12-5<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    451. 451. Political Strategy<br />Essential for a firm to form and implement political strategy<br />Formulation <br />Objectives<br />Issues<br />Stakeholders (allies, opponents, targets)<br />Position/Case (“public interest”) <br />Implementation <br />Timing<br />Techniques <br />Direct (negotiate, litigate)<br />Indirect (advocacy advertising, political contributions)<br />Vehicles (e.g. coalition, Government Relations department, consultants)<br />Style (e.g., confrontation or conciliation)<br />Slide 12-6<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    452. 452. Impact of International Business-Government InteractionObjectives and Motivations of MNC-SOE Alliances and Acquisitions<br />Objectives of MNCs<br />Increase profits, reduce potential risks and achieve economies of scale<br />Control/preempt competition, expand market share, achieve first mover advantage<br />Obtain lower-cost production or distribution facilities<br />Develop or adapt technology jointly, obtain new labor or technology resources<br />Expand domestic sales through overseas operations<br />Obtain new labor or technology resources<br />Objectives of SOEs or Privatized Enterprises<br />Ensure survival and financial viability<br />Gain competitiveness and become profitable<br />Acquire new technology and improve managerial competence<br />Objectives of Governments<br />Generate public revenues from SOE sales<br />Reduce subsidies to loss making SOEs, foreign debts and public budget deficits<br />Strengthen private sector, increase national productivity and stimulate growth<br />Expand shareholding among citizens and reduce government role in economy<br />Slide 12-7<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    453. 453. Proactive Management of Relations<br />MNE’s Perception of Government Policy<br />Exhibit 12-4<br />MNE’s approach to <br />Government Policy<br />Viewed as Potentially Influenced<br />by MNE Managers<br />Viewed as outside the Influence<br />Of MNE Managers<br />To achieve <br />Benefits of<br />integration<br />MNE’s objectives in Business – Government <br />Interactions<br />To achieve <br />Benefits of<br />National <br />Responsiveness<br />Slide 12-8<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    454. 454. Bargaining Power<br />Discriminatory enforcement occurs due to differing characteristics of subsidiaries – Bargaining Power<br />Sources of Bargaining power for host country<br />Growing capability to replace the MNE’s products<br />Control over access to raw materials, labor and capital<br />Sources of Bargaining power for MNE<br />Vertical integration<br />Slide 12-9<br />Beamish, Morrison, Inkpen and Rosenzweig<br />INTERNATIONAL MANAGEMENT 5/e<br />McGraw-Hill<br />McGraw-Hill<br />© 2003 The McGraw-Hill Companies, Inc. All rights reserved.<br />
    455. 455.
    456. 456. Lockout<br />Acquiring Technology Cheaply.<br />Innovating.<br />Selling Product Below Cost.<br />Build market share.<br />Adquiriendo Tecnología Barato. <br />Innovación. <br />Venta Del Producto Debajo Del Coste. <br />Cuota de mercado de la estructura.<br />
    457. 457. Lockout Case: VCR<br />En los años 80, Japón demandó el mercado global del VCR para sí mismo por los competidores potenciales de debajo-tasacio'n. Adquirieron una patente para el proceso del VCR de una compañía americana que no podría encontrar una manera de hacer un beneficio a corto plazo en el VCR. <br />Las compañías japonesas entonces comenzaron a vender VCRs debajo de coste para construir la cuota de mercado y pronto vendían en un tan alto volumen que sus costes declinaron a un nivel provechoso. <br />Las economías japonesas de la escala eran tan grandes que los competidores extranjeros eran bloqueados fuera del mercado.<br />In the 1980s, Japan claimed the global VCR market for itself by under-pricing potential competitors. They acquired a patent for the VCR process from an American company that couldn’t find a way to make a short-term profit on the VCR. <br />Japanese companies then began selling VCRs below cost to build market share & soon were selling at such a high volume that their costs declined to a profitable level. <br />Japanese economies of scale were so great that foreign competitors were locked out of the market.<br />
    458. 458.
    459. 459. Part 1: The Strategic Imperatives<br />Ch 1Expanding Abroad: Motivations, means & Mentalities<br />INB / MGT 352 <br />International Management<br />Spring 2008<br />Transnational Management, Text, Cases, and Readings in Cross-Border Management, Christopher Barlett, Sumantra Ghoshal & Palu Beamish, 5th Edition, 2008<br />
    460. 460. Definition of a Multinational Enterprise (MNE)<br />MNE have “substantial direct investment” in foreign countries (1) and “actively” (not passively) manage and coordinate these offshore assets, and their operations as integral parts of the company, both strategically an organizationally. <br />MNEs include ExxonMobil, Royal Dutch Shell, BP, Toyota, Ford, DaimlerChrysler, GE, Wal-Mart, GM, ChevronTexaco<br />In addition, definition of MNEs includes Intel, Unilever, Samsung, Singapore Airlines, McKinsey & Co., and Starbucks<br />Note 1: These are not simply trading relationships of an import/export business.<br />
    461. 461. Explosive Growth (MNE)<br />Number of International Companies <br />UNCTAD - United Nations agency in charge of all matters relating to FDI and international corporations.<br />1995 – 45,000 parent companies with 280,000 foreign affiliates ($7 trillion in sales)<br />2004 – 70,000 parent companies with 690,000 foreign affiliates ($19 trillion in sales) <br />
    462. 462. Economic Importance of MNEs<br />MNEs are equivalent in economic importance to medium-sized economies of Chile, Hungary, or Pakistan<br />MNEs have considerable influence<br />Employ high percentage of business graduates<br />Pose the most complex strategic and organizational challenges for their managers<br />
    463. 463. Top 500 MNEs<br />70% of world trade<br />85% of world automobiles<br />70% of computers <br />35% of toothpaste<br />65% of soft drinks<br />
    464. 464. Largest 100 MNE<br />In 2003, excluding banking and finance, the largest 100 MNEs accounted for over<br />$ 8 Trillion in worldwide assets, of which <br />$4.0 trillion was located outside there respective home countries.<br />
    465. 465. Motivations (the ‘Why’) of MNE Int’l Expansion<br />Traditional Motivations<br />Securing key supplies (aluminum, rubber, oil, etc.)<br />Market-seeking behavior (Nestle, Bayer, Ford)<br />Access to low-cost factors of production (clothing, electronics, household appliances, watches, <br />Emerging Motivations<br />Scale economies <br />Economies of scale and scope<br />Economies of scope<br />Ballooning R&D investments<br />Shortening product life cycles<br />Scanning and learning capability<br />Competitive positioning<br />
    466. 466. Motives to Go International<br />Market-Seeking<br />Motives<br />The Historically Indigenous Firm<br />Cost-Reduction<br />Motives<br />Strategic<br />Motives<br />
    467. 467. Global Strategy: An Organizing Framework<br />
    468. 468. What Forces Drive MNEs Toward Global Integration & Coordination?<br />Economies of scale<br />Economies of scope<br />National differences in the availability & cost of productive resources<br />
    469. 469. Economies of scale <br />How do new technologies make an economy of scale possible?<br />Why are capital-intensive industries susceptible to economies of scale?<br />How do I quantify an economy of scale?<br />What might threaten the benefits sought under an economy of scale?<br />
    470. 470. Economies of scope<br />What is an economy of scope?<br />What factors or changes might “enable” an economy of scope to develop?<br />What threats to an economy of scope could exist?<br />
    471. 471. MNE Advantages Int’l Operations<br />Ensuring critical supplies<br />Entering new markets <br />Tapping low-cost factors of production<br />Leveraging their global information access<br />Capitalizing on competitive advantage of multiple market positions<br />Use strength to play strategic game of “global chess”<br />
    472. 472. Means (the How?) of Internationalization: Prerequisites and Processes<br />Prerequisites for Internationization<br />
    473. 473. Scale Economies: Use of Scale for <br />Competitive Advantage – Higher Volume<br /> Inhibits Flexibility<br /> Political Risks<br /> Resource Risks<br /> Competitive Risks<br />Scope Economies: Cost of Joint Production<br /> For Two or More Products<br /> Provides Sharing of Physical Resources<br /> Provides for Shared External Relationships<br /> Provides for Shared Knowledge<br />
    474. 474. Tremendous Growth in International Trade & Commerce<br />
    475. 475. Foreign Market Entry Modes<br />Foreign Market Entry Modes<br />Wholly-owned <br />subsidiaries<br />Joint Venture <br />(e.g., w/local partner)<br />Franchising<br />Level of control over foreign services<br />Licensing<br />Export <br />(e.g., through agent<br />or distributor)<br />Indirect export<br />Amount of resources committed to foreign market<br />
    476. 476. International Mindsets<br />Specific pressures will affect competition in industries and firms that cross national boundaries causing<br />a “global orientation” that relies on coordination of worldwide activities to maximize the collective organization, and<br />a “multidomestic orientation” that responds to individual country opportunities and constraints.<br />Increasingly, there are pressures for international companies to be both globally efficient and locally responsive. <br /> These pressures derive from environmental changes such as new technologies, unanticipated competition, and the convergence of industry boundaries. <br /> In such situations, firms exhibit a “transnational mindset” to simultaneously gain efficiency and local market benefits.<br />
    477. 477. International Mindsets<br />Multinational Systems<br />International Systems<br />Businesses that follow an international strategy tend to have distributed GIS in which systems in the central headquarters are connected to those in the foreign operations.<br />Businesses that follow a multinational strategy tend to have decentralized, or independent, information systems for their central headquarters and different foreign operations.<br />Transnational Systems<br />Global Systems<br />Business that follow the transnational strategy require complex, integrated GIS in which the central headquarters and all the foreign operations participate equally<br />Businesses that follow a global strategy ten to have highly centralized GIS determined by the central headquarters.<br />
    478. 478. Foreign Market Entry Modes<br /><ul><li>Exporting
    479. 479. Countertrade
    480. 480. Contract manufacturing
    481. 481. Licensing
    482. 482. Franchising
    483. 483. Turnkey projects
    484. 484. Non-equity strategic alliances
    485. 485. Equity-based ventures such as wholly-owned subsidiaries and equity joint ventures</li></li></ul><li>Motives to Go International<br />Market-Seeking<br />Motives<br />The Historically Indigenous Firm<br />Cost-Reduction<br />Motives<br />Strategic<br />Motives<br />
    486. 486. 1-293<br />Evolutionary Stages<br />Stage 1: Foreign Inquiry<br />Stage 2: Export Manager<br />Stage 3: Export Department and Direct Sales<br />Stage 4: Sales Branches and Subsidiaries<br />Stage 5: Assembly Abroad<br />Stage 6: Production Abroad<br />Stage 7: Integration of Foreign Affiliates<br />
    487. 487. International Strategy<br />Assets, responsibilities decentralized<br />Formal control systems<br />HQ<br />International mentality<br />4-294<br />
    488. 488. International Strategy<br />Assets, responsibilities decentralized<br />Formal control systems<br />HQ<br />International mentality<br /><ul><li>Main role is to support the domestic parent company in different ways, such as contributing incremental sales to domestic manufacturing operations
    489. 489. Products developed for domestic market sold abroad
    490. 490. Technology and other knowledge are transferred from parent company to overseas operators
    491. 491. Offshore manufacturing represents a means to protect company’s home market
    492. 492. Companies with this mentality regard themselves fundamentally as domestic with some foreign appendages
    493. 493. Managers assigned to overseas operations are often domestic misfits who happen to know a foreign language or have previously lived abroad
    494. 494. Decisions related to foreign operations tend to be made in an opportunistic or ad hoc manner</li></ul>4-295<br />
    495. 495. HQ<br />An “International Business Strategy” Deploying Global Information Systems (GIS)<br />International Strategy<br />International Diagram<br />Involves transferring knowledge and skills from the central headquarters to the foreign operations.<br />Assets, responsibilities decentralized<br />Formal control systems<br />International mentality<br />GIS Deployment Strategy<br />International Strategy<br />Businesses that follow an international strategy tend to have distributed GIS in which systems in the central headquarters are connected to those in the foreign operations.<br />4-296<br />4-296<br />
    496. 496. Multinational Strategy<br />Loose controls; strategic decisions remote<br />HQ<br />Financial reporting flows<br />
    497. 497. Multinational Strategy<br />Loose controls; strategic decisions remote<br />HQ<br />Financial <br />Reporting flows<br /><ul><li>A multinational strategic mentality develops as managers begin to recognize and emphasize the differences among national markets and operating environments
    498. 498. Companies adopt a more flexible approach to their int’l operations by modifying their products, strategies, and even management practices country by country
    499. 499. As they develop national companies that are increasingly sensitive and responsive to their local environments, these companies undertake a strategic approach that is literally multinational: Their worldwide strategy is built on a foundation of the multiple, nationally responsive strategies of the company’s worldwide subsidiaries.
    500. 500. Managers tend to be highly independent entrepreneurs, often nationals of the host country
    501. 501. Using their local market knowledge and the parent company’s willingness to invest in these growing opportunities, these entrepreneurial country managers often can build significant local growth and considerable independence from headquarters
    502. 502. Results in a very responsive marketing approaches in the different national markets, it also gives rise to an inefficient manufacturing infrastructure within the company
    503. 503. Plants are built more to provide local marketing advantages or improve political relations than to maximize production efficiency
    504. 504. Similarly, the proliferation of products designed to meet local needs contributes to a general loss of efficiency in design, production, logistics, distribution, and other functional tasks</li></li></ul><li>An “Multinational Strategy”<br />Loose controls; strategic decisions remote<br />HQ<br />Financial <br />Reporting flows<br />Multinational Strategy<br />Multinational Diagram<br />Central home base; decentralized production, sales, marketing in other countries. The business allows its foreign operations to function largely independently.<br />Multinational Strategy<br />GIS Deployment Strategy<br />Businesses that follow a multinational strategy tend to have decentralized, or independent, information systems for their central headquarters and different foreign operations.<br />
    505. 505. Global Strategy<br />Tight controls; centrally driven strategy<br />HQ<br />One-way flows,<br />goods, information,<br />and resources<br />4-300<br />
    506. 506. Global Business Strategies<br />Global Strategy<br />Tight controls; centrally driven strategy<br />HQ<br />One-way flows,<br />goods, information,<br />and resources<br /><ul><li>In an operating environment of improving transportation and communication facilities and falling trade barriers, some companies adopt a very different strategic approach for their int’l operations
    507. 507. These companies think in terms of creating products for a world market and manufacturing them on a global scale in a few highly efficient plants, often at the corporate center
    508. 508. Subscribe to Professor Levitt’s to make and sell “the same thing, the same way, everywhere”
    509. 509. In an operating environment of improving transportation and communication facilities and falling trade barriers, some companies adopt a very different strategic approach for their int’l operations
    510. 510. These companies think in terms of creating products for a world market and manufacturing them on a global scale in a few highly efficient plants, often at the corporate center
    511. 511. The underlying assumption is that national tastes and preferences are more similar than different or that they can be made similar by providing customers with standardized products at adequate cost and with quality advantages over those national varieties they know
    512. 512. Strategic approach requires considerably more central coordination and control than the others and is typically associated with an organizational structure in which various product or business managers have worldwide responsibility
    513. 513. R&D and manufacturing activities are typically managed from headquarters, and most strategic decisions also take place at the center</li></li></ul><li>Global Strategy Example<br />
    514. 514. Global Strategy<br />Loose controls; strategic decisions remote<br />Assets, responsibilities decentralized<br />Tight controls; centrally driven strategy<br />HQ<br />HQ<br />Complex controls; <br />high coordination skills, <br />Coordinated strategic <br />decision process<br />Heavy flows;<br />materials, people<br />Information &<br />technology<br />Formal control systems<br />HQ<br />One-way flows,<br />goods, information,<br />and resources<br />Financial <br />Reporting flows<br />HQ<br />International mentality<br />Distributed<br />capabilities,<br />resources &<br />decision making<br />Global Business Strategies<br />All use global information systems (GISs) in various ways …<br />Multinational Strategy<br />International Strategy<br />Transnational Strategy<br />4-303<br />4-303<br />
    515. 515. A “MNE Business Strategy” Deploying Global Business Systems<br />Global Strategy Diagram<br />Tight controls; centrally driven strategy<br />HQ<br />One-way flows,<br />goods, information,<br />and resources<br />All use global information systems (GISs) in various ways …<br />Global Strategy<br />The central headquarters coordinates the activities of the foreign operations closely.<br />Transnational Strategy<br />GIS Deployment Strategy <br />Business that follow the transnational strategy require complex, integrated GIS in which the central headquarters and all the foreign operations participate equally<br />4-304<br />4-304<br />
    516. 516. HQ<br />Transnational Strategy<br />Complex controls; <br />high coordination skills, coordinated strategic decision process<br />Heavy flows;<br />materials, people<br />information, technology<br />Distributed<br />capabilities,<br />resources &<br />decision making<br />4-305<br />
    517. 517. Complex controls; <br />high coordination skills, <br />Coordinated strategic <br />decision process<br />Heavy flows;<br />materials, people<br />Information &<br />technology<br />HQ<br />Distributed<br />capabilities,<br />resources &<br />decision making<br />Transnational Strategy<br /><ul><li>The emerging requirement is for companies to become more responsive to local markets and political needs and pressures to develop global-scale competitive efficiency
    518. 518. Key activities and resources are neither centralized in the parent company nor so decentralized that each subsidiary can carry out its own tasks on a local-for-local basis
    519. 519. Instead, the resources and activities are dispersed but specialized, to achieve efficiency and flexibility at the same time
    520. 520. These dispersed resources are integrated into an interdependent network of worldwide operations
    521. 521. Transnational mentality recognizes the importance of flexible and responsive country-level operations – hence a return of “national” into the terminology
    522. 522. Compared to multinational approach, it provides for means to link and coordinate those operations to retain competitive efficetiveness and economic efficiency, as is indicated by the prefix “trans”
    523. 523. The resulting need for intensive, organization-wide coordination and shared decision-making implies that this is a much more sophisticated and subtle approach to MNE management</li></li></ul><li>A “Transnational Business Strategy” Deploying Global Business Systems<br />Complex controls; <br />high coordination skills, <br />Coordinated strategic <br />decision process<br />Heavy flows;<br />materials, people<br />Information &<br />technology<br />HQ<br />Distributed<br />capabilities,<br />resources &<br />decision making<br />All use global information systems (GISs) in various ways …<br />Transnational Strategy<br />Transnational Diagram<br />Truly global firm; no national headquarters; value-added activities managed from global perspective; optimizes supply & demand, taking advantage of local competitive strengths<br />Transnational Strategy<br />GIS Deployment Strategy<br />Business that follow the transnational strategy require complex, integrated GIS in which the central headquarters and all the foreign operations participate equally<br />4-307<br />4-307<br />
    524. 524. Global “Chess” Between Large MNEs<br />Customers demand differentiation along with the level of cost & quality typical of global products<br />Host governments have more aggressive development & tax agendas<br />MNEs fight for flexibility to continuously change product designs, sourcing, and pricing<br />
    525. 525. Multidomestic Strategy Example<br />
    526. 526.
    527. 527. Chapter 2: Understanding the International ContextResponding to Conflicting Environmental Forces<br />
    528. 528. Three Conflicting Setsof External Demands<br />Forces for cross-border integration and coordination<br />Forces for national differentiation and responsiveness <br />Forces for worldwide innovation and learning<br />2-312<br />
    529. 529. Forces for Global Integrationand Coordination<br />Economies of Scale<br />Economies of Scope<br />Factor Costs<br />Increasingly Liberalized Environment for Trade<br />Expanding Spiral of Globalization<br />2-313<br />
    530. 530. Global Competitors as Change Agents<br />For industry globalization to take place:<br />Underlying drivers (economies of scale and scope, etc.) have to be in place<br />But always triggered by actions of one of two global “change agents”<br />Examples:<br />British Airways (airlines)<br />Starbucks (premium coffee shops)<br />ISS (cleaning services)<br />2-314<br />
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