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Growth Strategies: Growing On Global Trends
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Growth Strategies: Growing On Global Trends

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This is the 8th part of the undergraduate course in Growth Strategies: Growing on Global Trends. Read by Pavel Luksha

This is the 8th part of the undergraduate course in Growth Strategies: Growing on Global Trends. Read by Pavel Luksha

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    Growth Strategies: Growing On Global Trends Growth Strategies: Growing On Global Trends Presentation Transcript

    • GROWTH STRATEGIES Growing on Global Trends Pavel Olegovich Luksha [email_address]
    • ‘ Growth Platform’ company competencies global trends customer needs Growth Platform
    • How to analyze environment
      • Multifactor analysis models, including:
      • PEST = Political, Economic, Social, Technological
      • STEEPLED = Social, Technological, Economic, Environmental, Political, Legal, Educational, Demographic
      • DEPICTS = Demographic, Economics, Politics, Infrastructure, Competition, Technology, Social
    • Trends that create growth Trends Economic Social / Cultural / Demographic Environmental Technological Global National Local
    • Some global economic trends Global trends Economic Globalization (trade & manufacturing) Economic & financial crisis Growing global middle class
    • IT Outsourcing: EPAM
      • ‘ Effective Programming for America’, created in early 1990s by former Soviet immigrants
      • A major offshore programming firm (no.1 in Eastern and Central Europe) facing rivalry mainly from India software houses
      • Employed available resource in Russia, Ukraine and Belarus
      • Expanded from the US to the UK and Germany as major client offices
    • Haier : budget solution from emerging markets
      • Began as low-quality refrigerator producer in 1980 s, moved to intl partnerships (Liebherr Group and others) to gain competence
      • Serves Chinese / South-Asian lower-middle class with innovative consumer electronics adapted to consumer needs (e.g. machine to wash vegetables for rural regions)
      • Gained leadership position in China and expanded to SAE through 1990s. Expanded to the US / Europe in 200s with niche / lower mid-market products:
        • 26% of compact fridge market and 50% of wine cellar market in the US
        • access to major retailers ( Wal-Mart, BestBuy etc .): positioned for students and young families
    • Glocalization
      • Consumer electronics manufacturer Haier ( China )
      • Hotel networks Shangri-La ( China ) and Taj ( India )
      • Fastfood restaurant chains: Nandos ( South Africa ) , Jollibee Foods (Philippines )
      • Automotive OEM: Tata Motors (India )
    • Globalization in trade & manufacturing: who uses the trend
      • Companies that structure global outsourcing of services (e.g. Indian software powerhouses and callcentres)
      • Companies that help find partners in emerging markets (e.g. China, South-Eastern Asia)
      • IT infrastructure companies providing integration solutions to global businesses
    • Global downturn: restructuring market
      • Size of bad debt globally is highest ever.
      • Governments committed to recapitalize banking system by pour money through buying bad debts: USD 5 trillion are agreed by OECD. Actual buy-outs in the US alone can rise to USD 1 trillion.
      • Good time for Wall-street ‘hottest businesses’: Rothschild, Lazard, Blackstone, Alvarez & Marsal, Alix Partners, FTI etc.
    • Global economic & financial crisis
      • Collector agencies and anti-collector agencies
      • Restructuring firms
      • Consultants (IT / business) that help strengthen management control
      • Cost-cutting solutions (from energy-saving to lawyers that support job-cutting)
      • Companies that focus on budget offerings
    • Some social / cultural / demographic trends Global trends Social / Cultural / Demographic Empowering women Urbanization in Asia Aging population Social movements
    • Women as consumers
    • Empowering women: who uses the trend?
      • Companies that consider women increasingly important in traditional shopping: apparel, food, leisure, etc.
      • Companies that focus on women as a customer: fitness & health, cosmetics, luxury etc.
      • Companies that offer to working women (e.g. babysitting solutions)
      • Companies that advise in management and HR practices
    • The Body Shop: growing by promoting activist agenda
      • Leading retailer selling cosmetics and bath products
      • Ad campaigns promotes ‘responsible’ values: animal right protection, environment protection, women empowerment etc.
      • Social activism: combated animal testing of major competitors
      • Rapidly grew 50% average p.a. over fifteen years in 1980-90s
    • Aging population: who uses the trend?
      • Pension funds that offer retirement solutions
      • Companies that consider ‘retired rich’ as one of the core customer groups: developers of golf residences, tourist companies offering ‘round the world’ tours etc.
      • Age-specific solutions: e.g. residences with medical care services (incl. care for Alzheimer disease)
    • The group project Business betting on global trends: is this a successful strategy?
    • Some global environmental trends Global trends Environmental Resource exhaustion Pollution & environ- mental hazards Sustainable industries
    • Pollution & environmental hazards: clean energy
      • Exploration on different kind of energy
        • wind energy, geothermal energy, …
        • solar energy is ultimate solution (solar panels so far not sufficiently efficient)
      • Companies try to join bandwagon:
        • windpower market growing 30% p.a.
        • major electric equipment producers include clean energy generators in their portfolio (e.g. GE)
        • IT companies: opportunities for ‘new energy’
        • financial market: responsible investment etc.
    • Socially responsible investment
      • Between 1995 and 2005 , SRI assets in the US grew by 2 60 % to 2 .3 trillion USD. EU market has reached 1 trillion USD.
      • One of ten dollars in professional management is SRI.
      • Over 60% of largest international banks offer products related to sustainable development.
    • Pollution and environmental hazard concerns: who can use this trend?
      • Alternative energy: generation & equipment
      • Energy saving solutions
      • Environmental engineering companies
      • Industry design & construction
      • Finance (products for responsible investors)
    • Exhaustion of resources: market for water
    • Sustainable industries: organic food
      • Organic farming, responsible / sustainable farming etc.
      • Due to lack of pesticides & fertilizers, yield lower by 20% (reflected also in price)
      • Fastest growing food market segment in the US and world, growth 20% p.a. (vs conventional food sales 2-3% p.a.)
      • Current share is 9-12% of food market in developed countries
    • Some global technological trends Global trends Technological Internet & IT Biotech & medicine Energy & transportation
    • Internet: transformations in media and education
      • Media and entertainment
        • blogging & newspaper death
        • online TV in YouTube format
        • online entertainment : MMORG (e.g . World of Warcraft), virtual worlds ( e.g . SecondLife)
      • Education & info business
        • Wikipedia vs. Britannica
        • standard solutions
        • IT: soft-on-demand
    • Robotics
      • Caterpillar expects to develop largely autonomous heavy robot machines before 2020
      • In Japan, robots are already used as hospital couriers and porters. Fully functional robots that care for elderly should be developed by 2013-17.
      • Range of robots for household use should appear in the market by 2015-17.
      • Military application: there were more unmanned flights in the US in 2008 than manned flights [e.g. Boston Dynamics]
    • Energy & transportation: electric cars
      • Tesla Motors: venture by Google founders to produce fully-electric cars. Tesla Roadster is 1c/km energy cost, goes to 100 kmph in less than 4 seconds. Plans for budget models under 30K USD.
      • Israel plans to convert to fully electrical (country small enough to ignore limitation of 300 km max driving before recharging)
    • Importance of biotech: PerkinElmer to Applera
      • PerkinElmer : leadership in spectrometry and gas chromatography (makers of Hubble) that faced stalling sales and losses in early 1990s
      • ‘ Orphan child’: Applera - AB company that had solutions for DNA structure analysis
      • Began involved in Human Genome project and became the major producer of DNA sequencing equipment
      • Used HG research to launch genetically-based drug division Celera
      • Applera grew by 7-10% p.a. to USD 2 Bln. Original PerkinElmer business was sold in 2006.
    • Transformation of medicine
      • New processes: improved control over events in the hospital, digitalized document flow and greater patient’s access to data
      • Learning from emerging countries (e.g. India)
      • New solutions: gene-based medicine (personalized treatment) [e.g. Amgen], nanomedicine [e.g. Zyvex]
      • Problem: medicine is the only sector in the US where prices were growing despite intense technological improvement
    • Growing on future trends
      • Vision and courage
      • The major way of growing into future
      • Many trends of the past have not been realized (‘manure catastrophe’)
      • Crisis will ‘recharge’ industries (experience from previous depressions)