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Global Strategy & Value Creation - Adaptation, Aggregation, Arbitrage

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  • http://www.urgentevoke.com/profiles/blogs/muhammad-yunus-a-hero-to-manyhttp://nationsindevelopment.blogspot.com/2011_01_01_archive.htmlhttp://dictionary.reference.com/browse/microfinance
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  • http://www.urgentevoke.com/profiles/blogs/muhammad-yunus-a-hero-to-manyhttp://nationsindevelopment.blogspot.com/2011_01_01_archive.htmlhttp://dictionary.reference.com/browse/microfinance
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Global Strategy & Value Creation - Adaptation, Aggregation, Arbitrage Global Strategy & Value Creation - Adaptation, Aggregation, Arbitrage Presentation Transcript

  • GLOBAL VALUE CREATION: ADAPTATION, AGGREGATION, ARBITRAGE Prof. Sameer Mathur, Ph.D.
  • Sameer Mathur BuddingMarkets.com Indian Institute of Management, Lucknow Marketing Professor 2013 – Marketing Professor 2009 – 2013 Ph.D. and M.S. (Marketing) 2003 – 2009
  • Agenda Adaptation Approaches Aggregation Approaches Arbitrage Approaches What strategy should a Company use? Implementing Multiple Strategies Developing a Strategy
  • Strategies for Creating Value in a Global Context • Adaptation • Aggregation • Arbitrage
  • Adaptation • Increase market share by adjusting parts of a company’s business model to be suitable for local markets. • Necessary for virtually all products.
  • Adaptation Approaches • • • • • Variation Focus Externalization Design Innovation
  • Adaptation Approaches VARIATION: making changes in products, services, policies, and positioning. • Example: Google’s issues with China’s censorship laws.
  • Adaptation Approaches FOCUS: concentrating on particular stages of the value chain or market segments to reduce impact across regions • Example: action films require much less adaptation to a new culture than local newscasts require.
  • Adaptation Approaches EXTERNALIZATION: accommodates local requirements, lowers cost, or reduces risk by transfering responsibility for parts of a company’s business model to partner companies • Example: McDonalds uses franchising as well as company-owned locations.
  • Adaptation Approaches DESIGN: reduce the cost of variation. • Example: Tata Motors created an very affordable car to sell in India.
  • Adaptation Approaches INNOVATION: improving the effectiveness of adaptation endeavors. • Example: IKEA’s flat-pack packaging has helped cut transportation costs and therefore allow the company to expand into other countries.
  • Adaptation Approaches • • • • • Variation Focus Externalization Design Innovation
  • Strategies for Creating Value in a Global Context • Adaptation • Aggregation • Arbitrage
  • Aggregation • Creating economies of scale to exploit similarities. • Introduce economies of scale without jeopardizing local responsiveness.
  • Aggregation Approaches ECONOMIC: • Example: companies distinguish between developed and emerging markets and choose to focus on one or the other.
  • Aggregation Approaches GEOGRAPHIC: focusing competitive interactions on a regional or global level • Example: centralizing global production in a few strategically placed plants.
  • Aggregation Approaches CULTURAL • Example: publishers only publish their bestsellers in a few languages, assuming readers are willing to read a book in their second language.
  • Aggregation Approaches ADMINISTRATIVE: • Example: companies looking to market new drugs in Europe must meet regulatory requirements of a few selected countries to qualify for a license to sell throughout the EU.
  • Strategies for Creating Value in a Global Context • Adaptation • Aggregation • Arbitrage
  • Arbitrage • Exploit differences between markets instead of trying to adapt to them. – Ex. By moving different parts of the supply chain to different places • Buy low in one market, sell high in another.
  • Arbitrage Approaches ECONOMIC: • Example: outsourcing and offshoring
  • Arbitrage Approaches GEOGRAPHIC: • Example: US doctors take X-rays during the day and send them to Indian doctors for interpretation overnight so the report is available in the US the following morning.
  • Arbitrage Approaches CULTURAL: • Example: associating French origin with success and quality in certain industries
  • Arbitrage Approaches ADMINISTRATIVE: • Example: placing acquisitions into holding companies in the Cayman Islands to reduce tax liabilities
  • Which Strategy should a Company Use? Depends on: • Financial Statements • Globalization history However, most companies will need to consider all of the strategies at different points in time.
  • Implementing Multiple Strategies • Some leading companies have implemented two or even all three of the strategies at one time. • Disadvantage: the strategies have inherent tensions between them, making them hard to mix.
  • Developing a Strategy • Combining all three of the strategies can cause a firm to: – Stretch its managerial ability – Be forced to operate with multiple corporate cultures – Give competitors opportunities to undercut the firm’s competitiveness
  • Points to Consider • • • • Focus on one or two of the strategies at once Make sure the strategy is a good fit for the firm Use multiple integration methods Consider externalizing integration – Ex. Through joint ventures • Know when not to integrate
  • Summary Adaptation Approaches Aggregation Approaches Arbitrage Approaches What strategy should a Company use? Implementing Multiple Strategies Developing a Strategy
  • Recommended Reading
  • Over 600,000 views from more than 100 countries http://www.BuddingMarkets.com/ Sameer Mathur BuddingMarkets .com http://www.facebook.com/BuddingMarkets/
  • Get These Slides Free Get These Slides Free Free to Download Sameer Mathur smathur.com