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
  • 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
  • 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
  • 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
  • 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
  • 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
  • Global Strategy & Value Creation - Adaptation, Aggregation, Arbitrage

    1. 1. GLOBAL VALUE CREATION: ADAPTATION, AGGREGATION, ARBITRAGE Prof. Sameer Mathur, Ph.D.
    2. 2. Sameer Mathur BuddingMarkets.com Indian Institute of Management, Lucknow Marketing Professor 2013 – Marketing Professor 2009 – 2013 Ph.D. and M.S. (Marketing) 2003 – 2009
    3. 3. Agenda Adaptation Approaches Aggregation Approaches Arbitrage Approaches What strategy should a Company use? Implementing Multiple Strategies Developing a Strategy
    4. 4. Strategies for Creating Value in a Global Context • Adaptation • Aggregation • Arbitrage
    5. 5. Adaptation • Increase market share by adjusting parts of a company’s business model to be suitable for local markets. • Necessary for virtually all products.
    6. 6. Adaptation Approaches • Variation • Focus • Externalization • Design • Innovation
    7. 7. Adaptation Approaches VARIATION: making changes in products, services, policies, and positioning. • Example: Google’s issues with China’s censorship laws.
    8. 8. 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.
    9. 9. 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.
    10. 10. Adaptation Approaches DESIGN: reduce the cost of variation. • Example: Tata Motors created an very affordable car to sell in India.
    11. 11. 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.
    12. 12. Adaptation Approaches • Variation • Focus • Externalization • Design • Innovation
    13. 13. Strategies for Creating Value in a Global Context • Adaptation • Aggregation • Arbitrage
    14. 14. Aggregation • Creating economies of scale to exploit similarities. • Introduce economies of scale without jeopardizing local responsiveness.
    15. 15. Aggregation Approaches ECONOMIC: • Example: companies distinguish between developed and emerging markets and choose to focus on one or the other.
    16. 16. Aggregation Approaches GEOGRAPHIC: focusing competitive interactions on a regional or global level • Example: centralizing global production in a few strategically placed plants.
    17. 17. 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.
    18. 18. 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.
    19. 19. Strategies for Creating Value in a Global Context • Adaptation • Aggregation • Arbitrage
    20. 20. 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.
    21. 21. Arbitrage Approaches ECONOMIC: • Example: outsourcing and offshoring
    22. 22. 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.
    23. 23. Arbitrage Approaches CULTURAL: • Example: associating French origin with success and quality in certain industries
    24. 24. Arbitrage Approaches ADMINISTRATIVE: • Example: placing acquisitions into holding companies in the Cayman Islands to reduce tax liabilities
    25. 25. 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.
    26. 26. 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.
    27. 27. 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
    28. 28. 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
    29. 29. Summary Adaptation Approaches Aggregation Approaches Arbitrage Approaches What strategy should a Company use? Implementing Multiple Strategies Developing a Strategy
    30. 30. Recommended Reading
    31. 31. Over 1 Million views from more than 100 countries Prof. Sameer Mathur Top 1% most viewed Over 250 presentations on Marketing www.BuddingMarkets.com

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