Anil gupta presentation slides [compatibility mode]

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Anil gupta presentation slides [compatibility mode]

  1. 1. The Quest f Th Q t for Global Dominance ANIL K. GUPTA The INSEAD Chaired Professor of Strategy The INSEAD Chaired Professor of Strategy INSEAD – The Business School for the World 1 Ayer Rajah Avenue, Singapore 138676 Email: anil.gupta@insead.edu Web: www.anilkgupta.com Web: www anilkgupta com Tel: +65.6799.5381 __________________________________ Anil K. Gupta, The Quest for Global 1 Dominance. July 2010. All rights reserved.
  2. 2. Agenda 1. The Changing Global Landscape 2. Designing Global Strategies a. Foundational Ideas b. Globalization of Market Presence c. Globalization of the Value Chain d. Globalization of Corporate Mindset 3. Globalizing the Young Venture: Additional Considerations __________________________________ Anil K. Gupta, The Quest for Global 2 Dominance. July 2010. All rights reserved.
  3. 3. The Changing Global Landscape Th Ch i Gl b l L d __________________________________ Anil K. Gupta, The Quest for Global 3 Dominance. July 2010. All rights reserved.
  4. 4. Declining Coordination & Transportation Costs Average Air Cost of Three- Transportation Minute Call Consumer Revenue/ from New York Price Index Passenger Mile to London (1990 = 100)* (US $)* (US $) 1960 0.061 45.86 23 1970 0.060 0 060 31.58 31 58 30 1980 0.115 4.80 63 1990 0.134 3.32 100 2000 0.146 0.30 132 2007 0.130 0.00** 159 *U.S. data **Using VOIP (e.g., Skype) Sources: U.S. Bureau of Transportation Statistics, IMF World Economic Outlook 1997, other __________________________________ Anil K. Gupta, The Quest for Global 4 Dominance. July 2010. All rights reserved.
  5. 5. Widespread Economic Liberalization p 1992 1996 2000 2004 2008 # of Countries That Changed Their 43 66 70 103 55 Investment Regimes Total # of Regulatory 77 114 150 270 110 Changes Ch Changes favoring 77 98 147 234 85 liberalization Changes reducing 0 16 3 36 25 liberalization Source: UNCTAD, World Investment Report 2009 __________________________________ Anil K. Gupta, The Quest for Global 5 Dominance. July 2010. All rights reserved.
  6. 6. Emergence of “Complex” Globalization __________________________________ Anil K. Gupta, The Quest for Global 6 Dominance. July 2010. All rights reserved.
  7. 7. Emerging Economies Gather Bulk World’s 24 Largest Economies = 85% of World GDP Source: World Development Indicators 2010, The World Bank. __________________________________ Anil K. Gupta, The Quest for Global 7 Dominance. July 2010. All rights reserved.
  8. 8. Aftermath of Aft th f the Great Recession Annual GDP Growth Rates (%) Country* 2000- 2008 2009 2010P** 2011P** 2007 World 3.1 3.0 -0.6 4.2 4.3 US 2.7 0.4 -2.4 3.1 2.6 Japan 1.7 -1.2 -5.2 1.9 2.0 Germany 1.1 1.2 -5.0 1.2 1.7 France 1.7 0.3 -2.2 1.5 1.8 China 10.2 9.6 8.7 10.0 9.9 India 7.8 7.3 5.7 8.8 8.4 Russia 6.6 5.6 -7.9 4.0 3.3 Brazil 3.3 5.1 -0.2 5.5 4.1 *The world’s top 12 economies also include U.K. Italy, Spain and Canada **IMF W ld E World Economic O tl k April 2010 i Outlook, A il __________________________________ Anil K. Gupta, The Quest for Global 8 Dominance. July 2010. All rights reserved.
  9. 9. Who s Who’s More Risky Now? Economic “Prudence” vs. Economic “Excess”? Source: World Development Indicators 2010, The World Bank & CIA, The World Factbook. __________________________________ Anil K. Gupta, The Quest for Global 9 Dominance. July 2010. All rights reserved.
  10. 10. From the “D8” to the “E8”: F th t th “E8” Emergence of A Multi-Polar Economy __________________________________ Anil K. Gupta, The Quest for Global 10 Dominance. July 2010. All rights reserved.
  11. 11. New Mega-Markets: Simultaneously Rich-and-Poor GDP (US$b) GDP/Capita (US$) 19889 56184 19510 46724 14204 5762 12852 3860 2911 1217 1068 4268 2008 2025 2008 2025 Note: 2025 projections not adjusted for inflation inflation. __________________________________ Anil K. Gupta, The Quest for Global 11 Dominance. July 2010. All rights reserved.
  12. 12. Emerging Economies: Five Stories Rolled I t O Fi St i R ll d Into One 1. Mega-markets & mega-growth (but micro-customers) i t ) 2. Platforms for global cost reduction 3. Global hubs for innovation 4. Springboards for the emergence of new global competitors 5. New sources of capital (esp. China) __________________________________ Anil K. Gupta, The Quest for Global 12 Dominance. July 2010. All rights reserved.
  13. 13. Rise of “Born-Globals” and “Micro-Multinationals” Costs and Benefits s 1900 1950 2000 2010 __________________________________ Anil K. Gupta, The Quest for Global 13 Dominance. July 2010. All rights reserved.
  14. 14. Designing Global Strategy: Foundational Ideas __________________________________ Anil K. Gupta, The Quest for Global 14 Dominance. July 2010. All rights reserved.
  15. 15. Globalization – A Multidimensional Concept Globalization of Capital Base Globalization of Organization & Mindset Globalization of Globalization of Value Chain Market Presence __________________________________ Anil K. Gupta, The Quest for Global 15 Dominance. July 2010. All rights reserved.
  16. 16. Why Go Global? GROWTH Imperative? EFFICIENCIES LEARNING Imperative? Gains? Go Global? CUSTOMER DE-RISKING Imperative? Gains? __________________________________ Anil K. Gupta, The Quest for Global 16 Dominance. July 2010. All rights reserved.
  17. 17. Industry Characteristics Matter Multidomestic Globally Integrated Industries Industries Hair-cutting Semiconductors Hospitals Pharmaceuticals Supermarkets Tires Globalization as a Globalization as a discretionary option strategic imperative Size of advantage High Hi h Low from globalization Local Bulk of market share in most Global players countries is captured by players Multi- Implications for global strategy Globally domestic integrated operations operations __________________________________ Anil K. Gupta, The Quest for Global 17 Dominance. July 2010. All rights reserved.
  18. 18. Industry Characteristics Matter “The planned sale is in line with the strategy set out by Lars p gy y Olofsson, chief executive, to pull out of markets in which the supermarket group has little prospect of becoming market leader and invest in those where it already is leader or has a good chance of becoming one. “ g __________________________________ Anil K. Gupta, The Quest for Global 18 Dominance. July 2010. All rights reserved.
  19. 19. Designing Global Strategies: Globalization of Market Presence __________________________________ Anil K. Gupta, The Quest for Global 19 Dominance. July 2010. All rights reserved.
  20. 20. Key Q y Questions 1. Choice of markets? 2. Entry strategies? 3. Extent of local adaptation? __________________________________ Anil K. Gupta, The Quest for Global 20 Dominance. July 2010. All rights reserved.
  21. 21. Wal-Mart: Ch i W l M t Choice of Markets fM k t __________________________________ Anil K. Gupta, The Quest for Global 21 Dominance. July 2010. All rights reserved.
  22. 22. Prioritization Across Markets Strategic Importance: • Market size • Growth rate • Learning value (leading edge customers, products, and/or technologies) Ability to Exploit: • Similarity to current markets • Potential to leverage existing competencies and infrastructure • Intensity of competition (lower is better) ) • Non-market entry barriers (lower is better) __________________________________ Anil K. Gupta, The Quest for Global 22 Dominance. July 2010. All rights reserved.
  23. 23. Wal-Mart: Entry Strategies W l M t E t St t i __________________________________ Anil K. Gupta, The Quest for Global 23 Dominance. July 2010. All rights reserved.
  24. 24. Entry Strategy: Go Al G Alone vs. Partner? P t ? Alliance-based entry modes are more appropriate when: • The market is more “foreign” (i.e., high economic, cultural, language, and political distance) • Subsidiary would need low operational integration with global network • Risk of asymmetric learning by partner is low • You Y are short of capital h t f it l • Government mandates local equity participation __________________________________ Anil K. Gupta, The Quest for Global 24 Dominance. July 2010. All rights reserved.
  25. 25. Degree of Local Adaptation • Be pragmatic, be open to learning from the market. • Extent of local adaptation may vary greatly across different elements of the marketing mix: g Product & service portfolio Product features Service features Pricing Advertising (theme vs. execution vs. media) Branding & logo Distribution channels • In dynamic markets, revisit your decisions at least once a year. __________________________________ Anil K. Gupta, The Quest for Global 25 Dominance. July 2010. All rights reserved.
  26. 26. Designing Global Strategies: Globalization of the Value Chain __________________________________ Anil K. Gupta, The Quest for Global 26 Dominance. July 2010. All rights reserved.
  27. 27. Need for Disaggregated Analysis Across Each Activity in the Value Chain Global Optimization Specific Value Chain Activities Declining need for geographic co-location of complementary activities __________________________________ Anil K. Gupta, The Quest for Global 27 Dominance. July 2010. All rights reserved.
  28. 28. Global O ti i ti Gl b l Optimization Of Individual Value Chain Activities Activity Architecture A Capabilities A F A Coordination At the Locations th L ti Across L A Locations ti A - Highly optimal A F - Highly suboptimal Choice of Location(s) __________________________________ Anil K. Gupta, The Quest for Global 28 Dominance. July 2010. All rights reserved.
  29. 29. Alternative Activity Architectures • Concentration in one location • Differentiated but global centers of excellence • Regional decentralization • Country-level decentralization The optimal architecture varies greatly across different value chain activities. Also, what’s optimal today will rarely be optimal tomorrow. __________________________________ Anil K. Gupta, The Quest for Global 29 Dominance. July 2010. All rights reserved.
  30. 30. Tapping the Most Optimal Locations Value Proposition: Examples: •Cost reduction • Production of Nike shoes in Vietnam •Access scarce talent • Microsoft: Speech p recognition lab in China •Access locally embedded knowledge • Texas Instruments: Software development in •Reduce risks India __________________________________ Anil K. Gupta, The Quest for Global 30 Dominance. July 2010. All rights reserved.
  31. 31. Building World-Class World Class Capabilities At the Locations June 2004 “The World's Hottest Computer Lab Microsoft's six-year-old Beijing lab has already paid dividends in speech recognition, wireless multimedia and graphics. By Gregory T. Huang Half a world away from the calm beauty of Seattle and Puget Sound, there's a lab where software dreams come true. At Microsoft Research Asia the true Asia, drive to succeed is as intense as the traffic that roars by the front door in unbridled, chaotic fury… Microsoft's mantra: work hard to get in the door; work h d to survive; then work even harder k harder t i th k h d because the real work-that of an information technology world leader-is just beginning….. The Beijing lab is a key part of Microsoft’s effort to ensure its global future through research.” g g __________________________________ Anil K. Gupta, The Quest for Global 31 Dominance. July 2010. All rights reserved.
  32. 32. Benefiting from Coordination Across Locations “We are beginning to understand the true meaning and benefits of being a global company. The best of class from all over the world now set the benchmarks for our industry, whether domestic or international. “Speedy checkouts,” “gravity walls” and new merchandise items are examples of ideas from international markets that we imported and applied to our domestic business. Just think of the multiplier factor when we apply a new sales-generating idea or cost-saving idea to 3,000 existing stores. This is what we call “Global Learning.”” – Annual Report 1998 A lR t __________________________________ Anil K. Gupta, The Quest for Global 32 Dominance. July 2010. All rights reserved.
  33. 33. Designing Global Strategies: Globalization of the Corporate Mindset __________________________________ Anil K. Gupta, The Quest for Global 33 Dominance. July 2010. All rights reserved.
  34. 34. “The culture of Coca‐Cola has moved from being an  “Th lt fC C l h df b i American company doing business internationally to an  international company which happens to be  headquartered in Atlanta … We were global when global  q g g wasn’t cool. Now everyone is trying to be global. If you go  back to our 1981 annual report, you will see references to  “foreign” sales or “foreign” earnings. Today, the word  “foreign” is foreign to our corporate language.” “foreign” is foreign to our corporate language ” Roberto Goizueta CEO, Coca‐Cola Beverage Digest, 1991 __________________________________ Anil K. Gupta, The Quest for Global 34 Dominance. July 2010. All rights reserved.
  35. 35. Globalization of Corporate Identity and Mindset Carlos Ghosn CEO, Nissan & Renault “There are no German or American There companies. There are only successful or unsuccessful companies.” Thomas Middlehoff Chairman, Bertelsmann AG Indra Nooyi The Wall Street Journal, 1998 CEO, PepsiCo __________________________________ Anil K. Gupta, The Quest for Global 35 Dominance. July 2010. All rights reserved.
  36. 36. Are You A Global Company? “International” Company: International “Global” Company: Global • “Domestic” vs. • “HQ Country” seen as “International” mindset one of many markets • Foreign markets seen • All major geographies as “add on” to domestic viewed as “domestic” market markets • Products and services • Products and services are invented first for the could be invented in domestic market and any geography then ported/adapted for • Market-centric rather foreign markets than product-centric __________________________________ Anil K. Gupta, The Quest for Global 36 Dominance. July 2010. All rights reserved.
  37. 37. Globalizing the Young Venture: Additional Considerations __________________________________ Anil K. Gupta, The Quest for Global 37 Dominance. July 2010. All rights reserved.
  38. 38. Whether or Not to Globalize – Early & Rapidly? • Global mindset Organizational • Past globalization experience • Acquisition/alliance capabilities Capability • Global coordination capabilities + Early & Rapid • Need for local adaptation • R&D intensity • Scale economies Globalization? • Need for local infrastructure • Customer globalization + - • Regulatory barriers Industry Industry Imperatives Constraints __________________________________ Anil K. Gupta, The Quest for Global 38 Dominance. July 2010. All rights reserved.
  39. 39. Whether or Not to Globalize – Early & Rapidly? 72 # of countries “entered” in first 5 years 22 7 3 __________________________________ Anil K. Gupta, The Quest for Global 39 Dominance. July 2010. All rights reserved.
  40. 40. Additional Challenges for Young Globalizers 1. Limited managerial, organizational, and financial resources 2. Lack of market knowledge, channel access & market relationships 3. Inability to attract and retain top talent in y p foreign locations 4. Limited or no experience in managing cross- cultural conflicts 5. Direct and indirect costs of coordination become unsustainable __________________________________ Anil K. Gupta, The Quest for Global 40 Dominance. July 2010. All rights reserved.
  41. 41. Guidelines for Young Globalizers 1. Understand the industry imperatives and constraints thoroughly 2. Don’t let global expansion distract you f from maintaining dominant position in strategic markets 3. Leverage existing relationships (customers, suppliers, partners, investors) ( li i ) 4. Resist the temptation to globalize too many activities at the same time add complexity in a sequential rather than parallel manner ti l th th ll l 5. Over-invest in integration capabilities (including early formalization of processes) __________________________________ Anil K. Gupta, The Quest for Global 41 Dominance. July 2010. All rights reserved.
  42. 42. Thank you! Jossey‐Bass/Wiley, March 2008 Jossey‐Bass/Wiley, Feb 2009 __________________________________ Anil K. Gupta, The Quest for Global 42 Dominance. July 2010. All rights reserved.

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