Lessons From Late Movers


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Lessons From Late Movers

  1. 1. Going Global Presented by: Diana Lim April 21, 2011 Lessons from Late Movers
  2. 2. Christopher A. Bartlett <ul><li>Jr. Professor of Business Administration at Harvard Graduate School of Business Administration </li></ul><ul><li>received an economics degree from the University of Queensland, Australia (1964) </li></ul><ul><li>masters and doctorate degrees in business administration from Harvard University (1971 and 1979) </li></ul><ul><li>marketing manager with Alcoa in Australia, management consultant in McKinsey and Company's London office, and general manager at Baxter Laboratories' subsidiary company in France. </li></ul>8 books 50+ chapters or articles 100+ case studies and teaching notes
  3. 3. Sumantra Ghoshal <ul><li>Born in Calcutta; Died of brain haemorrhage (age 55) in 2004 in UK </li></ul><ul><li>Studied physics at Delhi University then Worked for the Indian Oil Corporation (started as an intern and rose thru the ranks) </li></ul><ul><li>Doctoral degrees at both MIT School of Management and Harvard Business School (He worked on these degrees at the same time, writing two distinct dissertations on two different topics) </li></ul><ul><li>Joined London Business School in 1994 </li></ul><ul><li>‘ Managing across Borders: The Transnational Solution,’ co-authored with the Bartlett found a place in the Financial Times list of the 50 most influential management books of all time </li></ul>12 books 70 chapters or articles Numerous case studies
  4. 4. $25 Made in Indonesia $25 Made in Japan
  5. 5. $15 Made in Indonesia $25 Made in Japan
  6. 6. Country of Origin Labelling <ul><li>Before 1914 product’s origin was not a major issue </li></ul><ul><li>“ Made in Germany” required after WWI as a form of punishment </li></ul><ul><li>It has become a reputation, stereotype </li></ul><ul><li>Significant role in the customers’ perception of products </li></ul>
  7. 7. Country of Origin Labelling <ul><li>COOL - law requires retailers to provide country-of-origin labelling for fresh beef, pork, and lamb </li></ul><ul><li>Pros: </li></ul><ul><li>Provide US products advantage </li></ul><ul><li>Right to know (health and safety reasons) </li></ul><ul><li>Cons: </li></ul><ul><li>Disguised trade barrier </li></ul><ul><li>No evidence that consumers want such a thing </li></ul>Reason why companies from peripheral countries find it difficult to compete against global giants from Europe, Japan, or the US
  8. 8. Arvind Mills (Indian Garment Manufacturer) <ul><li>Perceived as a symbol of quality at home (still does) </li></ul><ul><li>Initial strategy worked great as a “quality” garment firm at home </li></ul><ul><li>Major denim supplier to 1990’s apparel firms in the US </li></ul><ul><li>Expanded rapidly providing quality products to global firms </li></ul><ul><li>Global competition increased dramatically </li></ul><ul><li>U.S jeans market continually started to sink </li></ul>
  9. 9. The Pharmaceutical Industry’s Value Curve <ul><li>All industries can be seen as a collection of product market segments </li></ul>The problem for most MNEs from peripheral countries is that they typically enter the global market at the bottom of the value curve, and they stay there
  10. 10. Ranbaxy (Indian Garment Manufacturer) <ul><li>Stuck at the bottom of the value curve </li></ul><ul><li>Ranbaxy created a pocket of excellence in India and also abroad </li></ul><ul><li>Moved into higher margin business </li></ul><ul><li>Consistently invested in R&D </li></ul><ul><li>Had significant cost advantages in R&D </li></ul><ul><li>Break out of the mind-set that they couldn’t compete globally </li></ul><ul><li>Find a competitive advantage in being a late mover </li></ul><ul><li>Develop a culture of cross-border learning </li></ul>
  11. 11. Breaking Out of the Marginal Mind-Set <ul><li>Companies from peripheral countries can fall into several traps, also known as liabilities of origin </li></ul><ul><ul><li>Gap between local and international standards </li></ul></ul><ul><ul><ul><li>Demand at home is strong – duck the challenge of going abroad </li></ul></ul></ul><ul><ul><li>Unaware of the company’s global potential; self-doubt </li></ul></ul><ul><ul><li>Limited exposure to global competition (overconfidence or blind to potential dangers) </li></ul></ul>
  12. 12. Breaking Out of the Marginal Mind-Set <ul><li>PUSH from home </li></ul><ul><ul><li>Moment of truth stimulates the initial steps towards internationalization </li></ul></ul><ul><ul><li>Especially for companies blinded by their domestic success that they fail to see that their origins present a liability (ex. Samsung 10 years ago) </li></ul></ul><ul><ul><li>Risk-taking, investing far ahead of demand </li></ul></ul><ul><ul><li>Even if doing so reduces the company’s responsiveness to its successful home market (ex. Thermax) </li></ul></ul>
  13. 13. Breaking Out of the Marginal Mind-Set <ul><li>PULL from abroad </li></ul><ul><ul><li>Need for offshore champions – senior executives from the target market </li></ul></ul><ul><ul><li>This increases credibility and confidence to win top management’s attention </li></ul></ul><ul><ul><li>Invest in management capabilities of your overseas units </li></ul></ul><ul><ul><li>Ex. Natura defended its position in Brazil but failed abroad </li></ul></ul>
  14. 15. Devising Strategies for Late Movers <ul><li>Benchmark and sidestep </li></ul><ul><ul><li>In today’s global market, you don’t have to go abroad to experience international competition. Sooner or later, the world comes to you </li></ul></ul><ul><ul><li>Emerging multinationals can learn how to compete against the players in foreign markets simply by adapting and responding to those players as they enter the home market </li></ul></ul><ul><ul><li>Copy and innovate </li></ul></ul><ul><ul><li>Ex. Jollibee </li></ul></ul>
  15. 16. Devising Strategies for Late Movers <ul><li>Confront and challenge </li></ul><ul><ul><li>Introduce new business models that challenge the industry’s established rules of competition </li></ul></ul><ul><ul><li>Can be effective in industries deeply embedded with tradition </li></ul></ul>ex. BRL Hardy Wine, an Australian Wine Company
  16. 17. Learning How to Learn <ul><li>Protect the past </li></ul><ul><ul><li>Exploit the resources and capabilities that have provided competitive advantage to date </li></ul></ul><ul><ul><li>Reinventing is not always the solution </li></ul></ul><ul><ul><li>Cooperation between parent company and overseas subsidiary establishes a dynamic of mutual learning </li></ul></ul><ul><li>Build the future </li></ul><ul><ul><li>New capabilities cannot simply be installed, they must be developed and internalized </li></ul></ul><ul><ul><li>Invest in new personnel, training, or reorienting internal culture </li></ul></ul>
  17. 18. Success Factors <ul><li>Breaking Out of the Marginal Mind-set </li></ul><ul><ul><li>Push from home </li></ul></ul><ul><ul><li>Pull from abroad </li></ul></ul><ul><li>Devising Strategies for Late Movers </li></ul><ul><ul><li>Benchmark and sidestep </li></ul></ul><ul><ul><li>Confront and challenge </li></ul></ul><ul><li>Learning How to Learn </li></ul><ul><ul><li>Protect the past </li></ul></ul><ul><ul><li>Build the future </li></ul></ul>