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Distance Still Matters [Sav Lecture Hb Sept 2001]


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Lecture slides to accompany "Distance Still Matters" HBR article (2001)

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Distance Still Matters [Sav Lecture Hb Sept 2001]

  1. 1. Toolkit Discussion<br />Distance Still Matters<br />
  2. 2. Distance Still Matters<br />What is our Market?<br />Country Portfolio Analysis<br />Population<br />Demographic (Male, Female, Age)<br />Ability to Pay<br /> = Total Addressable Market<br />Simplified Chinese translation :潜在市场总额/有开发价值的市场总额<br />Entered by: Mark Xiang<br /><br />
  3. 3. International Market Analysis <br />Logical, Calculated<br />Methodological<br />Scientific<br />Reliable<br />But is it Valid????<br />
  4. 4. Ghemawat begs to differ….<br />The Country Portfolio Analysis & TAM Models omit the real world factors that reduce your revenue potential<br />Some Cultural examples:<br />Language increases by 300%<br />Confucius doctrine (cultural transmit knowledge increases copyright infringement))<br />Ethnocentricity (Star TV English Programming reuse)<br />
  5. 5. Impact of Distance (Continued)<br />Administrative/Political<br />Colonial Examples account for 900% increase:<br />Spain/Latin America<br />France / Canada & West Africa<br />US / Britain<br />Today’s EU attempts to gain from this fact<br />Potential for China & Taiwan?<br />
  6. 6. Impact of Distance (Continued)<br />Political/Administrative Challenges<br />National Pride<br />Airlines, Commodity (Oranges, Coffee)<br />National Security (Telecommunications)<br />National Defense (Software, Arms)<br />Governments will protect these industries and restrict trade, especially for “distant” sellers<br />
  7. 7. Impact of Distance (Continued)<br />Geographic<br />Perhaps the best known/understood<br />Logistical limitations<br />Travel to and within<br />Technological distance (modern/ traditional )<br />Trade costs (Shipping costs)<br />Time zones<br />Recently though, geographicdistances are shortening (though technology and cost improvements)<br />
  8. 8. Impact of Distance (Continued) <br />Economic<br />GDP Trends<br />Total Addressable Market<br />Growing Middle Class<br />More countries are meeting the minimal level of critical mass to attract global attention (i.e. WalMart, Starbucks, Dominos Pizza)<br />
  9. 9. Tricon Example <br />CPA analysis indicated poor market potential for Mexico<br />Was limited to financial screening<br />Failed to observe the cultural and geographical distance to Tricon’s Headquarters<br />Cultural Similarities<br />Common Border<br />Trade Agreement<br />Moved from 16thplace statistically to number 2 (of 20).<br />
  10. 10. Discussion: Distance Still Matters<br />Describe the four dimensions of distance and why they are important.<br />What distance factor can help increase trade by nearly 900%, Why?<br />What does China suffer from the most in terms of distance? <br />What do you think is the most important distance factor? Why?<br />
  11. 11. Cage Framework (Distance Still Matters)<br />Start with a Base Business Plan created in your home country for Target Market<br />Review Each Distance Factor for applicability<br />Make Adjustments to Base Business Plan<br />Plan for Problems, Delays, Work Stoppages, Labor-Hiring Difficulties…<br />Create Contingencies<br />Especially Time Orientation (Hofstede)<br />
  12. 12. For Next Week: <br />Read carefully and analyze Disney Case<br />Prepare individual responses to Discussion Questions<br />You may Collaborate after you prepare your own DQ responses<br />Prepare for a student driven discussion…<br />
  13. 13. Feedback <br />Was anything unclear? Fuzzy?<br />Write it down and leave it at the desk…<br /> …I will address it next time we meet.<br /> Thank you.<br />