Globalization Opportunities & Challenges Our People (Core team) Shuki Katz is very experienced in the area of change, M&As and transformation of banking and financial systems. Mr. Katz was the Director of Organization and Systems in Bank Hapoalim. During his tenure in Bank Hapoalim, Mr. Katz lead major changes such as the transition from product lines to customer groups, establishing the private banking sector, commercial banking, online banking, direct banking, central call center, growing through activities abroad and many other strategic changes. Mr. Katz also acquired practical experience with other companies such as Master-card, Continental Bank, Israeli- American Bank and others. Shuki was very involved in the acquisition of the Israeli – American Bank by Bank Hapoalim and the merger of both banks’ operations. Mr. Katz was also instrumental in growing Bank Hapoalim’s activity and sales in the US by helping its branches grow new initiatives and business lines and building an adequate corporate culture, strategy and structure. Presented by: Yagev Ben Itzhak
A Global Company ?Going Global does not mean justdoing business abroad.In a true Global Company there isharmony between differentcultures.Resources, knowledge andmaterials are moved seamlesslyacross different countries so thatthe company enjoys maximumcompetitive advantage.
Rule # 2“And the small shall act big . . . One way smallcompanies flourish in the flat world is bylearning to act really big. And the key to beingsmall and acting big is being quick to takeadvantage of all the new tools for collaborationto reach farther, faster, wider, and deeper.”Thomas Friedman, Author“The World is Flat” 4
Rule # 3“And the big shall act small . . .One way that big companies learn to flourish inthe flat world is by learning how to act really smallby enabling their customers to act really big.”Thomas Friedman, Author“The World is Flat” 5
Why go Global? Small local market Benefits of Foreign Trade to accelerate growth Revolution in Global Communications Fast and Efficient Transportation Opening of Previously Closed Markets The field has been redefined
Bank of Israel – Research Department We find that the productivity of exporting firms in Israel ishigher than that of non-exporters. The export premium is higher before firms enter the exportmarket, an indicator of a self-selection effect. We also find an additional premium for firms after theyhave entered the export market, which is suggestive of alearning by exporting effect. We found a significant positivelearning effect. Growth in the productivity of exporting firms isapproximately 12 percent 5 years after they enter the exportmarket.
Means to go Global Exports to foreign Countries Strategic Alliances Licensing Franchising Contract Manufacturing Joint Ventures Wholly Owned Subsidiaries M&As
Components of effective Global Organizations Global Global Global Global Strategy Structure Leadership Culture Resources, knowledge and materials are moved seamlessly across different countries so that the company enjoys maximum competitive advantage.
Global Products & Multi–Local Products People all over have People in different similar needs cultures have different Some products have styles, tastes, language, Global demand culture Industrial products: Steel, Chemicals etc. Government Regulations Semiconductors, force Local Modifications Internet services, Economic Differences Software Global products are usually impersonal products.
Global Competitive AnalysisThe Fundamental aim of business Strategy is to create and sustain competitive advantagesFirst Step is to conduct competitive analysis. Country Specific Advantages Firm Specific Advantages (F.S.A.) Value Chain Analysis Best way to leverage these advantages in Foreign Markets & gain advantage over Local Firms Dealing with Global and Local Competitors
National Competitive Advantage A country might provide an absolute advantage by the virtue of having certain resources Homeland Security, Agriculture, Communication, High Technology in USA, Israel Comparative Advantage : When one country is better in producing a certain type of product Coffee in Brazil Software in India, Medical tourism in India
Heart Bypass U.S.: $130,000 Singapore: $18,500 Thailand: $11,000 India: $10,000 The East Shore Hospital is an InternationalPhoto: East Shore Hospital, SingaporeData: Business Week, Member of Blue Cross, Blue Shield of South Carolina..
Heart Valve Replacement U.S.: $160,000 Singapore: $12,500 Thailand: $10,000 India: $9,000Photo: Apollo Hospital, Chennai. India The Apollo Hospital is an InternationalData: Business Week, Member of Blue Cross, Blue Shield of South Carolina..
Angioplasty U.S.: $57,000 Singapore: $13,000 Thailand: $13,000 India: $11,000Photo: Bumrungard International Hospital , Bangkok 35,000 Americans traveled to Bangkok in 2007Data: Business Week, for this treatment
Hip Replacement U.S.: $43,000 Singapore: $12,000 Thailand: $12,000 India: $9,000 US Private equity firm, TPG has taken a controlling interest in the Parkway Group that owns the hospital.Photo: Gleneagles, SingaporeData: Business Week,
Hysterectomy U.S.: $20,000 Singapore: $6,000 Thailand: $4,500 India: $3,000 Active discussions with US insurersPhoto: a subsidiary of Wockhardt in Mumbai, IndiaData: Business Week,
Knee Replacement U.S.: $40,000 Singapore: $13,000 Thailand: $10,000 India: $8,500 Early stage infrastructure; not yet world-class..Photo: St. Luke’s Hospital in ManilaData: Business Week,
Spinal Fusion U.S.: $62,000 Singapore: $9,000 Thailand: $7,000 India: $5,500 Experimental stem cell treatments, not availablePhoto: Tiantan Puhua Hospital, Beijing, China in the USA..Data: Business Week,
Firm Specific Advantages (F.S.A.) Firms develop competitive advantages which is unique to them E.g: Patents, Distribution Network, Manufacturing techniques, Access to Raw materials etc Knowledge Based F.S.A. : Soft skills such as marketing, brand management etc. Skills reside in employees and experience of the Firms Resource Based FSA: Resources such as products, technology, know-how & Services Firms have to build both Knowledge based & Resource based advantages
Taking F.S.A. Abroad FSA cannot always be transferred abroad. The degree of transferability depends on FSA itself Intangible “skills” are toughest to transfer FSA tied at home country are not always transferrable.
Initial Thoughts Going global will stretch and mold company resources into a globally effective organization. Global Managers will have to select the right entry strategies, decide on trade-offs between localization or global standardization to achieve the optimal local responsiveness and global economies of scale. Going global is not only about selling abroad. It’s about a global strategy, global structure, global leadership and global culture.