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902 class 7
- 1. The Future Course Summary and Integration Douglas Reid douglas.reid@queensu.ca @douglasreid
- 2. Today’s objectives Framing a picture of the future What does it mean for the MNE What does it mean for you? 930-1045 Administrivia, the future 1045-1100 Break 1100-1215 Big questions for the MNE 1215-1230 Break 1230-120 You…and us
- 4. Assignment 2 – Back tomorrow, R&R September 18
- 5. Assignment 3 – DONE, RETURNED
- 6. Assignment 4 – Due September, R&R
- 7. Assignment 5 – Due SeptemberVirtual Office Hours: Tuesday, 745 PM – 1000 PM Kingston time
- 8. Customer willingness to pay Strategy Costs
- 10. What matters to the future?
- 11. Even good strategies decay… Replication Supplantation Exhaustion Evisceration Source: Hamel, 2009
- 12. National strategies may also decay.
- 14. What world do you live in?
- 16. What will you need to know?
- 17. Likely scenario What’s happening here?
- 20. Innovation needs to be done differentlyto address markets where fresh growth remains
- 22. What were today’s key ideas?
- 23. Global strategy Course Objectives Practical proficiency Generate more questions Stimulate lifelong interest Put bigger questions into perspective
- 24. Customer willingness to pay Strategy Cost of delivering what the customer buys
- 25. Implementation happen primarily by changing the allocation of resources consistent with objectives
- 26. Why do multinational corporations exist?
- 27. Four types of distance matter in IB Attributes Creating Distance Source: Ghemawat, 2001
- 28. Distance Difference Cost Risk
- 30. Internationalization Process Why Where What Locational attractiveness How
- 31. ADDING Helps Answer “Why?” Adding volume (growth) Decreasing costs Differentiating (increasing WTP) Improving industry attractiveness (bargaining power) Normalizing (optimizing) risk Generating knowledge (and other resources, capabilities) Source: Ghemawat
- 32. Resource seekers Source: Dunning
- 33. Market seekers Source: Dunning
- 34. Efficiency seekers Source: Dunning
- 35. Strategic Asset Seekers Geely FC-1(Source: www.leblogauto.com) Volvo XC90 (Source: www.autospectator.com) Source: Dunning
- 36. What makes a location attractive?
- 37. Relate to the Motivation for Internationalizing Resources (inputs) Markets Efficiency Strategic assets Others?
- 38. The Value Chain
- 39. Mode Escalating commitment Wholly-owned subsidiary Level of Control over Foreign Activities Joint venture Franchising Licensing Export through agent Occasional export Resources Committed to Foreign Market Source: Bartlett and Ghoshal
- 40. 50% of manufacturing to be done in host countries by 2010 Source: PRTM Trends in Functional Location
- 42. Fundamental Job of Management "… to maintain the cooperative system." Chester Barnard The Functions of the Executive, 1938
- 43. Global managers get things done over distances…
- 44. Critical Skills Developing peer relationships Carrying out negotiations Motivating subordinates Resolving conflicts Establishing information networks Disseminating information Making decisions in conditions of ambiguity Allocating resources Constant learner External representation
- 45. Cultivating global mindsets… Articulation of current mindset Exposure to diversity Integration of old and new knowledge Curiosity Comfort with differences
- 46. The environment faced by a subsidiary… Competition from the external marketplace Internal competition from new locations (e.g. East Europe, Far East) Competition from other subsidiaries with similar activities
- 47. We’ve come a long way…
- 48. You are here
- 49. What’s new here?
- 50. Be clear about your values What will you NOT tolerate?
- 51. Seek the opportunity to lead
- 52. Seek and embrace responsibility
- 53. Choose action
- 54. Develop others
- 56. Subsidiary Role Innovator Implementer Strategic Choice Arbitrage Aggregation Adaptation Commitment Level Wholly owned sub JV, alliance, license, export Distance Reality Cultural Administrative Geographic Economic Context matters
- 58. Cooperation Curation Coaching Managerial Practice New Literacies Habits of Mind
- 60. Cooperation Curation Coaching Managerial Practice Questions, not answers Pattern recognition Alternate interpretations New Literacies Habits of Mind
- 61. Result: Improved mental model Current Future A B A B Y X Y X
- 62. Cooperation Curation Coaching Managerial Practice Questions, not answers Pattern recognition Alternate interpretations New Literacies Seeking variance Reflection Attitude of wisdom Habits of Mind
- 63. To become a more effective manager, I will… Do more of… ___________________ ___________________ ___________________ ___________________ ___________________ Do less of… ___________________ ___________________ ___________________ ___________________ ___________________ Start doing… ___________________ ___________________ ___________________ ___________________ ___________________ Stop doing… ___________________ ___________________ ___________________ ___________________ ___________________
- 64. Result: Build the habit of wisdom OK, till circumstances change Best Sound Belief Can’t tell opinion from fact Indifferent Unsound Low High Strength of Attachment to Belief
- 66. Keeping up…
- 67. Books I’d read…
- 68. (free) Strategy and IB listserv
- 69. How to make things better, forever?
- 70. Thank you!
- 71. Dr. Douglas Reid dreid@business.queensu.ca @douglasreid
Editor's Notes
- See Hamel – strategic decay sources file
- The allure of distant markets does not eliminate the fact that they too are connected within a system. Given the difficulties many companies have operating at great distances (cultural, administrative, geographic and economic), it is wise for internationalizing firms to seek resilience as a matter of design.
- Most organizations seek predictable environments in which to make choices (i.e., such as the leftmost diagram). However, the interaction of forces in the global environment are producing situations of increasing ambiguity.I wonder whether managers estimate their world (in terms of ambiguity) based on data, or in a way that is, sadly, reflective of the cognitive biases that impair judgment and decision making.(For a good starter on the idea of cognitive bias, go here: http://en.wikipedia.org/wiki/Cognitive_bias
- A caveat…maybe none of this matters
- What does the idea of strategy help you do in a company?---------------------------------Sensemaking is the goalPlausible story that enables actionWhat does it let you do that matters?
- Tsai and Eisengerich 2010 CMR Internationalization strategies of emerging market firms (today’s reading)
- Distance comes in four flavours
- Liability of foreignness
- Why (ADDING)What (activities, or parts of value chain)Where (locational advantage)How (modes)
- March 28, 2010 definitiveagreementwith Ford signedGeelypays $1.8 billionFord bought Volvo Cars in 1999 for $6.45 billionVolvo’scurrentbook-value is $ 2.4 billion**** NB Volvo bought for lessthanbookvalue!!!Geelybenefitedfrom $ 800 million of preferentialChinesestateloansFord wasunderpressure to divestPreviouslydivested Aston Martin, Jaguar & LandRoverIP assettransferexplicitlyincluded in dealGEELYRoots in MotorbikemanufacturingAmong top 10 ChineseproducersSold327,000 carsin 20096% exportedFirststepto internationalization in 2003 throughsalesofficesImage of a low-endcarmanufacturerAmbitious5-year internationalizationplan -- 2/3 exports)Strategic goalsAcquisition of know how in building upscale car segmentAcquisition of marketing capabilities and customer base abroad Enlarge the brand portfolio and exploit the value attached to Volvo brand (safety and luxury)DriversGrowing competition in Chinese home market (need to conquer market share) pushes Geely towards resource seekingChinese government aid and supportChinese cultural long term orientation and mindsets (proactive)
- From prior class discussions…
- Key idea is coping with differences – not seeing them as disastrous – but seeing them as opportunities for creative response.
- So what are the skills needed? How is a global manager different than a single-country manager?Write a job description…based on these presentations
- Articulation of current mindset“Know thyself”Exposure to diversityEducationDiverse teams and locationsImmersion experiencesExpatriate assignmentsIntegration of old and new knowledgeNo “not invented here” approachCuriosityWonderment, discovery, interest
- Subsidiaries increasingly competing with each otherFor new capital investmentFor new mandatesFor survival (e.g., factory rationalizations)Low visibility in head officeLack opportunities to develop valuable social capital with key decision makersMust rely on results or innovative thinking to raise value, increase resources, add respect, etc.
- Key is seeing things differently using a disciplined approach (frameworks let you do that)
- Best leader – what did he/she do?
- Industry analysisBlue oceanSWOT…
- 2 x 2 matrixCore literacy here is knowing difference between an opinion and a fact
- Tarion Way?Black swans?Reinsurance?Capital plan?Approach to improving – continuous or infrequent?----- Meeting Notes (11-08-26 10:40) -----good discussion on Black Swans
- Or, feel free to contact me directly.Thanks.