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Slides for our classes on July 23
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Today: Getting things done in the MNE
800-930 Recap and briefing
930-945 Break
945-1045 Malur Narayan (Tata)
1045-1100 Break
1100-1200 BRL Hardy (part)
1200-100 Lunch
100-200 BRL Hardy (part), briefing
200-300 Nabeel Malik (FCMB)
300-330 Break
330-430 Jim McAllister (Novartis Animal Health)
430-500 Summary and close
Customer willingness to pay
Cost of delivering
what the customer buys
Strategy
Four types of distance matter in IB
Cultural distance
Administrative distance
Geographic distance
Economic distance
Different languages
Different ethnicities
Lack of connective social networks
Different religions
Different social norms
Absence of colonial ties
Absence of shared monetary or political association
Political hostility
Government policies
Institutional weakness
Physical remoteness
Lack of common border
Landlocked
Size of country
Weak transport’n or communication links
Climatic differences
Difference in consumer incomes
Differences in costs and quality of resources: Natural Financial Human Infrastructure Intermediate input markets Information or knowledge
Attrib
utes
Cre
ating
Dis
tanc
e
Source: Ghemawat, 2001
Distance Difference Cost Risk
Firm-SpecificAdvantage
Internationalization Process
Why
How
WhereWhat Locational attractiveness
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
Source: Dunning
Resource seekers
Source: Dunning
Market seekers
Source: DunningEfficiency seekers
Strategic Asset Seekers
Volvo XC90 (Source: www.autospectator.com) Geely FC-1(Source: www.leblogauto.com)
Volvo Geely
Country of Origin Sweden China
Founding Year 1927 1986
No. of Models 10 7
Price Range 25,600-49,000 USD ~8,000-9,500 USD
Company Revenue 2009 12.4 bn USD 2.1 bn USD
Competitive Advantage Safety, Design, Quality Low Cost, ImitationsSource: Dunning
The Value Chain
Natural advantages
Government and social advantages
Available alternatives
Entrant characteristics,
preferences and choices
Mode
Occasional export
Licensing
Joint venture
Wholly-ownedsubsidiaryLevel of
Control over
ForeignActivities
Resources Committed to Foreign Market
Franchising
Export through agent
Source: Bartlett and Ghoshal
Escalating c
ommitment
The world today…
The great rebalancing
The productivity imperative
The global grid
Pricing the planet
Market state
Source: World Bank (Gao Xu blog)
Does this matter?
Source: McKinsey, 2010
Source: PRTM
50% of manufacturing to be done in host countries by 2010
Response by MNEs…and implications
Subsidiary competence
Importance of host country market
StrategicleaderContributor
Black holeImplementer
High
Low
High
Low
Source: Bartlett and Ghoshal; Verbeke, Huebner and Yuan
17%
12% 21%
50%
Subsidiaries have different roles and skills within the MNE
What are the barriers to realizing desired outcomes?
Solutions – vectors / means of coordination
Corporate strategy
Operating decisions and practices – decision rights
Corporate culture
Trusted insiders (expatriates)
Global coordinators
Corporate strategy
Operating decisions and practices – decision rights
Corporate culture
Trusted insiders (expatriates)
Global coordinators
Fundamental Job of Management
"… to maintain the cooperative system."
Chester BarnardThe Functions of the Executive, 1938
Expatriates
Global managers get things done over distances…
What are the most important skills for being a great global manager?
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
Articulation of current mindset
Exposure to diversity
Integration of old and new knowledge
Curiosity
Comfort with differences
Cultivating global mindsets…
Let’s summarize…
Virtual office hours
http://queensbusiness.adobeconnect.com/douglasreid/
Wednesday, July 275:00 – 6:00 PM(Kingston time)
Backup will be Skype: dreid150
