Group 28

Towards a better future

Group No. 28

Roshan Kumar (PGP-10-156), Ganesh Shenoy (PGP-10- 117)Ashish Toshniwal (PGP-10-110), Ashwini R

(PGP-10-111), Shahji Chabbra (PGP-10-163), Aparnavalli (PGP-10-104)

PGDM 2010-12

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A. Forecasts on future of Globalization Globalization is here to stay in a long run. However the

Future of globalization on a long term is checkered with

alternate bouts of growth and recession.

With organizations becoming more complex it is

becoming hard to make predictions about the extent to

which they will adapt globalization strategy .This makes

it all the more inaccurate to forecast about globalization

at country levels.

The countries which were vehement supporters of Free

Trade resorted to protectionist measures like restricting

imports via non tariff barriers & making visa norms even

more stringent restricting free flow of services. This is being done to mainly safeguard their

economies from developing countries like China & India.

Even though the developing countries are opening up they would continue to maintain capital

controls keeping in mind the ASEAN & Brazil experiences.

Technology is a big leveler & is helping people connect, share

information leading to the formation of a boundary less

world. A contemporary example is about how the Tunisian

youth protested against the misrule of the president of the

country & forced him to flee the country. With the help of

technology people in other countries like Egypt are resorting

to similar moves to deal with improper governance

prevailing in the country.

Frequent changes in International Laws regarding Climate Change, IPR(Intellectual Property

rights),Human rights can affect the contours that globalization can take.

Globalization would also be fostered by the disparate Demographics prevalent all across the

globe leading to huge movement of workforce across borders. This would also need the

presence of mechanism to facilitate integration of different work Cultures resulting in synergy

from diversity.

Global Market recovery led by high disposable income in emerging economies will give a further

boost to the process of Globalization.

Yet, Semi Globalized nature of world economy will prevail for next few decades as it brings best

of both Global and local resources & strategy models, providing access to both growth as well as

insulation in case of any global shock to an extent.

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B .Improving path to future

Problems in an integrated world

Even if world is getting integrated there are there are many hurdles that the companies might face in

2015

In 2015 there is expected to be an increase in uncertainty in financial markets.

Governments might raise the barriers to growth.

Predicted reversal of globalization but growing economies like India and

China might still go for it.

IT industry might witness a borderless state by 2015 as the market is

emerging at a fast pace.

Unrestricted flow of information, cultural values and ideas.

Predictable surprises

In 2015 global economy might be dominated by reregulating, de-levering

and de-globalization.

De-globalization might lead to the strengthening of local markets.

If Globalization is on a rise by 2015 and provided the governments are

flexible, international players like Example: Wal-Mart might enter into

countries like India causing a threat to the local players which become a

predictable surprise.

Predictive power by taking down to the industry and company level

Managers, in 2015, should still add to predictive power by focusing on

risks and trends that are likely to affect their industry or company.

Prioritizing trends based on the line of business of the company is more

important.

Importance of business in shaping broad outcomes

Globalization will help is increasing the transparency of government decision making which will

help businesses build a relationship between different countries.

States would be working more with private sector organizations. The private sector

organizations will be very powerful as result of ongoing globzlization.

For-Profit businesses would grow fast over the next 4-5 years and would be responsible for

bringing about legal and judicial reforms.

Non-Profit organizations will grow 20 times as a result of their affiliation with many countries. They will look for opportunities other than delivering services.

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C.Forecasts about future of Globalisation:

5 step framework :

1) Performance Review-

Geography will still continue to be one of the main dimensions on which performance is disaggregated. This is owing to the fact that even in a globalised economy, countries will still be governed by economic, social and political environments prevalent in those geographies.

Along with geographies, another important dimension to consider will be the cluster of countries coming together to participate in mutual economies. These strategic alliances will be formed based on shared interests and practices in those countries. A typical eg. Is the EU nations coming together to bail out PIGS (Portugal, Ireland, Greece and Spain ) countries.

Take cost of capital into account.

The globalisation scorecard will hence contain a multi dimension evaluation giving importance to the criteria of both geography and strategic alliance.

2) Industry and competitive analysis

Basic industry analysis will be the first step for analyzing the competitiveness of the company in the globalised economy.

We suggest the following additions to the basic questions in cross border industry and competitive analysis:

i. IT infrastructure present in the country. ii. Skilled manpower availability and cost or the particular

industry. iii. Support service availability iv. Scope for integration-forward and backward.

3) Difference analysis by CAGE distance framework- The cultural, administrative, geographic, and economic (CAGE) distance framework helps managers identify and assess the impact of distance on various industries.

According to us, the priority order for deciding among the 4 aspects would be Economic distance, Administrative, Cultural, followed by geographic distances.

The company should concentrate on the availability of financial, human and natural resources, infrastructure availability and information or knowledge as their first priority. This should be followed by Government policies and presence of colonial ties with that country. The cultural and geographical factors, though marginally important, will take a backseat with reference to the above factors. We are not suggesting that the above factors be ignored, but that the policies necessary to deal with cultural and geography should be set before the company enters the country, as they are relatively unchanged over time.

Also, the bilateral and multilateral components to be considered while evaluating the global strategy of the company, should be calibrated to give easily verifiable measures for a particular industry.

4) Development of strategic options: AAA strategies

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AAA value scorecard is going to be the buzzword on which global strategies are going to be evaluated. There will be a combination of strategic options to choose from and finalise on the competitive moves that cater to the cross country differences.

The article mentions three steps for development of strategic options around the AAA strategies:

a. Having 2 or more options for strategies b. Documenting each strategy c. Constantly evolving and evaluating these strategies

We suggest that along with the three options mentioned above, a company must be ready to abandon their strategies in the face of crisis and able to spring up an entirely new business model to develop a strategic advantage to the company. Eg. The investment banks had to shed their risky portfolios and some of them even transformed into normal banks.

Eg) Tata Nano had to quickly shift its production facility from West Bengal to Gujarat to cater to the pressing demand of living upto consumer expectations.

5) Evaluation by ADDING value scorecard.

The 6 components-Adding volume, decreasing costs, differentiating, improving industry

attractiveness, normalizing risks and generating knowledge and other resources would

be the basis of evaluating the strategic options.

Avoid double-counting.

Each of the 6 components should be analysed separately and in totality keeping in mind

the value based approach.