Th Q t f The Quest f or Global Dominance ANIL K. GUPTA The INSEAD Chaired Professor of Strategy The INSEAD Chaired Professor of Strategy INSEAD – The Business School for the World 1 Ayer Rajah Avenue, Singapore 138676 Email : [email protected]Web: www anilkgupta com Web : www .anilkgupta.com Tel: +65.6799.5381 __________________________________ Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved. 1
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Th Q t fThe Quest forGlobal Dominance
ANIL K. GUPTAThe INSEAD Chaired Professor of StrategyThe INSEAD Chaired Professor of StrategyINSEAD – The Business School for the World1 Ayer Rajah Avenue, Singapore 138676Email: [email protected]: www anilkgupta comWeb: www.anilkgupta.comTel: +65.6799.5381
__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
1
Agenda
1. The Changing Global Landscape
2. Designing Global Strategies
a. Foundational Ideas
b. Globalization of Market Presence
c. Globalization of the Value Chain
d. Globalization of Corporate Mindset
3. Globalizing the Young Venture: Additional Considerations
2__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Th Ch i Gl b l L dThe Changing Global Landscape
3__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Size of advantage Hi hSize of advantage from globalization
Bulk of market share in most countries is captured by
Low High
Global players
Local players countries is captured by
Implications for global strategy
players
Globally integrated operations
players
Multi-domestic operations
17__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
operationsoperations
Industry Characteristics Matter
“The planned sale is in line with the strategy set out by Lars p gy yOlofsson, chief executive, to pull out of markets in which the supermarket group has little prospect of becoming market leader and invest in those where it already is leader or has a good chance of becoming one. “
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g
Designing Global Strategies:Designing Global Strategies:Globalization of Market Presence
19__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Key Questionsy Q
1. Choice of markets?
2. Entry strategies?
3. Extent of local adaptation?
20__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
W l M t Ch i f M k tWal-Mart: Choice of Markets
21__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Prioritization Across Markets
Strategic Importance:Strategic Importance:
• Market size• Growth rate• Learning value (leading edge
customers, products, and/ortechnologies)
Ability to Exploit:
• Similarity to current markets• Potential to leverage existing
competencies and infrastructure• Intensity of competition (lower is
)better)• Non-market entry barriers (lower
is better)
22__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
W l M t E t St t iWal-Mart: Entry Strategies
23__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Entry Strategy:G Al P t ?Go Alone vs. Partner?
Alliance-based entry modes are more appropriate when:
• The market is more “foreign” (i.e., high economic, cultural, language, and political distance)
• Subsidiary would need low operational integrationSubsidiary would need low operational integration with global network
• Risk of asymmetric learning by partner is low
Y h t f it l• You are short of capital
• Government mandates local equity participation
24__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Degree of Local Adaptation
• Be pragmatic, be open to learning from the market.
• Extent of local adaptation may vary greatly across different elements of the marketing mix:g
Product & service portfolioProduct featuresService featuresPricingAdvertising (theme vs. execution vs. media)Branding & logoDistribution channelsDistribution channels
• In dynamic markets, revisit your decisions at least once a year.
25__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Designing Global Strategies:Designing Global Strategies:Globalization of the Value Chain
26__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Need for Disaggregated Analysis Across Each Activity in the Value Chain
Global Optimization
Specific Value Chain Activities
Declining need for geographic co-location of complementary activities
27__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Gl b l O ti i ti OfGlobal Optimization OfIndividual Value Chain Activities
ActivityActivityArchitecture
A
CoordinationA L ti
CapabilitiesAt th L ti
F AAAcross LocationsAt the Locations
Choice of Location(s)
AA - Highly optimalF - Highly suboptimal
28__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Location(s)
Alternative Activity Architectures
• Concentration in one location
• Differentiated but global centers of• Differentiated but global centers of excellence
The optimal architecture varies greatly across different value chain activities. Also, what’s optimal today will rarely be optimal tomorrow.
29__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Tapping the Most Optimal Locations
Examples:Value Proposition:•Production of Nike shoes in Vietnam
•Microsoft: Speech
•Cost reduction
•Access scarce talent precognition lab in China
•Texas Instruments: Software development in
•Access locally embedded knowledge
Software development in India•Reduce risks
30__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Building World ClassBuilding World-Class Capabilities At the Locations
June 2004June 2004“The World's Hottest Computer LabMicrosoft's six-year-old Beijing lab has already paid dividends in speech recognition, wireless multimedia and graphics.By Gregory T. Huang
Half a world away from the calm beauty of Seattle and Puget Sound, there's a lab where software dreams come true At Microsoft Research Asia thedreams come true. At Microsoft Research Asia, the drive to succeed is as intense as the traffic that roars by the front door in unbridled, chaotic fury…
Microsoft's mantra: work hard to get in the door; k h d t i th k h dwork harder to survive; then work even harder
because the real work-that of an information technology world leader-is just beginning….. The Beijing lab is a key part of Microsoft’s effort to ensure its global future through research.”
31__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
g g
Benefiting fromCoordination Across Locations
“We are beginning to understand the true meaning and benefits of being a global company. The best of class from all over the world now set the benchmarks for our industry, whether domestic or international. “Speedy checkouts,” “gravity walls” and new merchandise items are examples of ideas from international markets that we imported and applied to our domestic business. Just think of the multiplier factor when we apply a new sales-generating idea or cost-saving idea to 3,000 existing stores. This is what we call “Global Learning.”” –A l R t 1998Annual Report 1998
32__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
Designing Global Strategies:Designing Global Strategies:Globalization of the Corporate Mindset
33__________________________________Anil K. Gupta, The Quest for Global Dominance. July 2010. All rights reserved.
“Th lt f C C l h d f b i“The culture of Coca‐Cola has moved from being an American company doing business internationally to an international company which happens to be headquartered in Atlanta … We were global when global q g gwasn’t cool. Now everyone is trying to be global. If you go back to our 1981 annual report, you will see references to “foreign” sales or “foreign” earnings. Today, the word “foreign” is foreign to our corporate language ”“foreign” is foreign to our corporate language.”