Yip’s Globalization Drivers- R1

Yip’s Globalization Drivers

Academic Group 24

Abhineet Nidhi RahulShweta Swayam Vipin

Globalization

“Globalization refers to the development of global or worldwide business activities, competition and markets and the increasing global interdependence of national economies” – Stonehouse et all. 2004

“International integration in commodity, capital and labour markets” – Bordo et all. 2003, WTO

“World 3.0's remapping of the terrain suggests a better path forward. Specifically, a more realistic appraisal of both globalization and regulation suggests a path to greater prosperity that involves more market integration as well as limited and targeted market regulation.” – Ghemawat, World 3.0

Industry Top 5 seller concentratio

nEntertainment 71%Carbonated Soft Drinks 70%Light Bulbs 68%Computer Software 59%Computer Hardware 59%Aerospace/ Defense 55%Automobiles 53%Semiconductors 40%Passenger Airlines 37%

Source : Ghemawat and Ghadar, 2006

Globalization Drivers : Yip’s Framework

Developed by George Yip(1992)

Helps analyze the degree of globalization in the industries

The 4 main categories of drivers are :• Market Globalization Drivers• Cost Globalization Drivers• Government Globalization Drivers• Competitive Globalization Drivers

Low (Domes

tic)High

(Global)

Macroeconomic Environment & Framework

Potential for Globalizatio

n

Market Drivers

Government Drivers

Competitive Drivers

Cost Drivers

Social & Demographic Factor

Political & Legal FactorEconomic &

Financial Factor

Technological Factor

Yip’s Framework : Market Drivers

Customer NeedsSimilarities/ Differences CultureEconomic DevelopmentPhysical EnvironmentClimate

Customers & ChannelsGlobal SuppliersGlobal Distributers

MarketingNames Advertising

Lead CountriesProduct Innovations

Market Drivers : Explained

Driver Parameter Pressure for globalization

Pressure for localization

MARKET Customers Global customers Local customers

Channels Global channels Local channels

Marketing Transferable marketing

Differentiated Marketing

Countries Lead countries No obvious lead countries

Yip’s Framework : Cost Drivers

Economies of Scale/ScopeNational market size (Scale)Common distribution outlets (Scope)Group of goods packaged together

Experience CurveLearning Curve

SourcingNames Advertising

LogisticsTransportation Costs

Country Costs, Productivity & SkillsProduct Life Cycles & Product Development Costs

Cost Drivers : Explained

Driver Parameter Pressure for globalization Pressure for localization

COST Economies of scale High fixed costs Low fixed costs

Experience curve Steep learning curve Shallow learning curve

Sourcing Low transportation costs & perishable products, no need to locate near customers

High transportation costs & perishable products, need to locate near customers

Logistics Differences in cost Similarities in cost

Product development costs High Low

Technological change Rapid Slow

Yip’s Framework : Government Drivers

Trade PoliciesLiberalizationTrade barriers

Technical StandardsCommonality between countries

Marketing RegulationsAdvertising Standards

Government-Owned CustomersGovernment-Owned Companies

Govt. subsidies, protection of home markets

Host Government ConcernsNational conditions

Government Drivers : Explained

Driver Parameter Pressure for globalization Pressure for localization

GOVERNMENT Trade policies Low trade barriers High trade barriers

Technical standards Compatible Incompatible

Marketing regulations Common Different

Government ownership Govt. owned competitors present

Govt. owned competitors absent

Host govt. concerns Policies that favor global businesses

Policies that hinder global businesses

Yip’s Framework : Competitive Drivers

Exports & ImportsLevel of export & imports

CompetitorsDomestic GlobalGlobal competition Global Strategy

Interdependence of countriesLevel of interdependenceLevel of independence

Competitive Drivers : Explained

Driver Parameter Pressure for globalization Pressure for localization

COMPETITIVE Volume of exports & imports

High exports & imports Low exports & imports

Competitors Competitors from different continents, globalized

Local competitors

Interdependence of countries

Countries largely interdependent

Countries largely independent

Yip’s Framework : Summary of Drivers

Identifies the drivers that are local & global, attributes of transnational synergy can be tailored to match the drivers

Can be mapped to Porter’s five forces

Changes in drivers indicated by macroeconomic analysis

Analyze both industry and market

Identifies the critical success factors of a global industry & market

Yip’s Framework : Porter’s Five Forces

Porter’s Forces

Threat of Entry

Threat of Substitutes

Power of Suppliers/Buyers

Competitive rivalry

Globalization driver impact Globalization Drivers

Common Customer: IncreaseGlobal economies of scale : DecreaseGlobal marketing : DecreaseHigh product development costs : DecreaseGlobal competition : Increase

GovernmentMarket

Lead nations : IncreaseResearch & Development : IncreaseInnovation : Increase

GovernmentMarket

Global customers : Reduce supplier powerGlobal suppliers : Counteract customer power

MarketCost

Common customer needs : IncreaseGlobal customers : IncreaseEconomies of scope : IncreaseGlobal sourcing : IncreaseCompatible technical standards & favorable trade policies : Increase

Competitive Cost

THANK YOU !!