902 class 7
DESCRIPTION
MBUS 902 Class 7TRANSCRIPT
The Future
Course Summary and Integration
Douglas Reid
@douglasreid
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
Administrivia
Grading status:
• Assignment 1 – DONE, RETURNED• Assignment 2 – Back tomorrow, R&R
September 18• Assignment 3 – DONE, RETURNED
• Assignment 4 – Due September, R&R• Assignment 5 – Due September
Virtual Office Hours:
Tuesday, 745 PM – 1000 PM Kingston time
Customer willingness to pay
Costs
Strategy
What matters to the future?
Source: Hamel, 2009
Exhaustion
Replication Supplantation
Evisceration
Even good strategies decay…
National strategies may also decay.
What world do you live in?
What will you need to know?
Likely scenario
What’s happening here?
Innovation needs to be done differently to address markets where fresh growth remains
What were today’s key ideas?
Global strategy
Course Objectives
Practical proficiencyGenerate more questionsStimulate lifelong interestPut bigger questions into perspective
Customer willingness to pay
Cost of delivering
what the customer buys
Strategy
Implementation happen primarily by changing the allocation of resourcesconsistent with objectives
Why do multinational corporations exist?
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
Liability of foreignness
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
What makes a location attractive?
Relate to the Motivation for Internationalizing
Resources (inputs)
Markets
Efficiency
Strategic assets
Others?
The Value Chain
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
Source: PRTM
50% of manufacturing to be done in host countries by 2010
Trends in Functional Location
Fundamental Job of Management
"… to maintain the cooperative system."
Chester BarnardThe Functions of the Executive, 1938
Global managers get things done over distances…
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…
Internal competition from new locations (e.g. East
Europe, Far East)
Competition from other subsidiaries with similar
activities
Competition from the external marketplace
The environment faced by a subsidiary…
We’ve come a long way…
You are here
What’s new here?
What will you NOT tolerate?
Be clear about your values
Seek the opportunity to lead
Seek and embrace responsibility
Choose action
Develop others
Be urgently curious.
Strategic Choice
ArbitrageAggregationAdaptation
CommitmentLevel
Wholly owned subJV, alliance,
license, export
Subsidiary Role
InnovatorImplementer
Distance Reality
CulturalAdministrative
GeographicEconomic
Context matters
Managerial Practice
New Literacies
Habits of Mind
CooperationCurationCoaching
Managerial Practice
New Literacies
Habits of Mind
CooperationCurationCoaching
Questions, not answersPattern recognitionAlternate interpretations
Result: Improved mental model
A
YX
B
Current
A
YX
B
Future
Managerial Practice
New Literacies
Habits of Mind
CooperationCurationCoaching
Questions, not answersPattern recognitionAlternate interpretations
Seeking varianceReflectionAttitude of wisdom
To become a more effective manager, I will…
Do more of…_______________________________________________________________________________________________
Do less of…_______________________________________________________________________________________________
Start doing…_______________________________________________________________________________________________
Stop doing…_______________________________________________________________________________________________
Result: Build the habit of wisdom
Belief
Sound
Unsound
Low High
Strength of Attachment to Belief
IndifferentCan’t tell
opinion from fact
OK, till circumstances
changeBest
Anything missing?
Keeping up…
Books I’d read…
(free) Strategy and IB listserv
How to make things better, forever?
Thank you!
