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- 1. Most Interesting Problem for Global Business Management Presentation for Nihon University July 23, 2002 Dr. D. Cartwright
- 15. Q & A Roots of Failed Globalization
- 22. Internet Being Adopted Faster Than Any Previous Technology 13 16 38 4 Years to 50 Million Users
- 23. Technology Migration to Internet Small # Users Applications Operational Departmental Cross-Enterprise 1960s–1970s 1970s–1980s 1980s–1990s 1990s–2000s Small Adoption Business-to-Business and Consumer Moderate Consumers, All Workers 10+ Years 7+ Years 5+ Years 3+ Years Client/Server Mainframe Mini/WAN PC/LAN Internet/Intranet
- 24. World Internet Commerce Sales Source: Forrester Research $Billions
- 25. The Internet Effect * As of May 28, 1999 Market Valuation $Billions
Notes de l'éditeur
- Not getting the results from globalization that you expected? Maybe you're looking for the wrong kind of return. For the past several years, the convergence of a buoyant stock market, the promise of the Internet, and the economic and financial integration of the European market made globalization seem the inevitable goal of every corporate strategy. But in recent months, we've begun to see equally strong indications that we may have seriously overestimated the rate of international expansion and its distinct impact on business life. The dot-com sector is rife with examples of companies that thought they had to be global players from the beginning--until they were confronted by the complexity inherent in developing a global strategy. But they're not alone. Every Internet company that failed to deliver on its promise of global products for global customers--every Boo.com that went bust--has a counterpart of long-standing reputation, a Ford or a McDonald's, whose international return has reached the limit of what could realistically be expected from global standardization. Along with these reversals of fortune has come a growing minority of contrary politicians and researchers who argue that markets are still culturally, legally, and socially diverse. Our own work with a great number of companies has forced us to agree that the degree of globalization and cross-border integration is far below original intentions. In an effort to understand why this is true--and to develop a formula for making globalization a more successful prospect--we've segmented three broad categories of missteps that cause global efforts to fall short: · The benefits of globalization aren't defined. Strategies and projects are launched without a clear identification or shared perception by the relevant teams of precisely what they're after. · Organizational structures aren't adapted to delivering the specified benefits. Inadequate organizational blueprints of the past survive for too long, or new ones focus on the wrong product, customer segment, or process. · The globalization process itself isn't managed well or followed up on. Often, too much is expected from big-bang approaches or one-shot deals. Believing that globalization was the ultimate end goal of a connected world, many companies spent a great deal of time, effort, and money preparing for global, or at least multinational, competition. Traditional national champions doubled or tripled their geographic reach overnight, mostly through mergers and acquisitions. No longer the monopoly of a small group of multinational corporations, globalization strategies were perceived as a conditio sine qua non for corporate survival. "Today, there's no business that can afford not to be global from the start," said former Yahoo CEO Tim Koogle near the peak of the dot-com momentum. Even as it opened restaurants around the globe, McDonald's found it had to compromise with regional authorities and consumers by tailoring its products and restaurants to local requirements. With kosher Big Macs the norm in Jerusalem, CEO Jack Greenberg acknowledged that rather than offering a single product line worldwide, "we are a network of local entrepreneurs." Similarly, Ford's Mondeo project, which attempted to launch a uniform car model around the world with an absolute minimum of local adaptation, fared better when handled region by region. Early in the development process, the R&D teams on both sides of the Atlantic highlighted the differing needs of their markets; as a result, the end product was far from homogeneous. And market research showed the name "Mondeo" wasn't acceptable to U.S. consumers. A global compromise on wheels, the car didn't fit the needs of American, Asian, or European customers. Its failure caused Ford to pare its global programs in R&D, production, and purchasing back to the regional level. Poor identification of goals can easily cause an internationalization process to fail. It's vital to monitor the business environment closely to detect benefits when and if they emerge.
- Cost advantages refer to the efficiency considerations of driving down costs by increasing scale and/or integrating processes, particularly in investment-intensive support areas such as IT, and in sectors such as purchasing and R&D. In a number of cases we studied, the anticipated savings from globalizing IT or research had barely been identified. Top management has to realistically quantify what can be gained, exactly where those gains will take place, and how significant they're likely to be. Often, the costs of getting to these benefits outweigh the potential return. Network benefits refer to the value of "being where the client is." The advantage for you as the international supplier is derived from the value that true global access to customers can bring. "It's not so much economies of scale or synergies that matter, as [much as] global access to customers," Juan Villalonga, the flamboyant former CEO of Spain's Telefonica, said in May 2000. But is it really important to your clients to have your services available around the globe? Many high-tech and dot-com companies tried to persuade investors and venture capitalists that global access to clients was crucial for the survival of their businesses. But in many cases, there were no real benefits to the customer. Does the average global business executive really expect a mobile phone operator to own an international network? Is there really an added value to working with the same portal across the globe? Cost advantages and network benefits are often the drivers that push companies to integrate their efforts across geographic borders. But this approach overlooks a key benefit of globalization: learning opportunities. Learning opportunities are a very different type of benefit, and harder to quantify. They refer to the power of diversity, the learning and knowledge base gained by operating in many different environments, making you more competitive both at home and abroad. Learning opportunities arise when globalization is structured as a two-way process that exposes you to a diversity of clients, competitors, markets, and regulations. It's extremely important to be efficient in managing the flux of information and using the lessons learned at branches around the world. Tractebel, a Belgian energy holding company, went international in 1993, long before any cost or network benefits could be reaped in the electricity business, given the slow pace of deregulation in Europe. Yet by anticipating and entering the competition in the United States and Scandinavia, as well as in places such as Oman, Ireland, and Chile, the company learned to operate in very different environments with very different requirements. Trial and error taught it how to compete far from its protected domestic market, and it became one of the leading and most competitive electricity companies in the world. For many businesses, the knowledge exchange among different markets could be precisely the added value offered by a global presence. This was one of the main drivers behind a number of local European insurance companies setting up a cross-border alliance called Eureko in 1992. Their objective was to strengthen the partners in the alliance in their domestic markets by sharing expertise and learning with each other. The alliance, now grown to eight members, still focuses heavily on sharing best practices among the partner companies and the individual managers in them. Ten years later, some of the initial partners now are ready to go for a full merger and cross-border integration in key areas. Effective international knowledge management requires systems, processes, and an organizational culture that encourage give--and take--between colleagues within and among units. But while technology platforms may support a free flow of ideas and experiences, in most instances they aren't sufficient. Management attitude and awareness, and appropriate incentives--the soft aspects--also need to be carefully developed. The future competitive edge of global masters will come down to managing best practices and knowledge across borders, product lines, and functions. True uniqueness often comes not only from reusing what we have, but from creating and developing new ideas by bringing together different insights, learning points, and creativity. It's not just an issue of systems and IT; the true management challenge is to allow ideas to clash and to support innovation and trial and error. Strategies focused in this way go beyond simplistic standardization; they leverage diversity--externally, through adaptability and innovation; and internally, across units, departments, functions, products, client segments, and processes. Genuine globalization in the 21st century is probably more about seeking out and managing diversity than about convergence and standardization.
- Slide: Graphic comparing Internet adoption compared to other technologies Main Point(s)/Script: If we compare the growth of the Internet, measured by numbers of users, the evidence is quite compelling. The PC took 16 years to reach 50 million users. The Internet has taken just 4. The main reasons for this growth are threefold: the high existing high levels of personal computers, the low cost of Internet access, and the ease of use of the medium. The US commerce department sees consumer traffic on the net doubling every 100 days. It estimates that 1 Billion people will be on the net by 2002. These estimates may be conservative, since actual use of the net has greatly exceeded previous commerce department predictions. Process: talk through, pace is rather fast since you’re giving data points. Interaction: Demo: none Evidence: in slide Transition to next slide: Commerce conducted over the net has risen sharply
- 1. Schwab > ML in MV but ML profits $1B more than Schwab 2. AOL P/E ratio is 390.56 3. Valuations based on demand side assets – Customer loyalty – Number of customers 4. New world is “sticky” – Stay at site
- Globalization often brings a strategic transformation--sometimes even a revolution--that causes resistance, inertia, and frustration among the staff. It's management's job to anticipate and acknowledge real and imagined barriers. Long-term success often comes down to managing globalization as complex iterations in an almost random order. This is an ongoing process of analysis, organizational change, management of people and teams, adapting the strategy to changes in the market, overcoming barriers to implementation, and then starting again at the beginning of the process.