Global Business #2
April 9, 2012
Dept of Technology Management for Innovation
(TMI), Graduate School of Engineering
Professor Kazuyuki Motohashi
工学系研究科 技術経営戦略学専攻教授
元橋一之
http://www.mo.t.u-tokyo.ac.jp
Today’s class
• What is business strategy?
• What is global business strategy（CAGE）
• AAA framework
Business Strategy
• Mid or long term direction of business to achieve
sustainable economic returns (corporate value)
– Strategy: military terms, back to Sun’s “The Art of
War”
– MOST
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Mission: like “Sony is pioneer”,
Objective: More concrete goal of business, corporate
Strategy： Short description of how to achieve goals
Tactics： Business unit level activities (often not documented)
• know your enemy, know thyself, and you shall not
fear a hundred battles
– External competition and internal competitiveness
– 3C of corporate management ：Competitor, Customer,
Company
Business Strategy Analysis: SWOT
Positioning School (by M. Porter): External competition focus
RBV(Resource Based View) School: Internal competitiveness focus
V(Value), R(Rarity), I(Imitability), O(Organization)
Strategic Planning
Articulation of Strategic Goal
Ex. creating new customer value
Evaluation
Conducting logic tests
(3C, SWOT analysis)
Strategic Options
Needs change?
ex. low cost strategy?
Selection
Communication
Execution
Pitfall: picking up bits and peaces
China: Factory or Market?
Why global strategy is different?
(CAGE)
• Cultural Distance: language, customs, religion,
cultures etc.
• Administrative Distance: regional integration
administration (FTAs), currency, common suzerain
state, political dispute
• Geographic Distance： physical distance, time zone,
• Economic Distance： per capital GDP, wages, living
costs
Value Creation by combining
Adaptation, Aggregation, Arbitrage
India vs China from US viewpoint
Ghemawat(2007)
AAA: How to manage “distance”?
Adaptation：Customization of product or
services to local market: McDonald’s vegiburger in India, soundless and compact
fridge in China (by Panasonic)…
Aggregation：Globally (or regionally)
standardized product and services: Toyota’s
pickup tracks for SE Asia, Apple i-phone…
Arbitrage：Making profit out of distance：
Infosys, UNIQLO….
AAA Triangle by P. Ghemawat
Shift of global strategies
Ghemawat(2007)
Economic valuation of global strategy
• Purpose of strategy: long term profit, valuation
• Supply side story
– Local cost advantage (arbitrage)
– Scale economy by global supply chain (aggregation)
– Globalization of value chain (production, R&D)
• Demand side story
– Localization of product and services (adaptation)
– Market analysis and marketing mix at local market
– Globalization of value chain (marketing, R&D)
Global Strategy Making
• Factory or Market?: Supply side story or
demand side story or both?
– Arbitration is not only for manufacturing
process but for various kinds of activities called
off-shoring
• Aggregation or Adaptation:
– Marketing concept: market segmentation and
targeting (or global market?)