Global Business (Chap 2)
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
•
•
•
•
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 pieces
China is market or factory?
China is market or factory?
Off-shore production
Local for local
(地産地消）
Export
(traditional global business)
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 mapping into P-M Grid
Adaptation or
Aggregation
Adaptation +
Arbitrage
Aggregation +
Arbitrage
AAA Triangle by P. Ghemawat
Shift of global strategies
Ghemawat(2007)
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?)
Value Chain by M.E. Porter
Value Chain and Global Strategy
AAA and value chain
Arbitrage
Production
Off shore site
Sales, services for
local customers
Local for local
Adaptation for local customer
HQ for local
Off-shore R&D
R&D
Aggregation for global customer
HQ for global
HR, marketing and technology
strategy, procurement
Mother
factory
Customer type and global strategy
B2C
B2B
Goods
Automobile
TVs,
cosmetics
Parts
Ind. Robots
Steel
Services
Financial
Retail
HR service
BPO
Package
(system
integrator)
IT System
integrator
B2G2C
Subway,
Water
Basically, adaptation to the customer
Some arbitrage, but some not
TBD
Case material: China and India
• India: factory or market? Please provide at
least one example in each Quadrant of
factory or market matrix.
• Pick up one industry of your favorite.
Discuss attractiveness in India over China
by CAGE framework.
• Then develop your global strategy plan
based on AAA framework (which “A”
should you put your focus on?)