Global Business (Chap 1) 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 • Introduction of this course – The world is flat? Yes, but…. – Growing importance of global business for Japanese economy and firms – Changing the rule of the global business game. • Introduction to global business studies – Example: China is your “market” or “factory”? – CAGE and AAA framework in global strategic making Some features of this course • Globalization studies for Japanese firms to invest in emerging economies, importance of partnership with government. (C and I) • Combination of theory (international business management) and practices: Teaching method: lecture and case studies (active class participation is encouraged!) • International business plan: Evaluation will be made with cooperation of Hitachi Co. Ltd. “The World is Flat” by Thomas Friedman • 1st Globalization Era: 1492: Columbus found the American continent. • 2nd Globalization Era: Around 1800: Industrial revolution (by steam engine) drove down transportation costs significantly. • 3rd Globalization Era: Around 2000: Internet and information technology revolution -> Globally flat business emerges (like Infosys) What is this? Galapagos islands Infosys：Bangalore Japan as Galapagos Islands? • 1990, in “Competitive Advantage of Nations” by prof. Michael Porter, describes Japan as “a country where you can find the most sophisticated customers in the world” • 200X, Japanese mobile phones are called as “Gala Kei”, stands for Galapagos Keitai (mobile phone) • 2010, Sharp introduced multi media terminal called “Galapagos” • 2012, Samsung hits the profit record by “Galaxy” • 201X, What happened in Japanese mobile producer in the international market? From Sharp’s website Is the world really flat? デリー市 ホンダ ハリヤナ州 スズキ ホンダ スズキ ホンダ ニムラナ ラジャスタン州 ムンバイ市 UP州 Wall at the national boarder and economics of fragmented labor market Price=wage Pj Pc Japan China Quantity What happened if this wall is lowered? Changes in the world population Financial Times What is Globalization and why? US/Europe US/Europe Toyota Motors Japan IBM Infosys Toyota Japan Motors China China India India Microsoft Catching up of Korea and China (TFP in electronics industry) 1.4 1.2 1.0 China 0.8 Korea Taiwan 0.6 Japan 0.4 0.2 0.0 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 RIETI-ICPA Project, Motohashi (2006b) What happened in PV module production? Size of value added Growing “Good Enough Market” Driving forces Aircraft (CoPS) Auto- EV? of propriety Protection technology motives (IPR), increasing complexity, strategic investment in complex system innvation PV panel PC Scientific approach for innovation (digitalization, modularization..) and technological catching up Level of complexity (difficulty in imitation) Development in emerging economies Such as China and India New markets New competitors Global Business Strategy • • Shift to “good enough market” and improvement in cost competitiveness Business model re-organization by service dominant design World in not so flat, understanding distance Consistency with corporate strategy China is market or factory? China is market or factory? Off-shore production Local for local (地産地消） Export (traditional global business) CAGE framework • 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, etc. • Economic Distance： per capital GDP, wages, living costs Redefining Global Strategy: Crossing Boarders in a World Where Differences Still Matter by Pankaj Ghemawat (Harvard Business School Press) 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…. Course organization: 2014 • Intensive classes from July 22 to 25 • Pre-registration should be made by July 18. (to email@example.com) • Grouping information will be provided at the first day (July 22) • Text book in Japanese is available (Other materials such as case studies will be provided on the first day.