INB 201
Intro to International Business
Spring 2013
Dr. Lairson
Technology
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2163
Rise of the Knowledge Economy
Basic features of the knowledge economy
Knowledge is the most important input to products, processes, services
Innovation main source of competitive advantage
US
China
Finland
Israel
India
Apple and RIM
Apple and Sony
Walmart and Kmart
Canon, Sony and Kodak
Samsung and Apple
Knowledge economy in rich states = potential rapid growth in poor states by
reusing existing knowledge
Knowledge base in developing nations leads to local and then to global innovation
New global knowledge pools = Bangalore, Hong Kong, Seoul, Tokyo, Shanghai,
Shenzhen, Singapore
Pace of competition and innovation rises
Turbulence in markets
Fast failure
Startups
Premium for knowledge increases
Basic Terms
Technology
1. Business analytics (predictive analytics) (Business intelligence) (Big data)
2. Datamining
3. GPS
4. Terabyte/Petabyte
5. Cloud Computing
6. Mobile Computing (Apps)
7. 3D Printing
8. Router; WiFi
9. Customer Relationship Management (CRM)
10. Enterprise Resources Planning (ERP)
11. Ubiquitous Computing
12. Computer Aided Design (CAD); Computer Aided Manufacturing (CAM)
13. Management Information Systems (MIS)
14. Supply Chain Management (SCM)
15. World Wide Web
16. Operating System
17.Browser
Important People and firms in microcomputers
Bill Gates
Xerox PARC
Steve Jobs/Steve Wozniak
Tim Berners Lee - WWW
DARPA
INTEL – microprocessor
Gordon Moore
Transistor
Moore’s Law
Personal Computer 1982
iPhone 4s 2012
Cost
$2500
$600
Processor speed
4MHz
1GHz
Weight
25lbs
4oz
Storage
30 mb
16gb
iPhone: camera, HD video, global phone, internet, verbal commands
Ratio
4.18:1
250:1
100:1
528:1
iPhone is vastly more powerful, vastly more capabilities, tiny fraction of the size,
vastly better screen resolution for less than ¼ the price (even less in real $)
Altair - 1975
Alto - 1978
Apple II - 1977
MacIntosh - 1984
McKinsey Global Institute
Disruptive technologies: Advances that will transform life, business, and the
global economy
What is a disruptive technology?
How does a disruptive technology affect business?
Yet some technologies do in fact have the potential to disrupt the status
quo, alter the way people live and work, rearrange value pools, and
lead to entirely new products and services.
Business leaders can’t wait until evolving technologies are having these
effects to determine which developments are truly big things. They need
to understand how the competitive advantages on which they have based
strategy might erode or be enhanced a decade from now by emerging
technologies—how technologies might bring them new customers or force
them to defend their existing bases or inspire them to invent new strategies.
the most significant advances in economies are often accompanied by a
process of “creative destruction,” which shifts profit pools, rearranges
industry structures, and replaces incumbent businesses. This process is
often driven by technological innovation in the hands of entrepreneurs.
identify which of these technologies could have massive, economically
disruptive impact between now and 2025.
Identifying disruptive technologies:
share four characteristics:
1) The technology is rapidly advancing or experiencing breakthroughs.
2) The potential scope of impact is broad.
3) Significant economic value could be affected.
4) Economic impact is potentially disruptive.
The technologies we identify have potential to affect billions of consumers,
hundreds of millions of workers, and trillions of dollars of economic activity
across industries.
McKinsey Global Institute
Disruptive technologies: Advances that will transform life, business, and the global economy
5
Exhibit E2
Speed, scope, and economic value at stake of 12 potentially economically disruptive technologies
Mobile
Internet
Automation
of knowledge
work
Illustrative rates of technology improvement
and diffusion
Illustrative groups, products, and
resources that could be impacted1
Illustrative pools of economic value
that could be impacted1
$5 million vs. $4002
Price of the fastest supercomputer in 1975 vs. that of
an iPhone 4 today, equal in performance (MFLOPS)
4.3 billion
People remaining to be connected to the
Internet, potentially through mobile Internet
$1.7 trillion
GDP related to the Internet
6x
Growth in sales of smartphones and tablets since
launch of iPhone in 2007
1 billion
Transaction and interaction workers, nearly
40% of global workforce
100x
Increase in computing power from IBM’s Deep Blue
(chess champion in 1997) to Watson (Jeopardy
winner in 2011)
230+ million
Knowledge workers, 9% of global workforce
400+ million
Increase in number of users of intelligent digital
assistants like Siri and Google Now in past 5 years
The Internet
of Things
300%
Increase in connected machine-to-machine devices
over past 5 years
80–90%
Price decline in MEMS (microelectromechanical
systems) sensors in past 5 years
Cloud
technology
18 months
Time to double server performance per dollar
3x
Monthly cost of owning a server vs. renting in
the cloud
Advanced
robotics
75–85%
Lower price for Baxter3 than a typical industrial robot
170%
Growth in sales of industrial robots, 2009–11
Autonomous
and nearautonomous
vehicles
7
Miles driven by top-performing driverless car in 2004
DARPA Grand Challenge along a 150-mile route
1,540
Miles cumulatively driven by cars competing in 2005
Grand Challenge
1.1 billion
Smartphone users, with potential to use
automated digital assistance apps
1 trillion
Things that could be connected to the Internet
across industries such as manufacturing,
health care, and mining
$25 trillion
Interaction and transaction worker
employment costs, 70% of global
employment costs
$9+ trillion
Knowledge worker employment costs,
27% of global employment costs
$36 trillion
Operating costs of key affected
industries (manufacturing, health care,
and mining)
100 million
Global machine to machine (M2M) device
connections across sectors like transportation,
security, health care, and utilities
2 billion
Global users of cloud-based email services
like Gmail, Yahoo, and Hotmail
80%
North American institutions hosting or planning
to host critical applications on the cloud
$1.7 trillion
GDP related to the Internet
$3 trillion
Enterprise IT spend
320 million
Manufacturing workers, 12% of global
workforce
$6 trillion
Manufacturing worker employment
costs, 19% of global employment costs
250 million
Annual major surgeries
$2–3 trillion
Cost of major surgeries
1 billion
Cars and trucks globally
$4 trillion
Automobile industry revenue
450,000
Civilian, military, and general aviation aircraft
in the world
$155 billion
Revenue from sales of civilian, military,
and general aviation aircraft
26 million
Annual deaths from cancer, cardiovascular
disease, or type 2 diabetes
$6.5 trillion
Global health-care costs
300,000+
Miles driven by Google’s autonomous cars with only
1 accident (which was human-caused)
Nextgeneration
genomics
Energy
storage
3D printing
10 months
Time to double sequencing speed per dollar
100x
Increase in acreage of genetically modified crops,
1996–2012
40%
Price decline for a lithium-ion battery pack in an
electric vehicle since 2009
90%
Lower price for a home 3D printer vs. 4 years ago
4x
Increase in additive manufacturing revenue in past
10 years
Advanced
materials
$1,000 vs. $50
Difference in price of 1 gram of nanotubes over
10 years
115x
Strength-to-weight ratio of carbon nanotubes vs. steel
Advanced
oil and gas
exploration
and recovery
3x
Increase in efficiency of US gas wells, 2007–11
Renewable
energy
85%
Lower price for a solar photovoltaic cell per watt since
2000
2x
Increase in efficiency of US oil wells, 2007–11
19x
Growth in solar photovoltaic and wind generation
capacity since 2000
2.5 billion
People employed in agriculture
1 billion
Cars and trucks globally
1.2 billion
People without access to electricity
320 million
Manufacturing workers, 12% of global
workforce
8 billion
Annual number of toys manufactured globally
7.6 million tons
Annual global silicon consumption
45,000 metric tons
Annual global carbon fiber consumption
$1.1 trillion
Global value of wheat, rice, maize, soy,
and barley
$2.5 trillion
Revenue from global consumption of
gasoline and diesel
$100 billion
Estimated value of electricity for
households currently without access
$11 trillion
Global manufacturing GDP
$85 billion
Revenue from global toy sales
$1.2 trillion
Revenue from global semiconductor
sales
$4 billion
Revenue from global carbon fiber sales
22 billion
Barrels of oil equivalent in natural gas
produced globally
$800 billion
Revenue from global sales of natural
gas
30 billion
Barrels of crude oil produced globally
$3.4 trillion
Revenue from global sales of crude oil
21,000 TWh
Annual global electricity consumption
$3.5 trillion
Value of global electricity consumption
13 billion tons
Annual CO2 emissions from electricity
generation, more than from all cars, trucks,
and planes
$80 billion
Value of global carbon market
transactions
1 Not comprehensive; indicative groups, products, and resources only.
2 For CDC-7600, considered the world’s fastest computer from 1969 to 1975; equivalent to $32 million in 2013 at an average inflation rate of 4.3% per year since launch in 1969.
3 Baxter is a general-purpose basic manufacturing robot developed by startup Rethink Robotics.
SOURCE: McKinsey Global Institute analysis
Information technology is pervasive. Most of the technologies on our list are
directly enabled, or enhanced, by information technology. Continuing progress in
artificial intelligence and machine learning are essential to the development
of
advanced robots, autonomous vehicles, and in knowledge work automation tools.
The next generation of gene sequencing depends highly on improvements in
computational power and big data analytics, as does the process of exploring
and tapping new sources of oil and natural gas. 3D printing uses computer
generated models and benefits from an online design sharing ecosystem. The
mobile Internet, the Internet of Things, and cloud technology are themselves
information and communications technologies. Information technologies tend to
advance very rapidly, often following exponential trajectories of improvement in
cost/performance.
Combinations of technologies could multiply impact. We see that certain
emerging technologies could be used in combination, reinforcing each other and
potentially driving far greater impact. For example, the combination of nextgeneration genomics with advances in nanotechnology has the potential to
bring about new forms of targeted cancer drugs. It is possible that the first
commercially available nano-electromechanical machines (NEMS), moleculesized machines, could be used to create very advanced sensors for wearable
mobile Internet devices or Internet of Things applications.
The nature of work will change, and millions of people will require new skills.
It is not surprising that new technologies make certain forms of human labor
unnecessary or economically uncompetitive and create demand for new skills.
The future for innovators and entrepreneurs looks bright. A new wave of
unprecedented innovation and entrepreneurship could be in the offing
as a
result of falling costs and rapid dissemination of technologies. Many of the
technologies discussed in this report will be readily available and may require
little or no capital investment.
It is possible that advancing technology, such as automation of knowledge work or
advanced robotics, could create disproportionate opportunities for some highly
skilled workers and owners of capital while replacing the labor of some less
skilled workers with machines. This places an even greater importance on
training and education to refresh and upgrade worker skills and could increase the
urgency of addressing questions on how best to deal with rising income inequality.
Supply Chains
What is a supply chain?
How have supply chains changed as a result of new technology and globalization?
Why is the supply chain so spread out?
What are some of the main problems in managing global supply chains?
Analyze the Apple suppliers list and the geographic distribution and nationality of
Apple suppliers. What kinds of issues can this present to supply chain managers?
How would knowing about operations management prepare you for these issues?
How does the value chain convey new information about the supply chain?
What does analysis of the value chain for an iPod reveal?
Figure 3. Breakdown of 30GB 5th-generation iPod retail price based on analysis so far
GROSS MARGIN
Retail
Price
$299
Wholesale
Price
$224
Cost of
Inputs
$144
Cost of sales
for 7 key inputs
$83
$45 retail
margin
$30 distr.
margin
$80 Apple gross margin
(gross margin for
7 key inputs)
COST
$33
$1 gross margin for
PortalPlayer supplier
$224 wholesale price to Apple
$144 cost of all inputs
$83 cost of goods for
7 key inputs
$4 other cost of
PortalPlayer chip
$28
(cost of 444
still-to-be analyzed inputs)
$78 still-to-be analyzed
cost for 7 key inputs
How
does
the evolution
Apple over time add new issues to the management of a
Source:
Authors’
estimates; seeoftext.
supply chain?
What
is the relationship
Apple’s
supply
and
its brand
value?
The dominance
of Apple’sbetween
gross margin
suggests
thatchain
in this
particular
iPod
model, the U.S.
captures most of the value. In the case of retail units sold in other countries, a significant portion
of the U.S. share would shift elsewhere. For a unit sold in Japan, the total value captured by
Japanese companies might even be larger than the U.S. share, depending on the identity of the
company that handles distribution.
However, it must be recalled that the gross margins for inputs in the third row of Figure 2
exclude direct labor, which is part of the $83 cost of goods. Direct labor, most of which will be
outside the U.S., would be included in an ideal value added analysis but will not be accounted for
in the current phase of the study because of data availability problems.7
The location of direct labor differs from headquarters location for most electronics firms.
Taiwanese CMs, for instance, have moved the bulk of their factories to mainland China over the
Big Data
http://www8.hp.com/us/en/business-solutions/nascar.html
http://www.npr.org/bl ogs/alltechconsidered/2014/03/19/291147096/for-prosports-public-relations-going-high-tech-real-time
In the NASCAR Fan and Media Engagement Center, 13 46-inch TV screens display charts, tweets and live
races.
By 2020, there will be 50 billion Internet-connected points – the Internet of things generating massive and exponentially growing data1
By 2018, the United States alone could face a shortage of 140,000 to 190,000 people
with deep analytical skills, as well as 1.5 million managers and analysts with the
know-how to use the analysis of big data to make effective decisions.2
Capturing value from data is a massive business opportunity: $300 billion in health
care3
Motley Fool, http://www.fool.com/investing/general/2014/02/03/how-the-internets-evolutioncan-transform-your-lif.aspx
2 McKinsey Global Institute, May 2011
3 McKinsey Global Institute, May 2011
1
What is Data Analytics and Visualization?
Information about human behavior
Behavior then predicts behavior now
Understand connections and relationships in social and economic systems
Decision makers need new analytical and conceptual tools for data analytics
Nature and consequences of large data sets
Importance of context for causation
Social and political issues in having and using data
Power of micro-relationships
Data ownership and transparency
New business models around specialized and authenticated services
Real-time macro data
Validity for correlated relationships
Unintended consequences of system intervention
Good data visualization = good communication
Discovery through interactivity
Third Industrial Revolution
3D printing
Digital manufacturing
New materials
Nanotechnology
Modularity and economies of scale and scope
Robotics
Manufacturing has always been limited by costs:
Factory
Machines
Mass production for economies of scale
Cost of retooling to make different types
High costs of small batches
You could not make anything that was not susceptible to economies of scale
Technology changes what we can do at what cost
It changes what we make, how we make it, where we make it and who can afford it
All of these create business opportunities and competitive threats
What does an auto factory look like? Or a steel factory?
3D manufacturing eliminates the difference between average cost and marginal cost
The batch of 1
It allows us to make things for very low cost that we could not make before
Use of synthetic living tissue to manufacture a kidney – bio-printing
Customized pet design
Will 3D printing become common in homes? Are businesses beginning to bet
on 3D?
In May, office supplies chain Staples announced it would start carrying a 3-D printer for
consumers called the Cube.
In July, eBay launched a 3-D printing service called eBay Exact where consumers can
order customizable products. Prices range from $9 for an iPhone case to $350 for a metal
ring. Even Amazon.com has a dedicated "store" for 3-D printers and supplies now.
Meanwhile, Microsoft is jumping on the bandwagon by adding support for 3-D printers
in its upcoming Windows 8.1 update. Making a 3-D object from your computer "will be
as easy as writing a document in Word and sending it to print," wrote Shanen Boettcher,
general manager of the firm's startup business group, in a June 26 blog post. "We want
this to be so simple anyone can set up their own table-top factory."
the technology is best suited for custom, one-of-a-kind products and the manufacturing of
goods that have low, but highly sporadic demand. "3-D printing will make inroads in
applications where demand is highly intermittent, and where true customization to the
unique characteristics of the customer is valuable," Ulrich notes in his Journal column.
One may not need a custom-made ice cream spoon, but customization will come in handy
for a patient who needs a hip replacement, he says. When it comes to infrequently
ordered items, such as a vintage motorcycle part, it is more efficient for a company to
3D-print it rather than keep an inventory of spares.
3-D printing is making a big impact in a variety of industries. These printers have been
used to make chocolate, synthetic scaffolds for organ transplants, detailed prosthetic legs,
aircraft, high-concept cars and even NASA rocket engine parts.
Global Business Strategy
Tech Giant at War
The impact of continuous, accelerating competition
No advantage lasts very long
Fast Follower/Lead Innovator
Winner takes most
where the battle lines between the four large companies seen as dominating the consumer
internet—Google, Apple, Facebook and Amazon—are in furious flux.
What is strategy?
The plans, actions and efforts to develop capabilities that increase your strength relative
to adversaries.
As the web becomes something that lives through and on the phone, and software
something handled in a cloud, the clear lines that once defined territories and strategies
are blurring. A mixture of threat and opportunity has the big four using their cash and
acumen to strike out into other areas—sometimes into uninhabited lands, sometimes into
places where some other firm is used to ruling the roost. And they are not the only ones
involved in the fray.
The battlefields on which the big four are fighting are, like most battlefields, messy and
confusing. They are also numerous. Apple and Google are crossing swords in operating
systems for smartphones and tablet computers; both firms and Amazon are butting
heads in hardware; Google and Facebook have become sworn enemies in social
networking; some of the other protagonists even have designs on e-commerce, which
has long been Amazon’s stronghold.
What is the specialization of each firm? Why do they encroach on each other’s
territory? What is the relationship of hardware, software and content?
Apple: software, devices, content as an integrated system
Google: search content and lots of bets
Facebook: social media and some bets
Amazon: e-commerce plus device plus content
competition between Apple’s iOS mobile operating system, which powers the iPhone and
the iPad tablet computer, and Android, Google’s rival operating system, which is used by
a host of manufacturers such as Samsung and HTC. Google snapped up the firm that
created Android in 2005 as a strategic hedge; it was worried that its search engine and
other services might be excluded from mobile devices owned by potential rivals. It has
since turned the system into a formidable competitor to iOS.
How do Apple and Google compete in operating systems? Symmetrical
competition? Best mobile experience?
Apple has 16% global market share in mobile phones and 60% of global profits.
What is Amazon’s strategic advantage over the other three firms?
How does Amazon compete with device and content? E-books versus e-music? Is
Kindle enough or does Amazon need a phone-computer?
Does Facebook compete on the basis of content? Other firm’s content with a social
twist?
Google and content? Google Play?
Apple versus everyone with mobile apps.
What are the implications of Google buying and then selling Motorola Mobility to
Lenovo?
Can Microsoft get in the game with Surface and Nokia?
Why has Facebook bought Oculus? What strategic purpose is it pursuing?
If Google wants to compete with Amazon in e-commerce, does it need to buy a
logistics firm to match Amazon’s warehouses? UPS?
Is Google Glass the device response to the iPhone and iPad?
What is the winning combination of content, device, commerce, ads \ ?