4. Explaining Internationalization Early contribution of ‘Uppsala model’: Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977 Key insight: internationalization is an incremental commitment, in terms of (a) geographical sequence and (b) entry mode choice, due to the gradual accumulation of experiential knowledge of foreign markets reducing the uncertainty effect interplay between knowledge and commitment the key driver
5. Distinctiveness of Uppsala model ‘We do not believe that [internationalization] is the result of a strategy for optimum allocation of resources to different countries where alternative ways of exploiting foreign markets are compared and evaluated. We see it rather as the consequence of a process of incremental adjustments to changing conditions of the firm and its environment.’ (Johanson and Vahlne 1977, p. 35)
6. Empirical basis for model: e.g. PHARMACIA: 9 overseas affiliates at the time. In the case of 8, the firm had received orders from foreign market, then signed an agency/licensing agreement. After a few years, established sales subsidiary (or made an acquisition in 1 case). In two countries began manufacturing, but only less complicated production at first. In case 9, started a sales subsidiary almost immediately, but company decision-maker had prior country experience. (Johanson & Vahlne 1977)
9. Why these patterns? A process explanation ‘the firm develops knowledge when it operates in the market, this knowledge enables the firm to better see and evaluate business opportunities, consequently, to make new market commitments. In their turn, these commitments lead to learning and the ability to identify new market opportunities, and so on.’ (Johanson and Vahlne 2003, p. 9)
10. The Uppsala model STATE ASPECTS CHANGE ASPECTS Market (Experiential) Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37
11.
12. Can only be acquired through first-hand experience
16. Provides framework for perceiving and formulating business opportunitiesJohanson & Vahlne 2003, p. 10 STATE ASPECTS CHANGE ASPECTS Market (Experiential) Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37
17. The Uppsala model STATE ASPECTS CHANGE ASPECTS Market Knowledge Commitment Decisions Result of the conception of business opportunities, which in turn are a result of market (experiential) knowledge. Johanson and Vahlne 2003, p. 12 Current Activities Market Commitment Johanson & Vahlne 1977, p. 37
18.
19. ‘current activities evidently have a continuous impact on internationalisation, occasionally being interrupted by discontinuities…’
20. By interacting with other firms in a market, the firm learns about their needs and situation
21. Interaction builds trust, which is an important element in commitment building(Johanson and Vahlne 2003:11) STATE ASPECTS CHANGE ASPECTS Market Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37
24. Degree of commitment: extent to which commitment cannot easily be withdrawn, and is defended by the firm
25. Degree of commitment dependent on firm’s resources and capabilities at homeJohanson and Vahlne 2003, p. 12 STATE ASPECTS CHANGE ASPECTS Market (Experiential) Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37
33. Influence of Culture on Negotiation: Managerial Perspectives Definitions of negotiation Negotiation opportunity Selection of negotiators Protocol Communication Time sensitivity Risk propensity Groups versus individuals emphasis Nature of agreements Emotionalism
39. II. Samurai’s Rule III. Modern-ization I. Emperor’s Rule IV. Postwar 1603 X WAR 1867 Rapid recovery and growth NARA Centralization MEIJI Westernization,industrialization,militarilization EDO Tokugawa Shogunate KAMAKURAMUROMACHISENGOKU HEIAN Nobles,Decentralization × 645 Internal wars, dynamic & fluid society Peace, isolation, conservative class society Taika Reform Clan fights Hunting & gathering xxxx xxxx xxx WEST!!! Chinese culture &political system WEST: guns &Christianity US occupation1945-52 Rice Buddhism
40. Japan’s Multi-layered Identity P.4 Pre-historic Japan 先史時代の日本 Rice cultivation Buddhism, China Heian & Samurai Culture Guns & Christianity Edo Culture Note: Colored areas indicate external impacts Western influence
41. Wartime controlled economy Energy saving & lean management Recovery period Postwar recovery period Bubble economy High-growth period Heisei recession Process management methodology Japanese style management American style management method Strategy & marketing Market-based flexible manufacturing American style global management Productivity improvement 1960～ 1970～ 1980～ 1990～ 2000～ 1950～ 1940～ <Japanese Economy Trends> <Management Innovation History> Japanese Economy and Management Innovation
50. Mitsubishi Heavy Industries Mitsubishi Corporation Bank of Tokyo-Mitsubishi Automotive Mitsubishi Fuso Truck Bus Mitsubishi Motors Shin Caterpillar Mitsubishi Finance & insurance DC Card Diamond Lease Meiji Life Mitsubishi Auto Credit Mitsubishi Securities Mitsubishi Trust & Banking Tokio Marine and Fire Industrial equipment Mitsubishi Electric Mitsubishi Kakoki Mitsubishi Precision Toyo Engineering Work Electronics & telecom IT Frontier Mitsubishi Research Inst Mitsubishi Space Software Nikon Space Communications Industrial materials Asahi Glass Dai Nippon Toryu Mitsubishi Aluminum Mitsubishi Cable Indus Mitsubishi Materials Mitsubishi Plastics Mitsubishi Rayon Mitsubishi Shindoh Mitsubishi Steel Transportation & dist Mitsubishi Logistics Mitsubishi One Transport NYK Line Resources & energy Nippon Oil Mitsubishi LPG Mitsubishi Nuclear Fuel Mitsubishi Paper Mills Chemical & pharmaceutical Dai Nippon Toryu Mitsubishi Chemical Mitsubishi Gas Chemical Mitsubishi Petrochemical Consumer goods & foods Kirin Beverage Kirin Brewery Ryoshoku Real estate & construction Mitsubishi Estate P.S. Mitsubishi Mitsubishi’s Horizontal Keiretsu
51. Major FDI Firms in Meiji Period FDI was relatively small (cf. China, India). However, it played leading roles in tobacco, oil refining, electrical and general machinery, weapons, automobiles, glass, (aluminum). Later, zaibatsu mostly took over FDI technology and production. Source: S.J.Bytheway (2005), pp.166-167
52. Post War Keiretsu Mitsubishi Bank of Tokyo Mitsubishi/ Bank of Mits Nikon Kirin Sutitomo Sutitomo Bank NEC Mitsui Toshiba Fuyo Fuji Bank Marubeni Dai-Ichi Dai-Ichi Kangyo Bank Cannon Nissan (part) Sanwa Sanwa Bank Kobe Steel
57. Efficiency Any production method relies on efficiency – this can be viewed in different ways: Productivity – a measurement of output per unit of the factor used (labour, capital or land) Total Output Productivity = ------------------- Units of Factor Technical Efficiency – output produced using the fewest possible inputs Productive Efficiency – output produced at the lowest possible cost
58. Efficiency Production decisions involve deciding methods for new production runs and analysis of existing methods. Decisions may include: Substitute machinery for labour? Use of new technology? Organisation of the production layout? Change of production method?
59. Production Methods As technology and analysis of production methodology has improved, methods have changed dramatically – what used to be labour intensive production methods are now capital intensive
62. the scale of productionTextile factory Copyright: Stock.Xchng
63. Production Decisions Market size and Segment One-Off Order? Which method? Complexity of design Type of Product Mass Market product? Batch? Factor Costs – Land, Labour and Capital
64. Production Methods Job Production – One-off production - each item might have particular specifications Flow Production – suitable for mass market products that are identical Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same
66. Production Methods Or this? 1a 1b 1c 1d 4 Operation 1 2a 2b 2c Finished product 3a 3b 3c 3d
67. Production Methods Or this? Cell 1 Cell 2 Cell 3 Finished Product Finished Product Finished Product
68. Production Methods Answer It could be any of them! The design of the production space can influence: Output levels Factor use Efficiency Cost levels Quality assurance procedures
71. Kaizen (Continuous Improvement) Japanese concept – not made redundant by the decline of the Japanese economy which may be due to other institutional factors! Focus on gradual and continuous improvement A whole business philosophy Importance of EVERYONE buying into the concept and the vision
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73.
74.
75.
76. Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
77. Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
100. Waste PRODUCT BUILT & SHIPPED CUSTOMER ORDER Time PRODUCT BUILT & SHIPPED CUSTOMER ORDER Waste Time (Shorter) is a manufacturing philosophy which shortens the time between the customer order and the product build / shipment by eliminating sources of waste. Business as Usual Lean Manufacturing Lean Manufacturing
104. Empties + production kanban Empties + withdrawal kanban A B C D E F G H Customer Plant Needed Components + kanban Newproduct Preceding processes replenish what is taken away. Downstream processes withdraw what they need when they need it. PULL Supplier Plant
105. Why Focus on Flow? “If some problem occurs in one-piece-flow manufacturing then the whole production line stops. In this sense it is a very bad system of manufacturing. But when production stops everyone is forced to solve the problem immediately. So team members have to think, and through thinking team members grow and become better team members and people.” Teruyuki Minoura, former President, Toyota Motor Manufacturing, North America
106. Lean Tools to Support Flow 5S-Visual Workplace Total Productive Maintenance Quick Changeover Standardized Work Quality Methods
109. What is TPM? Total Productive Maintenance (TPM) is Productive Maintenance with EVERYONE’s participation Maintenance=Teachers, Doctors of Equipment Operators=Clean, inspect, routine repair
110. Why Quick Change Over? Difference in average inventory level with more changeovers Change Over Average inventory levels Inventory level Time The more quickly we changeover, the more our inventory levels decrease. This helps accomplish our goal of waste elimination.
111. Standardized Work Chart Detail of each Process Step Work Element Sheet Detail of the Elements of each Process Step Takt 90s 1 2 3 4 5 Assembly Process # StackChart (Yamazumi) A Visual Tool for Balancing Processes Standard Work Tools
112. Standardized tasks are the foundation for continuous improvement and employee empowerment “Today’s standardization…is the necessary foundation on which tomorrow’s improvement will be based. If you think of “standardization” as the best you know today, but which is to be improved tomorrow-you get somewhere. But if you think of standards as confining, then progress stops.” Henry Ford, Today and Tomorrow, 1926
113.
114. Go see for yourself to thoroughly understand the situation. (Genchi Genbutsu)
115. Make decisions slowly by consensus, thoroughly considering all options; implement rapidly (Nemawashi)
125. People and Partners Respect, Challenge, and Grow Them: 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others 10. Develop exceptional people and teams who follow your company’s philosophy 11. Respect your extended network of partners and suppliers by challenging them and helping them improve
126. One-PieceFlow Demands Team Work! x x x x x Traditional Western Team x x x x x x x x x x x x Need help? Need help? Toyota Way Team X Workcell
127. Principle Five: Stop & Fix Problems Mr. Ohno used to say that no problem discovered when stopping the line should wait longer than tomorrow morning to be fixed. Because when making a car every minute we know we will have the same problem again tomorrow.” -Fujio Cho, President, Toyota Motor Corporation
128. 1 2 3 4 5 6 7 9 1 3 8 1 0 1 1 1 2 1 4 S T O P B U T T O N S T O P B U T T O N ( S T O P T H E L I N E A U T H O R I T Y ) ( S T O P T H E L I N E A U T H O R I T Y ) 5 4 Abnormality Station 5 Team Leader
129. Kaizen Typical Toyota Organization to support Continuous Improvement Team Size Team Member { 5 - 8 } Team Leader { 3 - 4 } Group Leader { 5 - 8 } Asst. Manager { 4 - 10 } Manager Source: Bill Costantino, former group leader, Toyota, Georgetown.
148. Principle Twelve Genchi Genbutsu “Observe the production floor without preconceptions and with a blank mind. Repeat “why” five times to every matter.” -Taiichi Ohno
149. “No Problem” is problem Problems are opportunities to learn Hiding problems undermines the system
151. Characteristics of Effective Lean Transformation Top Down Directive that this is the new way. Bottom-up involvement in concrete projects with clear results. Develop internal experts through learning by doing. Expert sensei to guide the process and teach. Learning philosophy: every project, activity, is a chance to learn. Start with value stream transformation projects. Build on successes to transform broader organization and culture over time---YEARS!
152. Why is this hard to do? Traditional organizations in fire fighting mode No clear vision of the future state culture change is hard Organizational change is disruptive Management has to change its role from managing from the office to deeply understanding processes!
165. In 1983, the FDA established the “Orphan Drug Act,” giving seven years market exclusivity to developers of drugs for rare (<200,000 patients) diseases. Also chose unusual strategy of doing its own manufacturing and sales rather than licensing to a large pharmaceutical company. Diversified into side businesses to fund its R&D Chemical supplies Genetic counseling Diagnostic testing
169. Assessing the Firm’s Current Position Porter’s Five-Force Model Whether a particular industry will be profitable determine if an individual firm’s chances for success via a vis its competitors
170. Assessing the Firm’s Current Position Degree of existing rivalry. Determined by number of firms, relative size, degree of differentiation between firms, demand conditions, exit barriers (for firm to leave the market) Threat of potential entrants. Determined by attractiveness of industry, height of entry barriers (e.g., start-up costs, brand loyalty, regulation, etc.) Bargaining power of suppliers. Determined by number of suppliers and their degree of differentiation, the portion of a firm’s inputs obtained from a particular supplier, the portion of a supplier’s sales sold to a particular firm, switching costs, and potential for backward vertical integration - firm produce its own supplies Bargaining power of buyers. Determined by number of buyers, the firm’s degree of differentiation, the portion of a firm’s inputs sold to a particular buyer, the portion of a buyer’s purchases bought from a particular firm, switching costs, and potential for forward vertical integration - supplier enters firm’s business Threat of substitutes. Determined by number of potential substitutes, their closeness in function and relative price. 6-107
190. What are Industry Clusters? (Porter) Geographic concentrations of competing, complementary, or interdependent firms Common needs for talent, technology, and infrastructure Dynamic, changing as the industries themselves or external conditions change Centered on firms that sell outside the local, state, national market Driving forces in a national, regional, state or metropolitan economy
191. What are Industry Clusters? (Porter) Porter Definition Geographic concentrations Common needs Dynamic, changing Sell outside the local, state, national market Driving forces economy Chilean salmon . . . . .
193. Competency “A bundle of skills and technologies (rather than a single discrete skill or technology) that enables a company to provide a particular benefit to customers” - Hamel and Prahalad 1994, p. 199.
194. It provides consumer benefits It is not easy for competitors to imitate It can be leveraged widely to many products and markets.
195. Dunning–Kruger Effect People reach erroneous conclusions and make unfortunate choices but their incompetence robs them of the metacognative ability to realize it Illusory Superiority
196. Core Competencies at FedEx FedEx Logistics management Metacompetency Package tracking Bar-code technology Wireless communications Network management Linear programming
197. Levels of competition for competence Levels Canon Develop precision mechanics, fine optics, microelectronics, and electronic imaging Develop and acquire constituent skills and technologies Bring competencies together to develop laser printer engines Synthesize core competencies Core product (engine) sold to HP, Apple, etc. Maximize core product share Maximize end product share (own brand plus OEM) Canon printers and Canon parts on competitors’ printers (own brand plus OEM)
199. Swatch Activity Summarize Look at the three theories Brainstorm and try to make connections where these theories apply and do not apply Criticize the choices made, and/or give suggestions to the country
200. Theories CwC RtB International Product Life Cycle Model 11/9: the fall of the Berlin Wall opening Windows 8/9: Netscape goes public Work flow software: Forces Cluster Competencies Open SOurce Dunning Kruger Effect Uploading Outsourcing Offshoring Supply-chaining In-sourcing In-forming Steroids Triple Convergence Personalization Strategic Alliance democtatization
202. Psychographic Segmentation Divides a population into groups that have similar psychological characteristics, values, and lifestyles Lifestyle people’s decisions about how to live their daily lives, including family, job, social, and consumer activities The most common method for developing psychographic profiles of a population is to conduct a large-scale survey AIO statements VALS and VALS 2 “Values and Lifestyles”
204. Swatch: Psychographic Segmentation 6-10: Consider it "cool", because big kids have it (42% awareness!) 11 –15: ("teeny boppers") provides sense of identity 11 –15: ("young rockers") high awareness, but represents t.b. lifestyle 11-15: ("students") Swatch too wild for them, but they might buy it to fit in 16 –22: ("rockers") like the price, but dislike the male model geeks 16 –22: ("preppies") prefer a dressier watch 16- 22: ("trendies") hate it; "fast food of time pieces" (73% wear no watch) 22 –32: ("transitionaries") like its durability, disposability, price 22 –43: ("older casuals") watches used to tell time (4% awareness!) • 33-43: ("weekend hippies") teen image (high awareness, but 43% have never seen a Swatch in real life
205. Japan Psychographic Segmentation Integrators Innovators/Adopters Display, daring, exciting Rykoshiki Home, career, status Traditional Traditional dress, customs, cooperative Pragmatics Few commitments, uninformed Sustainers Lack money, education, sustain the past
209. Strategies for Operations Abroad International Control remains predominately with HQ in home county Low pressure for local responsiveness-high pressure cost reductions Multidomestic Customize operations and products to each local market High local responsiveness-low pressure cost reductions
210. Strategies for Operations Abroad Global Tendency to centralize main operational functions Can mobilize world-wide resources High cost reductions from economies of scale and experience curve-low customization to national borders Transnational Looking for ‘global learning’ from HQ to subsidiaries, in reverse and between subsidiaries Cost reductions and product differentiation
213. Global Strategy To go global or not? Compelling Reasons Diversity of earnings Exposure to new and emerging markets Experience curve and access to the most demanding customers
214. Discussion Why do Unilever and Swatch enter new markets? How do Unilever and Unilever enter the markets? What is unique is unique or different about their approach?
215. Global Company (2SMCG) 1. Standard Products and Marketing Mix Core product and minimum marketing adaptations Economies of scale benefits Segmentation cross national borders
216. Global Company (2SMCG) 2. Sourcing all Assets on an Optimal Basis Ability to source all assets in value chain in terms of availability or cost-competitiveness Importance of assets deployment
217. Global Company (2SMCG) 3. Market Access in Line with Break-Even Volume Size not as important as generation of sales to cover demands of infrastructure and investment
218. Global Company (2SMCG) 4. Contesting Assets Ability to neutralize the assets and competencies of competitors
219. Global Company (2SMCG) 5. Global Orientation of Functions R&D, procurement, production, logistics, marketing, human resources and finance functions internationalizedorganizational structure
276. This can be expensive, as it is often borrowed with interest
277. There may also be difficult application procedures to access debt capital from non-governmental organizations
278. Some organizations can even find themselves shut out due to the region they operate in, particularly post-conflict regions
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282.
283. The business page also shows you all of the other people around the world who are contributing to this loan
284. Kiva’s Microfinance Partners Kiva has 89 Microfinance Partners in 42 countries and is still growing Ukraine Moldova Bulgaria Tajikistan Azerbaijan Afghanistan Iraq Gaza Pakistan Haiti Mexico Mali Vietnam Dominican Republic Senegal Cambodia Nicaragua Congo Ghana Uganda Honduras Togo Nigeria Ecuador Kenya Cameroon Indonesia Tanzania Bolivia Peru Mozambique Paraguay Samoa
295. Silicon Valley Silicon Valley is a nickname for the southern part of the San Francisco Bay Area centered roughly on Sunnyvale. coined by journalist Don C. Hoefler in 1971, It was named "Silicon" for the high concentration of semiconductor and computer related industry in the area, and "Valley" for the Santa Clara Valley. Fairchild Semiconductor really started and then fuelled it all
298. British and American Air War in Europe 28,000 Active Combat Planes40,000 planes lost or damaged beyond repair:18,000 American and 22,000 British79,265 Americans and 79,281 British killed
299. The German Air Defense SystemThe Kammhuber Line Integrated Electronic air defense network Covered France, the Low Countries, and into northern Germany Protection from British/US bomber raids Warn and Detect Target and Aim Destroy
301. Himmelbelt Local Air Defense Network • Box ~30 x 20 miles • Integrated network of radars, flak, fighters, searchlights Radars fed Himmelbett centers • Operators worked from rows of seats in front of a huge screen • Fighters would fly orbits around a radio beacon – fighter controller talked it to the vicinity of the target • Fighters would turn on its radar, acquire the target, and attack
302. Flak Radar Controlled Anti Aircraft Guns 15,000 Flak Guns 400,000 soldiers in flak batteries Radar-directed flak to 30,000’ Fused for time Fragmentation rounds No Proximity Fuses 105 mm flak
304. Harvard Radio Research Lab Signals Intelligence and Electronic Warfare Reduce losses to fighters and flak Find/understand German Air Defense Electronic and Signals Intelligence Jam/confuse German Air Defense Radar Order of Battle Chaff Jammers Top Secret 800 person lab
305. ELINT Understand German Air Defense B-24J flights inside Germany to intercept German radar signals Fitted with receivers & displays Wire and strip recorders Frequency, pulse rate, power, etc. 50 MHz to 3 GHz
306. Window/ChaffJam Wurzburg Strips of aluminum foil 1/2 Wurzburg frequency 46,000 packets tossed out by hand Each packet contained 2,000 strips Automatic dispensers came later First used July 1943 Raid on Hamburg Shut down German air defense Used 3/4’s of Aluminum Foil in the US
307. Blind German Early Warning Radar Put Jammers on Airplanes Carpet” AN/APT-2 Jammer Confuse Wurzburg radar Shut down flak Shut down GCI 5 Watts
308.
309. Fred Terman Who Ran this Secret Lab and became the Father of Electronic Warfare? • Harvard Radio Research Lab – Separate from MIT's Radiation Laboratory – Ran all electronic warfare in WWII – 800 people – 1941-1944 • Director: Fredrick Terman - Stanford
310.
311. Fred Terman Stanford Professor of engineering 1926 encouraged his students, William Hewlett and David Packard to start a company Dean of Engineering 1946 Provost 1955
313. Terman Strategy Focus on microwaves and electronics Not going to be left out of gov’t $’s this time Recruits 11 former members of RRL as faculty Set up the Electronics Research Laboratory (ERL) “Basic” and Unclassified Research First Office of Naval Research (ONR) contract 1946 By 1950 Stanford was the MIT of the West
314. Korean WarSpook Work Comes to Stanford • Applied Electronics Laboratory (AEL) – “Applied” and Classified Military programs – Doubles the size of the electronics program – Separate from the unclassified Electronics Research Laboratory – Made the university, for the first time, a full partner in the military-industrial complex
315. Cold War and Research The Cold War battlefield moves 500 miles east Fear of a “nuclear Pearl Harbor” Countermeasures, Elint and Sigint, become critical Stanford becomes a center of excellence for the NSA,CIA, Navy, Air Force
317. Stanford Helps Understand theElectronic Order of Battle Where are the Soviet radars? Consumers; SAC, CIA. Details of the radars NSA/CIA to contractors Periphery of Soviet Union known
318.
319.
320. U-2 Sigint Platform (1956)Stanford and Silicon Valley System IV 150 - 40,000 MHz Stanford Electronics Laboratories Ramo Woolridge E/F Band ELINT recorder (1956) A Band ELINT recorder (1959) E/F Band Jammer (1959) Granger Associates Watkins Johnson – QRC -192 Elint receiver – 50 -14,000 MHz Communications receiver – 100-150 MHz/3 channel tape recorder
321. Stanford Joins the “Black” World Electronics Research Laboratory “Basic” and Unclassified Research Applied Electronics Laboratory (AEL) “Applied” and Classified Military programs Merge and become the Systems Engineering Lab (SEL) in 1955 Same year Terman becomes Provost
322. Terman Changes the Startup/University Rules Silicon Valley as We Know it Starts Here Graduate students encouraged to start companies Professors encouraged to consult for companies Terman and other professors take board seats Technology transfer/IP licensing easy Getting out in the real world was good for your academic career
323. Stanford’s Role Interaction with industry (via legacy just discussed) Research funding and creativity Silicon Valley as a nearby planting ground for ideas Role of students as inventors, as disseminators, and as part of the workforce Encouraging entrepreneurship …
325. 1966 Hewlett-Packard entered the general purpose computer business with its HP-2115 for computation, offering a computational power formerly found only in much larger computers. It supported a wide variety of languages, among them BASIC, ALGOL, and FORTRAN. HP-2115
327. Radio Dishes Get Funded Attach ELINT receivers to Bell Labs 60’ radar antenna in New Jersey Use “matched filter” techniques Developed at Stanford • Build steerable antenna at Sugar Grove Virginia • Pay for and build Stanford “Dish” Hide relationships via “cover agencies”
328. Project Grab 1960-1962 ELINT in Space No more overflights Collect radar emissions from Soviet air defense radars Built by the Naval Research Laboratory Used by SAC for EOB then given to the NRO
329. Microwave Valley - Systems Some Stanford Alum’s Sylvania Electronics Defense Laboratory (1953) Countermeasures, search receivers, converters Hired faculty as consultants, including Terman GE Microwave Laboratory (1956) Granger Associates (1956) Electronic Systems Laboratories (ESL) (1964) Sylvania EDL director William Perry founder Argosystems (1969)
330. Terman and the Cold WarSilicon Valley’s 1st Engine of Entrepreneurship
331.
332. Valley Attracts Financial Attention1st West Coast IPO’s 1956 Varian 1957 Hewlett Packard 1958 Ampex
333. The Rise of Risk Capital “The Group” 1950’s • First Bay Area “Angels” – Reid Dennis – William Bryan – William Edwards – William K. Bowes – Daniel McGanney ~ 10 deals $75 -$300K
334. Summary • Terman/Stanford/Government responsible for entrepreneurial culture of Silicon Valley • Military primed the pump as a customer for key technologies – Semiconductors, computers, Internet – But very little technical cross pollination • Venture Capital turned the valley to volume corporate and consumer applications
335.
336. Hewlett Packard and Wozniack Steven Paul Jobs, Stephen Gary Wozniak and Ronald Gerald Wayne founded Apple Computer. In 1976, Ronald Wayne resigns from Apple Computer with only a one time payment of $80. Hewlett Packard grants Gary Wozniak the permission to create the Apple I.
338. Rice Markets And Taxes Taxes Jomen (fixed amount) system Stabilization Transport Roads Trade Routes Sekisho (passport Controls) Trade Cartels Futures markets
339. Rich Merchants in Edo Period (Gosho) Sumitomo -16c Adopt Western copper refining, copper trade (Kyoto)-17c Move to Osaka -Besshi Copper Mine (under Bakufu’s commission) <Transition to Meiji> Manager: Saihei Hirose -Avoiding gov’t confiscation-Introducing Western mining technology to renovate Besshi -Business diversification MITSUI -17c From Matsuzaka -Kimono trade & money exchange in Edo, Kyoto, Osaka – huge success <Transition to Meiji> Manager: Rizaemon Minomura -Cope with bakufu policy to protect Mitsui business -Support and work with new government -Internal reform: from gosho to zaibatsu -1876 Establish Mitsui Bank & Mitsui Trading Company
341. Negative Consequences Comprehensive commercial treaties treaties which the bakufu signed with the West were unequal treaties Japan had no right to decide tariffs (set at 5%) Japanese court could not judge foreign criminals in Japan. Japanese Indemnification for Political Problems Inflation: Samari Impoverished Arms
342. Positive Consequences New ideas, technology, industry and systems Silk and tea suddenly found huge overseas markets. Western Goods Yokohama merchants
344. Japanese Respose Initially, avoid colonization by the West Rapid modernization and Westernization Become “first-class” nation on a par with West Fukoku Kyohei (富国強兵) - Rich Country, Strong MilitaryShokusan Kogyo（殖産興業） - Increase Products, Build Industries
345. Konosuke Odaka: World of Craftsmen, World of Factories(NTT Publishing, 2000) In Japan’s early factories, traditional shokunin (craftsmen) and modern shokko (workers) coexisted. Craftsmen were proud, experienced and independent. They were the main force in initial technology absorption. Workers received scientific education and functioned within an organization. Their skills and knowledge were open, global and expandable. Over time, craftsmen were replaced by workers. Experience was not enough to deepen industrialization.
346. Monozukuri (Manufacturing) Spirit Mono means “thing” and zukuri (tsukuri) means “making” in indigenous Japanese language. It describes sincere attitude toward production with pride, skill and dedication. It is a way of pursuing innovation and perfection, disregarding profit or balance sheet. Many of Japan’s excellent manufacturing firms were founded by engineers full of monozukuri spirit. Akio Morita (Sony’s co founder)1921-1999 Sakichi Toyota1867-1930 Konosuke Matsushita1894-1989 Soichiro Honda1906-1991
370. Based on the belief that export operations are more risky relative to domestic sales - can result in uncompetitive prices.
371. Strategy 2- Pricing to yield similar returns in domestic and export markets
372. Based on the viewpoint that export markets do not necessarily differ from domestic markets
373. Strategy 3 - Pricing to yield lower returns, or even losses, in export markets—at least in the short run
374. Reflects an approach that views export markets as the potential growth markets of the future - firm vulnerable to antidumping action
375. Strategy 4 - Pricing to sell production in excess of the needs of the domestic market so long as these sales make a contribution to fixed overhead and profit
391. What are the export markets and the segments of those markets that will value our product sufficiently (relative to other competing products) to offset our costs of production and distribution?
392. Should the firm export a standard product with a standard marketing mix worldwide or should it tailor its products and marketing mix to individual export markets?
393. What natural and government-imposed trade barriers impede linking production in one country to purchase in another, and what factors might facilitate this linkage?
396. Firms often now analyze trade opportunities on a regional, and sometimes even broader basis
397. Products are often not sent directly from one home production site to an export market abroad. Inputs are sourced in a number of countries and assembled in other countries, and the final product is sold in yet other countries
405. Generally for infrastructure development - electricity generation, telecommunications, water and sewage treatment facilities, and even roads and ports.
428. A licensor lacks the capital knowledge of foreign markets required for exporting or FDI, but wants to earn additional profits with minimal commitment.
456. Lockout Acquiring Technology Cheaply. Innovating. Selling Product Below Cost. Build market share. Adquiriendo Tecnología Barato. Innovación. Venta Del Producto Debajo Del Coste. Cuota de mercado de la estructura.
457. Lockout Case: VCR En los años 80, Japón demandó el mercado global del VCR para sí mismo por los competidores potenciales de debajo-tasacio'n. Adquirieron una patente para el proceso del VCR de una compañía americana que no podría encontrar una manera de hacer un beneficio a corto plazo en el VCR. Las compañías japonesas entonces comenzaron a vender VCRs debajo de coste para construir la cuota de mercado y pronto vendían en un tan alto volumen que sus costes declinaron a un nivel provechoso. Las economías japonesas de la escala eran tan grandes que los competidores extranjeros eran bloqueados fuera del mercado. In the 1980s, Japan claimed the global VCR market for itself by under-pricing potential competitors. They acquired a patent for the VCR process from an American company that couldn’t find a way to make a short-term profit on the VCR. Japanese companies then began selling VCRs below cost to build market share & soon were selling at such a high volume that their costs declined to a profitable level. Japanese economies of scale were so great that foreign competitors were locked out of the market.
458.
459. Part 1: The Strategic Imperatives Ch 1Expanding Abroad: Motivations, means & Mentalities INB / MGT 352 International Management Spring 2008 Transnational Management, Text, Cases, and Readings in Cross-Border Management, Christopher Barlett, Sumantra Ghoshal & Palu Beamish, 5th Edition, 2008
460. Definition of a Multinational Enterprise (MNE) MNE have “substantial direct investment” in foreign countries (1) and “actively” (not passively) manage and coordinate these offshore assets, and their operations as integral parts of the company, both strategically an organizationally. MNEs include ExxonMobil, Royal Dutch Shell, BP, Toyota, Ford, DaimlerChrysler, GE, Wal-Mart, GM, ChevronTexaco In addition, definition of MNEs includes Intel, Unilever, Samsung, Singapore Airlines, McKinsey & Co., and Starbucks Note 1: These are not simply trading relationships of an import/export business.
461. Explosive Growth (MNE) Number of International Companies UNCTAD - United Nations agency in charge of all matters relating to FDI and international corporations. 1995 – 45,000 parent companies with 280,000 foreign affiliates ($7 trillion in sales) 2004 – 70,000 parent companies with 690,000 foreign affiliates ($19 trillion in sales)
462. Economic Importance of MNEs MNEs are equivalent in economic importance to medium-sized economies of Chile, Hungary, or Pakistan MNEs have considerable influence Employ high percentage of business graduates Pose the most complex strategic and organizational challenges for their managers
463. Top 500 MNEs 70% of world trade 85% of world automobiles 70% of computers 35% of toothpaste 65% of soft drinks
464. Largest 100 MNE In 2003, excluding banking and finance, the largest 100 MNEs accounted for over $ 8 Trillion in worldwide assets, of which $4.0 trillion was located outside there respective home countries.
465. Motivations (the ‘Why’) of MNE Int’l Expansion Traditional Motivations Securing key supplies (aluminum, rubber, oil, etc.) Market-seeking behavior (Nestle, Bayer, Ford) Access to low-cost factors of production (clothing, electronics, household appliances, watches, Emerging Motivations Scale economies Economies of scale and scope Economies of scope Ballooning R&D investments Shortening product life cycles Scanning and learning capability Competitive positioning
466. Motives to Go International Market-Seeking Motives The Historically Indigenous Firm Cost-Reduction Motives Strategic Motives
468. What Forces Drive MNEs Toward Global Integration & Coordination? Economies of scale Economies of scope National differences in the availability & cost of productive resources
469. Economies of scale How do new technologies make an economy of scale possible? Why are capital-intensive industries susceptible to economies of scale? How do I quantify an economy of scale? What might threaten the benefits sought under an economy of scale?
470. Economies of scope What is an economy of scope? What factors or changes might “enable” an economy of scope to develop? What threats to an economy of scope could exist?
471. MNE Advantages Int’l Operations Ensuring critical supplies Entering new markets Tapping low-cost factors of production Leveraging their global information access Capitalizing on competitive advantage of multiple market positions Use strength to play strategic game of “global chess”
472. Means (the How?) of Internationalization: Prerequisites and Processes Prerequisites for Internationization
473. Scale Economies: Use of Scale for Competitive Advantage – Higher Volume Inhibits Flexibility Political Risks Resource Risks Competitive Risks Scope Economies: Cost of Joint Production For Two or More Products Provides Sharing of Physical Resources Provides for Shared External Relationships Provides for Shared Knowledge
475. Foreign Market Entry Modes Foreign Market Entry Modes Wholly-owned subsidiaries Joint Venture (e.g., w/local partner) Franchising Level of control over foreign services Licensing Export (e.g., through agent or distributor) Indirect export Amount of resources committed to foreign market
476. International Mindsets Specific pressures will affect competition in industries and firms that cross national boundaries causing a “global orientation” that relies on coordination of worldwide activities to maximize the collective organization, and a “multidomestic orientation” that responds to individual country opportunities and constraints. Increasingly, there are pressures for international companies to be both globally efficient and locally responsive. These pressures derive from environmental changes such as new technologies, unanticipated competition, and the convergence of industry boundaries. In such situations, firms exhibit a “transnational mindset” to simultaneously gain efficiency and local market benefits.
477. International Mindsets Multinational Systems International Systems Businesses that follow an international strategy tend to have distributed GIS in which systems in the central headquarters are connected to those in the foreign operations. Businesses that follow a multinational strategy tend to have decentralized, or independent, information systems for their central headquarters and different foreign operations. Transnational Systems Global Systems Business that follow the transnational strategy require complex, integrated GIS in which the central headquarters and all the foreign operations participate equally Businesses that follow a global strategy ten to have highly centralized GIS determined by the central headquarters.
492. Companies with this mentality regard themselves fundamentally as domestic with some foreign appendages
493. Managers assigned to overseas operations are often domestic misfits who happen to know a foreign language or have previously lived abroad
494. Decisions related to foreign operations tend to be made in an opportunistic or ad hoc manner4-295
495. HQ An “International Business Strategy” Deploying Global Information Systems (GIS) International Strategy International Diagram Involves transferring knowledge and skills from the central headquarters to the foreign operations. Assets, responsibilities decentralized Formal control systems International mentality GIS Deployment Strategy International Strategy Businesses that follow an international strategy tend to have distributed GIS in which systems in the central headquarters are connected to those in the foreign operations. 4-296 4-296
498. Companies adopt a more flexible approach to their int’l operations by modifying their products, strategies, and even management practices country by country
499. As they develop national companies that are increasingly sensitive and responsive to their local environments, these companies undertake a strategic approach that is literally multinational: Their worldwide strategy is built on a foundation of the multiple, nationally responsive strategies of the company’s worldwide subsidiaries.
500. Managers tend to be highly independent entrepreneurs, often nationals of the host country
501. Using their local market knowledge and the parent company’s willingness to invest in these growing opportunities, these entrepreneurial country managers often can build significant local growth and considerable independence from headquarters
502. Results in a very responsive marketing approaches in the different national markets, it also gives rise to an inefficient manufacturing infrastructure within the company
503. Plants are built more to provide local marketing advantages or improve political relations than to maximize production efficiency
504.
505. Global Strategy Tight controls; centrally driven strategy HQ One-way flows, goods, information, and resources 4-300
506.
507. These companies think in terms of creating products for a world market and manufacturing them on a global scale in a few highly efficient plants, often at the corporate center
508. Subscribe to Professor Levitt’s to make and sell “the same thing, the same way, everywhere”
509. In an operating environment of improving transportation and communication facilities and falling trade barriers, some companies adopt a very different strategic approach for their int’l operations
510. These companies think in terms of creating products for a world market and manufacturing them on a global scale in a few highly efficient plants, often at the corporate center
511. The underlying assumption is that national tastes and preferences are more similar than different or that they can be made similar by providing customers with standardized products at adequate cost and with quality advantages over those national varieties they know
512. Strategic approach requires considerably more central coordination and control than the others and is typically associated with an organizational structure in which various product or business managers have worldwide responsibility
513.
514. Global Strategy Loose controls; strategic decisions remote Assets, responsibilities decentralized Tight controls; centrally driven strategy HQ HQ Complex controls; high coordination skills, Coordinated strategic decision process Heavy flows; materials, people Information & technology Formal control systems HQ One-way flows, goods, information, and resources Financial Reporting flows HQ International mentality Distributed capabilities, resources & decision making Global Business Strategies All use global information systems (GISs) in various ways … Multinational Strategy International Strategy Transnational Strategy 4-303 4-303
515. A “MNE Business Strategy” Deploying Global Business Systems Global Strategy Diagram Tight controls; centrally driven strategy HQ One-way flows, goods, information, and resources All use global information systems (GISs) in various ways … Global Strategy The central headquarters coordinates the activities of the foreign operations closely. Transnational Strategy GIS Deployment Strategy Business that follow the transnational strategy require complex, integrated GIS in which the central headquarters and all the foreign operations participate equally 4-304 4-304
516. HQ Transnational Strategy Complex controls; high coordination skills, coordinated strategic decision process Heavy flows; materials, people information, technology Distributed capabilities, resources & decision making 4-305
517.
518. Key activities and resources are neither centralized in the parent company nor so decentralized that each subsidiary can carry out its own tasks on a local-for-local basis
519. Instead, the resources and activities are dispersed but specialized, to achieve efficiency and flexibility at the same time
521. Transnational mentality recognizes the importance of flexible and responsive country-level operations – hence a return of “national” into the terminology
522. Compared to multinational approach, it provides for means to link and coordinate those operations to retain competitive efficetiveness and economic efficiency, as is indicated by the prefix “trans”
523.
524. Global “Chess” Between Large MNEs Customers demand differentiation along with the level of cost & quality typical of global products Host governments have more aggressive development & tax agendas MNEs fight for flexibility to continuously change product designs, sourcing, and pricing
527. Chapter 2: Understanding the International ContextResponding to Conflicting Environmental Forces
528. Three Conflicting Setsof External Demands Forces for cross-border integration and coordination Forces for national differentiation and responsiveness Forces for worldwide innovation and learning 2-312
529. Forces for Global Integrationand Coordination Economies of Scale Economies of Scope Factor Costs Increasingly Liberalized Environment for Trade Expanding Spiral of Globalization 2-313
530. Global Competitors as Change Agents For industry globalization to take place: Underlying drivers (economies of scale and scope, etc.) have to be in place But always triggered by actions of one of two global “change agents” Examples: British Airways (airlines) Starbucks (premium coffee shops) ISS (cleaning services) 2-314
