Global Business #1 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

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 (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 competition: international student team will compete for the best international business plan.

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?

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)

“The World is Flat” by Thomas Friedman 1 st Globalization Era: 1492: Columbus found the American continent. 2 nd Globalization Era: Around 1800: Industrial revolution (by steam engine) drove down transportation costs significantly. 3 rd Globalization Era: Around 2000: Internet and information technology revolution -> Globally flat business emerges (like Infosys)

Sources of Economic Growth? 9

Changes in the world population Financial Times

GDP size comparison

Population projection

What is Globalization and why? Japan US/Europe China India US/Europe Japan China India Infosys Toyota Motors Microsoft Toyota Motors IBM

What is competitiveness? (Japan, 1995=1.00) “Productivity in Asia” (Jorgenson, Kuroda and Motohashi) 2007, Edgar Elgar

Catching up of Korea and China (TFP in electronics industry) RIETI-ICPA Project, Motohashi (2006b)

But, what happened? （ PV module production)

Driving forces Size of value added Level of complexity (difficulty in imitation) Aircraft (CoPS ) Auto- motives EV? PC Scientific approach for innovation (digitalization, modularization..) and technological catching up Growing “Good Enough Market” Protection of propriety technology (IPR), increasing complexity, strategic investment in complex system innvation PV panel

Development in emerging economies Such as China and India New competitors New markets 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