The Global Marketplace Troy Bye Lisa Doumont Joe Serge

Overview Globalization and the Global Market Benefits and Drivers of the Global Capital Market Strategies for Success Obstacles Hewlett Packard’s Global Experience

Globalization –“The shift toward a more integrated and interdependent world economy.” (Hill, 2003) –Two components of Globalization: Markets Production Global market –Merging of distinct markets in one –Standardization of products offered in several “national” markets

Worldwide E-Commerce Growth Forecast

General Drivers Trade and investment barriers are disappearing. Perceived distances are shrinking due to advances in transportation and telecommunications. Material culture is beginning to look similar. National economies merging into an interdependent global economic system.

Development Drivers  Decline in cross-border investment barriers.  Saturation and slow growth in local markets.  Carrefour began the expansion followed by Tesco and Wal-Mart.  Retailers believed they would benefit from economies of scale from global buying power.  These retailers held strong domestic market positions. Top 25 Retailers Market Share %

Drivers: Fewer FDI Restrictions Between 1991 and 2000 of the 1,121 changes worldwide in laws governing FDI, 95% created a more favorable investment environment. During 2000, 69 countries made 150 changes to FDI regulations, 147 or 98% were more favorable to investment

Drivers: Growth of World Trade Output Trade Output

Drivers: Shrinking Globe s 1960s Best average speed of horse-drawn coaches and sailing ships, 10mph. Steam locomotives average 65mph. Steamships average 36mph. Propeller aircraft mph. Jet passenger aircraft mph.

The Major Benefits –Increased revenue opportunity through global sales. –Reduced costs by producing in ‘low cost’ countries.

Global Business Strategy View the world as one market Make global minded decisions Make local minded market decisions Do not micro-manage Develop multi-cultural skills Establish rapport between local managers, employees, vendors, distributors and customers

Strategic Choices Transnational Exploit experienced based cost and location economies, transfer core competencies within the firm, and pay attention to local responsiveness needs. Transnational Exploit experienced based cost and location economies, transfer core competencies within the firm, and pay attention to local responsiveness needs. International create value by transferring skills to local markets where skills are not present. International create value by transferring skills to local markets where skills are not present. Multidomestic oriented toward achieving maximum local responsiveness. Multidomestic oriented toward achieving maximum local responsiveness. Global increase profitability through cost reductions from experience curve effects and location economies. Global increase profitability through cost reductions from experience curve effects and location economies.

Obstacles in the Global Market Domestic vs. International Management Compliance with foreign government regulations Country / cultural differences Complexity of problems Currency conversion Controversy

Global Business Strategy Hewlett-Packard –Technology solutions provider –Divided into six business segments –Production, marketing and R&D located abroad –Adheres to a global and international strategy

Questions? Hill, C. (2003). International Business: Competing in the Global Marketplace, McGraw-Hill, New York, New York