Six More Weeks of Winter

Globalization F Are customers culturally/nationally diverse? F Large percent of foreign revenue? F Large percent of foreign assets? F Are competitors global? F Are owners, partners, suppliers global? F How big is globalization? F Who’s doing it? Why? F What are companies actually doing? Why? F Who is successful? Why?

Reasons to Go International Proactive Reasons F Exploit factor-cost differences across countries F Unique product F Technological advantage F Economies of scale F Growing foreign markets F Exclusive information F Attack rivals on home turf Reactive Reasons F Competitive pressure F Overcapacity F Declining domestic sales F Saturated home market F Under attack from foreign rivals

Going Global: Effect on Bottom Line ROI % Foreign Sales/ Total Sales

FDI in the U.S. “The New American Challenge” F Attractiveness test? F Performance test? F Diagnosis of barriers to competitiveness –Scale –Entry mode –Competitive response

FDI Modes and Choices WOS Ownership Majority Minority None Other MNC None Local Firm Govt. PartnerType Scale Level [Activity Type] Full Scale Distribution Sales None

Factors/Issues of GlobalizationEconomic Political Cultural Technology Competitive Legal

Challenge to Global Managers Strategy & Intelligence Structure & Configuration Learning, Cross-Pollination, & Change Cultural Interpreter Vision, Purpose, & Goals

Competitive Forces F First-mover advantage eroding via local competition in foreign markets –Great Lakes’ Juicee and MingLang juice in China –Wal-Mart/Seiyu stores in Japan F Market share dominance in U.S. under continuous attack by foreign rivals located here –Toyota, Honda, Nissan, Mercedes, BMW –Nestles, Grand Metropolitan, Unilever F “Made in America…Who’s the Enemy?”