Implementing Global Strategy Global business a growing trend

Presented By: Jeff beck David wright John lepore Pisit khumon

Introduction to Global Strategy Multi-domestic strategy Vs Global strategy

The Policy of Drucker, Porter, and Reich A marxian mistake Determinants and drivers Of cause and effect A lesson in transaction costs The industrial policy debate The experts policy perscriptions

Government As A Process Expertise Market Facilitator Establish information availability and transparency Increasing the supply of process expertise Increasing the demand for process expertise Addressing the learning process and its direction

How the United States Can Become Number One Again Industrial development policy Increasing global competitiveness 1) making the market for process skill learning more efficient 2) encouraging a better supply of process management skills 3) encourage more demand among firms for higher process skills 4) encourage innovations in learning and training

Global Sourcing Strategy and International Trade in the Pacific Management of production units and interfaces of R & D, manufacturing and marketing Objective: To exploit both competitive and comparative location advantages Much international trade is managed by multinational companies Offshore sourcing by U.S. Companies has been encouraged by U.S. Tariff provisions

Trends in Global Sourcing Strategy Decline of the exchange rate determinism of sourcing Fluctuating exchange rates and the appreciation of the US dollar made domestic manufacturing less attractive The exchange rate determines the extent of foreign sourcing New competitive environment caused by excess world- wide capacity Excess production capacity and downward pressure on prices Previous goals versus new strategies Macro- and microeconomic issues of outsourcing

Functional Interfaces in the Value Chain Steps involved in developing a global sourcing strategy Identification of the separable links in the value chain Determination of the company’s competitive advantages Assessment of transaction costs and selection of the lowest cost mode Determination of the comparative advantages of countries Development of adequate flexibility in corporate decision making and organizational design

Functional Interfaces in the Value Chain R and D / Manufacturing Interface Manufacturing / Marketing Interface core components standardization product design family universal product with all features universal product with different positioning Marketing / R and D Interface

Logisitics Pros and cons of production sharing Dependence Sustainable core competence vs transitory core competence

Third Generation R&D: The Key to Leveraging Core Competencies Who we are What we are good at Companies who ignored this fact –Exxon__reliance electric –Mobil__montgomery ward –Sears__finance and insurance businesses –At&t__personal computer –Shell oil__pharmaceutical business

Technology Is the Basis for Strategic Vision and Intent Marketplace –Technology provide the essence for sustainable competitive advantage in meeting customer needs Company –Technology forms the basis for many company core competencies Future –Technology provides insights into products and processes of the future

The Third Generation R&D Management Model First generation R&D –The strategy of hope Second generation R&D –Rational approach on a project-by-project basis Third generation R&D –Rational, holistic strategic approach guided by general managers who together establish and continually reorient the business vision and its portfolio of technologies

Competitive Advantage and Sustained Growth Identifying and leveraging technology core competencies Continually linking business strategies with the core competencies Actively managing core competencies for the future

Conclusions: Free trade offers new markets, which create growth in global consumption and production The future of the United States depends on its ability to coordinate the world in learning, marketing, R&D, and manufacturing processes Modern companies management depends on leverage of core competencies technology Multinational companies decisions must be based on the interplay between Competitive Advantage & Comparative Advantage