1. Globalization Drivers
Mahesh P. Joshi
Director of Research & Practice
Center for Innovation and Entrepreneurship
and
Associate Professor of Global Strategy and Entrepreneurship
School of Business – George Mason University
President - Joshi International, Inc.
Mahesh Joshi - Globalization Drivers

2. Some Thoughts Globalization is very difficult
All firms are born global
US was created as a result of globalization
To be successful a firm must be active in global arena
Mahesh Joshi - Globalization Drivers

3. Why Firms Internationalize
Demand
New Markets
Follow the customer
Follow the competition
Fend off new competition
Supply
Raw materials
Land
Labor
capital
Mahesh Joshi - Globalization Drivers 3

4. Benefits of Globalization
Cost reduction
Economies of scale, lower factor cost, focused production (rationalized production), flexibility, enhancing bargaining power
Quality enhancements
Exposure to demanding customers, focused offerings
Enhanced customer preferences
Global availability, global serviceability, global recognition
Increased competitive leverage
Cross subsidization of competitive moves, entering the backyard of your competitor 4
Mahesh Joshi - Globalization Drivers

5. Costs of Globalization
Main cost
Coordination of resources and people
Levers used to globalize pose their own costs
Market participation may have unique reasons
Standardized products/service created by committee
Location may be not suitable for global activities
Centralized marketing message may miss the local flavor
Cross competition may not be feasible 5
Mahesh Joshi - Globalization Drivers

6. Core Strategy Several dimensions to Key focus What is offered
Who is the customer
What geographic markets
What functional strategy
What is the competitive advantage
Key focus
Board versus narrow strategic choices 6
Mahesh Joshi - Globalization Drivers

7. International Strategy
International Market Selection leads to
A need for geographic market selection
Appreciation of barriers to trade (tariffs and quotas)
Foreign ownership and repatriation rules
Knowledge of local laws
Knowledge of Local preferences in customer behavior
Cross-Cultural interaction
Results: Weakening of the core strategy 7
Mahesh Joshi - Globalization Drivers

8. Core Strategy and Globalization8
Mahesh Joshi - Globalization Drivers

9. Creating a Global Strategy
To overcome weakening of the core strategy
Need to find a fit between external and internal environment
Competitive position of the firm
Resource base and businesses of the firm
Industry globalization drivers
Organization’s ability to implement global strategy 9
Mahesh Joshi - Globalization Drivers

10. Industry Globalization Potential10
Mahesh Joshi - Globalization Drivers

11. External: Industry Globalization Drivers
Market Drivers: Consists of but not limited to
Common customer needs and tastes
Global customer: Lifestyle and taste plus global travel
Global distributors and global brands
Global Marketing and advertisement message
Emergence of lead countries in specific industries
Growth of ICT
Cost Drivers: Consists of but not limited to
Economies of scale plus learning curve effect
Sourcing efficiencies and favorable logistics
Differences in country costs (including exchange rates)
Accelerating technological innovation at a higher cost
Changing product life cycles 11
Mahesh Joshi - Globalization Drivers

12. External: Industry Globalization Drivers: 2
Government drivers: Consists of but not limited to
Reduction in tariffs and other protective actions
Growth of compatible technical standards
Uniform or common marketing regulations
Government owned customers and competitors (Denationalization, deregulation, open economies)
Host government concerns (if managed well leads to reduction in isolated economies)
Competitive drivers: Consists of but not limited to
Rising world trade levels (high export and import)
New competitors are not restricted to developed economies because of born global firms -variety of countries
Global networks in many industries allow for global focus (interdependence of counties)
Globalized competitors (increased foreign ownership among corporations)
Transferable competitive advantage 12
Mahesh Joshi - Globalization Drivers

13. Global Strategy Levers
Market participation
Choice of countries or regions to exploit competitive advantage
Choice of Products/services
Product modification versus standardization
Activity location
Understanding the value added and hence location to exploit competitive advantage
Marketing
Choice of message that would be uniform or modified
Competitive Moves
Integration of competitive moves across the world 13
Mahesh Joshi - Globalization Drivers

14. The Globalization Triangle14
Mahesh Joshi - Globalization Drivers

15. Integration or Responsiveness
National responsiveness
Low
High
Global
strategy
Transnational
strategy
Global integration
Low
High
International
strategy
Multi-domestic
strategy
Mahesh Joshi - Globalization Drivers

16. References
Based on:
The Multinational Mission: Balancing Local Demands and Global Vision by C.K. Prahalad, Yves L. Doz, 1999.
Global Strategy... In A World Of Nations? By George S. Yip., Sloan Management Review; Fall 1989; pages
Mahesh Joshi - Globalization Drivers

17. Mahesh P. Joshi Contact President - Joshi International, Inc.
Director of Research & Practice
Center for Innovation and Entrepreneurship
and
Associate Professor of Global Strategy and Entrepreneurship
School of Business – George Mason University
President - Joshi International, Inc.
Mahesh Joshi - Globalization Drivers