1. Industry Globalization

2. Competitive Pressures - Economic - Technological - Political Industry Globalization Level Business Strategies -Multidomestic -Globally Integrated Industry Globalization

3. Strategic Business Options u Value Added Activities u Raw Materials u Components u End Products u Firm Specific Knowledge u Propriety Technologies u Management Skills u Marketing Skills u Brand Equity u Production know-how

4. Industry Globalization u A series of linked domestic industries in which rivals compete against each other on a truly worldwide basis (Porter 1986). u A firm’s competitive position in one country is significantly affected by its position in other countries or vice versa. u Competitively linked to similar industries in other countries through the integration of most or all of firms value-added activities (Yip, 1992).

5. Industry Globalization--Degree u Level of international trade u Intensity of international competition u Worldwide product standardization u Presence of key competitors in all key international markets. (Morrison & Roth ’92)

6. Industry Globalization--Degree u Intra-firm trade u Technological intensity Kobrin 1991

7. Industry Globalization--Degree u International linkages of value-added activities among countries u International integration of value-added activities among countries (Makhija, Kim, & Williamson ’97)

8. Industry Globalization Drivers Industry Globalization Potential Government Drivers Cost Drivers Competitive Drivers Market Drivers

9. Market Drivers u Per capita income converging among industrial nations u Convergence of lifestyles and taste u Growth of global and regional channels u Establishment of world brands u Spread of global and regional media

10. Strength of Market Globalization Drivers for Selected Industries LOWHIGH Book Publishing Pharmaceuticals (OTC) Commercial Banking Electrical Insulation Toothpaste Pharmaceuticals (Ethical) Specialty Chemicals Soft Drinks Automobiles Credit Cards Computers Aircraft

11. Cost Drivers u Continuing push for economies of scale ( but offset by flexible manufacturing) u Accelerating technological innovation u Advances in transportation (e.g., use of FedEx to deliver urgent supplies from one continent to another) u Emergence of newly industrializing countries with productive capability and low labor costs (e.g., China, India and Indonesia)

12. Strength of Cost Globalization Drivers for Selected Industries LOWHIGH Soft Drinks Commercial Banking Credit Cards Toothpaste Pharmaceuticals (OTC) Book Publishing Specialty Chemicals Electrical Insulation Computers Automobiles Aircraft (Civil) Pharmaceuticals (Ethical)

13. Government Drivers u Reduction of tariff barriers (e.g., North American Free Trade Agreement) u Reduction of non-tariff barriers (e.g., Japan’s gradual opening of its markets) u Creation of trading blocs (e.g., European Union, and Euro Currency in 1999) u Strengthening of world trade institutions (e.g., formation of the World Trade Organization)

14. Strength of Government Globalization Drivers for Selected Industries LOW HIGH Pharmaceuticals (OTC) Credit Cards Electrical Insulation Commercial Banking Aircraft (Civil) Pharmaceuticals ( Ethical) Specialty Chemicals Automobiles Computers Book Publishing Soft Drinks Toothpaste

15. Competitive Drivers u Continuing increase in level of world trade u More countries becoming key competitive battlegrounds (e.g., rise of Japan to become a “lead” country) u Rise of new competitors intent upon becoming global competitors (e.g., Japanese firms in the 1970’s, Korean firms in the 1980’s, Taiwanese firms in the 1990’s, Chinese firms in the 2000s, and probably Indian and Russian firms in the 2010’s.

16. Strength of Competitive Globalization Drivers for Selected Industries LOW HIGH Book Publishing Credit Cards Pharmaceuticals (OTC) Commercial Banking Soft Drinks Toothpaste Electrical Insulation Pharmaceuticals (Ethical) Specialty Chemicals Automobiles Computers Aircraft (Civil)

17. Industry Globalization-- Impact u In a Globalized industry, firms must simultaneously accomplish: u Global Scale Efficiency u Local Responsiveness u World-Wide Learning u (Bartlett and Ghosal, 1989)

18. Thank You!!!