This chapter focuses on adaptation strategies for adding value in the face of large cross-border differences, exploring in detail the strategies of the world's ten largest competitors in the major home appliance industry. This chapter was originally published as chapter 4 of "Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter."
Describes a company that had traditionally followed a strategy quite distinct from its major competitors', its eventual decision to imitate them, and its subsequent performance.
This chapter focuses on aggregation strategies that overcome some differences among countries by using various grouping devices to create greater economies of scale than country-by-country adaptation can provide. This chapter was originally published as chapter 5 of "Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter."
Suh Kyung-Bae, the President and CEO of AmorePacific, a South Korean cosmetics company, was an ardent globalizer. In its home market, AmorePacific had held off major multinational players such as L'Oreal and Estee Lauder and had engaged them in markets around the world, from France to China. The case discusses the company's position and options in the Korean, French, U.S., and Chinese markets. To reach their aim to run one of the top 10 cosmetics companies in the world, with 4 billion in sales by 2015 (1.2 billion from outside Korea), company managers had to ensure that as a global company, AmorePacific amounted to more than the sum of its country parts--a challenge compounded by deep differences across countries. Related questions included: in which countries should AmorePacific focus invest resources and managerial emphasis and attention? How concerned should they be about the diversity of approaches being taken in the three major countries/regions? And what role did non-organic options--aquisitions or joint ventures--plan as a way of boosting international growth rates?
This chapter focuses on arbitrage strategies that exploit selected differences across countries instead of treating them all as constraints, examining economic and labor arbitrage in particular. This chapter was originally published as chapter 6 of "Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter."
Argentine confectionery manufacturer, Arcor Group, seeks to implement an international strategy but in 2003, recovering from the Argentine financial crisis, thwarts globalization plans. Already Latin America's leading candy producer and an exporter to over 100 countries, Arcor analyzes how it can become truly global with production facilities and distribution networks in various regions, such as North America, Europe, and Asia. First, however, Arcor must stabilize its operations at home, where a devalued peso, economic uncertainty, and political instability still linger from the devastating financial crisis.
Argentine confectionery manufacturer, Arcor Group, seeks to implement an international strategy but in 2003, while recovering from the Argentine financial crisis, globalization plans are thwarted. Already Latin America's leading candy producer and an exporter to over 100 countries, Arcor analyzes how it can become truly global with production facilities and distribution networks in various regions, such as North America, Europe, and Asia. First, however, Arcor must stabilize its operations at home, where a devalued peso, economic uncertainty, and political instability still linger from the devastating financial crisis.
Describes the rivalry between two competitors who have attempted to become the dominant force in the emerging British satellite television industry. Can be used to examine issues of competitive positioning, technology adoption, and scenario analysis. Helps students make decisions given competitive challenges and industry uncertainties.
To create a competitive advantage, a company must commit itself to developing a set of capabilities superior to its competitors; But such commitments tend to be costly and hard to reverse. How then, should a company decide which broad path, or strategy, to commit itself to? And how are competition and uncertainty to be accounted for in that decision? In this brilliant reassessment of how companies gain and sustain competitive advantage, Pankaj Ghemawat consolidates contemporary research in economics and other disciplines into a comprehensive yet practical framework for comparing commitments to strategically distinct options. This framework will help managers address specific strategic choices such as entry, exit, vertical/horizontal integration, capacity expansion, and innovation, as well as choices of generic strategy. Step by systematic step, Ghemawat provides managers with the tools and techniques they need to improve the quality of the choices that they make. Specifically, Ghemawat discusses: * how to identify the choices that are truly strategic -- that involve commitment -- before rather than after the fact * how to analyze the short-run and long-run competitive positions implied by a particular strategic option * how to assess the sustainability of superior competitive positions over time * how to account for the flexibility afforded by a particular option in dealing with future uncertainties * how to deal with both honest mistakes and deliberate distortions in the process of choice This pathbreaking book will help managers invest in the future. Its logic applies to choices involving disinvestment as well as those involving investment -- and to choices that embody elements of both. Its logic can be used for diagnostic purposes, such as the valuation of business, and most broadly, it win force managers to think about important issues that they may have tended to ignore. Ghemawat's discussion of these important ideas is concise, studded with detailed examples, based on rigorous research and, above all, practical. It will become required reading for thoughtful practitioners as well as practitionersto-be in the 1990s.
A firm such as Schering-Plough that earns superior, long-run financial returns within its industry is said to enjoy a competitive advantage over its rivals. This note examines the logic of how firms create competitive advantage. It emphasizes two themes: First, to create an advantage, a firm must configure itself to do something unique and valuable. The firm must ensure that, were it to disappear, someone in its network of suppliers, customers, and complementors would miss it and no one could replace it perfectly. The first section uses the concept of "added value" to make this point more precisely. Second, competitive advantage usually comes from the full range of a firm's activities--from production to finance, from marketing to logistics--acting in harmony. The essence of creating advantage is finding an integrated set of choices that distinguishes a firm from its rivals. The second section shows how managers can analyze the full range of activities to understand the sources of added value.
At the time of the millennium, diamond demand was threatened by an increasing awareness among jewelry customers that diamond production and trading in some countries was being linked to growing inequities and human rights violations. This, in turn, had an impact on De Beers' reputation and consumer confidence in the diamond as a product that represented integrity, love, and commitment. In 2000, De Beers' sustainability depends on the ability of its leaders to shift the paradigm of both the firm and its context and embrace a distinctly different strategy.
Describes the problems facing De Beers at the start of 1983. De Beers had, since its formation in 1888, exercised a large measure of control over the world supply of diamonds. In 1983, the company itself mined over 40% of the world's natural diamonds and, through marketing arrangements with other producers, distributed over 70%. For 50 years up to 1983 the company had never lowered its prices and, overall, had raised them significantly ahead of the rate of inflation. However, in 1983 the company was faced with a series of problems that threatened the structure it had so carefully built. First, a large producing nation had stopped selling through De Beers. Second, new discoveries meant that the annual supply of mined diamonds would double by 1986. Finally, the industry was experiencing its worst slump since the 1930s, resulting in a significant deterioration in the company's financial position. Describes the structure and economics of the diamond industry and asks the student to decide whether or not De Beers should abandon the business strategy it had pursued for nearly a century.
This chapter enumerates the reasons that borders still matter and classifies them in terms of the cultural, administrative, geographic, and economic distances between countries. This chapter was originally published as chapter 2 of "Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter."
This case series is a vehicle for examining the strategic logic and risks of preemption. Rewritten versions of earlier cases.
Presents the systematic evidence in the context of the microeconomic model of market integration. Market integration is just one (economic) aspect of globalization; this is one of the particular interests to business managers.
Embraer is the story of a company from a developing country, Brazil, that has become the leader in a high-tech field, regional passenger jets. Embraer's first family of regional jets has been highly successful and, at the time of the case, it is embarking on a major commitment to a second, larger family. At the same time, though, it is embroiled in a bitter dispute at the World Trade Organization about Brazilian export financing. In addition, it faces issues related to its capital structure and corporate strategy.
Describes an attempt by Fox Broadcasting to enter the U.S. television broadcasting industry as a fourth network. Intended to integrate the analysis of major investment decisions with business strategy. Leads to a discussion of the investment decision based on industry structure, competitive positions, and sustainability.
The introduction of the Sensor Shaving System, one of the biggest product launches ever, forced Gillette to reevaluate its strategy in its shaving and non-shaving business. It had to decide whether to go ahead with the launch and if so, at what scale. Permits analysis of the margins and volumes the Sensor is likely to achieve, and issues of sustainability and flexibility.
This chapter discusses why firms should globalize in a world in which distance still matters, presenting a scorecard for tracking value creation that includes but goes beyond the familiar components of size and economies of size. This chapter was originally published as chapter 3 of "Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter."
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