globalization 3.0

PROFESSOR N. VENKATRAMAN

David J. McGrath Jr. Professor in ManagementBoston University School of Management

April 1,2008

Globalization 3.0:Opportunities & Challenges

Headlines.. Of Many Kinds

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And there are cartoons..

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Look Back in History: May 12, 1896

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40.94

Fast Forward to 2050: ‘BRIC’

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We are in an era of global networks…

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Live

ConsumePlay

Work Create

Connect

Or to put it differently…..

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And according to Dilbert…

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Process offshoring.. Just getting started

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Globalization: Stylized Shifts

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Globalization 1.0

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One of the First Global Corporations…

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Globalization 2.0

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Globalization 2.0 Infrastructure

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Globalization 2.0 Infrastructure

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Globalization 3.0

Three Technology Laws….

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What’s the impact today? What’s the likely impact in 2010? 2015?

Globalization 3.0 is about IT-enabled work

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Engineering

Legal

Medical

Software

BPOCall Centers

Tech Support

??

R&D

Analytics

??

??

Services

Design??

Where’s it designed? Where is it manufactured?

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Globalization through digital networks..

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Remote, Connected Work

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Globalization 3.0:Early observations…. But not prescriptions

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Healthcare in Global Business Networks

AN ILLUSTRATIVE COMPARISON OF

COSTS

(SOURCE: BUSINESSWEEK)

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Heart Bypass

U.S.: $130,000Singapore: $18,500Thailand: $11,000India: $10,000

Photo: EastShore Hospital, SingaporeData: Business Week, The EastShore Hospital is an International

Member of Blue Cross, Blue Shield ofSouth Carolina..

Heart Valve Replacement

U.S.: $160,000Singapore: $12,500Thailand: $10,000India: $9,000

Photo: Apollo Hospital, Chennai. IndiaData: Business Week, The Apollo Hospital is an International

Member of Blue Cross, Blue Shield ofSouth Carolina..

Angioplasty

U.S.: $57,000Singapore: $13,000Thailand: $13,000India: $11,000

Photo: Bumrungard International Hospital , BangkokData: Business Week, 35,000 Americans traveled to Bangkok in 2007

for this treatment

Hip Replacement

U.S.: $43,000Singapore: $12,000Thailand: $12,000India: $9,000

Photo: Gleneagles, SingaporeData: Business Week,

US Private equity firm, TPG has taken a controllinginterest in the Parkway Group that owns the hospital.

Hysterectomy

U.S.: $20,000Singapore: $6,000Thailand: $4,500India: $3,000

Photo: a subsidiary of Wockhardt in Mumbai, IndiaData: Business Week,

Active discussions with US insurers

Knee Replacement

U.S.: $40,000Singapore: $13,000Thailand: $10,000India: $8,500

Photo: St. Luke’s Hospital in ManilaData: Business Week,

Early stage infrastructure; not yet world-class..

Spinal Fusion

U.S.: $62,000Singapore: $9,000Thailand: $7,000India: $5,500

Photo: Tiantan Puhua Hospital, Beijing, ChinaData: Business Week,

Experimental stem cell treatments, not availablein the USA..

Medical Tourism in Thailand

Medical Tourism %USA: 33%China: 29%Japan: 18%UK: 14%Middle East: 6%Australia: 6%Others: 17%

Photo: Phuket Hospital, BangkokData: Business Week,

Thailand had 1.5 million medical tourists in 2007

Remember Lessons from the Global Motorcycle Sector?

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It’s not all about accent neutralization!

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Globalization 3.0: Early Experimenters

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Globalization 3.0: Positioning it in the Strategic Agenda

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1. What’s our business scope?

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StrategicImportance ofCapabilities Core

Necessity

Support

“Best”“Good”“Weak”Relative Position

Sourcing Logic

2. Where’s our global footprint?

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Shoringdecisions

3. How’s the governance distributed?

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[Sourcing]

“In”

“Out”

“On” “Off”

[Shoring]

4. How to architect global work?

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What’s the design logic for work? Transactional

Transformational

Tacit

Source: McKinsey

4. How to architect global work?

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How to design different types of work? Sequential work

Reciprocal work

Pooled work

(A) (B)

(A) (B)

(C)

Value creation and capture in Globalization 3.0

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Strategically thinking about Globalization

for value creation and capture

Embarking and Embracing Globalization 3.0

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CoreProcesses

KeyCases

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Thank You Very Much!