the moment is now global megatrends implications to strategy formulation & execution: a context...
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The Moment Is NowThe Moment Is NowThe Moment Is NowThe Moment Is Now
GLOBAL MEGATRENDS IMPLICATIONS TO STRATEGY FORMULATION & EXECUTION: A CONTEXT FOR TRANSFORMATION
Dr. Fariborz GhadarWilliam A. Schreyer Chair ofGlobal Management, Policies and Planning; andFounding Director, Center for Global Business StudiesPennsylvania State University
Email: fghadar@gmail.comWeb Site: www.ghadar .com
2| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
International Product Life Cycle
High Engineering Content
Few Manufacturers/ Less Competition
Unique/ Non-Standard
R&D Sales >10%
Technical Advertising
Small Market
Small Export Market Price/Cost High
Manufactured in Triad
Phase IHigh Tech
3| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Phase IHigh Tech
International Product Life Cycle
Phase IHigh Tech
High Engineering ContentR&D Sales > 10%Small export marketSmall marketFew Manufacturers/ Less CompetitionPrice/Cost highManufactured in TriadTechnical advertisingUnique/ Non-Standard
Process Engineering Emphasis
Mass Advertising
Growing Market
World Market Growth of
Export Market
More Standardized
R&D Drops
Rising Competition
International Manufacturing
Price/Cost Declines
Phase IIGrowth and
Internationalization
4| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
International Product Life Cycle
Phase IHigh Tech
High Engineering ContentR&D Sales > 10%Small export marketSmall marketFew Manufacturers/ Less CompetitionPrice/Cost highManufactured in TriadTechnical advertisingUnique/ Non-Standard
Phase IIGrowth and
Internationalization
Phase IIGrowth and
InternationalizationMore StandardizedR&D DropsRising CompetitionInternational ManufacturingGrowth of export marketWorld marketPrice/cost declineMass advertisingGrowing MarketProcess Engineering Emphasis
Standard Product
No Engineering Emphasis
High Competition
Manufactured where factors of production are lowest
No R&D
World Market
No Advertising
Saturated Market
Price/ Cost 1.0
Phase IIIMaturing
Phase IIIMaturing
Manufactured where factors of production are lowestNo R&DStandard ProductWorld MarketNo engineering emphasisSaturated marketNo AdvertisingPrice/cost ~ 1.0High competition
5| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Global Competitive Positioning
Unique/Non-Standard High Engineering
Content Few Manufacturers/
Less Competition Price/Cost High Manufactured in Triad R&D/Sales >10% Technical Advertising Small Market Small Export Market
Phase I: High Tech
More Standardized Process Engineering
Emphasis Rising Competition Price/Cost Declines International
Manufacturing R&D Drops Mass Advertising Growing Market World Market Growth of Export
Market
Phase II: Growth &Internationalization
Standard Product No Engineering
Emphasis High Competition Price/Cost 1.0 Manufactured where
factors of production are lowest
No R&D No Advertising Saturated Market World Market
Phase III: Maturing
6| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
International Product Life Cycle
Phase I: High TechPhase II: Growth &Internationalization Phase III: Maturing
7| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Factors Affecting Global Competitive Positioning
Employee Relations Cultural Sensitivity Marketing & Advertising International Trade Political Risk & Government Intervention Ownership Transfer Pricing, Management Fees, Royalty
Payments, Profit Repatriation Financing
Product Life Cycle
8| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Where are our…
Markets?Markets?
CustomersCustomers
Competitors?Competitors?
Culture?Culture?
Where are we?Where are we?
9| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Global Competitive Positioning Survey
A B C D
Where are our customers? 1 2 3 4 5 6 7
Where are our markets?
1 2 3 4 5 6 7
Where are our competitors? 1 2 3 4 5 6 7
Where is our corporate culture? 1 2 3 4 5 6 7
Where will we be? 1 2 3 4 5 6 7
10| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Discussion at Tables
What are the implications of these trends to our firm?
What are the implications of these trends to our firm?
How are businesses attempting to respond to some of these global economic and social trends?
How are businesses attempting to respond to some of these global economic and social trends?
11| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
International Product Life Cycle
Phase I: High TechPhase II: Growth &Internationalization Phase III: Maturing
12| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
International Product Life Cycle
Phase I: High TechPhase II: Growth &Internationalization Phase III: Maturing
13| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Does the Rule of Three Work?
?3
14| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
The Rewards go to #1 or #2
Earnings
3 - 4 Years
3.) $0
1.) $100M1.) $100M
2.) $36M2.) $36M
3.) $03.) $0
4.) - $28M4.) - $28M
predevelopmentcost doubling reduces earnings to $96M
predevelopmentcost doubling reduces earnings to $96M
15| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Market Share & Return on Investment
Return onInvestment
Market Share
Cost of Capital
16| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Market Position
Inner CircleRule of ThreeFull LineMarket CoverageField ForcesSOA Tech R&DVertical IntegrationScale
17| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Inner Circle Challenges
Monitor Outer Circle for “Breakouts”
Penetrate Niches Manage costs Convergence of other “Circles” Modernize/Recreate Industry Stabilize Inner Circle Cover Innovations Globalization
Inner CircleRule of ThreeFull LineMarket CoverageField ForcesSOA Tech R&DVertical IntegrationScale
18| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Market Position & Market Valuation
MarketCAP
XX
XX
X X X
Market Share
19| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Our Total Resource Network
Expanded ResourceNetwork
Core ResourceNetwork
Our Business
20| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Global Competitive Positioning
Phase I: High TechPhase II: Growth &Internationalization Phase III: Maturing
Product InnovativenessProduct capabilitiesProcess technologyInformation technologyR&D capability
ACustomer Intimacy
Brand franchiseDistribution systems
BMarket research
Competitive position
Operational ExcellenceEfficient operationsFinancial strengthLow cost
D
C
LeadershipOrganizational Capability
Shared mindset Reward system/metricsStructure
21| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Innovation & Core Competencies
Customer Intimacy
Operational Excellence
Innovation
22| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Recent Research Shows the Rise of the Niche Players
Reference:
Wall Street Journal Article
Financial Times Article
Harvard Business Review Article
Monitor Outer Circle for “Breakouts”
Cover Innovations
Convergence of other “Circles”
Modernize/Recreate Industry
Stabilize Inner Circle
Penetrate Niches
Globalization
Inner CircleRule of ThreeFull LineMarket CoverageField ForcesSOA Tech R&DVertical IntegrationScale
Manage costs
23| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Create a Culture that Lives The Value Promise
EffectiveLeadership
Employee Enthusiasm
Customer Satisfaction
ImprovedProfits
Commit to creating a valuable, differentiated employee experience
Commit to creating a valuable, differentiated employee experience
24| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
What Will it Take to Succeed?
Focused operations based on core competencies
Customer responsiveness
Relentless improvement
Innovative products &
services Value delivery
Reward for global focus
New. Quick. Global, “Good Deal”New. Quick. Global, “Good Deal”
25| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Global Tectonics
Environmental Degradation
Economic Integration
Environmental Degradation
Economic Integration
Population
Urbanization
Disease & Globalization
Resource Management
Population
Urbanization
Disease & Globalization
Resource Management
Knowledge Dissemination
Information Technology
Biotechnology
Nanotechnology
Knowledge Dissemination
Information Technology
Biotechnology
Nanotechnology
Future Conflict
Governance
Future Conflict
Governance
26| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
What To Do?
Empower the people to do the right thing
Core Competencies
Strategic Intent
LET’S DO IT!LET’S DO IT!
27| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL
Trademark Attribution
AMD, the AMD Arrow logo and combinations thereof are trademarks of Advanced Micro Devices, Inc. in the United States and/or other jurisdictions. Other names used in this presentation are for identification purposes only and may be trademarks of their respective owners.
©2010 Advanced Micro Devices, Inc. All rights reserved.
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