mgt3121 - lectures 14 & 15 - globalization(1)

5/20/2018 MGT3121 - Lectures 14 & 15 - Globalization(1)

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Our World is a System of Systems

Source: IBM


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Our World is a System of Systems

Source: IBM


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GlobalizationDefined as

,

across the globe.A force for economic growth, prosperity and democratic freedom.

world.

Represents one of the most influential forces in determining theu ure course o e p ane .

Benefits

Remarkable growth in trade and exchanges (including tech transfer)

Greater openness in the international economy

Growth of foreign direct investment (FDI)


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Areas affected by Outcomes ofOutcomes of

Increased interconnectedness of

o a za ono a za on

or ra e eve opmen

Investment

Technology

var ous econom es

Global sourcing & global supplychain

Extent

Cost

Culture

,

competitiveness & agility

Global strategies of organizations

Migration

Human rights

Increased accessibility to

technology

Com lex vendor ualification

n e ec ua proper y criteria


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27 fold increase in last 6 decades

Can result in economic growth but could also bring about socialdisruptions.

Extent of poverty has decreased (% of people living on < $1/day)

Results in development which is defined as The need and means by

which to provide better lives for people in less developed countries.

Wider selection of products for markets in different countries.

Interconnectedness of various economies.


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InvestmentInternational investment is the most powerful force in propelling the

world toward closer economic inte ration.

International investment can alter methods of production andthereby initiate much more change than the simple trading of goods.

FDI Yearly Total

1982 $57 Billion

2007 $1.5 Trillion

FDI just in China was $106 Billion in 2010.

2008 $ 1.4 Trillion

Le to ssues suc as a or stan ar s, wor ng con t ons, ea t ,safety & sustainability.


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IT revolution reshaping economies and societies around the globe

New ideas & increased access to information

Increased productivityComputers

e ones

Fiber optics led to widespread use of the internet

Rapidly reducing cost of technology

$400 laptop

$100 laptop in India

Shorter life cycle of products increases criticality of time to

market


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Has led to the widespread

ex ansion of the ca italist

model Opens minds to new ideas and

ex eriences chan es the wa

people think

A few consider this new

culture as a breach of their

values

Cultural Effect could be

+ve, -ve or neutral

More migration now than ever

before

Led to increasing health issues due

to people traveling more

internationally


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Human RightsHuman Rights

Human Rights recognize the Varying IP laws

Intellectual PropertyIntellectual Property

dignity inherent in every person

as a human being regardless of

any affiliation or characteristic

Level of implementation Losses incurred due to IP

infrin ement Era of globalization is also called

the era of the individual

Increasing degree of self

$500 Billion lost every year due to

counterfeit goods

Considered a major risk whenexpression

Think of what is happening in

the middle east

outsourcing technology to

countries where IP laws are

loosely defined


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Global Strategies of

rgan za ons

Problem Identification & Strategy formulationFeasibilit Economic & Social

Preparation (selecting vendors)

EvaluationCommitment / Investment

Business Transition/ Business Continuity

n go ng managemen


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Single Service Multiservice

Focused service: Clustered service:

Single * Dental practice * Stanford University

Location * Retail Store * Mayo Clinic* Family restaurant

Focused network: Diversified network:

u s e e era xpress* McDonalds * American Express

* Red Roof Inns * Accenture


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Benefits to the Franchisee

Management TrainingBrand Namea ona ver s ng

Acquisition of Proven Business

Economics of Scale Issues for the Franchisor

Franchisee Autonomy

ranc se ontractConflict Resolution

n o some examp es o ranc sesn o some examp es o ranc ses


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Generic International

Strategies

Transnational

StrateGlobal

High

Force

Towards

Global

Multi-domestic

Strategy

No

International

Strategy

ntegrat on

Low

Low High

Force Towards Local Responsiveness


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The Nature of the Borderless World The 5Cs

Customers - information has empoweredCompetitors - nothing stays proprietaryompany - xe cos s requ re arge mar e s

Currency -become currency neutral

Countr - de rive com etitor of home market

Planning Transnational OperationsCultural Transferability

or er ormsHost Government Policy


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International Strategic Service VisionService Delivery

System

Operating Strategy Service Concept Target Market

Segments

Available

technology?Infrastructure?

Utilit service?

Appropriate

managerial practice?Participative?

Autocratic?

What are customer

expectations?Perception of value?

Service ethic?

What are the market

segments?Domestic?

Multinational?

Labor market norms

and customs?

Labor market

institutions?

Government

Service encounter?

Language?

Acceptance of self-

Tourist?

What are important

cultural differences?

Space availability?

Interaction with

suppliers?

regulations?

Unions?

Host government

serve?

What are the usage

patterns?

Language?

Life style?

Disposable income?

Educating

customers?

policies?

Language?

Front office?

Cultural

transferability?

What are theworkforce

demographics?

Skills?

Back office? Age distribution?

Attitudes?

Work ethic?


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Considerations in Selecting a

o a erv ce ra egy

Globalization Global Service Strate ies

Factors

Multicountry Importing Follow Your Service Beating theExpansion Customers Customers Offshoring Clock

Customer Train local Develo forei n Develo S ecialize in Provide

Contact workers language & foreign back- office extended

cultural sensitivity customers office service hours of

skills components service

Customization Usually a Strategic Re-prototype Quality and More need forstandard opportunity locally coordination reliability &

service coordination

Complexity Usually Strategic Modify Opportunity for Time

routine opportunity operations focus compression

Information Satellite On site advantage Move Training Exploit

Intensity network experienced investments opportunity

Cultural Modify Accommodate Could be Cultural CommonAdaptation service foreign guests necessary to understanding language

achieve scale necessary

Labor Intensity Reduced Increased labor Hire local Reduced labor Reduced labor

labor costs costs ersonnel costs costs

Other Government Logistics Inadequate Home office Capital

restrictions management infrastructure employee investments

morale


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Recall that service operations can be classified asprocessing people, goods, or information. Whatchallenges are faced in each category whenglobalization is undertaken?

mgt3121 - lectures 14 & 15 - globalization(1)

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ibm5202018 mgt3121 lectures

economic growth

benefitsremarkable growth

system of systemssource

globenew ideas

cost of technology

za ono

closer economic inte