yips globalization drivers

25 May 09International Business - Yip's Globalisation Drivers 1

Yip’s Globalisation Yip’s Globalisation DriversDrivers

Team 6Sachin

Arun KABalaji

SwapnilArobinda

25 May 09 International Business - Yip's Globalisation Drivers 3

International Business Terms

International companies : Importers and exporters ; have no investment

outside of their home country.

Multinational companies : Have investment in other countries ; More

focused on adapting their products and service to each local market.

Global companies : Have invested and are present in many countries ; They

market their products through the use of the same coordinated

image/brand in all markets.

Transnational companies : More complex organizations. They have invested

in foreign operations ; have Decentralized decision-making, R&D and

marketing powers to each individual foreign market.


Introduction

• George Yip (1992)

• To know the degree of Globalisation within an industry, analyse

• 4 Main Categories of Drivers

1. Market Globalisation Drivers

2. Cost Globalisation Drivers

3. Government Globalisation Drivers

4. Competitive Globalisation Drivers

Low

(Domestic)

High

(Global)


Yip’s Framework

Technological Factor

Economic & Financial

Factor

Social & Demographic

Factor

Political & Legal Factor


Market Drivers…

Market Globalisation Drivers

• Customer needs• Customers & channels• Marketing• Leading Countries

Govt. Globalisation Drivers

Cost Globalisation Drivers Competitive Globalisation Drivers


Market Globalisation Driver - Strength

Low

(Domestic)

High

(Global)

Airlines

Computers

Automobile

Soft Drinks

FMCG

Retail Banking

Book Publishing

Baked Foods


Government Drivers…




• Trade Policies• Technical Standards• Marketing Regulations• Govt. Owned Competitors• Govt. Owned Customers• Legal protection

Cost Globalisation Drivers Competitive Globalisation Drivers


Govt. Globalisation Driver : Strength

Low

(Domestic)

High

(Global)

FMCG

Baked Foods

Soft Drinks

Computers

Automobile

Pharma

Airlines

Retail Banking


Cost Drivers…




• Trade Policies• Technical Standards• Marketing Regulations• Govt. Owned Competitors• Govt. Owned Customers• Host Govt. Concerns

Cost Globalisation Drivers

• Economies of Scale & slope• Experience Curve• Sourcing & Logistics• Country Costs, Productivity & Skills• Product Life Cycle & Product Development Costs

Competitive Globalisation Drivers


Cost Globalisation Driver : Strength

Low

(Domestic)

High

(Global)

Pharma

Airlines

Computers

Automobile

FMCG

Retail Banking

Baked Foods

Soft Drinks


Competitive Drivers…




• Trade Policies• Technical Standards• Marketing Regulations• Govt. Owned Competitors• Govt. Owned Customers• Host Govt. Concerns


• Economies of Scale & slope• Experience Curve• Sourcing & Logistics• Country Costs, Productivity & Skills• Product Life Cycle & Product Development Costs


• Exports & Imports• Competitors• Interdependence of countries


Competitive Globalisation Driver - Strength

Low

(Domestic)

High

(Global)

Airlines

Pharma

Computers

FMCG

Automobiles

Soft Drinks

Retail Banking

Baked Foods


Advantages

• Identifies the drivers that are global and those that are local

• Used to analyse both industry and market

• Can be mapped onto Porter's Five Forces

• Changes in drivers indicated by macro environmental analysis

• Assists in identifying critical success factors for industry and market


Case Study – Europe 1992


• Customer needs become

more common

• Birth of large ‘Euro mass’

Segment

• Customers and channels

increase

• Transferable marketing to

become the norm


• Trade Policies

• Eliminate all tariff and non

tariff barriers

• ‘Mutual Recognition’

• Subsidies outlawed

• Technical standards compatible

for all industries

• Government owned Customers to

lose their ability to favor national

suppliers


Case Study – Europe 1992


•Economic Scale of Europe to

increase

• Experience curve strategies

to be more viable

• ‘Favorable Logistics’

• Sourcing efficiency to

improve

• ‘Difference in country cost’

will become more significant

• More investment on high cost

Product Development

Competitive Globalisation

Drivers

1. Exports and imports within

EC to increase

2. More competitors from

different continent

3. Interdependence of

countries to improve

4. ‘Pan European’ Strategy


Case Study – Volkswagen


• Growing middle class in developing countries• Tie-up with Porsche


• Exchange rate variations • Interdependence of countries to help in subsiding competitors


• Relocation of production facility• Taking advantage of difference in country costs• Huge cost savings


• Threat of Entry to increase• Increase Rivalry among existing competitors


Five Forces Model

Threat of Entry

Threat of Substitutes

Power of Buyers / Suppliers

Competitive Rivalry

Globalisation Drivers

• Common Customers – Increase• Global economies of scale – reduce• Global Marketing – Reduces• High Production Cost – Reduces

• Lead Nations – Increases• R&D, Innovation – Increases

• Existence of global customers – Weaken

• Existence of global suppliers – Counteract

• Global Customers – Increase• Economies of Scale – Increase• Global Sourcing – Increase• Compatible TS & Favorable Policies -

Increase

Yip’s Framework & Porter’s Five Force Model

Government DriversMarket Drivers

Government DriversMarket Drivers

Government Drivers

Market Drivers

Government Drivers

Market Drivers

Market DriversCost Drivers

Market DriversCost Drivers

Competitive Drivers

Cost drivers

Competitive Drivers

Cost drivers

25 May 09 International Business - Yip's Globalisation Drivers 19Thank You Thank You

Industries and markets differ vastly in the extent to which they are

globalized

- Paint industry is largely globalized;

- Advertising and brand names- localized for linguistic and cultural reasons

Countries with the most favorable combination of drivers are likely to be

chosen as markets and as base by global business

Conclusion

Baked FoodsBaked Foods AutomobileAutomobile PharmaPharma

yips globalization drivers

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