When You Shouldn't Go Global PPT
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Transcript of When You Shouldn't Go Global PPT
When You Shouldn’t Go Global
Presented by:Diana Lim
2010.09.28
Marcus Alexander and Harry KorineHarvard Business Review | December 2008
The Walls Come Tumbling Down
1940 1950 1960 1970 1980 1990 20000
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Tariffs for Industrialized Countries 1940-2000
Aver
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Cust
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Tari
ff
Economic Globalization
Perceived incentives
Sense of inevitability
Pressure on companies to globalize
Revlon
Revlon’s expansion in Brazil in Brazil, the Camellia flower is for funeral
purpose Revlon launched a perfume with the aroma
of Camellia They need to recall back their product and
find other market to sell it Brand name infected, spent extra time,
money and effort
Avoiding Ill-Fated Strategies
Are there potential benefits for our company?
Do you have the necessary management skills?
Will the costs outweigh the benefits?
eBay’s failure in Japan may well have been prevented with a self-assessment like this
eBay
from eBay’s foundation in 1995 they were profitable
launched its Japanese site on February 28, 2000
Two years later when eBay pulled the plug on its Japanese operations – pulverized by Yahoo! Japan Auctions
eBay
they hired the wrong person as country manager tried to force Japanese consumers to fit the
company’s American-centric service model made grandiose announcements about their
entry into the Japanese market, well before they had a localized product ready to launch in Japan
missing the first mover advantage was perhaps eBay’s single biggest blunder
Globalization’s Siren Song
Deregulated Industries (telecom, postal service, utilities) – increased competition in home markets and new found freedom
Service Industries (retail, banking, insurance) – scale economies and growth beyond home markets
Manufacturing Industries (automobiles and communication equipment) – mergers and consolidation in order to survive
Vodafone
World's largest mobile telecom company measured by revenues and the world's second largest measured by subscribers
Vodafone acquired J-phone in 2001 full range of mobiles with features and
styling almost a generation behind those available from the other major carriers
Did not increase investment to catch up
delay in launching accompanying 3G services
Unloaded 98% of its share in 2006
Walmart
Retail giant with a tremendous success story Entered in 1998, exited in 2006 Difference in product preferences Located outside cities Do not distinguish between discount and normal
prices – no compelling reason Visually oriented customers (prefer the department store-like, neat, clean, and sophisticated atmosphere)
Daimler-Benz and Chrysler
“Mercedes was universally perceived as the fancy, special brand, while Chrysler, Dodge, Plymouth and Jeep were the poorer, blue collar relations”
-- James Holden, President of Chrysler
Daimler-Benz luxury vehicles had captured less than 1% of the American markets.
Chrysler's primary reason for teaming with Daimler-Benz is to extend its international reach
Globalization is getting more complex and this change is getting more rapid.
The future will be more unpredictable
“Sen. Obama cannot possibly believe, and doesn't even act as if he believes, that he can be elected president of the United States next year.”
– Christopher Hitchens, author/journalist, 2007
“Overall risks to the outlook seem less threatening than months ago.”
IMF 2007 World Economic Outlook
Ikea
first came to Japan in the mid 1970s
pulled out of Japan in 1986
reopened in 2006
“It’s not good enough just to land here and hope that everything is going to work. You need to have everything in place—the whole supply chain, the well-trained workers and an organization that can actually expand and grow.”
--Lars Petersson, CEO of IKEA’s Japan operations
Summary
Not all globalization strategies are flawed But many have stumbled Great vision, lousy execution Before launching a global move, need to
conduct a self-assessment Ensure efforts make strategic sense to avoid
disastrous consequences