Ecco 555 (Student)
-
Upload
rhinehart17 -
Category
Documents
-
view
106 -
download
0
Transcript of Ecco 555 (Student)
Organizing and Structuring Global Operations
• Case: ECCO A/S
International Business
Globalization And Economic
Markets
Strategy; Structure;
People
Political and Cultural Systems
Markets Culture Managing
Topic Case Reading
Global Environment
Globalization Sadhu Chapter 1; Debates
International Trade WTO Chapter 2
International Economic Integration
The Great Recession
Chapter 8
Global Markets and Culture
Culture Silvio Chapter 6
Ethics Corruption in the USA
Chapter 19
International Business Management
International Entry Strategy Cola Wars Chapter 10
Global Firm Structure ECCO A/S Chapter 11
Course Road Map
Road Map
1. Economist article
2. Review
3. ECCO Case
v The objective of global strategy is to manage differences
v Global strategy requires tradeoffs—focus on one or two strategies at a time [e.g., responsiveness, integration, arbitrage]
v Structure and people management practices should align with strategy
v Employ multiple integration mechanisms
v Effectively managing knowledge is the key factor in successful global operations
Review from last week
Benefits of Global Integration and Local Responsiveness
§ Lower costs § scope advantages § scale advantages
§ Integration of resources and competencies § meet global client needs
§ Standardization as control mechanism § Global leader
§ Local citizen § Responsiveness
§ customization § flexibility § speed
Inte
grat
ion
Responsiveness § Boost local sales § Access to local resources § Innovation
§ Ideas new to the firm § Capitalization on local talent
Oracle
Sanyo
IBM
Shell
Nestle
GE
Global structure map for managers
Advertising-to-Sales
Ghemawat, 2007
R&D-to-Sales
Labor-to-Sales
10%
20%
7% 6%
55%
10%
100%
1% .75%
Median
90th percentile
Today’s Objectives
v Understand industry analysis
v Understand core competencies and drivers of competitive advantage
v Understand the importance of global value chain analysis
v Understand the difference between in-house and outsourcing (offshoring)
v http://www.youtube.com/watch?v=CA9EGLaqFNk&feature=fvw v http://www.youtube.com/watch?v=Zh-b_ILPM3I v http://www.youtube.com/watch?v=c9otUdZ2d_4 v http://www.youtube.com/watch?v=v2PqTN04c6Y&feature=related v http://www.youtube.com/watch?v=HnYHGFVVR5w
What is the competitive environment like for
ECCO? How well are they positioned?
v SWOT Analysis:
Additional Industry Analysis Tools
Numerous Environmental Opportunities
Substantial Internal
Strengths
Major Environmental Threats
Critical Internal
Weaknesses
Overcome Weaknesses Grow
Diversify Restructure
Bargaining Power of Suppliers
Threat of New Entrants
Rivalry among Existing
Competitors
Bargaining Power of Buyers
Threat of Substitutes
Porter’s Five Forces Model
Barriers to Entry What factors keep potential competitors out?
v Scale economies § e.g., aerospace industry
v Scope economies § e.g., retailing
v Capital requirements § e.g., aerospace industry
v Switching costs § e.g., MSDOS operating system
v Access to distribution § e.g., Campbell soup
v Entry deterring regulations § e.g., Tobacco
D
A
B C
Industry
Bargaining Power of Suppliers
Threat of New Entrants
Rivalry among Existing
Competitors
Bargaining Power of
Buyers
Threat of Substitutes
Nature and Focus of Rivalry Why industries are more or less “competitive”?
v Factors § Industry growth rates
• Where to secure growth
§ Exit barriers • e.g., specialized assets, emotional barriers
§ Fixed costs • e.g. capacity increments
§ Lack of product differentiation • e.g. differences in functionality, performance
§ Switching costs
A
B C
Industry
Competitive rivalry can focus on many factors, including price, quality, technology, features, service, etc.
Bargaining Power of Suppliers
Threat of New
Entrants
Rivalry among Existing
Competitors
Bargaining Power of
Buyers
Threat of Substitutes
Supplier or Buyer Power How can my suppliers or customers extract value
v Buyer Power v Supplier Power
Supplier concentration • Few vs many suppliers
Supplier volume • Large vs small purchase decisions
Product differences • Dependence on unique features
Threat of forward integration • Ability to become competitor
Switching costs • Limitations on ability to change suppliers
Buyer concentration • Few vs many customers
Volume of purchases • Large vs small purchase decisions
Available alternative products • Competitive products
Threat of backward integration • Ability to become a competitor
Switching costs • Threat of switching suppliers
Bargaining Power of Suppliers
Threat of New Entrants
Rivalry among Existing
Competitors
Bargaining Power of
Buyers
Threat of Substitutes
Threat of Substitutes What alternatives are available to customers
v Direct substitution with the same functionality § diesel vs gas engines § DirecTV vs cable
v Eliminating need for product § water meters vs flat rate
A
B C
Industry
Customers
D
Bargaining Power of Suppliers
Threat of New
Entrants
Rivalry among Existing
Competitors
Bargaining Power of
Buyers
Threat of Substitutes
Successful Strategies Should:
v Reduce the threat of substitution § (e.g., incorporate their benefits)
Bargaining Power of Suppliers
Threat of New Entrants
Rivalry among Existing
Competitors
Bargaining Power of
Buyers
Threat of Substitutes
Minimize buyer power
• (e.g., build customer loyalty)
Offset supplier power • (e.g., alternative source(s))
Avoid excessive rivalry
• (e.g., attack emerging vs entrenched segments)
Raise barriers to entry • (e.g., make preemptive investments)
SUPPLIER POWER HIGH
• strong labor unions • concentrated aircraft makers
THREAT OF ENTRY HIGH
• entrants have cost advantages • low capital requirements • little product differentiation • deregulation of governmental barriers
INDUSTRY COMPETITIVENESS
HIGH • many companies • little differentiation • excess capacity • high fixed/variable
costs • cyclical demand
THREAT OF SUBSTITUTES
MEDIUM
• Autos/train for short distances
BUYER POWER MEDIUM/HIGH Buyers extremely price sensitive Good access to information Low switching costs
Source: J. de la Torre
SUPPLIER POWER LOW
THREAT OF ENTRY LOW
• economies of scale • capital requirements for R&D and clinical trials • product differentiation • control of distribution channels • patent protection
INDUSTRY COMPETITIVENESS
LOW
• high concentration • product differentiation • patent protection • steady demand growth • no cyclical fluctuations
of demand
THREAT OF SUBSTITUTES LOW
No substitutes. (Changing as managed care
encourages generics.)
BUYER POWER LOW Physician as buyer: Not price sensitive No bargaining power. (Changing with managed care.)
Source: J. de la Torre
Examine ECCO’s global value chain. How well do they match their industry?
What is a value chain?
Takeaways from Today
v Industry analysis means understanding my competitors and the market and environment factors that influence my company
v Competitive advantage comes from differentiating yourself from other companies in your industry or beating them at their game
v Value chain mapping helps us understand how to integrate the organization
v Outsourcing operations makes integration difficult… but not impossible