Lessons From Late Movers

Going Global: Lessons from Late Movers

Going Global

Presented by: Diana Lim

April 21, 2011

Lessons from Late Movers


Christopher A. Bartlett• Jr. Professor of Business Administration at Harvard Graduate School of

Business Administration• received an economics degree from the University of Queensland,

Australia (1964)• masters and doctorate degrees in business administration from

Harvard University (1971 and 1979)• marketing manager with Alcoa in Australia, management consultant

in McKinsey and Company's London office, and general manager at Baxter Laboratories' subsidiary company in France.

8books 50+chapters or articles

100+case studies and teaching notes


Sumantra Ghoshal• Born in Calcutta; Died of brain haemorrhage (age 55) in 2004 in UK• Studied physics at Delhi University then Worked for the Indian Oil

Corporation (started as an intern and rose thru the ranks)• Doctoral degrees at both MIT School of Management and Harvard

Business School (He worked on these degrees at the same time, writing two distinct dissertations on two different topics)

• Joined London Business School in 1994• ‘Managing across Borders: The Transnational Solution,’ co-authored

with the Bartlett found a place in the Financial Times list of the 50 most influential management books of all time

12books 70chapters or articles

Numerous case studies


$25Made in Indonesia

$25Made in Japan


$15Made in Indonesia

$25Made in Japan


Country of Origin Labelling Before 1914 product’s origin was not a major issue “Made in Germany” required after WWI as a form of

punishment It has become a reputation, stereotype Significant role in the customers’ perception of

products


Country of Origin Labelling COOL - law requires retailers to provide country-

of-origin labelling for fresh beef, pork, and lamb

Pros:•Provide US products advantage•Right to know (health and safety reasons)

Cons:•Disguised trade barrier•No evidence that consumers want such a thing

Reason why companies from peripheral countries find it difficult to compete against global giants from Europe, Japan, or the US


Arvind Mills (Indian Garment Manufacturer)• Perceived as a symbol of quality at home (still does)• Initial strategy worked great as a “quality” garment firm at

home• Major denim supplier to 1990’s apparel firms in the US• Expanded rapidly providing quality products to global

firms• Global competition increased dramatically• U.S jeans market continually started to sink


The Pharmaceutical Industry’s Value Curve• All industries can be seen as a collection of product

market segments

The problem for most MNEs from peripheral countries is that they

typically enter the global market at the bottom of the value curve, and

they stay there


Ranbaxy (Indian Garment Manufacturer)• Stuck at the bottom of the value

curve• Ranbaxy created a pocket of

excellence in India and also abroad• Moved into higher margin business• Consistently invested in R&D• Had significant cost advantages in

R&D

• Break out of the mind-set that they couldn’t compete globally

• Find a competitive advantage in being a late mover• Develop a culture of cross-border learning


Breaking Out of the Marginal Mind-Set• Companies from peripheral countries can fall into

several traps, also known as liabilities of origin– Gap between local and international standards

• Demand at home is strong – duck the challenge of going abroad

– Unaware of the company’s global potential; self-doubt– Limited exposure to global competition

(overconfidence or blind to potential dangers)


Breaking Out of the Marginal Mind-Set• PUSH from home

– Moment of truth stimulates the initial steps towards internationalization

– Especially for companies blinded by their domestic success that they fail to see that their origins present a liability (ex. Samsung 10 years ago)

– Risk-taking, investing far ahead of demand– Even if doing so reduces the company’s responsiveness

to its successful home market (ex. Thermax)


Breaking Out of the Marginal Mind-Set• PULL from abroad

– Need for offshore champions – senior executives from the target market

– This increases credibility and confidence to win top management’s attention

– Invest in management capabilities of your overseas units

– Ex. Natura defended its position in Brazil but failed abroad


Devising Strategies for Late Movers• Benchmark and sidestep

– In today’s global market, you don’t have to go abroad to experience international competition. Sooner or later, the world comes to you

• Emerging multinationals can learn how to compete against the players in foreign markets simply by adapting and responding to those players as they enter the home market

• Copy and innovate

• Ex. Jollibee


Devising Strategies for Late Movers• Confront and challenge

– Introduce new business models that challenge the industry’s established rules of competition

– Can be effective in industries deeply embedded with tradition

ex. BRL Hardy Wine, an Australian Wine Company


Learning How to Learn• Protect the past

– Exploit the resources and capabilities that have provided competitive advantage to date

– Reinventing is not always the solution– Cooperation between parent company and overseas

subsidiary establishes a dynamic of mutual learning

• Build the future– New capabilities cannot simply be installed, they must

be developed and internalized– Invest in new personnel, training, or reorienting

internal culture


Success Factors• Breaking Out of the Marginal Mind-set

– Push from home– Pull from abroad

• Devising Strategies for Late Movers– Benchmark and sidestep– Confront and challenge

• Learning How to Learn– Protect the past– Build the future

Lessons From Late Movers

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