SUMMARY – International management
Academic year 2019 – 2020
,Table of content
Introduction............................................................................................................................................. 3
The Conelearn Framework ...................................................................................................................... 8
The framework .................................................................................................................................... 8
1 Cost advantages ...................................................................................................................... 8
2 Network benefits ..................................................................................................................... 9
3 Learning opportunities .......................................................................................................... 12
The framework beyond the internationalization slogans ................................................................. 12
The “Why” ............................................................................................................................................. 14
Case: Walmart ................................................................................................................................... 14
Case: Saatchi & Saatchi ..................................................................................................................... 18
1 Is advertising a global industry? – what might be keeping it local? ...................................... 18
2 What are the key ingredients of Saatchi’s success? .............................................................. 18
3 S&S in the Conelearn framework .......................................................................................... 21
Guest lecture: Bain & Co ................................................................................................................... 21
1 Important concepts behind successful company expansion ................................................ 21
2 Experiences from the world of consumer goods .................................................................. 26
Case: P&G .......................................................................................................................................... 29
1 History of the case ................................................................................................................. 29
2 Case discussion ...................................................................................................................... 30
3 Case retrospective – what happened? .................................................................................. 34
Guest lecture: P&G – ‘changing FMCG environment’ ....................................................................... 35
1 Evolution from a fully local to a local/regional/global matrix ............................................... 35
2 Local customer relevance vs global scale efficiency challenge ............................................. 37
3 P&G growth strategy ............................................................................................................. 39
4 Summary - FMCG................................................................................................................... 40
The “What” ............................................................................................................................................ 41
Organisation ...................................................................................................................................... 41
The “How” ............................................................................................................................................. 45
Managing the process ....................................................................................................................... 45
Conclusion ............................................................................................................................................. 50
From Local Champions to Global Masters ........................................................................................ 51
Some final key points on strategy ..................................................................................................... 52
Main conclusion ................................................................................................................................ 55
2
,INTERNATIONAL MANAGEMENT
INTRODUCTION
ARTICLE: “THE GLOBALIZATION OF MARKETS.” – TED LEVITT (1983)
- Emergence of global markets for standardized homogenous consumer products
→ reasons: technology + human beings desire similar things
- Companies then
I. have the opportunity to offer same product everywhere
II. can run global standardized campaigns
→ benefit from economies of scale in production, marketing, distribution & management
+ beat competitors because of reduced world prices
Globalization of markets end of the multinational commercial world
“There is no such thing as a growth industry. Companies are organized & operated to create and
capitalize on growth opportunities. Companies must respond to market requirements and must
think of themselves as creators and satisfiers of customers rather than a producer of goods
and services. The firm must adopt a broad and dynamic view of market opportunity.” – Levitt
• We try to classify things and add it all up to call it “the economy” e.g. sectors
• Organizations that turn opportunities/ideas into business/growth opportunities
→ Only then numbers can be added find out there has been a growth (market)
! Paradox: referring to a multinational as collection of nations aspiring form of global corporation
A few years later: response from Douglas and Wind to tear his work apart
ARTICLE: “THE MYTH OF GLOBALIZATION.” – DOUGLAS AND WIND (1987)
- Levitt’s theory applies particularly well to upscale markets + certain groups
- Mass appeal brands (e.g. Coca-Cola, Nike, Apple) are rather exceptions than the rule
Conclusion: global standardization is only one of many strategies which may be successful in
international markets
Many waves of globalization
The globalization of crashes = globalization of credit market failures and crises
“de-coupling” of economies: positive connotation economy ≠ integrated
→ some countries are doing a better job than others
BUT: then global recession de-coupling
The crash of globalization = end of globalization-led growth
Don’t call it junk call it (re)structured products: German banks started buying repackaged
loans by mortgage banks in the US = basically globalization
Tom Freeman: German banks should’ve been more careful and applied due diligence (know
local customer) when deciding about their portfolio investments
Conclusion: Not top-down view = anti-market / anti-economist view
3
, Some positive statements and headliners from the previous ‘waves’
“Globalisation is Key to Survival in the 21st Century” – Chairman Lee (Samsung)
“Like it or not, every start-up is now global” – Fortune (26-06-2000)
“There is probably no business today that you can start that can afford not to be global” – Tim
Koogle (Yahoo)
“PW and Coopers put the case for globalisation – we need to merge in order to remain
competitive” – FT (02-02-1998)
“I am perfectly willing to budget for a loss in my region, if it fits the global strategy” – John
Ross (Deutsche Bank) set himself up for failure!
“We are in all the business we want to be, but not in all the businesses everywhere that we
want to be” – S. Weill (Citibank)
“Banking heads towards globalisation in a new guise” – FT (03-01- 2012)
“GDF plans 55bn global push to cut Europe focus” – FT (09-12-2011)
“International sales help Omnicom buck trend” – FT (15-10-2011)
“Julius Baer seeks scale with Merrill Lynch arm integration.… You have to be in emerging
markets because it is where the growth is…” – FT (14-08-2012)
“In the future, even the smallest business will be multinational” – HSBC ad
“The lesson is not that all start-ups should move to Helsinki… - but to set out with global
ambitions” – Niklas Zennstrom (FT, 08-01-2014)
“Business today is all about… competing with everyone from everywhere for everything” – The
Economist (20-09-2008)
Sometimes its not about competing… more often its about serving a customer
• Problem: Resources are spread to thinly = you lose your (main) focus
• Behind idea = market myopia – If you’re too stuck on the market that is = you’ll
lose sight of upcoming businesses disruption is happening on a global scale
• Solution: You always have to keep an open mind
e.g. inverse (perfect negative) correlation between sale motorcycles and iPhones
< motorcycles = freedom (disconnect), spent entire budget already, etc.
• Strategy = about focus = knowing where to compete with what and with whom
→ Essence should be on value creation financial value = capturing this value
Example: “A strong global bank”
- Numbers = % in total profit
- We see a collection of countries = portfolio of local numbers
- Picture contradicts the title nothing strong about it
- Simple globalization idea >< reality
e.g. Crisis Fortis = result of a failed internationalization strategy
!! Always underlying question for any internationalization strategy:
“is there any added value?”
→ Are synergies, complexity, overhead, added costs, etc.
outweighed by the realized benefits?
4
Academic year 2019 – 2020
,Table of content
Introduction............................................................................................................................................. 3
The Conelearn Framework ...................................................................................................................... 8
The framework .................................................................................................................................... 8
1 Cost advantages ...................................................................................................................... 8
2 Network benefits ..................................................................................................................... 9
3 Learning opportunities .......................................................................................................... 12
The framework beyond the internationalization slogans ................................................................. 12
The “Why” ............................................................................................................................................. 14
Case: Walmart ................................................................................................................................... 14
Case: Saatchi & Saatchi ..................................................................................................................... 18
1 Is advertising a global industry? – what might be keeping it local? ...................................... 18
2 What are the key ingredients of Saatchi’s success? .............................................................. 18
3 S&S in the Conelearn framework .......................................................................................... 21
Guest lecture: Bain & Co ................................................................................................................... 21
1 Important concepts behind successful company expansion ................................................ 21
2 Experiences from the world of consumer goods .................................................................. 26
Case: P&G .......................................................................................................................................... 29
1 History of the case ................................................................................................................. 29
2 Case discussion ...................................................................................................................... 30
3 Case retrospective – what happened? .................................................................................. 34
Guest lecture: P&G – ‘changing FMCG environment’ ....................................................................... 35
1 Evolution from a fully local to a local/regional/global matrix ............................................... 35
2 Local customer relevance vs global scale efficiency challenge ............................................. 37
3 P&G growth strategy ............................................................................................................. 39
4 Summary - FMCG................................................................................................................... 40
The “What” ............................................................................................................................................ 41
Organisation ...................................................................................................................................... 41
The “How” ............................................................................................................................................. 45
Managing the process ....................................................................................................................... 45
Conclusion ............................................................................................................................................. 50
From Local Champions to Global Masters ........................................................................................ 51
Some final key points on strategy ..................................................................................................... 52
Main conclusion ................................................................................................................................ 55
2
,INTERNATIONAL MANAGEMENT
INTRODUCTION
ARTICLE: “THE GLOBALIZATION OF MARKETS.” – TED LEVITT (1983)
- Emergence of global markets for standardized homogenous consumer products
→ reasons: technology + human beings desire similar things
- Companies then
I. have the opportunity to offer same product everywhere
II. can run global standardized campaigns
→ benefit from economies of scale in production, marketing, distribution & management
+ beat competitors because of reduced world prices
Globalization of markets end of the multinational commercial world
“There is no such thing as a growth industry. Companies are organized & operated to create and
capitalize on growth opportunities. Companies must respond to market requirements and must
think of themselves as creators and satisfiers of customers rather than a producer of goods
and services. The firm must adopt a broad and dynamic view of market opportunity.” – Levitt
• We try to classify things and add it all up to call it “the economy” e.g. sectors
• Organizations that turn opportunities/ideas into business/growth opportunities
→ Only then numbers can be added find out there has been a growth (market)
! Paradox: referring to a multinational as collection of nations aspiring form of global corporation
A few years later: response from Douglas and Wind to tear his work apart
ARTICLE: “THE MYTH OF GLOBALIZATION.” – DOUGLAS AND WIND (1987)
- Levitt’s theory applies particularly well to upscale markets + certain groups
- Mass appeal brands (e.g. Coca-Cola, Nike, Apple) are rather exceptions than the rule
Conclusion: global standardization is only one of many strategies which may be successful in
international markets
Many waves of globalization
The globalization of crashes = globalization of credit market failures and crises
“de-coupling” of economies: positive connotation economy ≠ integrated
→ some countries are doing a better job than others
BUT: then global recession de-coupling
The crash of globalization = end of globalization-led growth
Don’t call it junk call it (re)structured products: German banks started buying repackaged
loans by mortgage banks in the US = basically globalization
Tom Freeman: German banks should’ve been more careful and applied due diligence (know
local customer) when deciding about their portfolio investments
Conclusion: Not top-down view = anti-market / anti-economist view
3
, Some positive statements and headliners from the previous ‘waves’
“Globalisation is Key to Survival in the 21st Century” – Chairman Lee (Samsung)
“Like it or not, every start-up is now global” – Fortune (26-06-2000)
“There is probably no business today that you can start that can afford not to be global” – Tim
Koogle (Yahoo)
“PW and Coopers put the case for globalisation – we need to merge in order to remain
competitive” – FT (02-02-1998)
“I am perfectly willing to budget for a loss in my region, if it fits the global strategy” – John
Ross (Deutsche Bank) set himself up for failure!
“We are in all the business we want to be, but not in all the businesses everywhere that we
want to be” – S. Weill (Citibank)
“Banking heads towards globalisation in a new guise” – FT (03-01- 2012)
“GDF plans 55bn global push to cut Europe focus” – FT (09-12-2011)
“International sales help Omnicom buck trend” – FT (15-10-2011)
“Julius Baer seeks scale with Merrill Lynch arm integration.… You have to be in emerging
markets because it is where the growth is…” – FT (14-08-2012)
“In the future, even the smallest business will be multinational” – HSBC ad
“The lesson is not that all start-ups should move to Helsinki… - but to set out with global
ambitions” – Niklas Zennstrom (FT, 08-01-2014)
“Business today is all about… competing with everyone from everywhere for everything” – The
Economist (20-09-2008)
Sometimes its not about competing… more often its about serving a customer
• Problem: Resources are spread to thinly = you lose your (main) focus
• Behind idea = market myopia – If you’re too stuck on the market that is = you’ll
lose sight of upcoming businesses disruption is happening on a global scale
• Solution: You always have to keep an open mind
e.g. inverse (perfect negative) correlation between sale motorcycles and iPhones
< motorcycles = freedom (disconnect), spent entire budget already, etc.
• Strategy = about focus = knowing where to compete with what and with whom
→ Essence should be on value creation financial value = capturing this value
Example: “A strong global bank”
- Numbers = % in total profit
- We see a collection of countries = portfolio of local numbers
- Picture contradicts the title nothing strong about it
- Simple globalization idea >< reality
e.g. Crisis Fortis = result of a failed internationalization strategy
!! Always underlying question for any internationalization strategy:
“is there any added value?”
→ Are synergies, complexity, overhead, added costs, etc.
outweighed by the realized benefits?
4
