MSC Strategy Presentation
mardino97
1GlobalizationofMarketsandCompetition.pptxChapter 1 Globalization of Markets and Competition
Source: Using data from UNCTAD: World Investment Report 2017: Annex table 01
(http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Annex-Tables.aspx)
Globalization of the World Economy
2
2
FDI inflows, by region and economy, 1990-2016
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 204905.01843370049 153972.59585033279 162923.67398457031 220110.09216853688 254920.08925669413 341527.48109995876 388819.19185767643 481490.47579671897 690690.43390587287 1076318.3570279723 1360253.8111918014 772782.63864750694 594929.30392842751 558863.86017797131 697169.92875849048 958515.76860058412 1411171.0802568013 1909234.4055163991 1499132.796925996 1190005.9794308338 1383779.299762238 1591146.0714365176 1592598.3280871562 1443229.887217734 1323863.4133892066 1774000.740740123 1746423.4974280884 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 170185.54970915176 114524.08404636373 107815.9543458078 141395.90236044925 150599.03287537591 219763.68247217129 236342.29435356232 286293.00665438117 508530.16596062278 852937.60133227124 1120508.6115155804 547917.17199861526 413024.53085598035 337136.63708236895 400868.29891954997 587595.951516003 940235.50077118608 1283807.6328751147 788909.94334458828 654386.84846537898 677450.48709591536 824293.12640443631 856978.98304978944 684260.46656612062 563329.70298584853 984105.04653786123 1032373.0945554342 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 34648.568724548728 39309.891803969003 53456.638320662525 75689.48045798752 102386.52759896839 117765.2855741828 147138.73280411409 185390.75350967125 174991.68681959124 216248.97784180983 233820.85884949143 216607.50898525707 171859.21999100631 203894.68908828142 267304.65335418808 339991.87039485457 411896.31063290115 537893.94541486597 592713.0434442953 473892.74746416305 642689.68340378115 687511.21519618668 670998.13732148719 674658.20417604852 703780.4172976074 752329.0402437835 646030.43017485912 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 70.900000000000006 138.62 1651.0813181000001 3024.7093500999999 1934.5287823499998 3998.5130536050001 5338.1647000000003 9806.7156326668919 7168.5811256589623 7131.7778538917119 5924.3408267301766 8257.9576636342845 10045.553081440641 17832.534007321006 28996.976484752315 30927.946689726647 59039.268852713714 87532.827226419191 117509.81013711149 61726.383501291108 63639.129262541552 79341.729835894803 64621.207715880657 84311.216475563837 56753.293105750774 37566.653958478171 68019.972697795354 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0Millions
of
US dollars
Globalization of the World Economy:
Selected Indicators of FDI and International Production and Trade
1990-2016
Source: UNCTAD: World Investment Report 2017: Table I.4, Page 26
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| Total number of Multinational Corporations | 37,000 | 82,000 |
| Total number of Foreign Affiliates/Subsidiaries | 170,000 | 810,000 |
Globalization of the World Economy:
For Business Firms
OPPORTUNITIES for FIRMS
CHALLENGES for FIRMS
Wider scope of markets
Growth potential
Wider access to resources:
Labor
Raw materials
Components
Knowledge
Ability to gain costs advantages through economies of scale
Ability to moderate risks
Government regulation
Cultural diversity
Need for adaptation
Cross border management
1990
2008
4
Globalization of the World Economy: Business Firms
Internationalization trends in top 100 MNEs, 1990–2015 (percent)
Source: UNCTAD: World Investment Report 2017: Figure I.23, Page 27
5
Globalization of the World Economy:
The Macro Drivers
POLITICAL
Peace in the Triad
Opening of Markets (GATT, EEC, WTO, etc.)
Liberalization of Foreign Direct Investments
Liberalization of Financial flows
TECHNOLOGY
Increased efficiency of transportation and logistics : Air, cargos, containers
Increased efficiency of telecommunication and information technology
Increased critical mass of investments in R&D and production
SOCIAL
Some convergence of middle-class consumer behavior across countries
Wider access to internet, information, movies, TV series, etc.
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Macro Driver: Liberalization of Trade
China Tariffs rates
China Trade
Trade
(US+EU+Japan+UK)
Tariffs (US+EU+Japan+UK)
Weighted tariffs
rate all products
%
Uruguay
Round
Doha Round
China joint
WTO
Trade
In billions US$
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Macro Driver: Liberalization of Investments
Changes to national investment policies, 2002–2016
Source: UNCTAD: World Investment Report 2017: Table III.1, Page 99
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Macro Driver: Decline in Maritime Transport Cost
Redrawn with permission of the AEA from Hummels D. 'Transportation Costs and International Trade in the Second Era of Globalization'. Journal of Economic Perspectives 21, (3) 2007 pp 131–154 – Fig 6 p.147,
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Macro Driver: Decline in Air Transport Costs
Redrawn with permission of the AEA from Hummels D. 'Transportation Costs and International Trade in the Second Era of Globalization'. Journal of Economic Perspectives 21, (3) 2007 pp 131–154 – Fig 2 p.139,
10
Macro Driver: Decline in Telecom Costs
Source: World Bank World Development Report 2009: Reshaping Economic Geography Fig 6.3 p.180
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Why do Business Firms Globalize?
Markets
Resources
Competitiveness
Capture new markets
Natural Resources
Offshoring/Offsourcing
Knowledge
Security of supply
Economies of scale
Costs
Networks
Risk spreading
& diversification
12
Historically, corporate globalization
took place in 3 stages:
Export
(Trade)
Internationalization
(Multinational)
Global integration
(Global)
13
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GLOBAL INDUSTRIES
Global industries are industries:
in which firms can sustain competitive advantages
only if :
They are present in key countries of the world
And
They integrate and coordinate their activities across the world on a centralized manner.
MULTILOCAL INDUSTRIES
Local industries are industries:
in which firms can sustain competitive advantages within the boundaries of countries.
Firm competing in multilocal industries
are either:
Domestic firms within each country
or
Subsidiaries of multinational companies operating independently of each others in respective countries
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Industries: Global or Multilocal ?
Factors Pushing For Globalization
Similar needs & consumer behavior
Standardized products
Beyond country economies of scale
Speed of innovation
Transferability of experience
“Global” customers
“Global” pricing
“Global” competitors
Low entry barriers
High Scale Technology
Convergence of consumption
Transport
Cultural Differences
Customer proximity
Legal requirements
Pandemics
Different needs & consumer behavior
Customized products/services
Low economies of scale
Complex distribution
Transferability of experience
“Local” customers
High transport costs
Factors Against Globalization
Characteristics of Global Industries
Characteristics of Local Industries
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Going Global
Competitive
Battlefield
(Country by Country) Local
(World) Global
(Region) Regional
Global Firms
Domestic and Multinational Firms
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The Different Benefits of Going Global
Benefits
of Multimarket
Presence
Market opportunities
Resource opportunities
Risk spreading & diversification
The Multinational Advantage
Benefits of
Knowledge
Creation
and Transfer
Learn new knowledge
Use global operations to leverage
local capabilities and knowledge
Mix new capabilities and market
knowledge
The Metanational Advantage
Optimize competitiveness
By leveraging international
Resources
Assets
Competences
Leading to:
Differentiated advantages
Cost advantages
Speed advantages
Innovation advantages
Arbitrage
The Global Advantage
Benefits of Global Integration
and Coordination
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Customer Value
(CV)
PROFIT
Internal Costs
(C )
Supplies (S)
Costs
Volume (V)
Increase Size (V): Capture market opportunities
Increase Size: Benefit from Economies of Scale (C)
Access to resources and procurement (S)
Access to low-cost labor and infrastructure (C)
Get access to knowledge (CV and C)
Serve global customers (CV)
Reduce risks through geographical diversification
Price
The Economic Benefits of Going Global
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HIGH
GLOBAL
FORCES
LOW
LOW
HIGH
LOCAL FORCES
Different industries have different
competitive requirements
Civil Aircraft
Microprocessors
Bulk Chemicals
Catering
Automobiles
Telecommunication
Equipment
Food
Retail
Paint
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WITHIN INDUSTRIES DIFFERENT SEGMENTS HAVE
DIFFERENT COMPETITIVE REQUIREMENTS
HIGH
GLOBAL
FORCES
LOW
LOW
HIGH
LOCAL FORCES
AUTOMOTIVE
AIRCRAFT
MARINE
CAR REPAIR
INDUSTRIAL
DO-IT-YOURSELF
PAINTS
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