Case: Go Global or Not?
Why do firms need global strategy?
The domain for global strategy should be in a blend of home country strategy and altering for uniqueness of each strategy
Data clear is faced with competition and is forced to go global or not. Need to know the pros and cons / it’s a commitment to go internationally and they may of not been ready for it .
Dataclear is a Telecom and Finance Company. (CEO) Grey, (VP) David Lester. Revenue is 2.2 million 1999, 5.3 million 2000. Thinking of expansion into chemicals and pharmaceuticals Main issue/Trade off
Focus strategy vs. a competitive threat (globally)
What drives the need for globalization in the Software industry?
Cheaper production abroad, globalization would be a high up front cost but a low variable cost
What makes globalization difficult in the Software Industry?
DataClears market opportunities
Domestic: $900 million US pharmaceutical and chemical and $600 million in financial and telecom. Total of a $1.5 billion market
International: Totals $1.26 Billion market
Pros and Cons of going global
Pros: oversea talent, world domination, brand recognition, might not be too hard because customers were doing it themselves
Cons: Don’t have a clue how, reactionary, lack of global experience, need to focus on there own situation, is VisiDat really like the other company
Key Concepts from Case
Growth is not always best. Focus may be better
Don’t act on impulse, do better analysis first
The value of “good” advice
Value Chain: set of activities undertaken to deliver a product or service Wine ex; grape growing>wine making> distribution>marketing>retail
Five Forces framework
Case: OW vs. NW Why do Industries differ in their average probability? (answers based on industries and the firms within them)
1) intra-industry rivalry: among firms already in the industry
2) threat of entry: by firms new to the industry (or even another industry)
3) supplier power
4) buyer power: often individual consumers but could be firms
5) threat of substitutes: products from outside the industry
Summary Even agriculture-based economies can change dramatically. The old world had regulation, tight traditions, and focused on the wine making process. The new world was experimental, loosely regulated and controlled the entire value chain resulting in higher profits.
Examined Wine Industry using Value Chain and Five Forces Framework and did an Industry level analysis – industry structure is not static. This may change through actions of firms in the industry or new entrants. Change in industry structure may render previously good strategies ineffective. Competitors (not just how many, but who they are) matter a lot!
Who are the OW & NW producers? OW: France, Italy, Spain NW: Australia, Chili, Argentina, U.S
Timeline of events: OW European producers and NW brought threats and innovation, today there is a global competitive wine industry
French (old world) Dominance Comparative advantages: reputation, large population, wine making skills, tradition, “tarrior” soil, climate Competitive advantages: AOC classification, pasteurization, cork, trading infrastructure, negociants- tolls and takes
NW developments and their benefits
Grape growing: Resistant wines, irrigation, trollies, mechanical harvesting, larger fields, OAC regulations prohibited some of these new techniques they weren’t bound by, quality control starting with grapes, cheap labor, climate, night harvesting
Wine-Making: reverse osmosis, computerized tanks, freedom to produce different wines, uninhibited by AOC, responsive to consumers, younger generations, less steak in traditional ways
Marketing: wine in a box, screw caps, big food companies left a legacy in the failure, “trendy”, named wines