Implementing Global Strategy By Aggregation part 1

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IMPLEMENTING GLOBAL STRATEGY BY AGGREGATION EXAMPLES – Part. 1/2 Sameer Mathur, Ph.D.

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Agenda

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Sameer Mathur smathur.com Asst. Professor (Marketing) 2009 – 2013 Ph.D. and M.S. (Marketing) 2003 – 2009

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Bombardier Building Airplanes via Aggregation Regional Focus Regional Hub Regional Network Regional Mandate

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AEROSPACE 3 rd largest airplane manufacturer in the world. Headquarter in Dorval, Quebec, Canada. Aircrafts include business jets, commercial jets and turboprops. Bombardier Inc.

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RAIL TRANSPORTATION INDUSTRY One of the world ’ s largest company in the rail-equipment industry. Headquarter in Berlin, Germany 59 manufacturing locations around the world. 34,900 employees (25,400 in Europe ). Passenger rail vehicles, locomotives, bogies, propulsions, and controls. Bombardier Inc.

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Bombardier ’ s aerospace assembly plant in Quebec. Assembly line at a Bombardier manufacturing plant in Toronto Regional Focus - Canada

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Locations of Bombardier ’ s rail-equipment manufactures Bombardier Transportation

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Regional Networks

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Regional Mandates

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German airline Lufthansa American firm Skyjet German multinational automotive corporation Economies of Scale through Key Acquisitions and Partnerships

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Bombardier is continuing its strategy of regionalization by establishing a Bombardier Commercial sales and marketing office in Dallas, Texas through one of its US subsidiaries. To serve the United States and the growth markets in Latin America. Allows for a closer focus on customers. Bombardier’s Regionalization

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“The opening of new sales and marketing offices is part of our ongoing regionalization strategy to expand our presence globally, as we progress with our game-changing CSeries family of aircraft.” - Chet Fuller, Senior Vice President, Commercial, Bombardier Commercial Aircraft Bombardier’s Regionalization

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Bombardier envisions that there many prospective customers in Latin America as the growth of the middle class there drives the markets. The customers can be effectively targeted from the newly opened sales and marketing office in Dallas, Texas. Regional Hub

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Blue star indicates the new Dallas office Red stars indicate existing offices Bombardier’s Regional Hubs

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The opening of Bombardier’s Munich office in 2009, along with the recent opening of their Dallas office positions them better in their traditional markets where they already have a strong presence with their Dash 8/Q-Series and CRJ families of regional aircraft. Regional Hub

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Summary: Bombardier Building Airplanes via Aggregation Regional Focus Regional Hub Regional Network Regional Mandate

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Wal-Mart Aggregation at the Back-End

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Firms rely on the ALIKENESS of countries as opposed to fully adapting to their dissimilarities. NO COMPLETE STANDARDIZATION. Competitive advantage through ECONOMIES OF SCALE and SCOPE. Aggregation and Globalization

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- Ongoing success because of the LARGE ECONOMIES OF SCALE. - Has tremendous BARGAINING POWER over its suppliers. - Obtains and sells its products at VERY LOW PRICES. Over 4,000 STORES worldwide and INEXPENSIVE DISTRIBUTION. Wal-Mart’s Success

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- Front end of the stores are DIFFERENT - Back end of the stores are ALWAYS IDENTICAL , ensuring no inefficiencies. Most of the customers overseas are not even aware that they are shopping at Wal-Mart! Wal-Mart’s Success

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Japan Costa Rica Honduras Brazil United Kingdom Did you know these were Wal-Mart’s Stores?

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Coca-Cola Extending its Regional Portfolio via Expansion into Burma

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Coca Cola strives to expand beyond its regional focus in the United States. Its ultimate goal is to achieve worldwide economies of scale. Aggregation

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July 2012: Announced presence in Burma Burma recently lifted suspension on Western sanctions – Coca-Cola took this opportunity to expand to a new geographical region. Geographic Aggregation

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Coca-Cola can be seen as a symbol of the economic and political reforms. Coca-Cola was sold illegally through an underground market in Burma for the past 60 years. It’s legal presence will bring in tax revenues to the government. Administrative Aggregation

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Coca Cola is now available all over SouthEast Asia. Only two countries exist without Coca Cola (North Korea and Cuba). Regional Portfolio

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Coca-Cola has demonstrated how to successfully implement aggregation. Its regional portfolio expands all across the globe. They can achieve economies of scale in a wide variety of ways. Extending its Regional Portfolio via Expansion into Burma

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Vodafone Regional Focus

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A British company created in 1982. E xpanded on a global scale in 1999 to locations such as Europe, the Middle East, Africa , Asia Pacific, and the United States. Introduction

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Aggregation component is stressed by using a common feature throughout various countries to create economies of scale . The GSM system used in all countries with exception to Japan and the Americas . “Bigger is Better”

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Vodaphone started of with one production site in the United Kingdom . Company was regionally focused . Aggregation: Home Focus

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Vodafone started operating on a more global scale through acquisitions, mergers and agreements . 1992: first international GSM roaming agreement signed with Telecom Finland . Aggregation: Regional Portfolio

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Willing to make regions less dependent on UK. Example : The introduction of National Account Managers ( responsible for regional expertise) allows the company to get closer to consumers through its regional hubs. Aggregation: Regional Hubs

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Limited economies of scales in the A merican and Japanese market because they use the CDMA system. Administrative distance. CAGE Framework

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Chanel No. 5 Luxury Perfume

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Unchanged since 1921

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Consistent Global Image

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Luxury in Emerging Markets

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Consistent Global Packaging

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Formula hasn’t changed since 1921

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Made in France and the USA

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Summary

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Recommended Reading

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Over 500,000 views from more than 95 countries http://www.slideshare.net/ProfessorMathur/ Sameer Mathur smathur.com http://www.facebook.com/ProfessorSameerMathur/

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