Tag Archive for 'Globalisation'

The Bangalore Paradox

Published
by
ron
on May 4, 2005
in Emerging Markets and Global Strategy
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The city at the heart of India’s booming information-technology industry is already choking on its own success; but the boom has barely begun. Moreover, Bangalore may be on the verge of overtaking Silicon Valley as the biggest IT employment region in the world on the back of the rise in offshore outsourcing, according to some estimates.

The high-tech Indian city, which is home to major Indian IT outsourcers, including Infosys, Tata Consultancy Services and Wipro Technologies, as well as many Western IT companies, now employs 160,000 people in the technology sector. IT accounts for 100,000 of these jobs, with the rest in business process outsourcing and call centers.

MK Shankaralinge Gowda, secretary of IT and biotechnology for the state government of Karnataka, said that the number of tech workers in the region will exceed 200,000 between 2004 and 2005, as IT and business process outsourcing companies continue to rapidly hire workers.

Gowda claims that Bangalore has already overtaken Silicon Valley, but the latest figures from California’s state government Employment Development Department (EDD) estimate the number of technology workers in Santa Clara County, which is the heart of Silicon Valley, at 175,100 as of June.

However, Silicon Valley is not in danger of losing its stature as a tech leader, and it can benefit from competition overseas, said Sam Haddad, chairman of the Silicon Valley Engineering Hall of Fame and a consulting professor at Stanford University. Haddad said the region is seeing new growth in areas such as nanotechnology. “Silicon Valley is already beginning to reinvent itself,” Haddad said. “I am very optimistic.”

More insight can be found on this webpage.

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IBM’s Transition Goes Beyond Blue

Published
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ron
on April 14, 2005
in Global Strategy
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IBM Logo

“In the past, IBM defended the mainframe against client-server computing and PCs,” Palmisano says (Chief Executive Samuel J. Palmisano). “We’re not defending the past anymore.” No, IBM is off and running into a new world of business, beyond computers.

This sounds like IBM is changing its definition from international business machines to international business models.

The world of computing that IBM long ruled is increasingly becoming a commodity business. Ruthlessly efficient Dell Inc. fresh from its conquest of the PC market is climbing up in servers and even tech services. “The big question is: Will services go the same way hardware has? We think it will,” says Steve Meyer, a vice-president in Dell’s services unit.

IBM, with its legions of PhDs and closets full of patents, is not built to duke it out with the likes of Dell. Palmisano’s strategy promises a neat escape. Instead of battling in cutthroat markets, he takes advantage of all the low-cost technology by packaging it, augmenting it with sophisticated hardware and software, and selling it to customers in a slew of what he calls business transformation services. That way IBM rides atop the commodity wave - and avoids drowning in it.

Therefore, IBM is putting to use the immense resources it has in-house, from its software programmers to its 3,300 research scientists, to help companies like P&G rethink, remake, and even run their businesses - everything from accounting and customer service to human resources and procurement. “We’re giving our clients a transformational lift,” says Palmisano. He expects that within 10 years IBM could build an annual revenue stream of as much as $50 billion in business consulting and outsourcing services. If so, Palmisano will have created a second services miracle and hitched IBM to a crucial growth market. And in the process, his company will be fixing - or running - big chunks of the world’s business.

In its pursuit of vital industry experience, IBM - much like an eager college intern - is sometimes willing to work for free. IBM’s unpaid partnership with the Mayo Clinic dates back to a cocktail party in 2000 in Mayo’s hometown of Rochester, Minn., where IBM has a computer factory. A Mayo employee and an IBMer realised that scientists at both companies were working on genomics research. This soon led to joint projects on gene profiling of leukaemia cells, and a published paper in a scientific journal in 2003. This is not the kind of connection that Dell, Accenture, or Wipro is likely to make. “This is the way to transform the way we practice medicine,” says Dr. Nina M. Schwenk, chairperson of Mayo’s Information Technology Committee. And for IBM, it’s a foot in the door of the $1.4 trillion health-care business.

In addition to its four original businesses — accounting, HR, customer service, and procurement - it is now ploughing into six others. They include after-sales service for consumer electronics, insurance-claims processing, and supply-chain optimisation. The old IBM would have studied for many months before deciding whether to enter these new businesses. This time, it has set up small SWAT teams to work with a handful of initial clients and launch businesses.

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South Korea’s Consumer Power

Published
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ron
on April 8, 2005
in Emerging Markets and Global Strategy
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South Korea Consumer Power


South Korea is one of the most wired countries in the world. That is why Meg Whitman, the chief executive of eBay, the biggest online auctioneer, sees the country as a “window into the possibilities” of what might happen when high-speed broadband services are widely adopted in other places too.

Saturday morning in Myeong-dong, and the huge shopping district in the centre of Seoul, South Korea’s capital, prepares for a long day and night. As the hawkers move in with their barrows, a man selling fried squid sets up his stall next to a woman displaying shawls with Louis Vuitton logos. Real or fake, just about every fashion brand in the world can be bought here, if not from the hawkers, then certainly from the hundreds of stores, shopping malls or the massive Lotte department store. A solitary preacher stands outside a Starbucks singing hymns, as if to steer the swelling crowds away from the path of Mammon. Eventually he packs up and leaves, drowned out by the music blasting from the sound systems of trendy boutiques. This is consumerism at its most strident. So where is the internet?

It is all around. Start with shops, many of which display signs showing their website address. Then watch the shoppers, especially the younger ones. They have acquired new skills: walking through a crowd while studying the screen on their mobile phone, or examining a rail of clothes while using their thumb to text a friend. Some will also be checking their bank accounts, getting sports news, keeping track of an online computer game, or downloading a new ring tone or avatar-a cartoon-like character that will appear as their digital representative on mobile phone screens and in online games. Plenty will also be listening to music downloaded from the internet.

They are what marketing people call generation Y, a group born between 1980 and 1994. They have already turned some clothing, drinks and electronics brands into winners and losers. They have grown up with more choice than any other generation. They are busy and know how to shop around, both online and offline.

More than any other group, the 18- to 34- year-olds access the internet from places other than home, school or work, especially if they are using a mobile phone. They seem to want to be connected wherever they go. They also see the internet as one of their most important sources of information and entertainment.

So the group to watch closely is the younger generation. Young people are the most avid users of the internet because they have grown up with its benefits. For this age group, the internet will remain the most dominant medium in their lives, as it will be for the following generation - who even at primary school are using the web to do their homework.

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Market Outlook: Detroit’s Car Suppliers

Published
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ron
on April 7, 2005
in Global Strategy and International Business
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Automotive
America is the world’ s biggest market for cars and General Motors (GM) is the world’s biggest car manufacturer. In a few years, Toyota’s relentless growth is likely to render this statement only half true.

After several recent pieces of bad news and a share price languishing at a ten-year low, GM has revealed how it intends to keep itself at the top, at least for the moment. On Monday April 4th, Rick Wagoner, the firm’s chairman and chief executive, said that he would assume direct responsibility for GM’s North American operations in an attempt to reverse the company’s decline. But it is unlikely that GM and Detroit’s two other car making giants, Ford and Chrysler (the Detroit-based arm of DaimlerChrysler), will be able to keep Toyota and the rest of Japan’s high-revving carmakers at bay for long.

Is there anything US car suppliers haven’t tried to counteract the enormous purchasing power of the handful of car manufacturer that make up their customer base? As the suppliers’s profit margins have been squeezed again and again, they have responded with an array of strategic initiatives, including diversifying their customer base, going global, positioning themselves further upstream in the value chain, and actively helping to design components in hopes of capturing more value than they could by simply bending metal. In the 1990s, the industry also went through an M&A wave that many hoped would deliver the heft needed to push back against the car manufacturers.

Currently, facts speak for themselves, dwindling market share in the face of fierce competition from Japan has forced General Motors to shake up its management. Ford faces similar problems. DaimlerChrysler’s American arm is taking advantage of their misfortune but may be held back by problems at the group’s European operations. Detroit has bounced back before. Can it do so again?

The winning car suppliers of the future won’t try to fight size with size to gain an advantage against their big customers’s purchasing power. Only a restructuring that focuses on excellent processes as well as excellent products will provide the precision-targeted leverage suppliers need to fight back effectively and to preserve the long-term health of their industry.

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Dell: Time for a New Model?

Published
by
ron
on April 6, 2005
in Global Strategy
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Dell Logo


Its direct-sales strategy has been a winner so far. However, in today’s global market, that approach may need some adjusting.

For years, that direct, low-cost sales model worked perfectly. It allowed Dell to make high margins while selling computer gear for less than its rivals. As a result, it now holds a leading 17.9% share of the world PC market and has grown much faster than competitors Hewlett-Packard and IBM. But lately, this same sales approach might be hampering Dell’s growth.

Increasingly, industry analysts believe it’s time for Dell to tweak its sales model. After all, times have changed. And to keep growing Dell may need to change, too, and not just in appearance - last summer Kevin Rollins took the CEO reins from Michael Dell.

More on this topic check this webpage.

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The 21st-Century Supply Chain

Published
by
ron
on March 29, 2005
in Global Strategy and International Business
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21st Century Supply Chain

Building Deep Supplier Relationships
Two Japanese automakers have had stunning success building relationships with North American suppliers - often the same companies that have contentious dealings with Detroit’s Big Three. What are Toyota and Honda doing right?

The Supplier-Partnering Hierarchy

Conduct joint improvement activities.

  • Exchange best practices with suppliers.
  • Initiate kaizen projects at suppliers’ facilities.
  • Set up supplier study groups

Share information intensively but selectively.

  • Set specific times, places, and agendas for meetings.
  • Use rigid formats for sharing information.
  • Insist on accurate data collection.
  • Share information in a structutred fashion.

Develop suppliers’ technical capabilities.

  • Build suppliers’ problem-solving skills.
  • Develop a common lexicon.
  • Hone core suppliers’ innovation capabilities.

Supervise your suppliers.

  • Send monthly report cards to core suppliers.
  • Provide immediate and constant feedback.
  • Get senior managers involved in solving problems.

Turn supplier rivalry into opportunity.

  • Source each component from two or three vendors.
  • Create compatible production philosophies and systems.
  • Set up joint ventures with existing suppliers to transfer knowledge and maintain control.

Understand how your suppliers work.

  • Learn about suppliers’ business.
  • Go see how suppliers work.
  • Respect suppliers’ capabilities.
  • Commit to coprosperity.

21st Century Supply Chain 1

21st Century Supply Chain

21st Century Supply Chain

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Onshoring (Bay Area, California)

Published
by
ron
on March 25, 2005
in High Tech & Media
. 0 Comments

Onshoring
According to conducted research by McKinsey, a consultancy, the decision to offshore is hardly clear cut.

Roughly two-thirds of California’s 1.5 million manufacturing jobs are in customer-service-intensive and capital-intensive industries such as electronics, fashion apparel, and plastics, where the benefits of a short, responsive local supply chain can outweigh higher domestic wages. The advantages of staying onshore are greatest for a company with products that are not labour intensive, have short life cycles and high obsolescence costs, and target very time-sensitive customers.

Source

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China’s Telcos are catching up!

Published
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ron
on March 9, 2005
in Emerging Markets
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China Telco
My recent readings and thinkings are regarding the Hi-Tech and Telecommunication industries. Meanwhile a China’s leading telecoms-equipment manufacturer named Huawei is agressively pushing into international markets. In December, Huawei won an estimated $100m contract to build a third-generation (3G) wireless network for Telfort, a Dutch operator that has always used gear from Ericsson, the world’s largest telecoms-equipment firm. In January, Huawei won a $187m order for another 3G network, in Thailand, beating Ericsson and Motorola with a bid 46% below the operator’s original estimate.

Last week came evidence that Huawei can compete on more than just price. A report based on a survey of over 100 telecoms operators worldwide, carried out by Heavy Reading, a market-research firm, found that Huawei ranked eighth among wireline-equipment suppliers, up from 18th last year. (Cisco came top.) Most strikingly, Huawei ranked fourth in service and support. The report calls Huawei’s ascendancy “astounding” and says it has already surpassed several incumbent vendors in perceived market leadership.

I foresee great challenges and opportunities in this industry as we entering the “21st Century Network”. It will be an upbeaten “fight” which company can set the pace of technological innovation and which suppliers can follow. Moreover, some Chinese’s companies are pursuing to compete on quality rather then price, like Huawei and Haier, and in a broader range of industries as initially.

I’m particulary interested in how the developed-world rivals, meanwhile, are responding to the threat from Huawei and others. Finally, the outlook looks promising to keep watching closely.

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Europe United!

Published
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ron
on January 30, 2005
in Personal
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Europe United


Brussels is full of monuments to the “builders of Europe”. There is the Schuman district, the Monnet circle, the Spinelli building. It may now be time for a Stelios Square or a Boulevard O’Leary. For in recent years, Stelios Haji-Ioannou and Michael O’Leary, the two pioneers of Europe’s low-cost airlines, have done more to integrate Europe than any numbers of diplomats and ministers. They have helped to create a new generation for whom travelling to another European country is no longer exotic or expensive, but utterly commonplace.

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Globalcorp

Published
by
ron
on January 14, 2005
in Global Strategy and International Business
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GlobalCorp

Today I was reading the following appealing article which I like to share with you! Perhaps you can give me your thoughts on this article by posting a comment!

The most competitive companies will bring together the best talents around the world and link them virtually with each other.

The forces of globalisation are reshaping our world, with ever-growing economic integration as well as increasing movement of people and knowledge across borders. Global trade accounts for around 30% of world GDPâ??four times its share in the early 1970s. Developing countries are an important part of this story. Their stock of inward foreign direct investment (FDI) totals 30% of their GDP, compared with 13% in 1980. Globally competitive transnational corporations have begun to emerge from China, India and Latin America. Haier (China), Tata Motors (India), Acer (Taiwan), Petrobras (Brazil), Cemex (Mexico) and the IT-services companies of India are examples. Thanks to them, the outward stock of FDI from developing countries has increased from 3% of GDP in 1980 to 10% today.

Globalisation and the information revolution have raised customer expectations. To satisfy them, companies will need to source capital where it is cheapest, produce where it is most cost-effective and sell where it is most profitable, without being constrained by national boundaries. This is the essence of globalisation. It leverages each nationâ??s competitive advantage to produce goods and services more efficiently. The development of a product or service might typically be split among countries, with experts in America defining the customer requirements; the British defining the product attributes; the Australians defining the technology architecture; the Indians doing the software development; the Germans or the Japanese doing the manufacturing; and the Taiwanese doing the packaging. This new business model will distribute high-quality jobs around the world and deepen international collaboration.

We have already seen the emergence of such a model in the IT-services industry in India, leveraging talent and infrastructure in different parts of the world. Development tasks are distributed across various locations. The work that can be done in value-for-money, talent-rich places such as India is maximised. At the same time, the effort required at the client site is minimised.

However, before this model becomes viable for all international trade, some significant challenges must be faced. Working among teams spread across various locations requires a process-driven approach and standardisation in key areas. Cross-cultural issues have to be handled well. Robust structures are needed to ensure that risks are tracked. Speed and responsiveness to business needs are essential, to allow continuous innovation. And effective knowledge management is at the core of an efficient collaboration.

For companies, the order of the day will be to look for talent wherever it is available and create international relay teams. These virtual teams will work in unison, for faster development and delivery. Harnessing such intellectual power will accelerate growth.

The companies that can overcome these challenges will delight their customers with the speed of their response and the value of their product or service. These firms will successfully blend the creativity of an Italian with the professionalism of an American and the focus of an Indian just to name a few nationalities. They can emerge from anywhere in the world, and they will be the true global contenders of 2005.

Source: Economist

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