Structure of This Book
This book is a summary of theoretical ideas and case studies for corporations in developed countries, including Japan, for designing strategies to maximize opportunities and minimize threats in business expansion into demerging countries. The case studies featured here focus on Asia, including China and India, and use examples of Japanese manufacturers. The examples from China and India are used because of their geographical proximity to Japan and the importance of these two countries in the twenty first century as economic powerhouses in the world economy. However, the theories on global business strategy within this book are, of course, useful when considering business in other developing areas such as Russia, Eastern Europe, or Central and South America.
Japanese companies were used as a starting point to acknowledge how Japanese global corporations, which had conquered the global high-tech product market, should meet the challenges of a new era in developing countries. As stated previously, we have stretched the limits of a product model in which “high-quality products sell,” with one solution to this problem being strategic concepts based on service models (i.e., a customer value model). Accordingly, this book contemplates manufacturers in developed countries with relatively high levels of technology. Our main objective is to provide suggestions about requisite technological capability and technology management strategy to respond to the expansion of new markets and the rise of companies in developing countries.
This book deals with macro issues when considering global strategies at a company-wide level. Thus, more practical issues such as the optimum solution to labor issues in China and India or transfer pricing for ROI in local markets are not covered here. However, important issues that develop when pursuing global business are touched upon as much as possible within the case studies to provide a “boots-on-the-ground” perspective.
This book is divided into two sections: the first half deals with global business strategy and the second discusses the fundamentals of strategic planning. Chapter 2 provides an overview of corporate strategy theories and proposes a framework to deepen the understanding of global strategy that acknowledges national barriers. Chapter 3 gives an overview of world economic environment and its long term transition. It is shown that developed country centered world in 1990s becomes to be a divided world between developed and developing economies in 2030. Chapter 4 focuses on the contrasting examples of China and India and examines the strategies that reflect the differing institutional characteristics and business environments in these two countries. Chapter 5 discusses global strategies in developing countries and provides an operating model that specifically contemplates competition from developing countries. Furthermore, it explains the strategic planning process through the use of the overseas expansion of infrastructure operations as a case study for the shift from a single product model to a customer value model and of a multifaceted service business, as discussed earlier. Further, Chap. 6 provides a deeper understanding of operating strategy design by using India's Neemrana Industrial Park as a case study of a manufacturing operation with a complex customer value model.
The second half of the book presents some important components to create corporate wide global business strategy, such as strategic alliance, marketing, and technology management theory. Each of these is covered by both theory and case study. Chapters 7 and 8 cover strategic alliance. The theory contained in Chap. 7 begins with the issue of whether to create a wholly owned local subsidiary or partner with a local company, and then discusses management of strategic alliances and public– private partnerships (PPPs) for infrastructure businesses. These are examples of alliances with governments of destination countries. Chapter 8 uses Hitachi Construction Machinery (China) Co., Ltd. as a company case study, which made its entry into the market through joint ventures with local companies, but subsequently changed its organization to a wholly owned subsidiary. Next, Chaps. 9 and 10 discuss marketing strategy, with the theoretical part in Chap. 9 explaining standard marketing theory for customer segmentation and targeting before delving into marketing for “goodenough” product markets that are particularly important in developing countries. We also discuss the bottom of the pyramid (BOP) business that targets the poorest classes. The case study discussed in Chap. 10 examines Shiseido's marketing activities in China. Chapters 11, 12, 13 and 14 discuss the theory of technology management strategy within global businesses. The theory discussed in Chap. 11 examines the globalization of R&D and the management of overseas subsidiaries, followed by a discussion of the characteristics of Japanese companies and their future state with regard to R&D management within developing countries. Chapter 12 picks up China and India, to see more details of multinationals' R&D activities in emerging economies. Chapter 13 discusses this further while examining the relationship between Thailand's National Science and Technology Development Agency (NSTDA) and Japanese companies in Thailand as examples of open innovation promotion in developing countries. Chapter 14 examines Suzuki, an exemplary success story among Japanese companies in India, as well as its operating strategy and its integrative local development.
The book concludes with the issue of integrating strategies that differ by country at a global level in Chap. 15. The ultimate goal of management strategy in a global company is to increase a company's overall long-term profitability while expanding internationally. Doing this requires the optimal setting of various parameters appropriate to a company's circumstances, stemming from factors including regional strategies that focus on certain countries or regions, level of headquarter control and the delegation of authority to local entities, and open strategies such as M&A and strategic alliances. In addition, there is no guarantee that strategies that were at one time optimal will continue to remain optimal because of competition or changes in market environment. The ability to optimally adjust strategies in response to changing circumstances is critical when creating and implementing strategies for everchanging developing countries. Furthermore, integrating overseas subsidiaries that operate under varying management environments require diverse managerial abilities; this is done to retain subsidiaries' strength in addition to guidance that encompasses the entire company. Because Japanese corporations tend toward standardized management led by headquarters, we discuss herein the hurdles that must be overcome, as well as the ways to overcome them, to become a truly global company.
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