IB Global Landscape (PDF)

Sept. 10, 2024 IB the world economy The 4th industrial revolution The shift in global competition landscape  What is unique about IB?  Global Scope of Competition  Country Differences in Political Economy  National Differences in Culture  Res...

Sept. 10, 2024 IB the world economy The 4th industrial revolution The shift in global competition landscape  What is unique about IB?  Global Scope of Competition  Country Differences in Political Economy  National Differences in Culture  Resource Variations across Countries  Different Currencies  Competing in a Global Marketplace  The 4th th Industrial Revolution @ Video Discussion Questions What is meant by the 4th industrial revolution or industry 4.0? What are the implications of the 4th industrial revolution for global competition?  Railr Asse Inter Chat oads mbly net GPT, Mechanization Mass Internet DigitalGPU revolution production revolution Industrial Revolution Period  Knowledge Economy What does 4th industrial revolution mean to IB? The Shift in Global Competition Landscape ① Knowledge-based economies ② Disruptive innovation ③ Globalization paradox  Knowledge-based economies VALUE CURVE Resources 21 21stst Century Century Tangible resources (labor and Value Knowledge- Knowledge- capital etc.) based based economies economies Intangible resources (technology, premium brand, corporate culture and system, customized service etc.) Sources of Competitive Advantage 20 20thth Century Century Capital, scale economies, labor Industrial Industrial revolution revolution costs in the 20th Century period period Value Upstream and downstream Chain* activities of the value chain in R&D, Design, Manufacturing Marketing / Service New Materials, (assembly) (solutions) the 21st Century Software, Contents Upstream activities Downstream activities *Value Chain is a chain of value-adding activities that firms conduct to deliver products or services to end The birth of knowledge economy Slicing the Apple iPad’s Value ($275) iPads are assembled in Chinese factories owned by Foxconn, a Taiwanese firm, largely from parts produced outside China. Apple’s profit amounts to about 30% of the sales price. Product design, software development (i.e. upstream activities) and marketing (i.e. downstream activities) are done by Apple. Chinese wages paid to workers for assembling the product 2%  Global Largest Companies (ranked by market capitalization) 1980 1990 2000 2010 2020 2024 (today) Saudi NTT GE Petro Apple IBM Aramco 1 (US) (Japan) (US) China (US) (Saudi Telecommu Industrial (China) Information IT Services nication Arabia) Machinery Petroleum Technology Petroleum Apple Industrial Microsoft AT&T ExxonMo ExxonMo (US) Bank of (US) 2 (US) bil bil Informatio Japan Software & Telecommu (US) (US) n nication (Japan) Infrastruct Petroleum Petroleum Technolog Banking ure y Microsoft Microsoft Microsoft ExxonMo Sumitom (US) (US) (US) Nvidia 3 bil o Bank Software Software Software (US) (US) (Japan) & & & Semicondu Petroleum Banking Infrastruct Infrastruct Infrastruct ctors ure ure ure Industrial Google Pfizer Amazon Amoco Fuji Bank Bank of (US) 4 (US) (US) (US) (Japan) China Internet Pharmace Internet  Disruptive innovation Business/Product/Technology Life Longer Cycle in the 20th Century Cycle Under the 20th Century Competitive Environment Economies of Scale Capital investment/cost Economies of Scale advantage Uncertainty in the 21st century Changes in Consumer Preferences, Technology, Time Government Regulation and Policy etc. Business/Product/Technology Life Cycle Under the 21st Century Competitive Shortened Business Life Cycle Environment Disruptive to existing product, technology, and business model Disruptive Innovation Disruptive Innovation Winner-Take-It-All Economy Time Global first and best  Globalization paradox Globalization forces Global scale and efficiency Conflicting Challenges in Global Competition  Globalization Globalization Globalization Paradox* * The quality (i.e. organizational Nationalism Nationalism competence and strategy) that globalization requires is totally different from what nationalism National sovereignty (therefore, local responsiveness) does. Country differences Global vs. National Interests: In an age of globalization and increasing and greater nationalism at the same time (and at a time when American hegemony is being challenged by China), tension and conflict, within and across nations, are more possible (The Economist, 2020).  Globalization vs. Country Differences Despite all the talk about the emerging global village, and despite the trend toward globalization, - significant country differences remain in cultures, political systems, economic systems, legal systems, and levels of economic development. - Many of these differences are very profound and enduring. In today’s global business environment, competitive conditions are so intense that to survive, firms must do all they can to respond to pressures for globalization and country differences simultaneously. The fundamental issue in International Business is how to manage between globalization forces and country differences.