AAA strategy
adaptation (see adaptation in AAA strategy)
aggregation (see aggregation in AAA strategy)
arbitrage (see arbitrage in AAA strategy)
characteristics of AAA strategies, 199
choosing a strategy example, 212–215
competitive map-use example, 213–215
differences and trade-offs across, 199–200
global generalizations, 218
global strategy for production (see global strategy using AAA)
organizational principles, 215–217
ABB (multinational), 163–167
Abbey National (U.K.), 99–100
adaptation in AAA strategy, 4
analyzing, 130–132
design lever, 124–127
externalization lever, 122–124
focus lever, 119–121
global generalizations, 137
industry example (see appliance industry)
innovation lever, 128–130
levers and sublevers overview, 115–116
limitations of, 136–137
variation lever, 117–119
ADDING Value scorecard
AAA strategy, 202
adaptation levers, in, 116
adding volume (growth), 83, 85
aggregation analysis using, 160–163
aggregation, global generalizations, 168
analyzing adaptation, 131
application summary, 84
arbitrage and (see arbitrage strategy)
characteristics of AAA strategies, 199
company example, 77–78
comparisons made in the analysis, 82
comprehensive look at value, 79–80
creativity and, 100–103
decreasing costs, 85–87
differentiating (willingness-to-pay), 87–89
fundamental equation of business strategy, 78–79
global generalizations, 103–104
improving industry attractiveness (bargaining power), 90–93
judgment and, 99–100
knowledge generation, 95–96
normalizing risk, 93–95
sustainability considerations, 97–99
unbundling value into its components, 80–81
value added by quantification, 81–82
adding volume (growth), 83, 85, 184–185
administrative/political attributes in CAGE distance framework
arbitrage strategy and, 175–176, 184
country level, 42–44
India versus China, U.S. perspective, 46–47
industry level, 51–53
aggregation in AAA strategy
along geographic dimensions, 157
along noncountry bases, 159
along nongeographic dimensions, 157–159
analyzing, 160–163
described, 139–140
global generalizations, 168
lessons learned by ABB, 165–167
managing, 163–167
regionalization and (see regionalization and aggregation)
Alamo, The (movie), 120
Alford, William, 42
Amazon, 125
AmorePacific (South Korea), 56, 59, 60, 95, 131
appliance industry
adaptation levers use, 113–115
competitive strategies, 113
cross-border differences, 110–113
globalization history, 108–109
industry context, 110–113
regionalization, 141–142
arbitrage in AAA strategy
analyzing with ADDING Value scorecard (see arbitrage strategy)
CAGE framework and, 174–179
described, 169
generic drug manufacturing example, 180–183
global generalizations, 196
importance of, 170–173
innovation use, 181–182
jackalope metaphor, 194–195
lack of attention to, 172–173
managing, 191–194
arbitrage strategy
adding volume (growth), 184–185
decreasing costs, 185–188
differentiating (willingness-to-pay), 188–189
generating knowledge, 190–191
improving industry attractiveness (bargaining power), 189
normalizing risk, 189–190
summary, 194
Arçelik (Turkey), 114, 119, 142
Arcelor-Mittal (Eastern Europe), 102
Arla (Danish), 89
auto industry, 91, 142–144, 147, 151, 153
Barnevik, Percy, 163–164
Bazerman, Max, 222
beauty care products, 56
Beccalli, Nani, 147
Benihana of Tokyo (U.S.), 174
Bharti Airtel (India), 101
Bosch-Siemens (Germany), 108, 113
Boston Consulting Group (BCG), 131, 187
Botín, Emilio, 100
Brandenburger, Adam, 78
BRIC (Brazil, Russia, India, China) economies, 221
Brunswick (U.S.), 121
Bumrungrad Hospital (Thailand), 173
Cable & Wireless (C&W) (U.K.), 177
CAGE distance framework
ADDING Value scorecard, 84, 89
adaptation strategy for major home appliance industry, 110–112
aggregation, 142
along geographic dimensions, 157
along nongeographic dimensions, 157–159
global generalizations, 168
applications (see CAGE distance framework, applications)
arbitrage in AAA strategy
administrative/political, 175–176
cultural, 174–175
economic, 178–179
geographic, 177–178
challenges faced by companies, 34–36
characteristics of profitable versus unprofitable countries for Wal-Mart, 35–36
components, 34
country level analysis (see country level analysis, CAGE distance framework)
developing strategic options, 228–229
disadvantages of multinational versus local companies, 57–58
effects of country similarities versus differences on bilateral trade, 38
global generalizations, 64
gravity models, 37–38
industry level analysis (see industry level analysis, CAGE distance framework)
magnitude of distance effects, 37–39
selecting markets for adaptation, 118
strategic alliances in variation, 122
CAGE distance framework, applications
discounting by distance, 60–63
making differences visible, 54–55
market comparisons, 59–60
natural owners versus foreign competitors, 58–59
understanding the liability of foreignness, 56–57
Cairncross, Frances, 14
Canadian-U.S. trade, 38
capital mobility, cross-border, 2. See also foreign direct investment (FDI)
Cemex (Mexico)
ADDING Value scorecard, 77–78
company status, 68
costs analysis, 71–72
cross-border expansion, 53, 68–69
economic aggregation, 158
knowledge transfer, 75, 95, 96, 127
knowledge transfer map, 76
margins analysis, 69–70
prices and leverage, 73–74
prices and willingness-to-pay, 72–73
product differentiations, 88
risk, 74–75
Centerman, Jorgen, 164–165
centralization and standardization
Coca-Cola under Goizueta, 20
Coca-Cola under Isdell, 23
companies’ bias towards, 27
Chelsea FC, 2
China
attractiveness to foreign investment, 59, 189, 197
attractiveness to pharmaceutical industry, 183
censorship laws, 15
copyright laws and, 42
goods sales to Wal-Mart, 170–171
India and (see India versus China, CAGE framework)
Yum! Brands’ analysis of, 62–63
Clash of Civilizations, The (Huntington), 16
Coca-Cola (U.S.)
adaptation repositioning lever and, 118
adaptation variation lever and, 117
background, 18
core belief in similarities across countries, 18–20
in Japan, 25
managing similarities and differences under Isdell, 22–24, 103
staying the course strategy by Ivester, 20–21
“Think Local, Act Local” under Daft, 21–22, 28–30
Cognizant (India)
AAA strategy, 216
adaptation focus lever and, 121
compound strategies use, 208
common language issues, 49–51
coordination, 150, 154, 155, 199
country level analysis, CAGE distance framework
administrative/political distance, 42–44
economic distance, 45
geographic distance and attributes, 44–45
India versus China, U.S. perspective, 45–49
overview, 41
country portfolio analysis (CPA), 60
creativity, 100
cross-border capital mobility, 2
cross-border differences, 4, 89, 110–113, 127–28
cross-border economic activity. See country level analysis, CAGE distance framework
cross-border labor mobility, 1–4
cross-border strategy, 4, 10, 108
Cuba, 58–59
cultural attributes in CAGE framework
adaptation strategy and cultural literacy, 134–135
arbitrage and, 174–175
industry level, 49–51
currency and CAGE distance framework, 43
Daft, Douglas, 21–22
Dahod, Ashraf, 179
DaimlerChrysler (Germany/U.S.), 86, 91
Death of Distance, The (Cairncross), 14
De Beers (South Africa), 102
decreasing costs, 85–87, 185–188
design lever in adaptation
flexibility, 124–125
modularity, 126–127
partitioning, 125–126
platforms, 126
Deutsch, Karl W., 220
Diageo (U.K.), 157
differentiating (willingness-to-pay), 87–89
Discovery Networks (U.S.), 120
Disney (U.S.), 127
Dormann, Jurgen, 165
Dr. Reddy’s (India), 182
D’Souza, Francisco, 208
Dubai Ports World, 43
Eckstein, Alexander, 220
economic attributes in CAGE framework
arbitrage and, 178–179
country level, 45
economic profits and, 83
industry level, 53–54
Coca-Cola under Goizueta, 19
Coca-Cola under Isdell, 23
companies’ bias toward, 26
tapping across borders (see aggregation in AAA strategy)
electricity industry, 52–53, 66–67
Electrolux (Sweden)
adaptation metrics lever and, 119
competitive strategies, 113
cross-border differences problems, 112
globalization history, 108
regionalization, 142
Eli Lilly (U.S.), 122–123, 182
Embarco (Brazil), 114
Embraer (Brazil), 179, 192, 203
End of History, The (Fukuyama), 16
Enron (U.S.), 176
Ericsson (Sweden), 127
European Union, 43
externalization lever in adaptation
franchising, 123
strategic alliances, 122–123
user adaptation and networking, 123–124
FC Barcelona, 2
focus lever in adaptation
geographic, 120–121
product, 119–120
segment, 121–122
vertical, 121
Fontaine, Jean de la, 17
Ford (U.S.), 153
foreign direct investment (FDI)
administrative/political issues and, 43
distance effects, 39
flows in relation to capital formation, 11
geographic distance and attributes and, 44–45
historic failures, 66–67
regionalization of cross-border activity, 140
France, 15
franchising, 123
Fukuyama, Francis, 16
Gadiesh, Orit, 28
GDA (U.K.), 114
GEN3 Partners (U.S.), 184–185
General Electric (U.S.)
AAA strategy, 216
globalization history, 108
health-care business, 209–211
regionalization, 147
use of externalization, 114
General Motors (U.S.), 147
generating knowledge, 95–96, 190–191
generic drug manufacturing industry, 180–183
geographic attributes in CAGE framework
arbitrage and, 177–178
country level, 44–45
industry level, 53
Ghadar, Fariborz, 26
globalization
AAA strategies use, 228–229
ADDING Value scorecard use, 229–230
beliefs diagnostic, 29
CAGE distance analysis and, 227–228
cautions about, 221–224
football metaphor, 3–5
forecasts about, 219–221
global operations performance review, 225, 226
industry and competitive analysis, 225–226, 227
internationalization slogans, 67
Levitt, Ted, 9
of production, 198–199
reasons to globalize, 66–68
recommended integration steps, 223–224
value creation through (see ADDING Value scorecard)
value through cross-border expansion example (see Cemex)
global strategy using AAA
compound strategies company examples, 205–208
globalization scorecard, 202
level 0: AAA awareness, 200–202
level 1: one A strategy, 200, 202–204
level 2: compound AA strategies, 200, 204–205
level 3: trifecta AAA strategies, 208–212
levers, 201
redefining global strategy using, 198–200
global value creation. See AAA strategy; ADDING Value scorecard
growth fever
Coca-Cola under Goizueta, 19
Coca-Cola under Isdell, 23
companies’ bias towards, 26
Häagen-Dazs (U.S.), 88
Haier (China)
competitive strategies, 113
cross-border adaptation, 112
globalization history, 108
use of focus, 114
Hee, Lee Kun, 136
Hendricks, John, 120
Hicks, Muse Tate & Furst, 2, 4
Hindustan Lever (India), 128
Holcim (Switzerland), 69
Hommen, Jan, 215
Huawei Technologies Co., Ltd. (China), 189
Huntington, Samuel, 16
Hurvitz, Eli, 180
IBM (U.S.)
AAA strategy, 216–217
arbitrage and, 189
compound strategies use, 205–206
ICFAI Business School (India), 101
IKEA (Sweden), 127
Immelt, Jeffrey, 148
improving industry attractiveness (bargaining power), 90–93, 189
Inbev (Belgium), 174
platform lever, 126
regionalization, 142
use of design, 115
use of focus, 114
India
attractiveness to foreign investment, 189
costs of Indian software personnel, 185–186
pharmaceutical industry, 181–183
India versus China, CAGE framework
administrative/political factors, 46–47
cultural factors, 45–46
economic factors, 47–48
further considerations, 48–49
geographic factors, 47
industry level analysis, CAGE distance framework
administrative sensitivity, 51–53
cultural sensitivity, 49–51
economic sensitivity, 53–54
geographic sensitivity, 53
overview, 50
innovation lever in adaptation
knowledge transfer, 128
localization, 128–129
recombination, 129
transformation, 129–130
internationalization. See semiglobalization
International Paint, 85
international telephony industry, 177
international trade
bilateral, 39
intra-regional, 141
multilateral, 39
North American Free Trade Agreement (NAFTA), 35, 38, 142
Organisation for Economic Co-operation and Development (OECD), 43, 185
Internet, 14–15
Ivester, Douglas, 20–21
jackalope metaphor, 194–195
Jinro (Korea), 118
Kelley, Devin, 174
KFC (U.S.), 128
Kindle, Fred, 165
knowledge transfer/generation
in ADDING Value scorecard, 95–96, 190–191
innovation lever in adaptation and, 128
by Whirlpool, 127
Kogut, Bruce, 26
labor mobility, cross-border, 1–4
Lasserre, Philippe, 150
legal/ethical issues, 92–93
Lewin, Arie, 194
Li & Fung (Hong Kong), 178, 190
Lincoln Electric (U.S.), 117–118
Lindahl, Goran, 164
Lindstrom, Martin, 117
Linux, 123–124
Luntz, Frank, 223
Mahadeva, Kumar, 208
major home appliance industry. See appliance industry
Marakon Associates, 225
McDonald’s (U.S.)
partitioning lever and, 125
strategy of adding volume, 83
transformation use, 129–130
medical diagnostic imaging industry, 209–211
MEGA Brands, Inc. (Canada), 171, 191
Menzer, John, 125
Mexico, 60–62
Mittal, Lakshmi, 102
Murdoch, Rupert, 55
Nathan, Krishan, 206
networking, 123–124
News Corporation (U.S.), 55, 97, 129, 175
New United Motor Manufacturing (NUMMI), 147
Nicholas Piramal (India), 181, 182
normalizing risk, 93–95, 189–190
Novartis (U.S.), 183
Ohmae, Kenichi, 148
Organisation for Economic Co-operation and Development (OECD), 185
out-licensing, 182
outsourcing, 160, 161, 191, 193, 211, 223
pharmaceutical industry, 180–183
Philips Medical Systems (PMS), 211, 212–215
Polanyi, Karl, 219
Porter, Michael, 78
Procter & Gamble (U.S.)
AAA strategy, 216
adaptation variation lever and, 117
compound strategies use, 206–207
industry concentration, 56
outsourcing strategy, 211
regionalization strategy, 162–163
R&D expenditures, 87–88
Ramadorai, S., 207
Rambler, 15
Raytheon (U.S.), 158
Real Madrid, 2
regionalization and aggregation
company example, 142–144, 161, 163
of cross-border activity, 140–142
potential diagnostic, 156
regional headquarters uses and limits, 150
regional hubs use, 148–151, 152
regional mandates, 153–154
regional networks, 154–155
regional or home focus strategy, 145–147
regional platforms use, 151, 153
regional portfolio strategy, 147–148
rescaling of regions, 157
risk, normalizing, 93–95, 189–190
Rodríguez Inciarte, Juan, 100
round-tripping, 176
Royal Philips Electronics (Netherlands), 132–133
Rugman, Alan, 141
Ryanair (U.K.), 102
Sachs, Jeffrey, 16
Samsung (Korea)
globalization history, 108
managing adaptation and, 136
regional focus, 146
Santander (Spain), 99–100
Scherer, Mike, 180
Schultz, Howard, 130
Scott, Lee, 34–35
segmentation, 89
semiglobalization
“10 percent presumption,” 11–13
AAA strategy (see AAA strategy)
barriers at borders and, 15–16
company example (see Coca-Cola)
described, 7
dimensions of biases in companies, 24–27
FDI flows in relation to capital formation, 11
football metaphor, 1–4
forecasts about, 220–221
global generalizations, 30
globalization apocalypse, 10–11, 13
globalization beliefs diagnostic, 29
policy openings and integration, 16–17
problems with “think global, act local,” 28–30
reasons companies have misguided strategies, 28
technological improvements and integration, 14–16
trends in integration, 13
Shiseido (Japan), 95–96
Siemens Medical Solutions (SMS), 211
Skinner, Jim, 83
Starbucks (U.S.), 130
Starent Networks (U.S.), 179
Star TV (Asia), 54–55, 97, 129
statelessness
Coca-Cola under Goizueta, 19
Coca-Cola under Isdell, 23
companies’ bias towards, 26–27
To Steal a Book Is an Elegant Offense (Alford), 42
stock markets, 67
strategic alliances, 100, 122–123
strategy development for globalization. See AAA strategy; ADDING Value scorecard
Stuart, Gus, 79
sustainability, 191
Takeda (Japan), 123
Tata Consultancy Services (TCS) (India)
AAA strategy, 216
aggregation analysis, 158, 160–162
arbitrage strategy, 192–193
compound strategies use, 207–208, 209
tax differentials for companies, 175
technology and globalization, 14–16
telephony industry, 177
Teva (Israel), 180
Torvalds, Linus, 124
Toyota (Japan), 142–144, 147, 150, 153, 154–155
trade agreements, 43
ubiquity
Coca-Cola under Goizueta, 19
Coca-Cola under Isdell, 23
companies’ bias toward, 27
Unilever (multinational)
adaptation variation lever and, 117
aggregation difficulties, 203
localization use, 128
U.S. government
gambling restrictions, 15
India and China from a U.S. perspective, 45–49
value creation. See AAA strategy; ADDING Value scorecard
Van Heck, Nick, 66
variation lever in adaptation
metrics, 119
policies, 117–118
products, 117
repositioning, 118
Verbeke, Alain, 141
Verdin, Paul, 66
vertical differentiation, 50–51
Votorantim (Brazil), 68–69
Wal-Mart (U.S.)
adaptation difficulties, 203
challenges from distance, 34–35, 39
characteristics of profitable versus unprofitable countries, 35–36
global sourcing effort, 170–171
under-adaptation, 107–108
Warner, Andrew, 16
Watanabe, Katsuaki, 155
Watkins, Michael, 222
Welch, Jack, 147
Whirlpool (U.S.)
adaptation metrics lever and, 119
corporate strategy, 85
expansion efforts, 110
globalization history, 108
knowledge transfer, 127
use of focus, 114
use of innovation, 115
Whitwam, David, 108–109
Woodruff, Robert, 18
World Cup, 2
World Economic Forum, 39
Yandex, 15
Yum! Brands (U.S.), 60–63, 123
Yunus, Mohammed, 223
Zara (Spain), 88, 102, 121, 146, 147
Zhang Yin, 173