Yip’s Globalization Drivers- R1

Yips Globalization Drivers

Academic Group 24 Abhineet Shweta

Nidhi Swayam

Rahul Vipin

Globalization Globalization refers to

the development of global or worldwide business activities, competition and  markets and the increasing global  interdependence of national  economies  Stonehouse et all. 2004 International integration in commodity, capital and labour  markets  Bordo et all. 2003, WTO World 3.0's remapping of the terrain suggests a better path forward. Specifically, a more realistic appraisal  of both globalization and regulation suggests a path to greater prosperity  that involves more market integration as well as limited and targeted market  regulation.  Ghemawat, World 3.0

Industry

Top 5 seller concentratio n

Entertainment

71%

Carbonated Soft Drinks

70%

Light Bulbs

68%

Computer Software

59%

Computer Hardware

59%

Aerospace/ Defense

55%

Automobiles

53%

Semiconductors

40%

Passenger Airlines

37%

Source : Ghemawat and Ghadar, 2006

Globalization Drivers : Yips Framework 

Developed by George Yip(1992) Helps analyze the degree of globalization in the industries The 4 main categories of drivers are :  Market Globalization Drivers  Cost Globalization Drivers  Government Globalization Drivers  Competitive Globalization Drivers

Low (Domestic)

High (Global)

Macroeconomic Environment

Technological Factor

& Framework 

Market Drivers

Cost Drivers

Economic &

Financial Factor

Potential for Globalizatio n

Competitive Drivers

Social & Demographic Factor

Government Drivers

Political & Legal Factor

Yips Framework : Market Drivers Customer Needs Similarities/ Differences Culture Economic Development

Physical Environment Climate

Customers & Channels Global Suppliers Global Distributers

Marketing Names Advertising

Lead Countries Product Innovations

Market

Drivers : Explained 

Driver

Parameter

Pressure for globalization

Pressure for localization

MARKET

Customers

Global customers

Local customers

Channels

Global channels

Local channels

Marketing

Transferable marketing

Differentiated Marketing

Countries

Lead countries

No obvious lead countries

Yips Framework : Cost Drivers Economies of Scale/Scope

National market size (Scale) Common distribution outlets (Scope) Group of goods packaged together Experience Curve

Learning Curve

Sourcing Names Advertising

Logistics Transportation Costs

Country Costs, Productivity & Skills Product Life Cycles & Product Development Costs

Cost Drivers : Explained  Driver

Parameter

Pressure for globalization

Pressure for localization

COST

Economies of

High fi xed costs

Low fixed costs

Steep learning curve

Shallow learning curve

Sourcing

Low transportation costs & perishable products, no need to locate near customers

High transportation costs & perishable products, need to locate near customers

Logistics

Differences in cost

Similarities in cost

Product development costs

High

Low

Technological change

Rapid

Slow

Experience

scale

curve

Yips Framework : Government Drivers Trade Policies Liberalization Trade barriers

Technical Standards Commonality between countries

Marketing Regulations Advertising Standards

Government-Owned Customers Government-Owned Companies Govt. subsidies, protection of home markets

Host Government Concerns National conditions

Government Drivers : Explained  Driver

Parameter

Pressure for globalization

Pressure for localization

GOVERNMENT

Trade policies

Low trade barriers

High trade barriers

Technical standards

Compatible

Incompatible

Marketing regulations

Common

Different

Government ownership

Govt. owned competitors present

Govt. owned competitors absent

Host govt. concerns

Policies that favor global businesses

Policies that hinder global businesses

Yips Framework : Competitive Drivers Exports

& Imports

Level of export & imports

Competitors Domestic Global Global competition Global Strategy

Interdependence of countries Level of interdependence Level of independence

Competitive Drivers : Explained  Driver

Parameter

Pressure for globalization

Pressure for localization

COMPETITIVE

Volume of exports & imports

High exports & imports

Low exports & imports

Competitors

Competitors from different continents, globalized

Local competitors

Interdependence of  countries

Countries largely interdependent

Countries largely independent

Yips Framework : Summary of Drivers Identifies the drivers that are local & global, attributes of transnational synergy can be tailored to match the drivers Can be mapped to Porters five forces Changes in drivers indicated by macroeconomic analysis Analyze both industry and market Identifies the critical success factors of a global industry & market

Yips Framework : Porters Five Forces Porters Forces

Globalization driver

impact

Globalization Drivers

Threat of Entry

Common Customer: Increase Global economies of scale : Decrease Global marketing : Decrease High product development costs : Decrease Global competition : Increase

Government Market

Threat of Substitutes

Lead nations : Increase Research & Development : Increase Innovation : Increase

Government Market

Power of Suppliers/Buyers

Global customers : Reduce supplier power Global suppliers : Counteract customer power

Market Cost

Competitive rivalry

Common customer needs : Increase Global customers : Increase Economies of scope : Increase Global sourcing : Increase Compatible technical standards & favorable trade policies : Increase

Competitive Cost

THANK YOU !!