Yip's Globalization Drivers

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Yip’s Globalization Drivers

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

Industry

Top 5 seller
concentratio
n

Carbonated Soft Drinks

70%
68%

Computer Software

59%

Computer Hardware

59%

Aerospace/ Defense

55%

Automobiles

“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

71%

Light Bulbs

“International integration in
commodity, capital and labour
markets” – Bordo et all. 2003, WTO

Entertainment

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 & Framework

Technological
Factor

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

Airlines
Computers

Automobile

Low
(Domestic)

Soft Drinks

FMCG
Retail Banking

Book Publishing
Baked Foods

High
(Global)

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 scale

High fixed costs

Low fixed costs

Experience curve

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

Pharma
Airlines

Low
(Domestic)

Computers
Automobile
FMCG
Retail Banking
Baked Foods

Soft Drinks

High
(Global)

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...
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