Global Business Environment

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Global Business Environment

• Prasada Reddy
• Lund University, Sweden

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Business Environment

• 1) Liberalization of economic policies worldwide
  (import-substitution vs. export-led strategies).
• 2) Changes in the technology paradigms/regimes.

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Economic Liberalization 1

• Greater role for private sector.
• Liberalization of trade and investment policies.
• International institutional mechanisms to
  reinforce liberalization trends (e.g. WTO, EU,
  bilateral agreements)
• Sectoral policies affecting innovation (e.g.
  Intellectual property rights, clinical trials,
  etc.)

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Economic Liberalization 2

• International standards setting (e.g. ITU, UN)
  facilitated flow of goods and services.
• Global harmonization of consumer preferences in
  some industries.

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Technological changes 1

• Changes in techno-economic paradigm
• Emergence of new science-based pervasive
  technologies
• Even old products incorporate new technologies
• Multi-disciplinary inputs for innovations

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Technological changes 2

• ICT as a driver and facilitator of globalization
• Companies that did incorporate new technologies
  faded away
• Learning-by-doing approach to Learning-by-training
  approach
• Vertical disintegration of value chains
• Divisibility of innovation processes

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Chip Design Flow Chart
Market Analysis Product Planning
Define Standards
(Upstream) Market Specification
System/Application Level Specification
Behavioral Level Design
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RTL Level Design
Speed, Quality, Flexibility, Cost
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IC Design Implementation Flow
EDA Software Support
Gate Level Design
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Circuit Level Design
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Physical Level Design
?
Post-Layout Verification
Asias Advantage
Foundry Manufacturing, Packaging and Testing
(Downstream) Process Technology
Advantage of Advanced Countries
Semiconductor Material, Manufacturing Equipment
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Global competition 1

• Increased competition (more global competition in
  domestic markets also)
• Greater complexity in competition
• Oligopolistic competition in major industries
• Emergence of innovative small firms in niche areas

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Global competition 2

• Shorter product life cycles
• Technology becomes the key factor of
  competitiveness
• Increasing RD costs
• Shortage of ST skills in advanced countries.
• Access to global markets and resources

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New Competitors

• Entry of emerging economies as huge markets
• Brazil, Russia, India and China (BRIC-group of
  countries) as arbitrators of the global economic
  developments
• MNCs from the emerging economies
• Local availability of ST skills
• Low costs of operations

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Corporate responses

• Rationalization of corporate structures
• World/regional product mandates
• Global intra-organizational networks
• Global inter-organizational networks (including
  with universities)

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Implications for innovation 1

• Centre-for-global innovations for global markets
  centralized in headquarters
• Local-for local innovations for local markets
• Locally-linked innovations in each location for
  global application
• Globally-linked collaboration between different
  local units for global innovations (Barlett and
  Ghoshal, 1991)

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Implications for innovation 2

• Modularity and divisibility of innovation process
  (specialization within the innovation process)
• Globalization of RD (including to emerging
  economies)
• RD outsourcing
• Emergence of technology markets and research firms

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Implications for innovation 3

• Outsourcing of RD to emerging economies
  (firms/universities)
• Emerging Products for Emerging Markets (e.g.
  single-chip mobile phones low-cost car Nano)
• Standards setting by China
• Entrepreneurship in emerging economies

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Implications for innovation 4

• University spin-offs
• Regional/national government policies
• Cluster development/science parks
• New sources of financing for innovation
• Importance of intellectual property rights
• Regional agreements and trade barriers