Final Exam Review
The example in the textbook we talked about COVID 19 and we talked about how HNN is very focused on its physical spores.
That's where it puts a lot of its kind of resources and capabilities towards whereas Unionco focuses more on its on I'm not sure it's now, but it's in the text about the time okay so we'll talk about that as an example.
So the point is Unicloon was in a better position okay probably by luck more than anything that it could react to that situation
okay and so that was about reacting to external sources externiar agility, anticipation.
So again, I, I guess for this one, this one's not really skilled this is kind of more luck okay but the next two it talked about for example, anticipation is we talk about Nokia was the wom we talked a lot about.
Nokier did not anticipate a Smartphone Nokia was leading was the market leader for flip phones in the 1990s before the Smartphone came out,
it didn't anticipate, right?
It didn't prepare for that.
So that's why it fell behind.
And agility is about being able to move when something happens.
And we talked about the example of Zara with fast fashion Zarzara kind of leaders in this fast fashion Model.
And again we see it everywhere now but at the time Zara had a good advantage, a good competitive advantage and it managed to sustain for some time by creating that bottle.
So it had the agility
if so as becomes trendy, they can have it on the shelves faster than ever else right?
So they can sell that product quicker.
So your internal sources, internal sources are the way that you design your business okay so the way that you design your business, what can you do inside that can give you a competitive advantage make a new industry Model, right?
So you develop that Model yourself right?
So when we say agility external, that means agility means they can react to social trends, right?
So where social trends happening,
they can react to it. So that's external but internally they made this Model.
They made this fast fashion Model which totally changed the fashion industry, right?
I mean now we go shopping for most people every Saturday and they buy new clothes.
It's so cheap and the trends are changing very fast and new revenue models.
So I gave you the example of Rawls Royce how about an hour.
So for example, when maybe a small LCC budget airline, they can't afford to buy a full airplane, right?
But they can afford to rent one from and Rawls wise and some other countries right?
So that certainly gives them an opportunity.
That's a way for Rawls wise to make money it's a way for the smaller companies to be able to compete.
And enterprise models, enterprise, a little bit of enterprise, just big business.
So OK, new enterprise models.
So that means kind of the example we talked about is
how much control Apple takes of its supply chain.
So so in terms of producing, okay so I said to you that Apple outsources a lot of its manufacturing because that's the way that it can and it can save money it can save efficiencies, right?
Because if they've got to focus on the whole modeled, on every single stage of making the cell phone maybe that distracts them from other parts, right?
So now what they do is
and things like the manufacturing, they get other companies to that foot and that means they can focus on the more important things like designing and R D, that kind of stuff.
And we talked about this one red Ocean, blue Ocean strategies, right?
So again, we talk about monopolistic competition.
We talk about industries that are very, very competitive like we talked about terms coffee shops.
Coffee shop is a very, very competitive industry.
So we call it a red Ocean meaning there's lots of Sh,
there's lots of blood, there's lots of people dying in those markets right there very, very, very competitive.
Now if you're inside the red Ocean, it says you need to compete of course in the existing marketplace.
So if I wanted to open my coffee shop tomorrow, I've got to be in that marketplace in that industry competing against
other coffee shops. I need to find a way to beat them.
I need to find a way to exploit the existing demand.
So that means trying to take some customers from Starbucks or the small coffee shop R you're trying to get that existing demand make the value cost trade off.
Again, it's that fact point.
Do we choose between differentiation and maybe adding value that way or do we focus on being cheaper?
Okay which one do we do about mega coffee?
For example, they give us cheap coffe,
right? Maybe they give up some of the quality to give us chupo coffee where some of the coffee shops specializes in coffee The coffee is more expensive, but it's a better quality, right?
You got to make that decision.
So that's if you're in the Red Ocean if you're in the blue Ocean, you are bringing out something completely new okay you're free.
That's why it's a blue you're buying yourself.
It's an uncontested market space there is no competition
basically you've created a new industry, almost right or at least a new market so you have no one to compete against okay
the big, the main challenge is you've gotta make sure people are interested in your new industry, right?
So you're doing something completely different.
Like I said, coffee shops in the Red Ocean you know, people like coffee, right you do know people like coffee so you've got to try to get some of those customers.
If you're in the blue Ocean, it's something totally new
so you've got to make sure that it's something that people want okay so for example, I could create a new sport today, right?
Instead of soccer or baseball, I make a new sport.
It's only good if people like it, right?
If people don't like it, then I'm in the blue Ocean with the customers right?
So there's got to be something that people are interested.
But if it's something that people are interested in,
you're in a fantastic position right?
Because you've got your own new industry, no competitors.
You can just take all of this market that you've generated OK of course, eventually some people are going to come into that market as well right but you've got little needs when we talked about this kind of the blue Ocean strategy okay so idea we said
how can we make ourselves to the ocean is basically we're actually in a similar kind of industry but we totally differentiate, right?
We change the way that industry looks.
So the example I gave you was with Serfus Alle, Serfus Alle I said they brought up this whole kind of new way of what the circus looks like okay so the way the surface looks like and we said what we do is we eliminate, we reduce, we raise, we create.
That's the way we can make ourselves.
Yeah totally different.
That's the way we can totally differentiate and become this kind of blue ocean area.
So for example, so the flairies that we took away like the animal show, right?
The dancing bears and like the, the tigers and stuff like that or the lions which most people now are the kind of the, again, it's kind of against human animal rights, right?
So they took away that concept, right?
And they reduced kind of what's fun and human like the cloud doing like
funny stuff they reduce that stuff.
So what did they do? They made kind of unique venues they brought more kind of acrobatics and that kind of stuff into it.
This is stuff that they've created okay for the new part.
So if there's some elimination, reduction, raising creation, then you can make something totally different.
And that's what it's showing in this chart here right so it shows how yes
is kind of in the same industry.
It's not a totally new industry it's a similar industry but it totally changed what the industry looks like.
So that's an example of how you can be, make yourself blue Ocean.
Ya
no unless it's like we see really obviously it was like that right so if you like
so how is a competitive advantage sustained?
Okay so these are what we talked about here is four ways we can sustain our competitive advantage four strategies we can use.
And so the first one was obscuring superior performs.
So when we are, when we're doing and when we have this competitive advantage which I hid it right?
So I gave you the example of pedigree in the UK for example Pedigree had a huge profit margin okay but nobody knew
okay now this industrys become much more complexitive.
So obscurity is hiding don't let people know okay so that's why we always said that in life if you're successful, keep it to yourself okay don't tell people, right?
Because as soon as you tell people they want to follow you right?
So any of my friends in any industry that they put a business in, I ask, how is business?
They ask terrible don't do it, okay because you don't want to invite people you want to tell people you're doing well
deterrence. So deterrence means again, trying to use strategies to keep people away or trying to kill the opposition for example.
So one way we talked about was price scars.
Price scores are when I sell something at lower than cost price so I'm willing to take a loss on that product.
The reason is because maybe by opposition they can't afford to take the los,
right? And they can't compete with me.
So eventually they leave the market which means then I can raise, right?
So that's one way I can deter opposition okay and being ambiguous being ambiguous means being unclear okay so making my business Model very complex and very confusing.
So I think I said to you Apple is an example of that Apples and business Model.
I, I think I, I saw an interview with someone for Apple very high up and they said they themselves don't know exactly how the supply chain works.
It's so complex so that's a way it makes other companies difficult a problem right?
How can we form that Model?
And of course the simple when get resources, get the capabilities.
If you've got the resources, no one can comp if you've got the inputs that are needed for that product how can people comp?
Okay any questions I'm going fast.
So if you want to stop, stop, right?
Otherwise we'll be here all day because it's a hundred slides right?
So we'll quite quickly. And so competitive advantage I think we've said this many, many times okay so please don't forget that okay this is something I've repeated many, many times okay competitive advantage two ways cost advantage, differentiation,
right? So costs be cheaper.
Differentiation probably more focused on some kind of like being a big different probably ANTV right and cost advantage If you're going to use a cost advantage, we said these are ways you can make a cost advantage right?
So the cost advantage economies of scale We said the more I produce of something, the cheaper the cost per unit right so the more cell phones I produce,
the cheaper the cost of each cell phone becomes to make.
If I make one cell phone, the cost is high.
If I make two cell phones, the cost per cell phone drops down low pretty poorified right?
So the more I make, that's why we have mass production right?
When you, you see those kind of factories where like Hyundai or here or in Germany and they're producing the cars and they're just going through the big process the big plant
it's much cheaper and more efficient than say Mark trying to make one car by himself right?
And economies of learning as well that's kind of connected so that the more experienced you become, the cheaper you become.
So I gave you the example of McDonald's, right people making burgers.
If I go to McDonalds Auray, I'll be quite slow, quite awful at making a burger with no experience right?
I'm there for a month
I want to be quite efficient right?
So that's experience the more experience you do for something and the faster you can do it, the faster you can do it, the cheaper it becomes to do.
And supply chain of course for the supply chain, the very word supply chain is from the bottom of making your product, right?
So the more efficiencies you can make there, the cheaper your product becomes.
So that's why we use workers in countries like Myanmar for example why it makes the supply chains cheaper
and import costs of course the cheaper you get those the better right?
So these days I see in Korea they can talk about housing prices going up and by making new houses become more expensive because materials, construction materials more expensive at the inputs right?
So of course it was more expensive for cement housing has to be more expensive right?
Never mind other factors and capacity utilization that means that how much you can produce in your factory, right?
So
again, if there's a big demand, I gave you the example of face masks, this sort of thing.
So I said face masks during covert the places that had big factories where they could up capacity, stop producing something else.
Let's just focus on making masks successful.
People want that's capacity like so there's always a cost cost advantage differentiation we've talked a lot about in this course before midterm, after mid term right?
So using
and better quality compubutions right or brand experience being more reliable okay I gave you the example in the class of this kind of semanticing, right?
So that's why it's quite interesting.
Cement is like a product which is exactly the same.
But how did that company get an advantage by be reliable?
Okay so that company always delivers on time whereas other companies are more unreliable.
So of course if you need cement today,
you cool that company because you know they're going to bring a price and you've got that plan pay a little bit more but they're reliable right you need it for kind of construction yes so they're all differentiating this.
We talked a lot about those, okay and we did say this is not 100 but we did say usually differentiation beats across advantage over time usually that's what the study show.
So differentiation, it's usually the best strategy but there's a lot of variables that can go into that
okay and then we talked about, yeah so this was kind of Porton's generic strategy.
So we looked at this framework and we were talking here about how we can get rid of our focus.
What's our strategy right so this moved past and just talk about cost and differentiation, right so here we talk about the different markets and we said we've got kind of a niche market or a total market right so a total market is what I've just been talking about.
Really
by a total market you can go to low cost but you can go to differentiation, right those disption by a total market, the niche market we said focusing on a small group of customers, a small group of customers, right so if we use the example of a Rolex watches, Roletwatches Rolets are not targeting all of us okay because they know most of us can't afford a Rolance okay that's what they know, right so Rolxs are targeting a niche market, a small group of people who can afford a Rolex watch
and they're not focusing on trying to make the Rolex watch cheap.
They're focused on trying to make the Rolex watch the best one, the best of class in that area that's differentiation.
So that would be Rollax. Whereas again a niche market might go for a cost focus right?
So again a niche market let's say it could be, let's say organic food okay organic food not everyone cares about organic food okay so you just want to go to marked by whatever.
So some people do care about organic food, right?
Again that's a niche market, a small group of people.
Now you could focus on differentiation for the organic market you could maybe make the best quality or you could be a business that says we offer the cheapest organic.
So that was Porter's and generic strategies okay there's more examples there which you can look at yourself.
Okay yeah all right and then the next moment for industry evolution and strategic change.
So here we spend most of our time in this class talking about this one which is the industry life cycle.
So the industry life cycle we said and all industries typically go through this life cycle they come in
and they're very small. This is the industry scale how big they are how big is that industry?
Of course when something is new, it's very small it's very, very small over time it starts to grow okay it grows up and then it reaches the to maturity.
Maturity we said is when basically you run out of customers you run out of new customers.
How do industries grow? It's because there's new custom.
All right so if I start my business, I can sell one copy to her her and then there's no more customer, right?
By the maturity right? So to the point where I can't sell any more okay or there are too many other companies there right there competition that, that can also cause
a maturation right? So there might, there might still be a demand for coffee, right?
People still on their coffee every day but there's suddenly to the coffee shops that could also cause the industry to reduce this quite maturely.
And we said that in the introduction stage is when we have kind of and the lowest sales and we have a product which often is not kind of perfect, right?
It breaks down it's still kind of
and the perfect development strategy has not been made.
It's more expensive at this stage but then over time we start to improve as we move towards in this market and that's when we start to find like a dominant design a dominant design is the best way to make it, right?
So that once we found that way, then we can start to have market penetration.
Decline stage is as some kind of substitute problems or just we brought out customers, right?
But we said not necessarily we have to decline.
We do have sometimes transformation so some kind of development right?
So I said to you, for example, maybe the Smartphone right now stays maturity, right?
People are changing their Smartphone much less frequently okay so I said for example, me, I would change my Smartphone every
two years typically okay but now I've, almost, I'm going to past three years of this one.
There's no kind of real urgency I wouldn't mind it's a real urgency to change this one, right?
So that's sort of the issue, right?
So the Smartphone makers need to go with some new transformation.
And again, this is just going through them just to explain in more detail we said that in this, in this kind of knowledge stage, in this third stage,
it's about where this got there's lots of innovation.
Innovation is high at this stage which is basically our next one here right?
So we said at this early stage innovation's very high, something new okay but in terms of making the product if you don't have much experience, that's why it breaks down.
So I think about things like drones and when the first drones came out, it was very innovative okay but they weren't very effective.
They'd break down and have problems with that.
But as time goes by, we get more experience we get better at the production and of it the better how to make them.
And we find this dominant design we know which materials to use and which, how to make the motor for example.
Again, don't feel like you've got to memorize every single word on the slide and there's too much okay one more interesting to do the concepts okay that's more interested.
I don't expect you to sit and memorize every single word on the slight even the concepts that's what I mean
we said industry life cycle can be different by whichever industry we're in okay so some of them are very fast okay and you go for the, it's like as trending, right?
It's very, very fast and disappears some are very slow and some of them never actually declined or we had clothing clothing we always need clothing right?
So if we talk about clothing as a, as a subject as an industry, yes but again,
designs of clothing do right so designs of clothings go through in life cycle but in terms of clothing is a thing it doesn't so much rejuvenation get us some transformation to television black and white TV, color television, black screen, blob and blow smart TVS okay but it keeps on going on and on and on.
So that was the life cycle and
how can we be successful?
Okay the introduction stage lots of investment is needed okay lots of good innovation is needed in the growth stage, we need to scale up, right?
We need support for scaling up right?
Because that's where if we want to get things like economies to scale, right?
We need to produce more and more and try to reduce the cost of purchasing them.
At maturity stage, it's probably going to be a red ocean.
It's very competitive there's lots of other people in there.
You're trying to fight for set off.
So that time we need to focus either on costs or you need to focus on differentiation to training more customers.
In the decline stage, you're probably trying to get out of the market, okay or find other ways to cut costs okay so when you hear companies are really trying to cut costs, maybe it's move towards the end of that industry.
So diversification, we said these are ways, these are kind of growth strategies, right?
So how companies can find a way to grow okay to find a way to grow.
So I gave you the example from before mid term it Freem right I said Frem they've got these capabilities, these resources that they've relied on but they haven't kept producing the same products.
They change their products they've diversified over time so on there for example, is videotape videotape
some people still use it but there's not a huge demand for it right?
So of course they're not going to spend a lot of time making videotape today instead they're making lots of, for example cleaning materials which I've got in a house for example, which are more Ian demand using the same resources and capabilities
and ways of diversifying.
So we talked about horizontal diversification.
Horizontal diversification, we said is making a product which is quite similar to what we already make right?
So the Smartphone is not selling.
Well, let's make something quite similar right?
It seems like the small for example, right?
That that's an example of horizontal diversification and vertical diversification is what your supply chain, right?
So how maybe you can find ways in your supply chain
to make changes, right? So we said backward integration is going backwards down the supply chain forward integration, for example, the retail parts okay so you can look to retailers conglomerate diversification to start acquiring other companies.
These are all ways we can diversify.
Why do companies want to diversify?
So this one's pretty obvious they're going to grow okay companies want to keep growing, right?
Because as we said before, we looked at the industry life cycle.
We said if you're not growing, then you are declining okay that's the problem right so every time when we talk about the value, if your industry is declining, that means you're losing value right so a lot of companies, again, I've got some friends who own companies
a lot of the time they're focused on the value of the company right because actually when you talk to them, they don't make a huge amount of money each year.
They make enough money, they make enough money but the reason they're rich it's because of the value of the company right so selling their company is the value of their company right?
So as long as that company's growing, their company's more valuable and they're becoming richer
on paper not in reality it only becomes reality when you sell it to them right so it's very important to them that their company, it's good because if it's declining, then there's starting to lose that right and so that's the first reason why they were dead.
This second one risk reduction right so again, if you're all invested in one industry, maybe you want to move some of your resources and capabilities to another industry that reduces risks.
Yeah. So
if you're all invested in kind of the restaurants and bar industry okay if, if we're going through a time like now where the economy's not good, that industry starts to die you need less of a lack of priate insurance not doing so yeah some problems we said it becomes more complex, right so if you're just focused on one industry, if you diversify into another industry, you've got to start working in two different places right?
That becomes complex and complicated right?
Maybe we need to
hire new people with specialities in that area okay just because you were good in this industry doesn't mean you're necessarily good in the other industry.
Your brand have become talented okay so you're very careful when you do that when you diversify capital, maybe you need money for investment.
And then we looked at this one again I'm not going to go through all of this and again, don't feel like you need to memorize every minor detail on here just know the concept again right so these were
and tests tests for whether we should diversify OK and again it's important okay supporter industry attractiveness, supporter just common sense right?
So is it worth while goods the industry?
Is it attractive enough?
Is it attractive enough the cost of entry?
Right? So again, that's a big problem just because an industry looks attractive, how much does it cost to enter?
Right? So maybe you look at like the airline industry or there's so much money to be made in the airline industry
but how much does it cost to actually get in there?
You've got to buy some planes, you've got to make deals with airports there's so much investment required right?
So how much is it going to cost to enter?
Do you have enough to enter?
And then of course the last one are we going to be better off?
Okay just because something looks attractive is it really going to be worthwhile?
Right? What is the,
the cost benefit analysis right?
So how much is the cost? Are we really going to benefit from doing this?
Right
and we looked at Amazon again as an example.
So again, don't feel like you're going to memorize all of this but it's just the examples we've talked about with Amazon said Amazon has done lots and lots of diversification right?
So this picture here shows different stages of diversification, right?
Amazon started off just as a boost that's what it started, right but you can think of that now
and again when I talked about this one in class, I said yes of course Amazon's been a great success.
There's no denying that but even in their diversification there's been errors there's been problems, right mistakes.
And again, if you're a big company, you can, you can maybe afford a mistake.
If you're a small company, a small mistake can, it's been bankrupt you right?
So that's the consideration of
and then we just talk about Clus again this is the framework this is the ANZF matrix these are ways we can grow ourselves right?
So you four different quadrants okay four different quadrants.
Again on the left side you've got the markets you've got new markets or existing markets
OK your products and services, existing products or new products right?
So you can stay in your existing market and try to penetrate further which basically means try to get more market share get more market share in your existing market or you can save your existing market and produce some new products right?
So that was what I said before I get a horizontal diversification, right?
So people are already buying the Smartphone for me so I'm going to start making earbooks and,
and the watch right? That's kind of product development.
I feel like that's kind of what Apple and Samsung are doing at the noment right?
Because they haven't thought out a solution for the next step for this one but they seem to bring lots of new kind of gadgets and those kind of things.
And last, that feels like product development to me and go to new markets okay new markets.
So for example, if you are a coffee shop chain in Korea and you feel like there's no more growth left in Korea,
take your coffee shop to Japan for example right?
It's a new market today or you can't diversify what you right?
So you go to a new market with new products okay so we're told to a new market we sly told so that with ends off okay so we can explained in more detail there again don't feel like you don't memorize everything just kind of know what it means.
And then that got us to, yeah, team to leadership okay so teams to leadership we talked together about what are the characteristics of a global leader and you guys give me lots of examples and then basically the examples you gave me a lot of them overlapped with this one.
Again, that's what I said on the visionary integrity, empathy, siseness, accountability, these more things that we identified in the textbook and the facing you guys toopy yourselves.
Then we talked about the five types of leaders autocratic, transactional, transformational, democratic bass Fair We said, autocratic leaders are kind of lab, absolute power, full power, very top down, very little opportunity to kind of voice your opinion and very controlling.
I guess it all sounds very negative but I guess the benefit is it's maybe more efficient and faster.
It's a faster method. If you've got a very talented autocratic leader, it could work perhaps in some circumstances, maybe maybe all over the long term but maybe over a shorter period of a certain right?
So and maybe some companies need that companies that are in big danger, companies that need strong leaders to come in and really take control of things quickly.
I think it could work in the short term right?
Transactional is a paraton sticker.
Paraton sticker is rewards based.
Do a good job, get a reward, do a bad job, get funished okay very clear requirements of me.
Every time I come to work, I know exactly what's expected of me.
So it's quite good for just a person who wants to go to work do their job, go home.
Perhaps it's quite good for I think we talked about the example
and it's a way that we can differentiate between who's working well, who's not working well.
Maybe it's a good way for clarifying who deserves to be promoted, who deserves not to be promoted right to a transaction situation.
I guess the boring part, some of these jobs can be quite monotonous, quite, quite, quite boring perhaps in case it depends on the job transformation Al said's all about trying to make you grow and improve okay so there's this belief that every time
when you go to work, there's a chance for you to develop there's a chance for you to grow.
Your boss is always trying to push more out of you push more out of you than you think you've got.
Okay so again sounds loving.
It sounds like we're always going to keep creating.
We're always going to be innovating.
We're always going to be getting better.
But again, the downside is there's a lot more pressure maybe that you've got to keep improving, right?
It's hard to relax. Maybe in this environment
democratic is the exact opposite of autocratic rights.
We know that very well, very collaborative, very sharing ideas.
There's not much we talk about power distance we do in culture, right power distance this one can have less power distance than for example autocratic right?
So it's very easy to share your opinions.
And again, this one probably sounds nicest to a lot of us but it can be slower right?
And
a democratic leader has to be good at finally making the decision right?
Otherwise there's going to be too much maybe maybe maybe right too much uncertainty elastic that is very hands off, right so it says and we've had this kind of debate after Cobt, right during Cobt, we had to go online for a lot of companies.
Since Cob, do we stay online we would be back to the office okay
if we leave people at home, give them kind of freedom.
It's more kind of a that trust our workers, right?
But more and more companies are starting to not believe their workers are doing their jobs and trying to bring them back into the office for that's what I think.
And then the team role types.
In the second class we talked about team roll types.
We talk about Merative Belvin at 9, 9, 9 team role types
and his argument was that all of us are kind of have our talents.
We go at our floors okay so by ourselves we can't be perfect.
The idea of the Belbin's rules is that we can get a team together which can make the perfect person basically the team because we can use the each person's strengths which can mean that in the team, each person's weaknesses can be overcome with other people's strengths.
So I've got some strengths, got some weaknesses.
Maybe your weaknesses can overcome some of my strengths, right?
Your weaknesses can be overcome another person's strengths.
That's how we can make the team
here on the PVT. So we talked so each of them's got their contributions, but their weaknesses, right?
So we talk about ourselves
then we run into week 13. So last week we talked about culture okay culture.
We talked about different dimensions, cultural dimensions.
So we said yes, we can't just say because somebody's from some country they are exactly this by the dimension, right?
But we can say that the cultural dimensions can give us kind of an insight into what we can perhaps expect
in that culture right? So it's very, very useful for conglomerates, right?
Conglomerates like international conglomerates which are going to many different countries it can give them some kind of insight about what they can expect if they're going to go into that country both in terms of how they run their company and maybe both in terms of what the market for the people are going to be like, right?
So is it going to be a good match for my company?
The first one we talked about was our high context and low context.
So we said high contact countries are for example, we've got Japan, China, Korea on there low context we've got us UK, Germany's on there.
We say kind of high context is more kind of about close relationships.
It's more kind of
it's more than a happy they can t with their eyes maybe less and more so than their words, right?
Whereas in a low context society people are much more direct to what they want to say, right?
So
my director, if I say an idea, I director does Mike she never says no Mike she always says maybe okay and I know maybe means no mark okay but she never wants to say no okay whereas in the UK directed no idea s okay it's much more, much more direct okay so that's kind of the difference between high context and low contex
because all my directors trying to do is save my face.
She doesn't want to be shady, right?
So she just kind of say, maybe rather than being very direct, right in law context, people are much more straight to the point.
I'll tell you what they me.
So let's hypext little context.
And then we talked about our Hostad's dimensions, Hosta's dimensions.
And first we have power distance is the distance between me and my superior.
So how easy it would be to approach my superior
to share my opinions and I give you a score for us and career at us regular schools.
And then we looked at individualism okay so we said individualism is about like how the opposite collectivism is how connected society is, how much we're trying to work not for ourselves but for society whereas individualism is very much focused on me and, and motivation towards achievement and success.
So is the society more decisive or more cooperative?
Okay so it's consensus based.
It's much more about doing what's best for society as a whole from a decisive base.
It's about winning and being the best.
We said Scandinavian countries are much more consensus based.
That's why we have things like higher taxes perhaps in the Scandinavian countries versus say America, anti America I think it's only 62 of them.
I really feel America should be higher for that one, right?
America feels very decisive about winning how a material success, right?
Uncertainty avoidance we said is how we kind of prepare for your, not right?
So we said I gave the example of COVID, right?
So we're preparing for COVID.
Korea was much more prepared, much more.
I'm going to say like the people followed the rules, the people do what they're told.
And because of that, Korea managed to keep the economy open
and long term, short term.
So that's kind of what you'll focus are you for today or for the future?
Long term short term indulgence restraints is kind of how much you are, the way you spend your money and things like that right?
So can you delay gratification right?
So can you wait for what you want and you just go for it today?
So those are our dimensions week 13 in the second class we talked about trade and protectionism, right?
So trade and protectionism we talked about wider countries trade.
I think some reason why they trade because they can't make it domestically or it's more expensive domestically or other countries can specialize they can do it better than us.
And other countries have an advantage like an absolute advantage, got lots and lots and lots of excess so they can give it to us right?
There's many, many reasons also maybe our people in society are happier if we trade because there's more products to buy products are cheaper.
And there's lots of reasons why we trade
types of advantage. We talked about two absolute advantage and comparative advantage right?
So absolute advantage, we said is I can produce more than you is absolute.
So America can produce more of many things than countries that are smaller okay because it's got bigger space and if it's got more resources, you can use more of them.
So I give an example there and, and then we talked about comparative advantage.
So comparative advantage
it is maybe I cannot produce as much as you but I can produce it more efficiently than you okay so for example, I can present you the cost.
So again, we've got country A, country X, right?
So before we said country A has an absolute advantage country A can make one million gallons of milk.
Country X can only make half a million gallons.
So country A has an absolute advantage but country X has a comparative advantage because it costs 125 per gal in Country A,
it only costs one dollar per gallon year.
So that means country X is more efficient.
They can specialize better than us.
That's a comparative advantage.
And then here I give you an example of China and America focusing on labor okay so focusing on labor.
So maybe America has an absolute advantage in something over China but because of the labor, it's not it's a labor intensive kind of product.
It's going to be more efficient to use China because China can specialize in that.
So absolute means I can do more comparative means I can specialize.
And then we talked about the Model at the end and we said that this one talks about the factor endowments.
So this is how we can work out which countries specialize in different things right?
So labor, it could be skilled, it could be unskilled, right?
So it means some countries have a specific skill that we need in labor, right?
So it might be expensive but they've got the skill no one else has it.
Other countries might be cheap labor they offer right?
So for example, for many years it was China okay and now it's becoming more countries like Vietnam for example, got cheap labor there okay which we can take advantage of and capital can be your financial resources, your infrastructure, natural resources and oil, right?
So I give the example from the obvious one is UAE, right
skills education, your expertise, right?
That's your human Cer. So these are ways that we can specialize.
And we said the benefit is, I think we've always said the benefit for trade is if we can specialize, it means we can just focus on this thing and let the other country that can specialize something else focus on that thing and then we can trade together and then we both benefit right?
There's more produced okay so if we specialize in Korea, focus on cars, we can just produce lots and lots of cars where we have enough cars for Korea and enough cars to export.
Another country can focus on something else they can produce a lot of that excess and they can send to us.
So we have more production more is produced by specialization.
And then the last one we talked about was protectionism, right?
So protectionism, we said is kind of the opposite of trade, right?
And that's the way we're going towards now where some countries are moving away right?
There's been a sense for many years now for quite a few decades that trade is the answer.
Global trade helps everyone everyone benefits from global trade.
People who support protectionism, they would say no okay so protectionism means it's not the best way to run the global economy it's not the best way for our country because for example, it impacts domestic industries, right?
So if we import so many cars from Korea, that means our car industry is suffering in our country.
So why would we do it? It says here like stop the foreign competition, try to save jobs in our country but what's the risk?
Probably it would be more inefficient okay because I just told you why trade is very popular higher prices how can we use protectionist measures?
The one we talked about first was tariffs.
So tariffs are basically taxes we're going to tax of the goods.
So I send this cell phone I put a 10 percent tariff on this cell phone, which means it's 10 percent more expensive because it's more expensive people might stop to buy the American made cell phone instead right?
Quarters we said is the number we can send.
So how many we can send to a quarter the quantity so if tariff is a tax quantity is how many and then we said we can give subsidies.
Subsidies are a way we can support and industries, right?
So the ways we can support them, right?
So it's supporting our domestic industries so that can make them more competitive.
How do we do that? Give them money OK direct payments one way or make them pay less taxes isn't
okay I'll give them loans that low interest is going to be paid.
And the last one, we said a very common in the agricultural industry government purchasing programs right?
So the government promises if we produce this much rice and every year they're going to buy a certain percentage if we can't sell it right?
So if we can sell it to a problem where we know I guarantee the government will buy from those cases.
So it's very good for those companies that can benefit from that.
And yeah that's just kind of surmarise.
Why do we? Why why why make tariffs?
Why do we do it? Okay why make tariffs?
Try to protect domestic industries try to lower the risk of the foreign foreign competitors, right?
So what's the risks? The risk is become more inefficient.
Other countries also want to punish us.
So they'll put borders on us for example after tarriffs on us same with quotes, same with substance, right?
So there's PROs and cons basically both ways, right PROs and cons
Okay so that's, that's all the slides and so what you've got is everything there as I said, I know some of the slides have got words on them but please don't try to memorize every single word.
I think the best thing is just to know the concept okay all of the questions if you know the concept, you can get the answer okay so that's more important than trying to memorize a little time detailed way
which is your project Okay so your project I'll give you some time now We've got 20 minutes now so you start them now okay I'll be all class on Wednesday as well okay so you want to make a start.
If you can complete this worksheet you're well set for the exact level.
Summary
주요 내용 요약
✅ 외부/내부 경쟁 우위 전략
외부: 기민성(Agility) – 사회적 변화·트렌드에 빠르게 대응
내부: 새로운 비즈니스 모델 설계 – 예: Zara의 패스트 패션, Rawls Royce의 렌탈 비즈니스
Blue Ocean 전략: 경쟁 없는 새로운 시장 창출 → 독자적 산업·시장 형성
Red Ocean 전략: 기존 시장에서 경쟁 (가격/품질의 trade-off를 고민)
✅ 경쟁 우위 유지 방법
성과 숨기기 (obscure superior performance)
진입 억제 (deterrence, 예: 가격 덤핑)
모호성 (ambiguous business model)
자원·역량 보유 (unique resources & capabilities)
✅ 비용 우위 & 차별화
비용 우위: 규모의 경제, 학습효과, 공급망 효율화
차별화: 품질, 신뢰성, 브랜드 이미지 (예: 고급 시멘트 브랜드)
대부분 연구는 차별화가 장기적으로 더 우수한 전략이라고 지적
✅ 포터의 3대 전략
비용우위
차별화
집중(틈새 시장 공략): 예: Rolex – 고가 명품시계 틈새시장 집중
✅ 산업 생애주기(Industry Life Cycle)
도입기: 혁신·투자 집중
성장기: 대규모 생산/시장 확장
성숙기: 레드오션 경쟁 → 차별화·비용우위 필요
쇠퇴기: 비용 절감/다른 산업으로 전환
예외: 옷처럼 ‘필수재화’는 산업자체는 계속 유지 (디자인만 주기적으로 바뀜)
✅ 다각화 전략
수평 다각화: 유사제품 추가 (예: 스마트폰 → 이어폰)
수직 다각화: 공급망 단계 통합 (예: 유통까지 직접 진출)
복합 다각화: 전혀 다른 산업 진출
목적: 성장, 리스크 분산, 기업 가치 유지
✅ 문화와 리더십
문화 차이(맥락: 고맥락/저맥락, 권력거리, 개인주의/집단주의 등)
5가지 리더십 유형 (권위적, 거래적, 변혁적, 민주적, 방임적)
✅ 무역과 보호무역
무역 이유: 절대/비교우위, 특화 이점, 효율성 극대화
보호무역(관세, 수입할당, 보조금 등): 국내산업 보호, 단점은 비효율·보복관세
