Developing Global Capabilities

Dr. Elijah EzenduFIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM,

PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr

Requirements for Developing Global Capabilities

Source: Elijah Ezendu, Global Trends in Business Development

Global Efficiency

Efficiency = Outputs Inputs

Increase in efficiency can be achieved by acting on one or both variables.

Cost Efficiency

This gives rise to the following:

Greater opportunity for promotional responsibility

More product features without price increase

Lower Prices

Sources of Cost Efficiency

Supply Costs

Experience

Economies of Scale

Product/ Process Design

Cost Efficiency

Drivers of Global Innovation

i. Increase in Complexityii. Customer-centricityiii. Offshoringiv. Emergence of Innovation Networksv. Open Innovation

Global Intelligence Imperative

This is underscored by extensive web of inter-relationships connecting key players, as well as the complexities of regionalization, continentalisation, and consumer sophistication.

Responsiveness to National Differences

Take advantage of local comparative advantages to improve inputs.

Calibrate output with due consideration to differences in tastes, preferences, and channels.

Global Learning

Optimizing and harnessing learning systems through processes and practices that ensure proper codification and transfer of knowledge.

Distinctive Competencies, Resources and Capabilities

ResourcesResources

HigherProfits

DistinctiveCompetencies

Capabilities

Differentia-tion

Low Cost

ValueCreation

Superior

•Efficiency•Quality•Innovation•Customer Respon- siveness

Source: Jeff Shay, International Business.

Strategy Model of a Multinational

OrganizationalStructure:Centralized

Decentralized

ManagementProcesses:CoordinationConfiguration

Performance:Market share

Profits

Formalization:HighLow

IndustryGlobalization

Drivers:Market

CostGovernmentCompetitive

Strategy:Multidomestic

GlobalInternationalTransnational

Industry Globalization Drivers

Cost Drivers

Good Logistics

ICT

Global Economies of Scale

Competitive Drivers Realizable Competitive Advantage

Market Drivers

Global Customers

Global Channels

Global Customer Needs & Wants

Government Drivers

Policies

Regulations

Tools for Developing Global Capabilities

Value Chain Analysis Benchmarking Activity System Mapping Cost Management Analysis Network-Structure Analysis Intellectual Capital Analysis SWOT Analysis

The Value Chain Concept

Source: M.E. Porter, Competitive Advantage, Creating and Sustaining Superior Performance

Value Chain

The value chain describes activities that are within and around a firm which contribute value towards the creation of product or service.

Value Chain Analysis

Identifies inefficient activities. Identifies distinctive roles of activities Identifies activities that are value-adding to

customers. Provides room for ascertainment of

cost/value of activities.

Value Network

Value network shows the inter-organizational links and relationships which are required to create a product or service.

A Simple Value Network

Organization'sValue Chain

Supplier Value Chains

Channel Value Chains

Customer Value Chains

Identifying Capabilities Through Value Network

Profit pool.Fitting partner.Activities that should be outsourced.The most relevant activities.

Benchmarking

It’s the process of identifying, learning and adapting exceptional practices and processes with the intention of enhancing an organization's performance.

Advantages of Benchmarking

Useful for identifying best practices. Aids in detection of performance gaps. Advances knowledge of competition. Gives room and reasons for positive change. Boosts managerial objectivity. Facilitates discovery of drivers and enablers of top

performance. Provides a baseline for measuring improvement. Encourages new ideas, innovation and creative

thinking. Aids initiation of effective budget process.

Benchmarking of Capabilities

i. Historicalii. Industry/Sectoriii. Best-in-Class

Feasible Questions During Analysis

Is this other organization better than we are?

Why are they better? By how much? What best practices are being used now or

can be anticipated? How can their practices be incorporated or

adapted for use in our organization?

Activity System Mapping

i. Provides for consistencyii. Identifies critical success factorsiii. Gives room for reinforcementiv. Identifies resource-flow

Techniques for Cost Management Analysis

Activity Based Cost Analysis Lean Business Analysis Process Analysis Capacity Analysis Customer Value Preference Analysis Target Cost Analysis Product/Service Value Analysis

Network-Structure Analysis

This focuses on determination of the right inter-firm network–structure that would serve as strategic fit for development of required capabilities, through simple and complex alliances as well as mergers and acquisition.

Skandia Concept of Intellectual CapitalMarket Value

Financial Capitalvalue of all physical and monetary assets

Intellectual Capital

Human Capital‘thinking’• competence (knowledge and skills)• attitude (motivation, behaviour, conduct)• intellectual agility (innovation, imitation, adaptation)

Structural Capital‘non-thinking’

Customer (Relationship) Capitalcustomers, suppliers, shareholders, alliance partners, other stakeholders

Organisational Capital• infrastructure• processes• culture

Innovation Capitalrenewal and development value

Process Capital

Intellectual Property Intangible Assets

Developed by Leif Edvinsson

Adam and Oleksak Concept of Intellectual Capital

Market Value

Intellectual CapitalFinancial Capital

Human Capital

Structural Capital

Relationship Capital Business Model

Management

Employees Processes

Intellectual Property

Customers

Brand

Network

Current Concept of Intellectual CapitalMarket Value

Intellectual CapitalFinancial Capital

Human Capital

Structural Capital

Relationship Capital

Spiritual Capital

Management

Employees Processes

Intellectual Property

Customers

Brand

Network

Business Model

Intellectual Capital Analysis

This provides clear picture of a firm’s intellectual structure which would be useful in identifying unexploited strengths and incontestable openings for global possibilities.

SWOT Analysis

This is used for identifying opportunities and threats in the business environment as well as strengths and weaknesses within the firm.

Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise in HR, OD, Competitive Intelligence, Strategy, Restructuring, Business Development, Sales & Marketing, Interim Management, CSR, Leadership, Project & Programme Management, Cost Management, Outsourcing, Franchising, Intellectual Capital, eBusiness, Social Media, Software Architecture, Cloud Computing, eLearning & International Business. He holds proprietary rights of various systems. He is currently CEO, Rubiini (UAE) and Hon. President, Worldwide Independent Inventors Association. He functioned as Chair, International Board of GCC Business Council (UAE); Senior Partner, Shevach Consulting, Nigeria; Chairman (Certification & Training), Lead Assessor & Council Member, Institute of Management Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead Consultant, JK Michaels; Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Director, Fortuna, Gambia; Director, The Greens; Director of Programmes & Council Member, Institute of Business Development, Nigeria; Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria; Adjunct Faculty, Regent Business School, South Africa; Adjunct Faculty, Ladoke Akintola University of Technology, Nigeria; Editor-in-Chief, Cost Management Journal; Council Member, Institute of Internal Auditors of Nigeria. He holds Doctoral Degree in Management, Master of Business Administration and Fellowship of Several Professional Institutes in North America, UK & Nigeria. He is an author & widely featured speaker in workshops, conferences & retreats. He was involved in developing Specialist Master’s Degree Course Content for Ladoke Akintola University of Technology (Nig) and Jones International University (USA). He also works as Adjunct & Visiting Professor of Universities and holds Interim Management Assignments on Boards of Companies.

Thank You