1. Widener’s School of Business Administration is considering whether it should offer its
MBA program globally. Apply the ADDING framework to determine whether or not it
would be worthwhile for the SBA to enter international markets with an MBA program.
To decide whether it will be worth it or not, for Widener SBA to offer the MBA program globally, I applied the ADDING framework, which is a series of questions you must ask yourself as a business before making a big decision. The first being does the volume increase profit. Offering the program in a new market will result in profit, as a new demographic of students are now enrolled at the university, which they wouldn’t have had the opportunity to before this change. The next questions are will costs increase or decrease and does going global effect WTP. To successfully begin offering the MBA program globally, costs would increase to be able to have the same quality of connection, communication, and access to faculty as the existing MBA programs. This does affect their willingness to pay because they would know costs will raise if the administration goes through with this. When looking at industry attractiveness, going global has been a trend in the industry, however, is not something that is a must, but more of an option. The more that schools successfully do this, the more schools will look to implement a global MBA program. Risk increases when doing this because it is a big investment that doesn’t always work out and often underperform. Lastly, the firm will gain knowledge on international markets and increase capabilities. Overall, I believe that it would not be worthwhile now to begin an international program given the risk. It needs to be the right fight and have the right strategy. Continuing to grow the cu
ent SBA MBA programs will be more beneficial now.
2. Widener’s School of Business Administration (SBA) is trying to decide in which global
markets to offer its MBA program. (a) Perform a CAGE analysis to explain what factors
should be considered when deciding where to offer the MBA. (b) Pick a suitable market
ased on your CAGE analysis and explain why this would be good market for the SBA to
A CAGE analysis considers different distances between the home and target countries. Cultural, administrative, geographic, and economic. The cultural distance can determine the relationships between global students and the school. Understanding someone else’s culture is very important and can go a long way. This includes language, religion, daily lifestyle, etc. Administrative distance involves the difference in the country’s laws and policies. This wouldn’t be as much of a factor for the students, but more for the university knowing the other countries laws. Geographically, a location that has already established a market for grad school and college education, will be heavily considered. A market where students already have global programs from institutions like Widener will be where the SBA targets. Physical distance will also be a factor. Lastly, the economic distance is the difference between the country's incomes. Offering the program in a market that can afford tuition is also critical. As a result, this will affect the willingness to pay.
The market I chose for the SBA to enter is Greece. I chose them because they already have established MBA programs, so a market is already set. The geographic distance is far of course but the communication would be good. Greece is a country that understands and speaks English well. They are also successful economically. With all those factors considered, I chose Greece as the market to enter.
Managing for Results Through Global Strategy
How to Find and Leverage Global Opportunities for Superior Results
Globalization is the trend, but…
Is it a mandate or an option?
Can it enhance value?
Multinationals’ global operations often under-perform domestic operations
Wrong focus - market size & similarities → growth, but bigger is not always better
Fit/integration & an effective strategy is still relevant
An example: eBay entering China failed twice
eBay in China
EachNet acquisition in 2003 ($180 mil)
Founded in 1999
70% market share by 2003, but…
Enter a local rival to lead the market – TaoBao of Alibaba.com
Tom Online joint venture in 2006 ($40 mil)
EachNet separated from this global platform by 2007
www.eBay.cn in 2007 for international trade
A platform to link local entrepreneurs to buyers worldwide (finally a success)
Key Questions to Ensure Superior Global Performance
Will going global improve our results?
i.e. Why enter international markets?
The ADDING Value Scorecard
What global markets should we enter?
What is the best global strategy for us?
Aggregation, adaptation, or a
1. The ADDING Value Scorecard
Does going global add value? See notes section
See notes section for more details.
Back to considering competitive advantage (CA) and unpacking the elements. Unpacking economic value moves beyond just considering market size (i.e. potential volume) to a consideration of decreasing costs, enhancing the differentiation source of advantage, and improving industry attractiveness.
Components of ADDING Value
Will volume increase profitability? → Bigger is not always bette
Will costs increase or decrease?
Does going global affect WTP?
Will attractiveness improve industry attractiveness → the 5 Forces?
Will risk increase or decrease?
Will the firm acquire new knowledge
2. Which global markets to enter?
Country Portfolio Analysis (CPA) - GOOD
Attractiveness determined by:
Unilateral factors: Economic indicators related to market size, consumer wealth, and consumption rates
Multilateral factors: Tariffs, insularity, home bias, or remoteness
Problem – does not consider all dimensions of “distance”
Misses out on bilateral differences that are specific to country-pai
CAGE Analysis - BETTER
Considers distance between home and target country on 4 dimensions.
Impact of each type is felt differently by different industries and firms
Differences between countries affect the success of global strategy
A business model that succeeded in one country may not succeed in anothe
Example: eBay’s problems in China
Importance of face-to-face meetings, liability of foreignness (cultural)
Government style, censorship, suspicious of foreign entities (administrative/legal)
Local presence (geographic)
Auction/pricing differences, bartering (economic)
Language, religious/social norms/values
Influences consumer choices, business actions, societal sanctions
Greater impact on products that have:
High linguistic content (e.g. multi-media)
Cultural identity (e.g. food, sports)
Country-specific quality perceptions (wine)
Preferences/attributes that vary by country
Laws, policies, institutions, treaties, historical ties, political beliefs, cu
Influences government restrictions, legal enforcement, protectionism
Greater impact on firms/industries that:
Produce staples/entitlement products
Affect national security, economy, or pride
Sell to govt., exploit resources, build infrastructure
Physical remoteness, climate, lack of common border, sea access, transport or communication infrastructure
Affects transportation costs
Greater impact on products that:
Have low value-to-weight ratio
Are fragile or perishable
Require communication, supervision
Differences in income, capital costs and access, natural resources, education, labor productivity, infrastructure
Affects costs and WTP
Greater impact on products that are:
Labor intensive or distribution intensive
Dependent on infrastructure (e.g. phones)
Example: India or China?
Cultural distance Admin. distance
India English spoken
Ethnic tension Common law
Geographic distance Econ. distance
Poor transportation & communication links
Distant More educated
Better transportation & communication links
Distant Larger market
Better infrastructure (e.g. distribution systems
U.S. Call centers in India versus XXXXXXXXXXU.S. manufacturing in China
See notes section for more details.
Blue check marks indicate closeness between India and the U.S. Gray check marks indicate closeness between China and the U.S.
3. What kind of global strategy?
Exploiting CAGE differences between countries by locating value chain activities in different locations
Customizing product/process in response to CAGE differences
Achieving economies of scale by grouping similar countries into regions
Consider fit/integration with existing activities
Approaches to Adaptation →
Mix of features, policies, etc. to meet various needs
Meet segments with similar needs to ↓need for variation
Joint ventures, franchises, etc.
Adapting to the local environment
Use regional strategies based on the situation
Main operations at home – supply worldwide
Operations in important markets
Regional bases provide resources /services to country operations
↓ number of basic offerings that are offered worldwide
Some regions supply a product or perform a role for entire organization
↓ redundancy & ↑ efficiency/scale where possible
Which global strategy to select?
The firm’s particular circumstances suggests which strategy to favor, for example:
itrage – when labor costs are high
Adaptation – when advertising is key
Aggregation – economies of scale are key
Maybe a combination?
What factors determine if this is possible?