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Kellogg School Corner | Why geography matters today

Kellogg School Corner | Why geography matters today
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First Published: Sun, Jan 13 2008. 11 11 PM IST

Updated: Sun, Jan 13 2008. 11 11 PM IST
The American anthropologist Edward T. Hall wrote in 1959 that his countrymen’s lack of cultural sensitivity was hurting the US’ global reputation: “Most of our behaviour does not spring from malice but from ignorance, which is as grievous a sin in international relations. We are not only almost totally ignorant of what is expected in other countries, we are equally ignorant of what we are communicating to other people by our own normal behaviour.”
He rejected the notion that respect was an adequate substitute for regard between nations and added, “It is time that we stop alienating people with whom we are trying to work.”
Nearly 50 years later, diplomats, business leaders and other global citizens still struggle to learn one another’s secret handshakes, but working effectively with foreign counterparts is more complicated than ever.
According to Daniel Spulber, the Kellogg School’s Elinor Hobbs distinguished professor of international business, avoiding cultural missteps is just the beginning.
“Global business is where strategy meets geography,” says Spulber. “To gain a competitive advantage in global business is a huge challenge.” The global manager cannot simply duplicate her domestic strategy abroad, nor is it sufficient for her to possess a sense of local history and custom in the native lands of her business partners. She must be able to organize a torrent of information on a host of economic factors in her company’s home country and in the countries of her suppliers, customers and competitors.
“What the manager needs to solve this problem is some kind of framework,” Spulber says.
His book, Global Competitive Strategy (published in July by the Cambridge University Press), provides just such a framework—a five-point plan Spulber calls the star analysis.
“The star analysis tells you how to gather and organize information from the markets you’ll be working in,” says Spulber. “The international business manager begins with an overview of the marketplace.”
If that sounds easy enough, one need only remember that the marketplace in any given country is a vast, tangled web of commerce, culture, politics, technology, labour and trade laws, costs and operating risks, and the much larger web of the global marketplace connects them all. Spulber’s star analysis starts by surveying the marketplace in the company’s home country, then in potential customer countries, followed by supplier countries, then partner countries and, finally, in competitor countries.
“You need to take advantage of the opportunities the global market offers you,” he says. A thorough star analysis requires patience and persistence, but Spulber says the effort will allow managers to “use global markets as the way to meet the challenge of global markets.”
Take supply chains, he says. Rather than be daunted by the incredibly complex global supply chain, why not learn to use its complexity to one’s advantage? Spulber points to Apple Inc. and the runaway success of the iPod: “When Apple made its iPod, the real innovation was not necessarily the technology,” he says. Though Apple entered the market late, the company set the gold standard for portable MP3 players. “To do this in a way that was both affordable and cutting edge, they had to go all around the world for components.” He cites a recent study finding that the iPod was composed of more than 400 separate components and adds, “It’s really remarkable.”
Also a professor of management and strategy at Kellogg, Spulber headed the school’s International Business and Markets Program from its inception in 2001 until 2006, when he passed the torch to Kellogg colleague Torben Andersen, the school’s Nathan S and Mary P Sharp distinguished professor of finance. In addition to his work in the classroom, Spulber is a founding editor of the quarterly Journal of Economics and Management Strategy.
Global Competitive Strategy is a refined, condensed version of the material Spulber has been teaching for the past six years in international business strategy—a core course in the International Business and Markets Program. Since September, Spulber’s book has been the primary text for that course.
“Kellogg students generally have a lot of experience in global business,” Spulber says. “Managers are continually expanding their horizons and stepping out of their comfort zones.” Even so, he adds, the challenges they face are changing every day. Whether searching for suppliers in unfamiliar regions or keeping watch for new, previously unknown competitors, tomorrow’s global leaders will need to exercise great care to understand the culture and customs of the nations that host their business partners and competitors—and to appreciate the position of each nation in the global marketplace.
Spulber is confident his students will be ready. “With Kellogg’s international business program and the diverse backgrounds of our students, Kellogg graduates are well positioned to be successful in the global marketplace,” he says.
Aubrey Henretty is a writer for the Kellogg School of Management at Northwestern University. The article is based on the book Global Competitive Strategy by Daniel Spulber, the Kellogg School of Management’s Elinor Hobbs distinguished professor of international business.
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First Published: Sun, Jan 13 2008. 11 11 PM IST