- Subject: Strategic Management. - Mandatory book for this week's assignment (file attached - please include in citations): Rothaermel, F. T. (2013). Strategic management: Concepts. New York: McGraw-

E ssay # 1: T he H olly w ood film in dustr y g arn ers a s u rp ris in gly la rg e p erc e n ta ge o f it s

r e ve nues ( n early 7 5 p erc e nt) fr o m fo re ig n s a le s. T his n um be r is s u rp ris in gly la rg e g iv e n

se ve ra l c o nstr a in ts th at U S film s h ave w hen s e llin g in te rn atio nally . F ir s t, th ere a re

n um ero us p ir a cy c o nce rn s. E ve n in th e E uro pean U nio n ( E U ), w here c o untr ie s lik e

B rit a in a nd F ra nce im pose fin es o n p ro duce rs a nd b uye rs o f p ir a te d c o nte nt, o th er

co untr ie s s u ch a s S pain h ave lo ng b een h ave n s fo r th e d is tr ib utio n o f ille gal m ovie s

and m usic . In F ebru ary 2 011 , S pain p asse d a n ew la w to p ro vid e b ette r p ro te ctio n o f

co pyrig hte d m ate ria l, b ut e nfo rc e m en t m ay b e d if f ic u lt in a c o u ntr y w here n early 5 0

perc e nt o f a ll In te rn et u se rs a dm it to ille gally d ow nlo adin g c o p y-rig hte d c o nte nt ( tw ic e

th e E U a ve ra ge r a te ).

C hin a is in fa m ous fo r it s r a m pan t b usin ess in ille gal m ate ria ls . In 2 010, a C hin ese

g ove rn m ent r e port fo und th at th e m ark e t fo r p ir a te d D VD s w as $ 6 b illio n. A s a

c o m paris o n, th e to ta l b ox-o ff ic e r e ve n ues in C hin a in 2 010 w ere $ 1.5 b illio n. O ne

re aso n is th at tic ke t p ric e s fo r m ovie s in C hin a a re s te ep a nd m ovie s a re c o nsid ere d

lu xu ry e nte rta in m ent th at fe w c a n a ff o rd . A noth er r e aso n th at “ b la ck-m ark e t” s a le s in

C hin a a re s o h ig h is th at le git im ate s a le s o fte n a re n ot a llo w ed. C hin a a llo w s o nly a bout

20 n ew n on-C hin ese m ovie s in to it s th eate rs e ach y e a r. A ddit io nally , it h as s tr ic t

lic e nsin g r u le s o n th e s a le o f h om e-e nte rta in m en t g oods. C hin ese c e nso rs a re n ot lik e ly

t o a ppro ve th e s a le o f o ff ic ia l D VD s fo r m ovie s s u ch a s L ara C ro ft T o m b R aid er: T he

C ra dle o f L if e , B la ck S w an, a nd T he S ocia l N etw ork . A s a r e su lt th ere is o fte n n o

le git im ate p ro duct c o m petin g w it h th e b ootle gged o ff e rin gs a va ila ble v ia D VD a nd th e

In te rn et in C hin a.

M ovie s tu dio s a re m ovin g to s im ult a neous w orld w id e r e le ase s o f e xp ecte d b lo ck-

b uste rs in p art to tr y to c u t d ow n o n th e r e ve n ues lo st to p ir a cy. In te rn atio nal g ro w th is

e xp ecte d to c o ntin ue a nd ta ke in cre asin g s h a re s o f H olly w oo d film r e ve nues, e sp ecia lly

i n th e fa ce o f fa llin g U S D VD s a le s. C hin a is r e porte dly b uild in g n ew c in em a s cre ens a t

a r a te o f th re e p er d ay in 2 011 . Y et g ro w th in C hin a ( a nd e ls e w here ) is n ot a s p ro fit a ble

a s tr a dit io nal r e le ase s in th e U nit e d S ta te s. F or e xa m ple , film d is tr ib uto rs ty p ic a lly e arn

5 0 to 5 5 p erc e nt o f b ox-o ff ic e r e ve nues in A m eric a . T he a ve ra ge in m any o th er

co untr ie s is c lo se r to 4 0 p erc e nt ( th e r e st g oes to th e c in em a o w ner). B ut in C hin a, a

t y p ic a l H olly w ood film d is tr ib uto r g ets o nly 1 5 p erc e n t o f th e b ox-o ff ic e tic ke t r e ve nue.

Q uestio ns

1. G iv e n th e fo rc e s o n th e H olly w ood m ovie in dustr y , is it lik e ly w e w ill s e e a

d ecre ase in th e p ro ductio n o f r e g io nal- a nd U S-c e n te re d m ovie s, o r w ill s m all

i n dependent m ovie p ro duce rs p ic k u p a h ig her s h a re o f th e d om estic U S m ark e t?

P le ase e xp la in .

2. Wh at a lt e rn ativ e s c o uld m ovie p ro duce rs d eve lo p to h elp c o m ba t th e p ir a cy o f fir s t-

r u n m ovie s a nd fo llo w -o n D VD a nd In te rn et r e le ase s?

3. H ow w ould y o u p rio rit iz e w hic h n atio ns to e xp a nd d is tr ib utio n in to if y o u w ere

w ork in g fo r a m ajo r H olly w ood m ovie s tu dio ? Essay # 2: M any U S c o m panie s h ave b eco m e g lo bal p la ye rs . T he te ch n olo gy g ia nt IB M

em plo ys o ve r 4 65,0 00 p eople a n d h as r e ve n ues o f r o ughly $ 100 b illio n. A lt h ough IB M ’s

h eadquarte rs is in A rm onk, N ew Y ork , th e v a st m ajo rit y o f it s e m plo ye es ( m ore th an 7 0

perc e nt) a ctu ally w ork o uts id e th e U nit e d S ta te s. IB M , lik e m an y o th er U S-b ase d

m ult in atio nals , n ow e arn s th e m ajo rit y o f it s r e ve n ues ( ro ughly tw o-th ir d s) o uts id e th e

U nit e d S ta te s[1 ]. IB M ’s r e ve nues in th e B R IC c o u ntr ie s h ave b een g ro w in g a t b etw een

20 a nd 4 0 p erc e nt p er y e ar, w hile th ey h ave g ro w n b y o nly a bout 1 to 3 p erc e nt in

d eve lo ped m ark e ts s u ch a s th e U nit e d S ta te s. IB M ’s g oal is to o bta in 3 5 p erc e nt o f it s

t o ta l r e ve nue fr o m fa st- g ro w in g e m erg in g e co n om ie s s u ch a s th e B R IC c o untr ie s b y

2015. T o c a ptu re th ese o pportu nit ie s, IB M ( a lo ng w it h m an y o th er m ult in atio nal

co m panie s) h as b een r e ducin g t h e U S h eadco u nt w hile in cre asin g e m plo ym ent in

e m erg in g e co nom ie s s u ch a s In dia .

Q uestio ns

1. G iv e n th at tr a dit io nal U S fir m s s u ch a s IB M h ave o ve r 7 0 p erc e n t o f th eir

e m plo ye es o uts id e th e U .S . a nd e arn a lm ost tw o-th ir d s o f th eir r e ve nues fr o m

outs id e th e U S, w hat is a n a ppro pria te d efin it io n o f a “ U S fir m ”?

2. Is th ere a ny s p ecia l c o nsid era tio n a fir m s h o uld h ave fo r it s “ h om e c o untr y ”? Is it

e th ic a l to la y o ff w ork e rs in th e U S w hile h ir in g o ve rs e a s? W hat a bout k e epin g

pro fit s o uts id e th e U S in o ff s h ore a cco unts to a vo id p ayin g c o rp ora te ta xe s?

E ssay # 3: A lib aba a nd C hin a’s E -C om merc e : “ O pen S esa m e” c o m es tr u e in th e A ra bic

t a le o f “ A li B aba a nd th e F orty T hie ve s.” A li B aba, th e p oor w oodcu tte r, o pened th e

ca ve w it h h id den tr e asu re b y s a yin g th e m ag ic w ord s “ O pen s e sa m e!” In m odern -d ay

C hin a, A lib aba is a fa m ily o f e -c o m merc e b usin esse s, w hic h T he W all S tr e et J o urn al

describ ed a s “ c o m para ble to e B ay, A m azo n , a nd P ayP al a ll r o lle d in to o ne, w it h a s ta ke

in T w it te r-lik e W eib o th ro w n in to b oot.” A lib aba’s m ain tr a din g p la tfo rm s a re T a obao

and T m all; to geth er th ey p ro ce sse d $ 170 b illio n in tr a nsa ctio ns la st y e ar. T his is m ore

th an A m azo n a nd e B ay c o m bin e d! S o, w hat is A lib aba’s m ag ic ?

A lib aba h ad a h um ble b egin nin g. In 1 999, a fo rm er E nglis h te ach er n am ed J a ck M a

sta rte d th e c o m pany w it h a te am o f 1 8 in h is a partm en t in H angzh ou, a c it y s o m e 1 00

m ile s s o uth w est o f S hanghai. T he y e a r 1 999 a ls o m ark e d th e s ta rt o f C hin a’s e xp lo siv e

g ro w th o f In te rn et u se rs ( S ee F ig -2 4). B y 2 012, C hin a’s In te rn et u se rs g re w to 5 64

m illio n, a c o m pound a nnual g ro w th r a te ( C AG R) o f a w hoppin g 3 7.6 p erc e nt. Fig ure 2 4

In it ia lly , A lib aba’s w ebsit e w as a b usin ess-to -b usin ess ( B 2B ) p la tfo rm w here C hin a’s

s m all a nd m ediu m -s iz e d b usin esse s c o u ld s h o w ca se th eir p ro ducts to b uye rs a ro und

th e w orld . A lib aba w as n ot th e f ir s t c o m pa ny to e xp lo re o pportu nit ie s in in tr o ducin g

C hin a’s m anufa ctu rin g to g lo bal d em an d, b ut it w as th e fir s t to d o s o o nlin e. In it s fir s t

ye ar o f o pera tio n, A lib aba s ig ned u p n ew m em be rs a t a r a te o f 1 ,2 00 p er d ay. B y 2 002,

th e y o ung s ta rtu p w as a lr e ady p ro fit - a ble . B y 2 012, A lib aba fa cilit a te d tr a nsa ctio ns in

b asic a lly e ve ry c o untr y in th e w orld .

1999, E ach N et, a noth er C hin ese In te rn et v e n tu re , w as fo unded in S hanghai b y tw o

Harv a rd M BAs w ho w ante d to c re ate a “ C hin ese e B ay,” a n a uctio n s it e fo r lo ca ls to s e ll

a nd b id fo r g oods. B y 2 003, E ach N et h ad 2 m illio n u se rs a nd 8 5 p erc e nt m ark e t s h are

in C hin a’s c o nsu m er-to -c o nsu m er ( C 2C ) tr a nsa ctio ns. A t th e tim e, e B ay w as a ctiv e ly

l o okin g to e xp and in C hin a a nd e ve n tu ally a cq u ir e d E ach N et a s it s C hin a o pera tio n fo r

$180 m illio n in 2 003.

F earin g e B ay w ould lu re a w ay s m all b usin esse s, A lib aba la unch ed a c o m petin g C 2C

pla tfo rm , T a obao ( m eanin g “ d ig g in g tr e asu re ” in C hin ese ), a s a d efe nsiv e s tr a te gy.

U nlik e E ach N et w hic h c h arg ed lis tin g a nd tr a nsa ctio n fe es fr o m s e lle rs , T a obao w as

fr e e fo r th e u se r. B ut T a obao’s f r e e s e rv ic e s d id n ot e ro de E ach N et’s lo ya l c u sto m er

base . E ach N et’s d om in ant m ark e t p osit io n m ea nt m ore p ro ducts a nd m ore

o pportu nit ie s fo r b oth b uye rs a nd s e lle rs to tr a de. A lt h ough E ach N et w as c o m petin g

head to h ead w it h T a obao o n a dve rtis in g c a m pa ig ns, e B ay m ad e a d ecis io n to

t e rm in ate E ach N et’s h om egro w n te ch n olo gy p la tfo rm a nd m ove a ll E ach N et u se rs to

e B ay’s U S p la tfo rm in 2 004. In te rn ally , th is w as c a lle d a “ m ig ra tio n” a t e B ay. T he in te nt

w as to c re ate o ne g lo bal tr a din g p la tfo rm th at w ould a llo w e B ay u se rs to tr a de w it h

e ach o th er, n o m atte r w here th ey w ere lo ca te d. The p ro ble m w as th at e B ay’s U S p la tfo rm d id n ot h ave th e s e t o f fe atu re s th at E ach N et

needed to c o m pete in C hin a. T he o nlin e d ata th at o nce fr e ely flo w ed w it h in C hin a n ow

beca m e c ro ss-b ord er tr a ff ic a nd h ad to p ass th e C hin ese g ove rn m ent’s “ fir e w all. ” T he

sp eed to lo ad E ach N et’s w eb p a ge s lo w ed s ig nif ic a n tly . F ru str a te d u se rs le ft E ach N et

in d ro ve s a nd tu rn ed to T a obao fo r a b ette r a lt e rn ativ e . W hile m ost d ecis io ns a t

E ach N et h ad to g o to e B ay’s U S h eadquarte rs fo r a ppro va l, A lib aba s w if tly la unch ed a

n um ber o f in nova tiv e s e rv ic e s to a ssis t tr a nsa ctio ns o n T a o bao. O ne w as A liw angw ang,

an in sta nt m essa gin g s e rv ic e h e lp in g b uye rs a nd s e lle rs in te ra ct. A noth er w as A lip ay,

a n e scro w p aym ent s yste m to r e duce o nlin e tr a nsa ctio n r is ks. J u st th re e m onth s a fte r

eB ay’s m ig ra tio n, T a obao h ad c a ptu re d 6 0 p erc e n t o f th e C 2C m ark e t s h are , le avin g

E ach N et a t 3 0 p erc e nt. In 2 006 , e B ay s h u t d ow n E ach N et a nd fo ld ed it s C hin a

opera tio n a lt o geth er.

A lib aba, m eanw hile , c o ntin ued to b uild it s e -c o m merc e v e n tu re a ro und T a obao. In

2 007, it s e t u p A li- s o ft, w here T a o bao s e lle rs c o u ld b uy c u sto m iz e d th ir d -p arty s o ftw are

to h elp w it h th eir d ay-to -d ay o pera tio ns, a nd A lim am a, w here T a obao s e lle rs c o uld p ost

a ds o n a n etw ork o f s p ecia liz e d w ebsit e s. A ntic ip atin g a g ro w in g s h are o f b usin ess-to -

co nsu m er ( B 2C ) tr a nsa ctio ns o f o nlin e r e ta ilin g, T a o bao la unch e d T M all, a d edic a te d

B 2C p la tfo rm to c o m ple m ent T a o bao in 2 008. ( S ee F ig -2 5)

F ig ure 2 5

B y 2 012, A lib aba e m plo ye d 2 4,0 0 0 p eople a nd h ad o ve r $ 4 b illio n in r e ve nues,

b eco m in g th e c le ar m ark e t s h are le ader in a ll th re e e -c o m merc e a re as ( B 2B , C 2C , B2C ) in C hin a ( s e e F ig -2 6). A lib a ba’s in it ia l p ublic o ff e rin g is h ig hly a ntic ip ate d b eca use

th e c o m pany is v a lu ed a t s o m ew he re b etw een $ 55 b illio n a nd $ 120 b illio n. C hin a’s

I n te rn et e -c o m merc e m ark e t is e xp e cte d to g ro w to $ 600 b illio n b y 2 020. T he U S o nlin e

se arc h fir m Y ahoo o w ns a 2 4 p erc e n t s ta ke in A lib aba.

F ig ure 2 6

Q uestio ns

1. H ow w as A lib aba a ble to b eco m e th e le adin g o nlin e tr a din g p la tfo rm in C hin a?

T hin k a bout s ta ndard s, n etw ork e ff e cts , a nd c ro ssin g th e c h a sm ( fr o m m odule 4 ).

2. A pply th e C AG E d is ta nce fr a m ew ork to h elp e xp la in w hy e B ay w as n ot s u cce ssfu l

in th e C hin ese m ark e t. Wh y d o y o u th in k A m azo n h as o nly 1 .9 p erc e nt m ark e t

sh are in C hin a ( s e e F ig -2 6), w hile it h old s s o m e 2 6 p erc e n t m ark e t s h are o f th e

$226 b illio n U S e -c o m merc e m ark e t? W hat g enera l c o n clu sio ns d o y o u d ra w ?

3. Revie w th e in te gra tio n-re sp onsiv e n ess fr a m ew ork . W hic h g lo bal s tr a te gy p osit io ns

w ould y o u r e co m mend U S e -c o m merc e c o m pa nie s s u ch a s e B ay, A m azo n, a nd

oth ers p urs u e, a nd w hy?

4. D oes y o ur r e co m mendatio n in q u estio n 3 s u p port th e n otio n th at th e “ w orld is fla t,”

o r w ould “ s e m i- g lo baliz a tio n” b e a m ore a ccu ra te d escrip tio n? S upport y o ur

arg um ents .

E ssay # 4: B YD – “ B uild Y our D re am s” in A m eric a

T he C hin ese c o m pany B YD , a n a cro nym fo r “ B uild Y ou r D re am s,” b egan lif e a s a

m anufa ctu re r o f r e ch arg eable b a tte rie s in 1 995. It is n ow le ve ra gin g th is e xp ertis e in to

e le ctr ic v e hic le s. B ut w hy w ould a b atte ry m an ufa ctu re r d iv e rs if y in to c a r

m anufa ctu rin g? U nlik e c o m ple x g aso lin e e ngin es, e le ctr ic c a rs a re p ow ere d b y s im ple

m oto rs a nd g earb oxe s th at h ave v e ry fe w p arts . E le ctr ic v e h ic le s a re th ere fo re m uch

c h eaper a nd m ore s tr a ig htfo rw ard to b uild . B YD ’s c la im to fa m e is a lit h iu m ir o n

phosp hate b atte ry o n w hic h c a rs c a n r u n 2 50 m ile s o n a s in gle th re e-h our c h arg e. B YD se lls p lu g-in h yb rid s a nd a ll- e le ctr ic v e h ic le s in C hin a, A fr ic a , th e M id dle E ast, a nd

S outh A m eric a . In 2 013, it e nte re d th e U S m ark e t.

G iv e n th e p ro ble m s c a rm ake rs fa ce d in th e a fte r-m ath o f th e g lo bal fin ancia l c ris is ,

w hic h w it n esse d th e b ankru ptc ie s o f G M a nd C hry sle r, fo r a n ew fir m to e xp and in to th e

auto m anufa ctu rin g in dustr y d oe sn ’t s e e m a dvis a b le . Y et B YD is jo in in g th e fr a y. H ow

ca n it s id este p s u ch in su rm ounta ble e ntr y b arrie rs ? T he a nsw er: T e ch nolo gy is le ve lin g

th e p la yin g fie ld . M r. W ang, fo und er a nd c h a ir m an o f B YD , e xp la in s h is s tr a te gic in te nt:

“ It’s a lm ost h opele ss fo r a la te co m er lik e u s to c o m pe te w it h G M a nd o th er e sta blis h ed

auto m ake rs w it h a c e ntu ry o f e xp erie nce in g aso lin e e ngin es. W it h e le ctr ic v e hic le s,

w e’r e a ll a t th e s a m e s ta rtin g lin e .” [2 ] A ctu ally , B YD m ay e ve n h ave a h ead s ta rt

b eca use o f it s d eep e xp erie nce in b atte rie s, s e llin g th em to te ch nolo gy c o m panie s s u ch

a s M oto ro la , N okia , a nd S am su ng, a nd s u p ply in g m ore th an 5 0 p erc e nt o f th e w orld ’s

g lo bal h andse t b atte rie s. N ow it is le ve ra gin g it s c o re c o m pe te ncie s in b atte rie s, th e

m ost c rit ic a l c o m ponent o f e le ctr ic v e h ic le s, in to c a r m an ufa ctu rin g.

In 2 003, M r. W ang, w ho w as tr a in ed a s a c h e m is t, d ecid ed to m ake c a rs . B YD a cq uir e d

a s ta te -o w ned, n ear-d efu nct c a r m an ufa ctu re r a nd la unch e d it s fir s t s e lf - d eve lo ped

se dan m odel tw o y e ars la te r. T he m od el s o o n b eca m e a n atio nal b ests e lle r, a nd B YD a

t o p-te n a uto m anufa ctu re r in C hin a. B y 2 009, B YD ’s a uto d iv is io n m ade u p m ore th an

50 p erc e nt o f th e c o m pany’s to ta l r e ve n ue ( F ig -2 7). E ve n le gendary in ve sto r W arre n

B uff e tt w as s o im pre sse d w it h th e c o m pa ny a nd W ang’s e ntr e pre neuria l s p ir it th at a

s u bsid ia ry o f M r. B uff e tt’s B erk s h ir e H ath aw ay b ought a 1 0 p erc e nt e quit y s ta ke in B YD

fo r $ 232 m illio n.

F ig ure 2 7

Leve ra gin g th e c o m pany’s k n ow -h ow in m akin g r e ch a rg eable b atte rie s, B YD d eve lo ped

an a ll- e le ctr ic m odel, th e e 6. In 2 009, B YD in tr o duce d th is n ew m odel a t th e N orth

A m eric a n In te rn atio nal A uto S how . T he d ebut g enera te d b uzz in th e c a r in dustr y a nd

fu ele d th e c o m pany’s a m bit io n to p ro m ote it s b ra nd in A m eric a . B YD in dic a te d it s p la n

to s ta rt s e llin g th e fiv e -s e at s e d an to fle et c u sto m ers in th e L os A ngele s a re a b y 2 010.

A fte r a lm ost a y e ar o f d ela y, B YD o pened it s N orth A m eric a n h eadquarte rs in L os

A ngele s in 2 011 . H ow eve r, th e c o m merc ia liz a tio n o f th e e 6 n eve r o ccu rre d in th e U S fo r

a n um ber o f r e aso ns: T he e 6 n ee ded fu rth er d eve lo pm en t; L os A ngele s la cke d th e

adequate in fr a str u ctu re o f c h arg in g s ta tio ns r e quir e d fo r e le ctr ic v e hic le s; a nd th e c it y

d id n ot p ro vid e a n in ce ntiv e s ch e m e fo r g re en c a r b uye rs a t th e tim e. In a ddit io n, alr e ady w ell- e sta blis h ed a uto m an ufa ctu re rs la unch e d e le ctr ic m odels , s u ch a s

N is sa n’s L eaf a nd G enera l M oto r’s V olt ( a p lu g-in h yb rid ), n ot to m entio n th e p opula r

To yo ta P riu s ( a ls o a p lu g-in h yb rid la unch e d in 2 000 in th e U S). A ll th is h as m ade it

m uch m ore d if f ic u lt fo r B YD to e nte r th e U S m ark e t s u cce ssfu lly .

G iv e n th ese c h alle nges, B YD is n ow fo cu sin g o n m akin g a ll- e le ctr ic b use s. T he p rim ary

ta rg et m ark e t is m etr o polit a n tr a n sp o rt a uth orit ie s, a nd B YD s e e m s to b e g ain in g

m om entu m . Its a ll- e le ctr ic b use s a re b uilt o n th e p ro ductio n p la tfo rm o f a C hin ese

co ach m anufa ctu re r a cq uir e d in 2 009. T he fir s t a ll- e le ctr ic b us m odel, th e K 9, r o lle d o ff

B YD ’s p ro ductio n lin e in 2 010. K 9’s d ebut g enera te d im media te c o m merc ia l in te re st. In

2 012, B YD s o ld m ore th an 1 ,2 00 b use s p ric e d a t $ 300,0 00 e ach to c o untr ie s s u ch a s

Is ra el, U ru guay, C olu m bia , C an ada, a nd th e N eth erla nds.

M r. W ang h asn ’t g iv e n u p o n h is d re am o f m akin g it b ig in A m eric a , th ough. T o m eet th e

re quir e m ents o f th e “ B uy A m eric a A ct” ( w hic h s p e cif ie s th at U S g ove rn m ent a gencie s

m ust p ro cu re p ro ducts w here U S-m ad e p arts a cco unt fo r m ore th an 6 0 p erc e nt o f to ta l

co m ponent c o sts ), B YD a nnounce d in 2 012 it s p la n to o pen a n e le ctr ic -b us a sse m bly

p la nt in L anca ste r, C alif o rn ia . T his a nnounce m en t c a m e r ig ht a fte r B YD r e ce iv e d a 1 0-

bus o rd er w orth $ 12.1 m illio n fr o m L ong B each T ra nsit , a tr a nsp ort a gency s e rv in g th e

co m munit ie s s o uth o f L os A ngele s. B YD is n ow b uild in g it s b use s in th e C alif o rn ia p la nt

usin g lo ca l la bor, a nd h as b ene fit te d fr o m th e a bilit y o f tr a nsp o rt a gencie s a nd o th er

public e ntit ie s in th e U S to ta p f e dera l s u b sid ie s th at c o ve r u p to 8 0 p erc e nt o f th e c o st

o f b uyin g e le ctr ic b use s. B YD is e ye in g o th er lu cra tiv e C alif o rn ia m ark e ts , a ls o , s u ch a s

th e L os A ngele s C ounty M etr o polit a n T ra nsp o rta tio n A uth orit y a nd B AR T ( B ay A re a

R apid T ra nsit ) . B YD p la ns to d e liv e r b etw een 2 00 a nd 3 00 e le ctr ic b use s to c u sto m ers

in th e U S b y th e e nd o f 2 014. S o, th e q uestio n r e m ain s . . . W ill B YD b e a ble to

c o ntin ue b uild in g it s d re am in A m eric a ?

Q uestio ns

1. Wh at ty p e o f c o m pany is B YD ? Is it a b atte ry m an ufa ctu re r o r a c a r a nd b us

m anufa ctu re r? O r is it s o m eth in g e ls e e ntir e ly ? W hat is B YD ’s c o re c o m pete ncy?

H ow d oes it le ve ra ge it s c o re c o m pe te ncy to d iv e rs if y ? ( Y ou m ay w ant to r e fe r to

F ig -2 8, “ T he C ore C om pete nce – M ark e t M atr ix .” ) Fig ure 2 8

2. T hin kin g a bout th e c o nce pt o f lia bilit y o f fo re ig nness, w hat w ould y o u c o nsid er to

b e B YD ’s g re ate st c h alle nge w he n a tte m ptin g to c o m pe te s u cce ssfu lly in th e U S

m ark e t? H ow w ould y o u a ddre ss th ese c h a lle nges?

3. Wh at ty p e o f g lo bal s tr a te gy w ou ld y o u r e co m mend B YD p urs u e b ase d o n th e

in te gra tio n-re sp onse fr a m ew ork ? D o y o u th in k B YD w ill b e s u cce ssfu l in A m eric a ?

Wh y o r w hy n ot?

[1 ] IB M A nnual R eports , v a rio us y e a rs .

[2 ] “ T e ch nolo gy le ve ls p la yin g fie ld in r a ce to m ark e t e le ctr ic c a r,” T he W all S tr e et

Jo urn al, J a nuary 1 2, 2 009.