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Star power

In his new book, Global Competitive Strategy, Prof. Daniel Spulber maps the complex constellation of international business, creating order with a new framework

By Aubrey Henretty

7/23/2007 -

The American anthropologist Edward T. Hall wrote in 1959’s The Silent Language that his countrymen’s lack of cultural sensitivity was hurting the United States’ global reputation: “Most of our behavior does not spring from malice but from ignorance, which is as grievous a sin in international relations.” Hall claimed we were “almost totally ignorant” about effective communication in both domestic and international interactions. He also noted, “It is time that we stop alienating people with whom we are trying to work.”

Nearly 50 years later, while diplomats, business leaders and other global citizens still strive to work effectively with their counterparts around the world, secret handshakes alone won’t seal the deal. According to Daniel Spulber, the Kellogg School’s Elinor Hobbs Distinguished Professor of International Business, avoiding cultural missteps is just the beginning of forging successful connections.

“Global business is where strategy meets geography,” says Spulber. “To gain a competitive advantage in global business is a huge challenge.” Managers today simply cannot duplicate domestic strategies abroad, nor is it sufficient merely to possess a sense of local history and custom in the native land of a business partner. Leaders must organize a torrent of information about a host of economic factors in their companies’ home countries and in those of suppliers, customers and competitors.

“What the manager needs to solve this problem is a conceptual framework,” Spulber says.

Spulber’s new book, Global Competitive Strategy (published in July by Cambridge University Press), provides precisely that — a five-point plan the Kellogg professor calls the “Star Analysis.”

“The Star Analysis tells you how to gather and organize information from the markets that you’ll be working in,” says Spulber, an economist by training who joined Kellogg in 1990. “The international business manager begins with an overview of the marketplace.”

If that sounds easy enough, consider that the marketplace in any given country is a vast web of commerce, culture, politics, technology, labor and trade laws, costs and operating risks. And the global marketplace is larger still and even more complex. It encompasses all the complexities of the national markets and adds a few of its own at the macro level.

Spulber’s Star Analysis starts with an overview of the marketplace in the company’s home country. Managers ask themselves how the political and regulatory climates at home may strengthen or weaken the company’s global position and how well the brand is known nationally. They consider the legal dynamics and consumer behavior that may limit supply and cap demand at home. Once managers have gathered the requisite information on their home-base countries, they can move on to the other four points of the Star Analysis, in which they chart the commercial and cultural dynamics at work in potential customer countries, supplier countries, partner countries and competitor countries. With this wealth of knowledge, managers are well equipped to seek out partner countries and to anticipate competitors’ strategies.

“You need to take advantage of the opportunities the global market offers you,” says Spulber. 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.”

To illustrate the point, he describes an ideal response to the complexity of global supply chains: that of Apple Inc. in the production of the iPod.

“When Apple made its iPod, the real innovation was not necessarily the technology,” he says. Apple entered the market late, Spulber notes, but the company sought to 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 University of California-Irvine study that found the video iPod is composed of more than 400 separate components, sourced widely. “It’s really remarkable.”

Spulber is quick to point out that there was more to Apple’s strategy than simply scouring the market for bargains on parts and labor. “You gain a competitive advantage by making the best connections,” he says. He elaborates on the point in the third chapter of Global Competitive Strategy: “The global business chooses the best match between its home country, supplier countries, partner countries, and customer countries. Toyota produces cars in the US, with relatively high labor costs, to build customer relationships and respond quickly to change in market demand.”

Also a professor of management and strategy at Kellogg, Spulber headed the school’s International Business & Markets Program from its inception in 2001 until last year, when he passed the torch to Kellogg colleague Torben Andersen, the school’s Nathan S. and Mary P. Sharp Distinguished Professor of Finance. Home of the Kellogg international business major, IBMP offers the popular Global Initiatives in Management course and the International Exchange Program, each of which provides a unique opportunity for students to immerse themselves in leadership roles around the world. 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 IBMP. Starting this fall, Spulber’s book will be the primary text for that course. Chapter topics ranging from “The global mosaic” to “Global investment strategy: choosing the best mix of transactions and investments” will give students a strong foundation in global strategy basics, and the final four chapters contain detailed profiles of leading global companies including Groupe Danone and Lenovo Group Ltd.

“Kellogg students generally have a lot of experience in global business,” Spulber says. Even so, he adds, the challenges they face are changing every day. Whether searching for suppliers in unfamiliar regions or identifying new competitors, global leaders need not only to understand the culture and customs of partner and competitor countries, but also to grasp the position of each nation — including the leaders’ own — in the global marketplace.

Spulber is confident his students will be ready.

“With the Kellogg International Business and Markets Program and the diverse backgrounds of our students, Kellogg graduates are well positioned to be successful in the global marketplace,” he says.