The Forgotten Strategy - article by Pankaj Ghemawat - blog by Karl Janowski
This article was published in Harvard Business Review.
The normal Chinese strategy is to create a mix of local products and services and global products and services to sell in China. The essence of the strategy is to determine the mix.
The forgotten Chinese strategy is to exploit the differences betweem regions. To do this there are four forms of arbitage:
- Cultural Arbitage - opportunities that pop up because of local cultutre, example: fast food chains that serve both local and American food in foreign countries
- Administrative Arbitage - legal and political differences open up opportunities, example: tax differences
- Geographic Arbitage - although the world is getting smaller there are still several ways to use geographic arbitage as a strategy, example: crops or resources found only in one area
- Economic Arbitage - exploit certain economic conditions, example: cheap labor in a country
At the same time companies expoit the differences they should also look to exploit the similarities between regions
Complex Aggregation Strategies - align business model not by having country by country strategies but by regional or business strategies and build global networks