International Management Part 2-Lite

2/25/2022
Product Marketing
Mohamed Kholief
Digital Transformation – Integrated Knowledge
Dynamics
Innovation and Marketing Lecturer
Email: mkholief@ikdynamics.com
https://www.linkedin.com/in/mkholief/
‫ محمد خليف‬- ‫جميع الحقوق محفوظة‬ 1
The Google Story
• In 1998, co-founders Brin and Page delivered an

innovative new search strategy that ranked results
on popularity as well as keywords.
• Today, Google performs a bilion searches a day in
181 countries, speaks 146 languages and is the
most-visited U.S. Web site.
• Had revenues of $37.9B and 25.7% in net income in
2011 and continues to grow in sales, new markets,
and new products offered.
© 2014 Pearson Education, Inc. 2
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The Google Story, Cont.
• Uses a media e-business model to generate revenue

from several B2B markets:
– Licensing of its search services.
– Sales of advertising to Web advertisers, 96% of
its revenues from advertising.
• Google strategy is data driven decision making
• Google’s product mix includes 24 search products, 3
advertising products, 20 applications, and many
enterprise products. They are all based on data
constituting the customer behavior and patterns of
purchase and their taste.
The Google Story, Cont.

(Data Driven Decision Making )
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Creating Customer Value

Online
 Customer value = benefits – costs

 Value is the entire product experience
 Value is defined wholly by the mental beliefs and
attitudes held by customers
 Value involves customer expectations
 Value is applied at all price levels
 Part of the success Google is their ability to use
internet to increase benefits and lower costs and
create value continuously.
Creating Customer Value

Online
 The Internet created a new set of consumer desired

benefits. Users expect:
 effective web navigation,
 quick download speeds,
 clear site organization,
 attractive and useful site design,
 secure transactions,
 privacy,
 free information or services, and
 user-friendly Web browsing and e-mail reading.
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What are BENEFITS?
• Attributes include overall quality and specific

features.
• Product features can include color, taste,
style, size, and speed of service.
• Benefits also are the same features from a
user perspective (that is what will the
attribute do to solve problems or meet needs
and wants? e.g. Facebook)
Global HR Management
Mohamed Kholief
Board Member and Head of Innovation and
Entrepreneurship Programs – CIT
Principal Consultant – Integrated Knowledge Dynamics
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What Is Human
Resource Management?
• Human resource management (HRM) - the activities
an organization carries out to utilize its human
resources effectively
– more complex in an international business
• These activities include determining human resource
strategy, staffing, performance evaluation,
management development, compensation, labor
relations
– expatriate managers
• Firms need to ensure there is a fit between their
human resources practices and strategy
What Is International Human

Resource Management?
• International Human Resource Management (IHRM)
can be defined as a set of activities targeting human
resource management at the international level.
• It strives to meet organizational objectives and
achieve competitive advantage over competitors at
national and international level.
• IHRM comprises of typical HRM functions such as
recruitment, selection, training and development,
performance appraisal and dismissal done at the
international level and additional exercises such as
global skills management, expatriate management
and so on.
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IHRM vs HRM
• Domestic HRM takes place at the national level, that is, within a
country and IHRM takes place at the international level, that is, in
between two or more than two countries.
• Domestic HRM is bothered about managing employees belonging
to one nation and IHRM is bothered about managing employees
belonging the home country and host country as well as third
country employees.
• Domestic HRM is concerned with managing limited number of HRM
activities at the national level and IHRM is concerned with
managing additional activities such as expatriate management.
• Domestic HRM is less complicated due to less imprint from the
external environment. IHRM is comparatively more complicated, as
it is deeply affected by the external factors such as cultural distance
and institutional factors.
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What Is The Strategic Role Of

HRM In International Firms?
The Role of Human Resources in Shaping Organizational Architecture
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Staffing Policy
• IHRM is concerned with three types of employees −
– Home country employees − Employees staying in the home
country of the company where the corporate head quarter is
situated, for example, an Egyptian working in Egypt for some
company whose headquarters are in Egypt itself.
– Host country employees − Employees staying in the nation in
which the subsidiary is located, for example, a US citizen
working in US for Egyptian Company or Expatriate Egyptian
working in the US subsidiary.
– Third country employees − These are the employees who are
not from home country or host country but are employed at the
additional or corporate headquarters, for example British
working in the US subsidiary of Egyptian company.
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What Is A Staffing Policy?

• Staffing policy - the selection of employees who
have the skills required to perform a particular job
• Three main approaches to staffing policy
1. The ethnocentric approach - fill key management
positions with parent-country nationals
2. The polycentric approach recruit host country nationals
to manage subsidiaries in their own country, and parent
country nationals for positions at headquarters
3. The geocentric approach seek the best people,
regardless of nationality for key jobs
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Which Staffing
Policy Is Best?
Comparison of Staffing Approaches
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What Is Expatriate
Failure?
• Firms using an ethnocentric or geocentric staffing
strategy will have expatriate managers
– expatriate failure is the premature return of an expatriate
manager to the home country
• The main reasons for Japanese expatriate failure are
– the inability to cope with larger overseas responsibility
– difficulties with the new environment
– personal or emotional problems
– a lack of technical competence
– the inability of spouse to adjust
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What Is Expatriate
Failure?
• The main reasons for U.S. expatriate failure are
– the inability of an expatriate's spouse to adapt
– the manager’s inability to adjust
– other family-related reasons
– the manager’s personal or emotional maturity
– the manager’s inability to cope with larger overseas
responsibilities
• The reason for European expatriate failure is
– the inability of the manager’s spouse to adjust
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How Can Firms Reduce

Expatriate Failure?
• Firms can reduce expatriate failure through improved
selection procedures
• Four dimensions that predict expatriate success are
1. Self-orientation - the expatriate's self-esteem, self-
confidence, and mental well-being
2. Others-orientation - the ability to interact effectively with
host-country nationals
3. Perceptual ability - the ability to understand why people of
other countries behave the way they do
4. Cultural toughness – the ability to adjust to the posting
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What Is Training And

Management Development?
• After selecting a manager for a position, training and
development programs should be implemented
• Training focuses upon preparing the manager for a
specific job
– Cultural training
– Language training
– Practical training
• Management development is concerned with
developing the skills of the manager over time
– historically, most firms focus more on training than on
management development
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What Happens When

Expatriates Return Home?
• Training and development should include
preparing and developing expatriate managers
for reentry into their home country
organization
– need good programs for
• re-integrating expatriates back into work life within
their home country organization
• utilizing the knowledge they acquired while abroad
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How Should
Expatriates Be Evaluated?
• Evaluating expatriates can be especially complex
– typically, both host nation managers and home office
managers evaluate the performance of expatriate
managers
• But, both types of managers are subject to
unintentional bias
– home country managers tend to rely on hard data when
evaluating expatriates
– host country managers can be biased towards their own
frame of reference
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What Are The Key Issues In

Compensating Expatriates?
• Two key issues on compensation
1. How to adjust compensation to reflect
differences in economic circumstances and
compensation practices
– there are substantial differences in executive
compensation across countries
2. How to pay expatriate managers
– most firms use the balance sheet approach
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What Are The Key Issues In

Compensating Expatriates?
• A compensation package has five components
1. Base salary - normally in the same range as the base salary
for a similar position in the home country
2. Foreign service premium - extra pay the expatriate receives
for working outside his country of origin
3. Various allowances - housing, cost-of-living, education
4. Tax differentials - may have to pay income tax to both the
home country and the host-country governments no
reciprocal tax treaty exists
5. Benefits – many firms provide the same level of medical
and pension benefits abroad that employees receive at
home
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Expatriates Compensation
Schemes
• Home-Based Approach
– The home-based, or balance sheet approach, is the most
popular of these approaches and used by more than 85%
of U.S. multinational companies.
– The balance sheet approach provides international
employees with an expatriate compensation package that
equalizes cost differences between the international
assignment and the same assignment in the home country
of the individual or the organization.
– The balance sheet approach is based on some key
assumptions and is designed to protect expatriations from
cost differences between their home and host countries.
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Schemes
• Host-Based Approach
– The host-based approach means the assignee
transfers to the host country payroll and receives base
and incentive pay based on host country
compensation practices and regulations.
– With organizations looking for cost-cutting
opportunities, they have looked to localize assignees.
– Difficulties can occur in dealing with assignees,
because it integrates employees into the local host
salary structure. It can make it very difficult to move
the assignees to another destination or back to their
home country.
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Schemes
• Global Market Approach
– Unlike the balance-sheet approach, a global market
approach to expatriate compensation requires the
international assignment be viewed as continuous,
even though the assignment may be for various
periods of time and the employee may be in various
countries.
– All assignees are on the equivalent compensation
scale, regardless of their home country.
– This approach is much more inclusive. Regardless of
which country the assignee is assigned, the main
benefits are provided.
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International Business and HR

International
Mergers and
Acquisitions
Importance of
Foreign Human Global Human
Global Competition
Resources Resources
Management
Market Access
Opportunities
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Factors that influence International HRM
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Hofstede’s Five Dimensions of Culture

How Countries Differ
1. Individualism/Collectivism Describes the strength of the relation

between an individual and other individuals
in the society.
2. Power Distance Concerns the way the culture deals with
unequal distribution of power and defines
the amount of inequality that is normal.
3. Uncertainty Avoidance Describes how cultures handle the fact that
the future is unpredictable.
4. Masculinity/Femininity The emphasis a culture places on practices
or qualities that have traditionally been
considered masculine or feminine.
5. Long-term/Short-term Suggests whether the focus of cultural
Orientation values is on the future (long term) or the
past and present (short term).
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Performing International
HRM Functions
Recruiting
1. Matching process
2. Personal qualities vs. job competence
(adaptability, language skills, local
knowledge, etc.)
Selection Process
1. Interviewing - family participation
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Topics for Assessing Candidates for

Overseas Assignments
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HRM Functions (continued)
Training
1. Cultural training
2. Language training
3. Personal adjustments
Performance Appraisal
1. Dual responsibility – host and home
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HRM Functions (Compensation)
Compensation
1. Based on length of assignment/conditions
2. Support for expenses
3. Financial support
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Thank You!
Any Questions?
Mohamed Kholief
Board Member and Head of Innovation and
Entrepreneurship Programs – CIT
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Global Outlook of Business Strategy:

Innovation, Technology ,
Entrepreneurship and Platforms
Mohamed Kholief
Digital Transformation Consultant
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Why Competitiveness
• International competitiveness has become an
essential precondition for growth. The context for
competitiveness is changing significantly, rapidly and
irrevocably.
• The change is driven by technical progress, but its
impact is very uneven.
• It is uneven across activities, regions, countries and
particular groups within countries.
• This is driving a wedge between the technological
‘haves’ and ‘have-nots’ in the developing world –
and it needs to be countered.
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Globalization is driven by rapid and

pervasive technical change
The ‘death of distance’ opens opportunities: new
markets and narrower forms of specialization in
‘fragmented’ production & global value chains
Innovation changes structure of industrial and

export activity, shifting the dynamics of different
activities – the key to success is good
‘positioning’ to exploit these changes
The pace and spread of innovation make it

imperative to constantly access new technologies,
but raises minimum entry levels in capabilities,
institutions39
and infrastructure
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Technical change alters the

organisation of production and trade
Harnessing innovation and globalization needs more
than opening up to trade or FDI: it needs building
capabilities to use new technologies efficiently and
moving up the technology scale
Thus: globalization offers new markets and mobile

resources but competing for these calls for more than
primary resources or cheap labour – it requires the
ability to harness innovation
Globalization raises the role of MNCs in innovation,

technology transfer, production and particularly
exports. Around 2/3 of world trade is handled by
MNCs, about401/3 is within companies
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Capability building in developing countries

is not ‘innovating’ at the frontier
• It is building the specialized skills, technical knowledge,
organizational structures and inter-firm linkages to seek,
absorb, adapt and improve technologies.
• This requires strengthening the institutional base: the
‘national innovation system’
• The interacting complex of technology (MSTQ, R&D,
technical services, extension), education, training and
other institutions that help enterprises to become
technologically capable
• The NIS is as important (or even more so) for less
industrialized as it is for more advanced economies: they
find it harder to cope with new technologies and to tap
dynamic global value chains
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Capability building …
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Technological structures: a
simple categorisation
• Primary products
• Manufactured products
– RB (Resource based): e.g. food, wood & forestry
products, processed minerals, petroleum products
– LT (Low technology): e.g. textiles, clothing, footwear,
toys, sports goods, simple metal products
– MT (Medium technology): e.g. automotive products,
TVs, machinery, chemicals, steel
– HT (High technology): Advanced ICT and electricals,
pharmaceuticals, aerospace, precision instruments
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Technological structures: a
simple categorisation
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New World
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How COVID 19 Impacted Business
‫الصحة‬
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The Best in New Economy
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Accelerating Speed of Technological Change
• Exhibit
7.1
• Source:.
Depiction of
data from the
U.S. Census
Bureau, the
Consumer
Electronics
Association,
Forbes, and the
National Cable
and
Telecommunica
tions
Association.
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Causes of Rapid Technological Diffusion and Adoption
• Initial innovations are foundational for other rapid

innovation.
• New business models make innovation
possible.
– Example: Dell’s direct to consumer model
• Satellite and cable distribution systems
– Enable mass media such as radio and TV
• The emergence of the internet
– Social networking
– Viral messaging
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CHARACTERISTICS OF SUCCESSFUL
INNOVATING COMPANIES
• Systematic collection of all impulses that could lead to innovation
• Creativity of employees
• Ability to evaluate the possibility of the innovation idea
• Good team work
• Cooperation with external experts (universities, research
laboratories…)
• Risk-taking
• Employees’ motivation (the employees are willing to improve the
product and the operation of the whole company)
• Continued education of employees
• Ability to finance the innovation activities
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What causes innovation to fail?

1. Lack of Leadership Skills
2. Poor access to Finance
3. Poor access to Talents
4. Too much Focus on Technology rather than Value
5. Wrong Team
6. Lack of Innovation Management
7. Lack of Partners
8. Poor Management of Cash
9. Disruption by Market or Competitors
10. Lack of Management Skills
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Is
Globalization
Slowing Down?
Technology factors: Percentage
of population online, number of
internet hosts per capita, and
number of secure servers per
capita
Non-technology factors: Trade
in goods and services, capital
flows, and personal contact.
COVID-19?
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Obstacles to entrepreneurship in DCs
Source: World Development Report, 2005 (World Bank)
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Sources of growth
• Growth in inputs
• Efficiency in factor allocation
• Innovation (useful knowledge)
– Vehicles (trade, FDI,..)
– Cross-border education
– etc …
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The crucial role of innovation

• Technological innovation
– Disruptive vs incremental ?
– Individual vs collective
• Process innovation
– Non technological innovation
– Shifting value along the chain
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What is Digital
Transformation
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Digital Transformation
• Digital transformation is the adoption

of digital technologies in business.
• Common goals for its implementation
are to change or disrupt business
models, reengineer business
processes to deliver value added or
innovations
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© Mohamed Kholief | 2021 62
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‫قصص نجاح‬
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Success Stories ‫قصص نجاح‬
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Netflix: Disrupting the TV Industry
• Streaming video is re-shaping the television industry.

– Netflix accounts for 1/3 of downstream internet traffic
• The rise of Netflix
– Netflix started after Reed Hastings was
annoyed by a $40 late fee at Blockbuster
– Monthly DVD subscriptions through the mail began
• Got off to a slow start
– Approached Blockbuster to purchase 49% of the
company, which they declined
• Blockbuster lost 75% of value from ‘2003-’05
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• Netflix began streaming content online.

– Adjusted quickly to consumer preferences
– Streaming available on many types of devices
– Broadcast networks began to take notice
• Netflix began creating their own content.

– Achieved huge success
• Emmys and Golden Globe awards
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• Netflix re-shaped the TV Industry:

– Delivery: online streaming
– Access: episodes can be viewed on-demand
– Programming developed based on algorithms
• Challenges:
– How to ensure viewing is uninterrupted (buffering)
– Available titles + broadband limitations hinder
growth
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• By 2017 it was operating in over 190 countries, and today close to 73

million of its some 130 million subscribers are outside the U.S.
• In the second quarter of 2018, its international streaming revenues

exceeded domestic streaming revenues for the first time.
• This is a remarkable achievement for a company that was only in the

U.S. before 2010, and in only 50 countries by 2015.
• Market cap is more than $174 billion in 2022
• Netflix’s stock appreciated by some 2,600 percent, while the tech-

heavy NASDAQ-100 index grew by “only” 310 percent in the same
period.
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• Other U.S. internet companies have scaled internationally, of course

(Facebook and Google are two obvious examples). But Netflix’s
globalization strategy, and many of the challenges it’s had to
overcome, are unique.
• Netflix must secure content deals region by region, and sometimes
country by country. It also must face a diverse set of national
regulatory restrictions, such as those that limit what content can be
made available in local markets.
• International subscribers, many of whom are not fluent in English,
often prefer local-language programming. And many potential
subscribers, accustomed to free content, remain hesitant to pay for
streaming services at all.
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• Strong competition in streaming already exists in many countries. In France

and India, for example, homegrown leaders offer local-language video
content, thus preventing Netflix’s first-mover advantage.
• In some countries, like Germany and India, rivals such as Amazon Prime
were already established.
• Yet the majority of Prime subscribers are in the U.S., and Netflix has
managed to make inroads into even those markets where Prime arrived
first.
• Now Netflix, with its global reach, has more subscribers worldwide than all
other pure streaming services combined.
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• Netflix did not try to enter all markets at once. Rather, it carefully
selected its initial adjacent markets in terms of geography and
psychic distance, or perceived differences between markets.
• For example, its earliest international expansion, in 2010, was to

Canada, which is geographically close to and shares many
similarities with the United States.
• Netflix was thus able to develop its internationalization capabilities

in locations where the challenges of “foreignness” were less acute.
• In doing so, the company learned how to expand and enhance its
core capabilities beyond its home market.
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• In that sense, the first phase of its globalization process was

consistent with the traditional model of expansion.
• Netflix developed the capabilities to expand into a diverse set
of markets within a few years
• Netflix involving a faster and more-extensive international
expansion, saw Netflix extend its footprint to some 50
countries, drawing on the lessons it learned in the first phase in
order to operate in a wider variety of markets.
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• The choice of those markets was influenced by their degree of

attractiveness, such as from shared similarities, the presence
of consumers who can afford to pay for subscription, and the
availability of broadband internet.
• Netflix continuous learning involved expanding into more-
distant markets, it was supported by investments in content
geared toward the preferences of those geographies, as well as
technological investments in big data and analytics.
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• The last step in their internationalization strategy, Netflix

accelerated pace of entry to reach 190 countries.
• Netflix had gained expertise in the content people prefer, the
marketing they respond to, and how the company needed to
organize itself.
• Now Netflix focused on adding more languages (including for
subtitles), optimizing its personalization algorithms for a global
library of content, and expanding its support for a range of
device, operation, and payment partnerships.
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• Recognizing that in some parts of the world, particularly

emerging and developing economies, mobile is the primary
way most people access the internet, Netflix also began placing
a greater emphasis on improving its mobile experience,
including sign-ups, credentials and authentication, the user
interface, and streaming efficiency for cellular networks.
• It has been developing relationships with device makers,
mobile and TV operators, and internet service providers as well.
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• Netflix has worked with, key local companies to forge win-win

relationships.
• In some cases, it has joined with cell phone and cable operators
to make its content available as part of their existing video-on-
demand offerings.
• For example, when Vodafone launched a TV service for its
customers in Ireland, it included a dedicated Netflix button on
its remote controls.
• More recently, Netflix announced deals with Telefonica in Spain
and Latin America and with KDDI in Japan.
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• And while Netflix believes that “great storytelling transcends borders,” and
that’s why they currently producing original content in 17 different markets.
• Importantly, Netflix sees such content production as not just local-for-local,
but also local-for-global.
• In other words, it aims to have content attract an audience not only locally,
where it is produced, but also more widely. As such, Netflix potentially reaps
the benefits of investing in local content all around the world.
• Netflix adopt global licensing deals to face the fierce global competition so
it can provide content across all of its markets at once. Netflix has also
begun to source regionally produced content, providing a win-win for these
producers, whose local content can find a global audience.
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• The company is also applying its deep customer insight to

international markets, using that knowledge to create content
that appeals to a wide range of customer segments.
• Despite its very rapid internationalization, Netflix implemented
in all markets the same customer-centric model of operations
that had been key to its success in the United States.
• It experiments with customer usage data to determine which
offerings work best. Because it operates in so many countries,
Netflix is able to try different approaches in different markets.
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• As the number of its international subscribers grows, the

performance of its predictive algorithms continues to improve.
• Netflix has demonstrated that developing country-specific

knowledge is critical for success in local markets. This knowledge
needs to be both broad and deep, extending across political,
institutional, regulatory, technical, cultural, customer, and
competitor domains. Understanding local cultures ensured that
Netflix could be sensitive to and respond to their differences.
• This enhanced its credibility and helped it forge smooth relationships

with key stakeholders.
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• Netflix’s expansion strategy constitute a new approach that can be called

exponential globalization. It’s a carefully orchestrated cycle of expansion, executed
at increasing speed, to an increasing number of countries and customers.
• The approach has helped the company expand far more quickly than competitors.
Going forward, Netflix will face increasing competition not only from other global
players such as Amazon Prime but also from new entrants and regional or local
players. In that regard, it will have to continue to expand its blending of global and
regional content.
• For a variety of market and technological factors, including the absence of high-
speed broadband and a very low level of internet penetration in many parts of the
world, exponential globalization was infeasible until a few years ago.
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• Netflix has demonstrated that this strategy is now a viable option. But it
requires a mastery of local contexts, including the ability to acquire local
knowledge and to demonstrate sensitivity and responsiveness.
• Netflix movies are almost always available to stream the same day they are
released in theaters.
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• Studios figured out a long time ago that the most profitable way to
accomplish this goal was to strategically vary the timing, quality, and
usability of their movies, so that high-value consumers would voluntarily
pay a high price for a movie that other consumers will see for less.
• The theatrical release was the key to making this price-discrimination

strategy work. Making a movie available exclusively on “the big screen”
allowed studios to segment their (impatient, quality-conscious) high-value
customers from the rest of the market. Why else would anyone pay $15 for
a theater ticket if they could rent the same movie for $4.99 a few weeks
later?
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• So far, so good. But then why does Netflix release its movies in theaters on
the same day it makes them available for “free” on its streaming platform?
The answer is that Netflix is pursuing a fundamentally different business
model from everyone else in the industry.
• Netflix is not in the business of selling individual movies to many different

customers. Instead, it’s in the business of selling many different movies to
individual customers—in bundles.
• Bundled subscriptions allow Netflix to practice a different kind of price

discrimination from the movie studios. The company doesn’t have to figure
out how much a consumer values any individual movie on the service. The
bundle does that for them—very profitably.
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• Bundling works in an interesting way. The more products a

seller can offer consumers in a bundle, the better that seller
can predict the average value of the bundle across different
consumers.
• Not every consumer assigns the same values to the individual
movies in the bundle, but in a large bundle that doesn’t
matter: the differences in the individual values average out.
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• If a seller can accurately predict the average value a subscriber

is willing to pay for all the movies in the bundle, then it can set
a price just slightly below that value and extract the maximum
value possible from its audience.
• In the traditional business model, messing up the theatrical
release window puts the entire business at risk. But Netflix sees
things differently. If the company can make some money or win
some awards by releasing its movies in the theaters, that’s
great. But it doesn’t need a successful theatrical release to
generate profit from its movies.
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• Bundling allows great artists to tell great stories — stories like

Alfonso Cuarón’s Oscar-winning movie Roma. In an interview
last month, Cuarón noted that Netflix had allowed him to make
a film that would have never been made in a traditional
theatrical release.
• Netflix should be proud of what has truly made it an insider in
the entertainment business, is that it has come up with newly
effective and profitable ways of doing what has always defined
success in the entertainment industry, Using new technologies
to create engaging stories, and using the right business models
to bring these stories to the audience.
88
88
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Establishing Strategic Direction:

Ansoff Matrix - Netflix
Existing products New products
Market penetration strategy Product development strategy

Existing U.S.A.- more purchasing and Develop new products such as video
markets usage from existing customers and computer games.
across all product categories (20% increase in sales in 2008)
New Market development strategy Diversification strategy

markets
Investigate optimum markets in
North America i.e. Canada, and
adjacent countries such as Mexico,
moving on to Argentina, Chile and
Brazil and later –U.K. Australasia,
and India (Bollywood factor).
89
89
BCG Matrix - Netflix

Market share (relative to largest competitor)
High Low
Stars Question Marks
Streaming
Subscribers software to enable commercials to be
Movie downloads avoided
High
Dogs
Market growth Cash Cows
Low
Generates demand for
older, cheap films
90
90
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Understanding how Netflix adds value to its

business and its place within the value system
Firm’s
Firm’sInfrastructure
Infrastructure
Open
Openand
andtransparent
transparentculture.
culture.Interesting
Interestingadult
adultattitude
attitudetotostaff.
staff.Progressive organisation.
Support Activities
HR Management
Margin
Innovative approach to staff management. Black and white to some extent. Slackers are fired
and great staff are rewarded by having open ended annual leave arrangements.
Technology Development
Large scale digital distribution via streaming and downloading service
Procurement
Strong buying power. Sources the latest DVD’s , blu ray discs from producers /manufacturers.
Inbound Operations Outbound Marketing Service
Logistics Online Logistics & Sales Prides itself
Assume effective distribution is Supply chain Brand mgt – on good
systems in place working well functioning well. No need to customer
as operations, problems measure service and
Margin
inbound encountered with awareness and innovative
logistics/service distriibution /supply position the staff policy
all run smoothly. of products to products more
customers memorably in a
crowded
marketplace
Primary Activities
91
91
Competitor Analysis: Netflix

Porter’s Five Forces Map
Threat of new entrants - High
Crowded marketplace. Barriers to entry
are low. Key competitors are Apple,
Amazon, Google, Walmart, Hulu, and
Redbox,
Buyer power – High

Consumers today have so much choice in
Supplier power- Industry rivalry - Intense
buying dvd’s blu ray discs, video on
Medium Competition in all product
demand etc. so prices have to be
Suppliers will always try to commodities is increasing.
competitive
drive up prices but equally they Supermarkets have immense
need to sell their products and buying power. Category killers
are under pressure from such as Walmart can compete
recessionary factors effectively on price
Threat of substitutes – Medium

Technology grows at a fast pace.
DVD’s are expected to be around
for a while but the internet will
become the principal vehicle for
distributing films in years to come.
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92
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Matching Assets and Competencies – Netflix’s

sustainable competitive advantage in U.S.Market
Netflix’s Assets/Competencies Customer Requirements

• Sells DVD’s and Blu ray • Consumers always need and
discs that consumers need enjoy home entertainment
• Strong brand recognition in • Brand recognition/brand long-
U.S.A term stability
• Quality product • Quality over competition
• Wide product range • Large selection to choose from
• Fairly strong customer Best Fit • Attentive customer service
service – high levels of Match
customer satisfaction.
• Services are tailored for • Personalisation
individuals-onscreen
welcome, recommendations • Good distribution network –
• Offers high speed streaming mail, video kiosks, vending
of movies and TV machines, downloading,
programmes via the internet streaming, etc.
• Internet service includes • Advice on which films to
movie recommendation watch
algorithms
93
93
Product analysis - Netflix
High Price Low Price
PREMIUM STRATEGY GOOD VALUE STRATEGY
Streaming and discs for rent, Older films

High popularity
both Blu-ray and DVDs
OVER CHARGING ECONOMY STRATEGY

STRATEGY
Low popularity
DVD Boxed sets
95
95
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Product Perception Grid - Netflix

Quality
High
1=
2=
3=
1
4=
2
5=
Price High Low
4 6=
7=
Low
96
96
The Players in a Platform Ecosystem
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Advantages of the Platform Business Model

• Platform models, such as Alibaba, Facebook, and Uber
scale more efficiently by eliminating gatekeepers.
• They enable value-creating interactions between external

producers and consumers, and they set governance
conditions.
• They benefit from community feedback.
98
Netflix Business Model: Leveraging Network

Effects to Drive Demand
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Uber’s Business Model: Leveraging Network

Effects to Increase Demand
100
Uber’s Network Effects with Feedback Loop
101
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102
Value?!
103
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104
105
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What triggers Digital Transformation
106
106
What triggers Digital

Transformation
https://www.lead-innovation.com/english-blog/types-of-innovation
107
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What triggers Digital

Transformation
https://www.lead-innovation.com/english-blog/types-of-innovation
108
Opportunities in Media
• 400 Billion Dollars Publishing
Industry vs 1 Billion Dollars for
Arab World
• 10 Trillion Dollars US Creative
Industries
• Interactivity and Metaverse
• On the go mode for News and
Media
• Data Driven Economy Leading
to personalization and mass
customization
IKD - Copyright © 2016
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Opportunities in Media
• Customer satisfaction
• Improved efficiency
• Increased Convenience
• Personalization
• Revenues increased
• Increased Competitiveness
110
Key Facts
• The digital transformation market size to grow from USD 521.5
billion in 2021 to USD 1247.5 billion by 2026, at a Compound
Annual Growth Rate (CAGR) of 19.1% during the forecast period.
• Global Online Video Platform in Media and Entertainment Market
to Reach US$1.2 Billion by the Year 2026
• Video streaming industry to grow to $150 billion by 2026
• The gaming market was valued at USD 173.70 billion in 2021, and
it is expected to reach a value of USD 314.40 billion by 2027
• Digital Transformation Industry Trends – constant need for
improvement for addressing the changing dynamic customer
needs to propel the digital transformation market
111
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Challenges in Media
• Lack of IT and Creative Skills and Skill Gap
• Security and Content piracy
• Digital Rights Management
• Laws and Regulations
• Lack of Change Management Strategy.
• Complex Software & Technology.
• Driving Adoption of New Tools & Processes.
• Continuous Evolution of Customer Needs.
• Infrastructure
IKD - Copyright © 2016
112
Technologies
• Artificial Intelligence
• Blockchain
• Internet of Things
• Cloud Technologies
• Virtual Reality
• Augmented Reality
• METAVERSE
113
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Thanks Questions
114
114
Thanks
Mohamed Kholief
115
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Innovation that matters
Mohamed Kholief
116
Impact of Innovation
• Globalization
• Entrepreneurship, innovation and growth
• Efficiency and transparency
• Regulatory and legal framework
• Issues and challenges ahead
117
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Growth, Innovation, Enterpreneurship

Regulatory Monetary
Competition & Fiscal
Framework Policies
Macro-
Governance Economic
Policies
Rule of Law Growth Domestic

Corruption savings
IPRs Capital
Formation
Entrepre
Innovation neurship
T of Tech
Openness F.D.I.
Trade Global
Policy Reach
Exports
International Niches &
competition Alliances
118
What is Value?
• Value is a term that explains what benefit
you provide for who and how you do it
uniquely well. It describes your target buyer,
the problem you are trying to solve, and why
you’re distinctly better than the alternatives.”
119
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What are the

definitions of
Discovery, Image
Innovation,
Invention and
Creativity
Exercise
120
INVENTION CREATIVITY INNOVATION

Creating new ideas, Creating new ideas for a introduction of a new
Meaning imaginations and product, process or product, process, or
possibilities. service. service into the
marketplace.
Quantifiable Yes No Yes

Nature Introducing Thinking something Producing something new
something new new
Cost Yes No Yes
Revenue No No Yes
Risk Yes No Yes
Time After Discovery In the whole Journey Must be at end to add
value and make an
impact
121
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Idea, Invention, Innovation, and Imitation
• Idea
– Abstract concepts or research findings
• Invention
– Transformation of an idea into product or process
– The modification and recombination of existing ones
• Innovation
– Commercialization of an
invention by entrepreneurs Exhibit 7.2
• Imitation
– Copying a successful innovation
122
122
Innovation: A Novel and Useful Idea

That Is Successfully Implemented
123
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Types of Innovation
• Product innovation
– A good or service that is new or significantly improved. This includes
significant improvements in technical specifications, components and
materials, software in the product, user friendliness or other functional
characteristics.
• Process innovation
– A new or significantly improved production or delivery method. This
includes significant changes in techniques, equipment and/or software.
• Marketing innovation
– A new marketing method involving significant changes in product design
or packaging, product placement, product promotion or pricing.
• Organisational innovation
– A new organisational method in business practices, workplace
organisation or external relations.
124
Types of Innovation
• Technological innovations – based on specific
technology, invention, discovery,
• Social innovations – in critical historic periods
more important than technological ones (mail,
educational systém, social systém, health care,
…)
125
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DEGREE OF NOVELTY
• Incremental innovations
• Radical innovations
• Systemic innovations
126
Dimensions of innovation culture
127
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Innovation Funnel
7–128
128
The
The Development
Development of
of Technology:
Technology: From
From
Knowledge
Knowledge Generation
Generation to
to Diffusion
Diffusion
IMITATION
Supply side
Basic
Invention Innovation Diffusion
Knowledge
Demand side
ADOPTION
7–129
129
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The
TheDevelopment
Developmentof
ofTechnology:
Technology:Lags
LagsBetween
Between
Knowledge Generation and Commercialization
Knowledge Generation and Commercialization
BASIC FIRST PRODUCT IMITATION

KNOWLEDGE PATENTS LAUNCH
Xerography late 19th and 1940 1958 1974
early 20th
centuries
Jet Engines 17th-- early 1930 1957 1959
20th centuries
Fuzzy logic 1960’s 1981 1987 1988
controllers
130
Appropriation
Appropriation ofof Value:-
Value:- How
How are
are the
the
Benefits
Benefits from
from Innovation
Innovation Distributed?
Distributed?
Customers
Suppliers
Innovator
Imitators and
other
“followers”
7–131
131
64
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The
The Profitability
Profitability of
of Innovation
Innovation
Value of the
• Legal protection
innovation
Profits
• Complementary
from
Innovation Innovator’s resources
ability to • Imitability of the
appropriate the technology
value of the
innovation •Lead time
7–132
132
Legal
Legal Protection
Protection of
of Intellectual
Intellectual Property
Property
• Patents —exclusive rights to a new product,

process, substance or design.
• Copyrights —exclusive rights to artistic, dramatic,
and musical works.
• Trademarks — exclusive rights to words, symbols
or other marks to distinguish goods
and services; trademarks are
registered with the Patent Office.
• Trade Secrets — protection of chemical formulae,
recipes, and industrial processes.
Also, private contracts between firms and between a firm and its
iemployees can restrict the transfer of technology and know how.
7–133
133
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U.S.
U.S. Managers’
Managers’ Perceptions
Perceptions of
of the
the Effectiveness
Effectiveness of
of
Different
Different Mechanisms
Mechanisms for
for Protecting
Protecting Innovation
Innovation
Processes Products
Patents to prevent duplication 3.52 4.33
Patents to secure royalty income 3.31 3.75
Secrecy 4.31 3.57
Lead time 5.11 5.41
Moving quickly down the learning 5.02 5.09
curve
Sales or service efforts 4.55 5.59
1 = not at all effective 7 = very effective
Source: Levin, Klevorick, Nelson & Winter. Brookings Papers on Economic Activity, 1987.
134
Alternative
AlternativeStrategies
Strategiesfor
forExploiting
ExploitingInnovation
Innovation
Outsourcing Strategic Joint Internal

Licensing certain Alliance Venture Commercialization
functions
Limits Benefits of Shares Biggest risks &

Small risk, but
investment, but flexibility; investment & benefits.
Risk & limited returns
dependence on risks of risk. Risk of Allows complete
Return also (unless
suppliers & informal partner control
patent position
very strong partners structure conflict &
culture clash
Few Allows outside Permits pooling of the

resources & resources/capabilities of Substantial
Competing
capabilities more than one firm resource
Resources
To be accessed requirements
Konica Pixar’s movies (e.g. Apple and Microsoft TI’s

Examples licensing its “Toy Story”) Sharp build and NBC development of
digital marketed & the formed Digital Signal
camera to distributed by “Newton” MSNBC Processing
HP Disney. PDA Chips
7–135
135
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The
TheComparative
ComparativeSuccess
Successof
ofLeaders
Leadersand
and
Followers
Followers
PRODUCT INNOVATOR FOLLOWER WINNER

Jet Airliners De Havilland (Comet) Boeing (707) Follower
Float glass Pilkington Corning Leader
X-Ray Scanner EMI General Electric Follower
Office P.C. Xerox IBM Follower
VCRs Ampex/Sony Matsushita Follower
Diet Cola R.C. Cola Coca Cola Follower
Instant Cameras Polaroid Kodak Leader
Pocket Calculator Bowmar Texas Instruments Follower
Microwave Oven Raytheon Samsung Follower
Plain Paper Copiers Xerox Canon Not clear
Fiber Optic Cable Corning many companies Leader
Video Games Players Atari Nintendo/Sega/Sony Followers
Disposable Diapers Proctor & Gamble Kimberly-Clark Leader
Web browser Netscape Microsoft Follower
PDA Psion, Apple Palm Follower
MP3 music players Diamond Multimedia Sony (&others) Followers
7–136
136
Uncertainty
Uncertainty&&Risk
RiskManagement
Managementin
inTech-based
Tech-basedIndustries
Industries
Selection process for standards and

Technological dominant designs emerge is complex
uncertainty and diifficult to predict, e.g. future of 3G
Sources of
uncertainty Market Customer acceptance and adoption rates
uncertainty of innovations notoriously difficult to
predict, e.g. PC, Xerox copier, Walkman
Cooperating with lead users

early identification of customer requirements
–assistance in new product development
Strategies for Limiting risk exposure

managing risk —avoid major capital commitments
(e.g. lease don’t buy)
—outsource
—alliances to access other firms’
Flexibilility resources & capabilities
—keep options open —keep debt low
—use speed of response to adapt
quickly to new information
7–137 —learn from mistakes
137
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2/25/2022
Thanks
Mohamed Kholief
138
68

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2/25/2022

The Google Story

• In 1998, co-founders Brin and Page delivered an

© 2014 Pearson Education, Inc. 2

The Google Story, Cont.

• Uses a media e-business model to generate revenue

The Google Story, Cont.

© 2014 Pearson Education, Inc. 4

Creating Customer Value

 Customer value = benefits – costs

Creating Customer Value

 The Internet created a new set of consumer desired

What are BENEFITS?

• Attributes include overall quality and specific

What Is International Human

What Is The Strategic Role Of

What Is A Staffing Policy?

How Can Firms Reduce

What Is Training And

What Happens When

What Are The Key Issues In

What Are The Key Issues In

International Business and HR

Factors that influence International HRM

Hofstede’s Five Dimensions of Culture

1. Individualism/Collectivism Describes the strength of the relation

Topics for Assessing Candidates for

Global Outlook of Business Strategy:

Globalization is driven by rapid and

Innovation changes structure of industrial and

The pace and spread of innovation make it

Technical change alters the

Thus: globalization offers new markets and mobile

Globalization raises the role of MNCs in innovation,

Capability building in developing countries

How COVID 19 Impacted Business

The Best in New Economy

Accelerating Speed of Technological Change

Causes of Rapid Technological Diffusion and Adoption

• Initial innovations are foundational for other rapid

What causes innovation to fail?

Obstacles to entrepreneurship in DCs

Source: World Development Report, 2005 (World Bank)

The crucial role of innovation

• Digital transformation is the adoption

© Mohamed Kholief | 2021 62

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• Netflix re-shaped the TV Industry:

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