Global retail: can it work?

Here's English version of Helen Edwards' article, published on Forbes Russia. The original Russian version you can find here.

Many businesses dream of going global, reaching new markets by expanding into new countries. As western populations age and demand decreases for many types of consumer products, it becomes more and more important to acquire new customers. In Being Global: how to think, act and lead in a transformed world, business school academics Angel Cabrera and Gregory Unruh set out the theory of the opportunities awaiting potential global entrepreneurs. They define entrepreneurship as "applying resources and assuming risks to create new value." Global entrepreneurs bring together people and resources from different regions of the world to create new value. This is done by strategies focusing on convergence, divergence or networks.

Convergence refers to what people have in common, meeting the needs people have everywhere, but in a new market. Globalization has already increased standardization in certain classes of products, especially IT and the internet, industrial machinery, athletic equipment and fashion and many commentators believe this consolidation is set to continue. Divergence takes advantage of different cost structures and demand patterns in different parts of the world. Globalization of sourcing has now taken off and many products travel through several countries during the course of their construction, to take advantage of cheaper costs and labor markets world wide. The iPhone is an example of both convergence , in its iconic status everywhere, and divergence in its manufacture.

Retailing, on a global scale has proved to be more difficult to achieve than either designing products to appeal to global markets or multi region sourcing and manufacture. There have been many expensive failures. Few retailers can cross the Atlantic; either a US retailer to Europe or a European to the US. No global retailer has yet emerged from the emerging economies.

SKOLKOVO graduates: Elena Shifrina

We continue the series of interviews with our graduates, and today we’d like to get you acquainted with Elena Shifrina, SKOLKOVO MBA graduate, and with her project – BioFoodLab.

- Elena, how has the project idea arisen?

Within the studying at the SKOLKOVO MBA programme we have significantly widened our outlook, world view and world perception due to the fact that two times for two and a half months we had traineeships in the USA and China. I have been especially impressed with Boston where, despite all the stereotypes concerning unhealthy and harmful American culture, we have discovered lots of new and useful things. In Boston every morning starts really early. At 6 a.m. the majority of people go jogging outdoors. A considerable part of our class has adopted such an active way of life. Some jogged, others attended wrestling, others just trained in the fitness-studio, I attended yoga classes that took place in a heated room. Even the most slender of us were dripping with sweat, and endorphins were brimming over.

As for meals, we ate mostly in the MIT canteen and had some snacks there as well. We were offered balanced dishes made out of the freshest ingredients. Our usual snacks were fruits and bars from natural ingredients, without any chemicals.

I should say that the majority of our class had never gone in for sports so much and, surely, had never eaten so regularly and balanced. Before our term at MIT the majority of us had never felt themselves as good, light and energetic as in Boston.

Having come back to Moscow, we missed sports, the routine and balanced nutrition. We tried to find yoga classes, food and snacks as those in Boston. And while we have managed to find yoga classes, the thing with fresh food has appeared to be more complicated. Fresh food tastes a bit as “rubber”, and cheap bars, claiming to consist out of “Fruits Only”, apart from rice cereals in sugar syrup comprise a number of unknown and unpronounceable ingredients which origin is extremely concerning.

Once my classmate Sasha Both from Germany came to me in Boston and said, “You are so enthusiastic about healthy way of life. Think about what you could do”. Having come home, the first thing I did – I started to study the bio-food market. So our company BioFoodLab was created. We like to produce natural bio-products. Our goal is to make natural, innovative and healthy products affordable. We stick to the branch strictest quality standards, and our firm commitment to the business guarantees sustainable growth of the fair international trade and production. Every day we feel excited and happy creating our one-of-a-kind and tasty products.

SKOLKOVO graduates: Alexander Khrenkov, SKOLKOVO EMBA

Any school is famous for its graduates. That is why we start a series of interviews with the SKOLKOVO MBA and EMBA graduates. And today Alexander Khrenkov, co-founder of Naturage, Executive MBA graduate, has shared his story with us.

- Alexander, how have you come up with the project idea?

- The idea concerning my own business-project arose while I was studying at the SKOLKOVO business-school at the Executive MBA programme. Mostly my further direction development in business was influenced by Subi Rangan, professor of the strategy module. He is one of the world strategy gurus and professor at INSEAD, one of the most famous business-schools in the world. I remember Mr. Subi saying that in modern Russia as well as in all BRICS countries almost nobody thinks about creation of global innovative companies. At that, everybody gets that nowadays we live in the global world, and one has to compete with large transnational companies almost in all economic branches.

In order to be able not only to compete with global companies in its own country, but also to have a chance to become a transnational company, such a company has to possess definite competitive advantages. So, I have considered what other advantages Russia has apart from hydrocarbons. One of them is, undoubtedly, the high level of the Russian scientists’ elaborations.

My first higher education I have obtained in the legendary Moscow Institute of Physics and Technology. That is why everything connected with scientists is not alien to me. And, still having studied at the business school, I decided to start communicating with scientist groups from different higher education institutions and research institutes around the country in order to assess what their ideas could be brought to life in the form of the innovative company creation. During less than a year I have managed to communicate with several dozens of scientist groups. At last I have made my choice in favour of a scientist group from MSU under the guidance of a DPhil who offered a method of creation of brand new drinks, the so called functional natural drinks.

- And why exactly drinks, was it the life dream or the barest necessity that you had sensed every day? Why have you chosen exactly that?

- I got the understanding that in order to create a global company a quite capacious market should be chosen, a market the products that my company is going to produce. Moreover, I stick to the healthy way of life what comprises healthy food and drinks. Unfortunately, at the moment shop shelves are full of drinks with synthetic additives that negatively influence the human health.
I found really good the concept of functional drinks creation offered by the MSU scientists; such drinks do not only taste pleasantly, but contribute to the human health as well. I consider it to be really modern and right.

Round table with Ruben Vardanian: leadership of the future

Recently a round table with Ruben Vardanian and SKOLKOVO students and graduates has taken place on Campus. Various entrepreneurship issues have become the core topic of discussion. As we had promised Ruben Vardanian has answered some questions from our Twitter readers.

"Have the requirements for a leader undergone any changes since 10-15 years?” - Denis Vasiljev (@denis_vatis)

R.V. - Everything changes, and the key change that has occurred within several last years is the speed of changes. The world has become globally connected; the boarders between countries have vanished. That is why the fight for the best human resources is getting fiercer and fiercer. At that a leader has to face new challenges; nowadays and in future one should be mobile, know how to keep creative specialists in their team and feel the technological world.

"What management style is the most efficient?"- Aziz Saatov (@a_saatchi)

R.V. - There is no a single style that is the most efficient one. There are: the military system, Greenberg’s system, Catholic Church… On each project stage a definite management model is needed.

Unfortunately, we haven’t had a chance to ask all the questioned that we received in Twitter. However we are going to go on with that tradition and will ask speakers our readers’ questions. And for now here are the brightest quotations from the round table:

Interview with Evgeny Raguzin: the Indian module

In March the MBA-3 students have finished their module in India and returned to Moscow. Evegeny Raguzin, one of the students, has told us, what results of the project work in Delhi and Mumbai are.
- Evgeny, what sphere was your project dedicated to?

- I have been working in one of the leading commercial banks. Our task was to elaborate a service improvement strategy.
- Have you gained some useful experience?

- Sure. I intentionally chose that direction as my knowledge of the banking sphere had been quite limited; and it has appeared that India is an excellent market for banks. The banking system is much better developed that in Russia. Lots of things that are applied there are often the best known in the world practice.

- Did you like to work with your team?

- Yes, we have feathered in.

- Are you going to continue working with those guys?
- No, our course task is to learn how to work in a team that is why each time we are going to mix. We draw knowledge not only from professors, but from our course mates as well. Such kind of networking!

- What are three new things you have found out during the module?

- How to work in a team, how to work with a client and engage him/her in the process so that he/she would be interested, and how to arrange your resources in order not to drown in your duties.

How to control your negotiation play?

Here's English version of Moti Kristal's article, published on Forbes Russia. The original Russian version you can find here.

How many times you faced a gorgeous sales woman smiling at you, trying to ask you to buy one more thing that you don't need? How many times you were sitting, sweating, in a room with no air condition, knowing that you have to make a decision now? How many times you came to the meeting, and you found not only your counterpart, but also three of his "partners", big guys with no smile? If these situations – or similar in nature - happened to you in one of your past negotiations – you should read the following piece. It meant only one thing – you allowed the other side to control the game, and it should not happen again!

Writing about negotiations, and giving negotiation tips, is like trying to teach you riding your bicycle using a powerpoint presentation. It will not work unless you will try it on your own.

When applying my negotiation tips, one should remember that becoming an expert negotiator is a long process of try and error, during which you develop your negotiation style, and learn! The most skilled negotiators are those who learn lessons and change their behavior and tactics based on the situation they are facing, because this is all what negotiations are about: A scene, a play, a game, an episode which has to be well scripted and performed.

Here are the fundamental ground rules for how to control the negotiation scene:

Advice on business literature from Helen Edwards

A new spring selection of business literature from SKOLKOVO Library Project Manager Helen Edwards. Which book is of most interest to you? We'll be glad to know your opinion. You have something to advise? Leave it below in the comments.

The IKEA edge: building global growth and social good at the world's most iconic home store

Anders Dahlvig
McGraw Hill, 2012
xiii, 191 pages
ISBN: 9780071777650

Former CEO of IKEA Anders Dahlvig describes his vision of combining good business with social responsibility and environmental stewardship: better everyday life for the majority of people. During the period Anders was CEO IKEA averaged annual growth and profits in excess of 10%. At the same time sales prices to the customer were reduced by 20% and the workforce was increased by 70,000. The book covers the strategy of differentiation through control of the value chain and the globalization programme.

Explaining creativity: the science of human innovation

R. Keith Sawyer
Oxford University Press, 2012.
xi, 555 pages
ISBN: 9780199737574

This is a comprehensive report on the latest scientific research into creativity. It covers the arts, but also science, business innovation and creativity in everyday life and contains appendices listing top creativity thinkers, university departments, conferences and professional associations. The section on organisational creativity includes a case study of the development of the Windows GUI interface and an analysis of the characteristics of entrepreneurs.