Transcript 1 - 元橋研究室

Global Business #5
May 14, 2012
Dept of Technology Management for Innovation (TMI),
Graduate School of Engineering
Professor Kazuyuki Motohashi
工学系研究科 技術経営戦略学専攻教授
元橋一之
http://www.mo.t.u-tokyo.ac.jp
Today’s class
• What is complex service system? Why service
model?
• Global Infrasctuture business as an example
• Business planning: practical guide and
introduction to global business competition
• Introduction to next class: case study on
Neemrana Industrial Park
Current issues in global business for
emerging economies
• Meta-manufacturing model: fast commoditization of
product (catching up Korea, China etc.) -> complex
system, service model
• Importance in risk analysis for long-term business
(operation and maintenance in infrastructure biz.)
• Relationship with local government (business modeling
for PPP)
• Globalization of management style: Genchi-ka, proper
balance between control and autonomy of local
subsidiaries -> importance in human resources in global
business
Development in emerging economies
Such as China and India
New
markets
New
competitors
Global Business Strategy
• Shift to “good enough market” and improvement in cost
competitiveness
• Business model re-organization by service dominant
design
World in not so
flat,
understanding
distance
Consistency
with corporate
strategy
Product architecture and value creation
Aircraft
(CoPS)
Size of value added
Unbundling, competition
Modularization
Mainframe
computer
EV?
Automotives
Scalability
in services?
Service
science
PC
Level of complexity (difficulty in imitation)
IT
services
Difference in product architecture
Integrated architecture
Modular architecture
Size of value added
Growing “Good
Enough Market”
Driving forces
PC
Aircraft
(CoPS)
EV?
Protection of propriety technology
(IPR), increasing complexity, strategic
Auto- in complex system
investment
motivesinnvation
Scientific approach for innovation
(digitalization, modularization..) and
technological catching up
Level of complexity (difficulty in imitation)
What is complex service system?
Local environment
Value Proposition
to the customer
Organizational factors
Low cost/
high
performanc
e
Operation and Controlling Functions
Complex system of products
Complex system case: global
infrastructure business
• Infrastructure development
needs in Asia until 2020
reaches $8 trillion due to
urbanization (METI estimates).
• Public money cannot cover
such amount, so that PPP
(public private partnership) is
needed.
• Analyzing infrastructure
business is important
• Risk analysis and
simulation
• Business modeling with
relevant players
Complexity in Global Infrastructure Business
Product Design
(Autos, PCs etc)
Social System Design
(GIB)
Unit of observations
(agents)
Component, technology
(such as IPR)
Firms, government,
NGOs etc
Origin of complexity
Interdependency of
components and
technology
Interactions among
different economic
agents
Objectives
Balance of quality and
cost
Total profit
maximization and winwin solution
Inference approach
Deductive
Inductive
Why?
Natural Science Base
Irregularity in
organizational decision
making process
Analytical approach
Top down from grand
theory
Learning by doing ex.
Social experimentation,
simulation
Types of PPP
Design
•
•
•
•
•
•
Build
Operation
BOT (Build Operate Transfer): concession contract
BOO (Build Own Operate)
Leasing: Public leases out for private, affermarge
Joint Venture
Operations or management contract
Cooperative arrangement: public supports to private
Complex system of PPP project
Host country
Government
Influence
$$$(ODA)
Japanese
Government
Contract
Contractor
Policy
Project
Company
(SPC)
Supplier
Local
Partner
Customer
Agent based modeling
Dynamic linear programming
Equity
Investor
Lender
NPV Project Evaluation
O&M (Operation and Management)
Cash Flow
EPC (Engineering, Procurement and Construction)
T
CFt
NPV  
t
t 1 (1  r )
IRR  r ( NPV  0)
Risk analysis of global infra project
• Development of NPV model and monte carlo simulation
• Risk management tools: trade insurance, project financing
technique, etc
IPP, Water, Waste
Transportation
(rail, road)
Political Risk
Regulatory framework + currency exchange
risk, confiscation risk, risk
contract breach,
political violence,
feedstock supply risk
Commercial Risk
Project completion
risk, operation risk,
+ off taker risk
(demand uncertainty)
Natural force majure
『国際インフラ事業の仕組みと資金調達』（加賀隆一著）を著者加工
Analytical aspects by PPP Entity
Goal/Contingency
Key Variable
Major risks
Procurer
Value for money/
failure in PPP
project
NPV of project
Quality of public
services
Bid qualification
Sponsor
Return on Equity/
financial close
Equity IRR
Demand factors and
cost factors (OPEX,
CAPEX)
Senior Lender
Return on Loan/
delay and default of
interest and
principle
Loan life cover
ration (LLCR)
Annual debt service
cover ratio
(ADSCR)
Whole project risks
but senior over
equity and junior
loan
Example of optimization problem:
Too high D/E ratio -> LLCR (ADSCR) shortage -> Require mezzanine loan
-> higher financial costs -> Lower equity return
The degree of procurer’s commitment to demand (electricity, ridership clause)
-> lower contingency (like bankruptcy of SPV) -> make NPV of project higher
Business Plan Competition : ASEAN
ASEAN : factory and/or market for Japanese multinationals?
Myanmar
Laos
Thailand
Vietnam
Cambodia
Philippines
Brunei
Malaysia
Singapore
Indonesia
Adapted from Financial Times
Changing the landscape of Asia
Comparative table in 2010
Japan
5,809
127
45.7
1,458
0.4
GDP
Population
GDP capita
Trade
Land
ASEAN10
1,852
573
3.2
2,127
4.5
2010
Japan
38%
billion US$
million
K US$
billion US$
millon KM2
2030
NIES3
11%
ASEAN
12%
China
5,878
1,339
4.4
2,973
9.6
2050
NIES3
8%
China
39%
NIES3
7%
ASEAN
15%
Japan
20%
ASEAN
20%
China
57%
Japan
11%
China
62%
Diversity in ASEAN countries
(GDP per capita, unit: 1000 US$)
Business Plan Items
• Executive Summary
• What is your company? (Hitachi group? or others? Start-up
company?)
• Management Team and Division of Labor
• What kind of global business in ASEAN? And why
– Summary of your new business
– Business model of your proposal
• Who’s your customer?
• Market and competitor analysis
– Risk analysis
• Potential risks and contingency plan
• Business execution planning (HOW)
– Partnership with local players (with whom? why?)
– Local operation
– Marketing plan
• Business Plan Evaluation (such as NPV, IRR analysis)
15 min presentation in the last class of this course
Next class: Case study on Neemrana
Industrial Park
• Neemrana Industrial Park has been developed by cooperation
of Japanese and Indian governments. What are reasons why
both side of governments helped to develop this industrial
park?
• What are risks associated with investment in production sites
in India? What are benefits located in Neemrana Industrial
Park, in terms of lowering these risks?
• Hitachi plans to extend “Neemrana Shared Energy Center (NSEC)” model to other region of India? Do you think whether
Hitachi will succeed?
• Do you have any recommendation in new business in India?
What kind of business will be successful? You can extend a
scope of your industry, not only in manufacturing, but also to
trading companies, banks and logistics business.