International Business Strategy

Calculation of GRI and GCI

Given,
1. Distribution of world market, by region, selected industries, 2000 (% of US$ value)

Industry North America Europe Asia Rest of World

(%) (%) (%) (%)
Automobiles and light trucks 28.0 39.1 18.3 14.6
Beer 26.0 33.5 10.8 29.7
Biotechnology 31.0 27.6 28.2 13.2
Building products and materials 19.6 30.5 33.9 16.0
Canned foods 11.5 33.8 19.8 34.9
Clothing 19.5 33.4 17.0 30.1
Drugs 33.3 26.9 24.7 15.1
Electrical power systems and 12.2 26.3 49.2 12.3
equipment
Financial services 13.9 45.7 23.2 17.2
Home computers 59.2 14.7 11.9 14.2
Household consumer goods 20.6 34.7 21.7 23.0
Machine tools 15.0 43.2 24.9 16.9
Mobile phones 27.4 34.5 23.0 15.1
Petrol 28.0 30.1 22.5 19.4
Plastic materials and resins 24.2 33.2 27.7 14.9
Retail trade 27.5 36.6 21.6 14.3
GDP US$ billion (1999) 9,600 9,300 7,800 3,300
GDP % (1999) 33 31 27 7
Source: Data base from ICON Group International Inc.

2. Distribution of markets and revenues in consumer electronics

Company North America Europe Asia Rest of World

(%) (%) (%) (%)
Industry 32 30 30 8
SONY 32 25 36 7
Matsushita 13 8 76 3
Philips 18 56 22 3
Thomson 64 25 10 1
Multimedia
Source: Data base from ICON Group International Inc.

Formula,

GRI = ∑1n [Ixn(cumRXn+cumRX(n-1) ]

Sony: calculation of GRI:

Distribution of sales Rest of World Europe North America Asia

(%) (%) (%) (%)
Industry 8 30 32 30
SONY RX 7 25 32 36
CumRX 7 32 64 100
Cum RX – n 0 7 32 64
Cum RX+ cum RX – n 7 39 96 164
lx*(cum RX+ cum RX – n) 0.56 11.70 30.72 49.20
Then SONY’s GRI (%) = 0.56
+11.70+30.72+49.20 = 92.18
Similar calculations will derive
the following results for the other
players:
Philips GRI = 70
Thomson GRI = 61
Matsushita GRI = 52

Note: GCI can be calculated in the same way using the assets deployment in the
industry and by respective firms.

Practice Exercise:

The distribution of sales and assets of General Motors, the US cars and trucks
manufacturer, is shown below:

Nafta Europe Asia Rest of World

Unit sales 5,874,000 1,968,000 421,000 523,000
Personnel 217,000 87,000 10,000 23,000
Industry World Market 28.0 39.1 18.3 14.6
( %)

What is GM’s position on a GCI/GRI mapping?