[MUSIC] Hello everyone, this is Professor Kim, from KAIST Business College in Korea. Welcome to coursera, a very special project Global Public Procurement, and US government procurement. This course basically provide you with information about the global public procurement focused on US Federal Government Procurement. The context of overall courses, that I'm going to cover here, we are going to talk about the global procurement introduction. And perhaps we can talk about procurement the definition and maybe market, a little bit of history. And I intend to cover the example of the public procurement market and government, and also other public procurement market sector such as United Nation and the Multilateral Development Bank. As I said earlier, this course is very dry actually, depends on how you look at it, but I will bring a practical case study to refresh your memory and we can build our case along line. So let's have a look at it as the first segment of this course. So, the market originated from Latin word Mercatus which means to trade, a merchandise or a place where business transacted. A Chapman actually introduced term the term market refer not to sell, not to a place a commodity or commodities and the buyer and seller who are in different competition with one another in his book in economics. And also Peter Kotler introduced a market as a set of actual and potential buyer of a product, introduced in his books, Principles Of Marketing. So a market exist as three different market as we can see, that is domestic market, international market and global market. So let's have a look at domestic market is the internal market or home market, we can say that way. It is where goods and services are bought and sold within the national boundary of a specific country or a concept, that is geographic region within the national boundary or a company's home country. So when we trade in domestic market, you buy and sell and in a very close set over the market. International market, however a little bit different, we can define international market as geographically as market outside the international border of a company or nation of the citizen. A company, to some extent it is a legally distinct entity from its owner like a corporation, is usually citizen of the country where it is organized. So global market is basically a very different concept. I think we refer a lot of other global marketing these day. Everything goes global. So we can say all the people in our area of the world who buy and sell, want to buy something. So basically in the global market contact, entire global your market and the people and the citizen live in different parts of the world, your buyer or seller so there is no limit anymore. Like internet words, market wide open, anyone can be a buyer. Anyone can be your seller and also you can produce design, manufacture product without any specific consideration of where you come from. So global marketing, the then again a very important element. How we do promote, the how we do sell, how we do actually design the product in global marketplace. So global marketing is defined as a process of adjusting, marketing strategy of your company to adapt to the condition of other country basically like something electronic in Korea. Has a global operation and has multiple location for the semiconductor or their white goods manufacturing facility all across the global market. And also they have totally different entry strategy for different country, depend on the product they having. So global marketing is really the full process of planning, creating, and positioning, and promoting your product and service in global market. So we do have in Korea for example, many global company that globally recognized brand like as I said, Samsung and we have LG and Posco and a few other major global brands. Also in Asian country, and if you come from any part of Asia, you have many conglomerate or large corporation in your country, start with your own country like a Tata Group from India and has grown as like, you know a global company. So all those recognised brand in Asia they are now global player. Basically are doing everyday global marketing. So we can say actually by definition, global marketing is more than simply selling a product internationally. Rather it include the whole process of planning, producing and actually pricing and promoting a company product and services in worldwide market and global market. So large business often have offices in foreign country. The market too with different strategy, different entry strategy, investment strategy and the logistics management strategy. But with the expansion of the internet, even small company can reach customer throughout the world. So the global marketing used to be a like a concept developed utilized the most by the global operator like LG and Samsung all other larger corporation. But in this day as Internet basically open all our national boundary, small farmer in Africa, for example can sell their producers in different country and even small merchant. And mountainous country on the proton concealers they can sell their unique item to other country, for example selling their unique souvenir to Korean tourist market. So we indeed live in the global market and global marketing is part of life in this day. So we come to realize the how important in global marketing. So let me think about one more, what do we need to do to be a global operator. So conceptually, the market is wide open. We don't have any more boundary, in different country, so we don't even have any more demographical limit, and the time zone seems to also disappear. Because even we are living in Korea, we have 13 hours differences in the eastern part of the United States. And we have our differences in Europe. But you see, we can sell them by things to all our internet access and the enormous flow of information with now in the artificial intelligence, in a rush to reach out any customer anytime without the border. Still, we got a couple of crucial elements of to be a global operator. Let's have a look at it. Maybe the most important thing is understanding customer, and cultural, and social. That is the most important, 35% of it. So you can argue whether this percentage is different from, on the same operating environment, but it's really depend on where you come, what is the marketing strategy of your company. So this analysis, what I put together is basically 35% majority of key element to the global operator is. You have to understand your customers, their culture and social practice, and also the history. This is especially true, if you want to deal with company in the United States. If you want to sell your product to the customer in the United States, you have to understand what people in Texas, or people in the Albuquerque, New Mexico understand, versus what Bostonian in Boston think, and act and actual react. So, once you understand their culture, social, and behavior, that will give you very good idea of how you can design your product. How even to package your product. And that is very important. So, most of the capitalism in Asian countries including Korea, and in America, I think we have very unique capitalism, where we can call it target oriented capitalism. Versus our European capitalism, more toward the balance I would say, is like a socialist, the basis of the cross and also distribution. So, when you're dealing with European customer in comparison with American customer, there are a lot of things you have to take into consideration, how they react, actually how they think. For example, one can ask a very simple question. Why most of the luxury watch brand? Okay, you're all from Europe, especially Germanic countries that all people speak German, and Austria, and Swiss, and also France. So, why they are so many mechanical engineering, or famous and worldwide brand come out of the Germany versus other country. So, we can use this one as a simple example of people in Germany country, they like to pay attention for the detail. Therefore they take it very seriously when they assemble more than 700 different here the call to complete one famous and luxury brand watch. Versus the people in the East Asia, or Southeast Asia, who would like to do the mass production like China. And they can afford to produce one watch per day, instead they will produce 100 watches per day with the mass production. But their quality may not be the same. So all this thing, the marketing approach is based on where they come from, the historical background, the social background, and the culture basically background. So, to be a global operator, you have to understand the other side of the market. And you have to understand their market itself. So, understanding customer is number one. And number two, you have to understand operating environment. So, operating environment is, it's very closely interwoven with understanding customer, the culture and social behavior. But then again understanding operating environment, it can be social environment, it can be legal environment, it can be political environment. So, you have to understand if you enter a market that has a very different regulation that you do not have from your home country, you have to be fully aware of the risk of investing your money into it. So FDI, Foreign Direct Investment, to a developing country already bring risk, but there will bear a little bit more return at the end of the day. So, operating environment for global company is very, very key element. There's no doubt about that. And third element you can think of, is understanding your own capacity. I mean, we all know analyzing your own capacity, whether you can do SWOT analysis. Different mechanism and detailed analysis of what is actually your capability, as much as you want to enter a different country like China or any other emerging developing country. If you do not have a system in place, if you do not have infrastructure to have the manpower to analyze, assess, conduct research, to develop entry strategy for that particular country. You may not be able to get it in, but you will fail miserably at the end of day. So, assessing yourself capacity or your capability is obviously key element of global operator. How many times we come across the story of failure, story a company from the States, or a company from a different continent try enter into the new market then fail. From Yamper, and we have a serious issue with China. I guess you know, it's no longer a secret. When we had the conflict with North Korea. When the THAAD missile defense system installed in Korea, that upset the Chinese government. So a lot of Korean businesses suffer in China, because there is a change of operating environment, and also the understanding our own capability. So, the number of the company, I don't want to name their company name, but a lot of company had to walk away from China and leaving billions of dollars behind. They have basically have no other option but close the operation, because their operating environment basically dramatically change. The country risk, political pressure, and then basically sabotage against a specific brand from a specific country. Company could not handle that. So when it comes to have any challenges that you cannot control, or beyond your capability, you have to understand what is your actually intrinsic capability versus what people think you have it. So, third element of the global operator, you gotta have your own self awareness, have the capability, I call it intrinsic capability, that you know it can be the driving force to overcome your challenges. Fourth element of global operator, I can say understanding of a customer needs or problem. This is not new one, but if you think about it, this is a very important element. Because if you do not understand your customer needs and the problem, you can hardly can come up with a solution. So when we enter new market with a very unique marketing strategy that you think it can be work, especially in the global public procurement side of it. When they issue an RFP, request for proposal mean that they have some needs number one, number two, they have a problem. If there is no need to know the problem, there is no need to come up with REP. I think that's quite normal, isn't it? So, therefore, even global operator, well beyond the actually concept of public procurement. You got to know your customer needs and the problem. So when it comes to understanding public procurement for global context, understanding your customer public procurement needs and problem, are the first element of your success. That is very much my personal view. Yeah we can add on to other things like a self analysis for your personal vision goal, like a vision for the company and the mission statement okay comes to the another element of the global operator. So to summarize and ever changing in the global market as you as a global operator. There are number of the key element that you have to keep in mind, understanding your customer, culture, social and historical background, which enable you to understand the operating environment and the political environment, economic environment, actually overall the nature of the environment as well. And also you have to understand your own intrinsic capability, things what you can do as your core capability when it comes to facing major challenges. And also understanding your customer need and the problem there another important element. So, these are the context of what do we have to be a global operator. So there are obviously a number of elements in terms of the global public procurement, understanding customer need and problem. It is stipulated in the REP, the number one start. So normally when you getting into public procurement, you should read first statement of the work or QR before getting into anything, so if you do not understand why customer come up with a specific request for proposal or request for information or EOI, you cannot solve the problem because if you do not understand the customer needs, there is no way you can solve the problem. So now let's talk about the little bit and more detail in the global contact and historical element of the caliber public procurement. So let me have a look at how far we go as back as the history of the public procurement, it goes back as early as 3000 BC in Egypt. People responsible for pyramid design. They function as clock, using as purpose to record the amount of labor and materials needed for the construction. So these were sort of a basis of start to think about the procurement related task. The ancient Roman also used different mechanism to create the contract. When empire was engaged in trade with a property supplier, they kept the old record of the element of the procurement. Great Britain as we know procurement history goes back to William the conqueror. William wanted the concise way of the recording all information for the purpose of collecting taxes. So practice evolved to incorporate goods and services with the rise of the British Empire, in colonial pursuit. It became a very important basis of the developing procurement practices. So government procurement or the public procurement, I mean, we're going to talk about the definition of the procurement government versus the commercial one but let's have a look at the concept or the definition of the public procurement. First, the government procurement or we can say public procurement is the the procurement of the goods and services. Under construction on behalf of authority, we call it contracting authority, such as a government agency. Typically, with 10 to 20% of GDP, gross domestic product, government procurement account for the substantive part of the global economy. So, we see the country, for instance, has anywhere between 15 to 18% of the GDP for public procurement. So to prevent the pros waste the corruption or local government protectionism or actually national level protectionism, In each day from the trumpism from the United State, the law of the most country require very strict regulation for the government procurement program. And the law and regulation usually require procuring authority or controlling authority to issue public tender, often format invite the people coming in. If the value of the procurement exceed a certain threshold, and the government should actually open the public notice to invite all other people with different categories, so this is a way to protect a minority and everyone should given the equal opportunity with the fairness and also transparency. So the government procurement is also subject of the agreement on government procurement agreement under WTO, which we are going to talk about in more detail in the next session. Thank you very much.
