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Transcript of INTERNATIONAL BUSINESS Ilan Bijaoui 2005 [email protected].
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INTERNATIONAL BUSINESS
Ilan Bijaoui
2005
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ECONOMIC SYSTEMS
Market Allocation: Consumers allocate resources. Competition + Consumer Protection (USA)
Command Allocation: State Planners.
Mixed Systems: Governmental Expenditures/GDP 32% USA, 64% Sweden
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INDEX OF ECONOMIC FREEDOM
Source: Heritage foundation www.heritage.org
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China's Trade with the United States ($ billion
%change
%change
%change
1997 1998 1999 2000 2001 2002 2003
US Exports 12.8 14.3 13.1 16.3 19.2 22.1 28.4
6.7 10.9 -8.0 24.4 18.3 14.6 28.5
US Imports 65.8 75.1 87.8 107.6 109.4 133.5 163.3
21.0 14.1 16.9 22.6 1.6 22 22.3
Total 78.6 89.4 100.9 123.9 128.6 155.6 191.7
18.4 13.7 12.9 22.8 3.8 21 23.2
US Balance -53.0 -60.8 -74.7 -91.3 -90.2 -111.4 -134.8
SOURCES: US International Trade Commission, US Department of Commerce
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MOTIVATION PUSHES AND PULLS TO INTERNATIONALIZE
TRADITIONAL MOTIVATIONS(Bartlett)
Secure Key Supplies
Access Low Cost Factors
Local Market Saturation-Competition
Market Seeking Behavior
Technology – Vernon Product Life Cycle
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EMERGING MOTIVATIONS
Economic, Technological, Social Developments
Amortization of R&D Expenditures(public telephone switching systems)
Shortening Product Life Cycle
Scanning & Learning Capabilities
Competitive Positioning (Cross Subsidization)
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PM 4.4 Natural and technological environments
NATURAL ENVIRONMENT
Energy costs Geography
TECHNOLOGICAL ENVIRONMENT
RegulationImprovement
InfrastructureKnow howChange
Raw materials Pollution
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Spending patternsEconomic
PM 4.3 Demographic and economic environments
ECONOMIC ENVIRONMENT
Age
DEMOGRAPHIC ENVIRONMENT
PopulationFamily Education
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PM 4.5 Political and cultural environments
POLITICAL ENVIRONMENT
Interest groupsEnforcementLegislation
CULTURAL ENVIRONMENT
ShiftsSubculturesValues
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POLITICAL ENVIRONMENT
• Sovereignty of Nation States: Regulations, Law & Support
• Political Risk: Expropriation Restrictions, Controls, Currency, War, National Buyers
• Taxes: Bi lateral tax treaties• Equity Control & Expropriation
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LEGAL ENVIRONMENT
• Public International Law: International conventions, custom
International Court of Justice (ICJ) • Private International Law:
Common Law (English) US, India, Singapore
versus Code Law (Napoleonic Code) Thailand, Japan China. US Uniform Commercial Code
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EstablishmentJuridiction of Host-Home Country
Intellectual Property Paris Union, Right of Priority
Antitrust: US Sherman Act (1890) EU Competition law
Licensing:
Law-Competition/ Competitors
Champagne perfume (YSL)France-US Counterfeiting
Bribery: Foreign Corrupt Practice Act (197)7
Patent Cooperation Treaty(PCT) 39 European Patent Office
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OWNERSHIP AND CONTROL
. Licensing: Risk New Competitor (AT&T Bells –Sony small batteries transistors, Cardin
Investment – Joint Ventures (T92)
Ownership Investment
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OWNERSHIP & CONTROL
Equity
Ownership&
Strategic Alliances
Joint venture
Licensing Franchising
Management Contract
Ownership ` 100%
Control 100% 0
0
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ENTRY STRATEGIES
Exports
Sourcing
Licensing
Joint Venture .
Equity
Ownership Alliances
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ORIENTATION OF MANAGEMENT & COMPANIES
Ethnocentric
Home Country Superior, Similarities
Regiocentric Geocentric
Similarities & Differences Similarities & Differences
In a world region In home & host Countries
Polycentric
Each Host Country is Unique, Differences
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Domestic
International
Multi-domestic, Multi National
Global
Transnational
INTERNATIONAL STRATEGIES
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STAGES OF DEVELOPMENT
Strategy/ Stage
DomesticInternationalMultinationalGlobalTransnational
ModelCoordinatedDecentralizedCentral hub
Integrated
Network
View of the World
Home Country
Extension markets
National markets
Global markets or resources
Global markets and resources
OrientationEthnocentricEthnocentricPolycentric MixedGeocentric
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INTERNATIONAL STRATEGY OF SELECTED FIRMS
GlobalMultidomesticTransnational
Ethnocentric Ikea 1 Danone Coca Cola
Polycentric Ikea2 Unilever
Regiocentric Toyota
Geocentric
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PM 11.2 The generic value chain
(Source: Michael E. Porter, Competitive Advantage (New York: Free Press, 1985), p.37.)
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ILLUSTRATIVE CONFIGURATION ActivitiesUS Canada UK France Germany Japan
Inbound logistics
Operations
Components
Assembly
Outbound logistics
Order processing
Physical distribution
Marketing
Advertising
Sales force
Promotion materials
x x x x
x x x x x
xx x x x x x
x x x x x x x x x x x x x
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ILLUSTRATIVE CONFIGURATION
ActivitiesUS Canada UK France Germany Japan
Service
Procurement
Technology Dvt
Human resource
Management
Firm structure
x x x x x x x xx x
x x x x x x
x
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ILLUSTRATIVE COORDINATION
ActivitiesConfiguration Coordination
Operations
Marketing & Sales
Service
Procurement
Technology Dvt
Location of Tasks allocation,production Networking, Technology transfer Product line Brand worldwideCountry Sales coordinationAdvertising\Promotion Similar channels Pricing coordination
Location Similar standards
Location Managing suppliersLocation Tasks allocation Knowledge transfer Sequence of products
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CONFIGURATION OF ACTIVITIES
High
Low
Coordination
of Activities
Geographic Dispersed Geographic Concentrated
Extensive Coordination among subsidiaries
Simple Global
Strategy
Country-centered strategy by multinationals operating in one country
Export-based strategy, decentralized marketing
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PORTER’S DIAMOND
Factor Demand
Conditions Conditions
Chance Firm Strategy
Structure &
Rivalry
Related &
Supporting Government
Industries
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PORTER’S DIAMOND DISCUSSION
Factors Conditions• Human, Physical resources, Capital,
Knowledge, Infrastructure
•Hierarchy, factors: Basic-Advanced
• Factor Creation
Demand Conditions• Demand Composition
• Demanding Buyers
• Anticipatory Buyers
• Pattern Growth
Firm Strategy, Structure& Rivalry• Style of Management & Structure
• National Norms
• Rivalry
Supporting & Related Industries• Supplier Industries & Development
• Related Industries & Market
• Related Industries & Production
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ITALIAN SUPPLIER INDUSTRIES TO FOOTWEAR
Leather Footwear
Parts of Design Footwear Services
Leather Processed working Leather Machinery
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ITALIAN INDUSTRIES RELATED TO FOOTWEAR
Parts of Footwear
Leather Processed working Leather Machinery
Design Services
Leather Leather Leather Athletic Clothing Handbags Footwear Footwear
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PARTIAL CLUSTURING IN DANISH ECONOMY
Barley, Malt Food Processing Refrigeration Yeast Equipment Equipment
Pork Beer Dairy Industry
Trypsin Fermentation Purification (Enzyme) Insulin Equipment Technology
Fermented Insulin Fermented
Enzymes