Im2019.2.5
- 1. Introduction
- 4. Uppsala internationalization model Johanson and Wiedersheim-Paul, 1975 No regular export (sporadic) Independent representatives (export modes) Foreign sales subsidiary Foreign production and sales subsidiary Market A Market B - Market N Increasing market commitment Increasinggeographic diversification
- 5. Companies
- 6. The transaction costs analysis model Coase, 1937, Williamson, 1985) Organization of international activities and the choice of international market entry mode 1 „If the transaction costs through externalization (e.g. through and importer or agent) are higher than the control cost through an internal hierarchical system, then the firm should seek internalization (hierarchies) of activities, i.e. implementing the global market strategy in wholly –owned subsidiaries. Or… if the friction between buyer and seller is too high then the firm should rather internalize, in the form of its own suubsidiaries.“(Hollensen, S., 2007) 2
- 10. Born Global
- 12. OLI
- 13. OLI
- 14. OLI
- 15. LLL
- 26. National Competitiveness “policy clusters” External Competitiveness •Openness to international trade Regulatory Competitiveness •Attractiveness of the domestic business environment •Regulation supportive of efficient markets Public sector Competitiveness Investment in infrastructure Security Education Dangers: ideological bias (“liberalisation”) lack of economic analysis Source: Weymouth and Feinberg
- 27. Theory Red Ocean Blue Ocean
- 30. Five Step Process 1. Find competitors 2. Find areas of competition 3. Chart red ocean 4. ERRC 5. Chart blue ocean
- 32. 2. Competition Lo price Speed Number of ingredients Cleanliness
- 33. 3. Create Red Ocean Strategic Canvas
- 34. 4. ERRC
- 35. 5. Create Blue Ocean Strategic Canvas
- 36. Theory Red Ocean Blue Ocean
- 38. Red Ocean • Intro band • Festivals
- 39. ERRC • Eliminate: Intro Band • Reduce: • Raise: Video, Meeting Band • Create: Snake Pit, local content
- 40. Blue Ocean • E: Intro Band • R: Video, Meeting Band • C: Snake Pit, local content
- 42. Theory Red Ocean Blue Ocean
- 46. History • Founded in Shenzhen in 1987 by Ren Zhengfei. • Initially reverse engineering foreign technologies rather than relying on importing lesser technology. • Controversy when Huawei would pay “dividends” to public officials who used Huawei equipment in their networks. • Phones and 5G
- 49. Forms of Government One Party State/State Owned Enterprises Nationalism Targeted Fear and/or Animosity Trade Disputes
- 53. Tax Controls
- 56. Errors
- 57. Way Forward
- 61. 61 Porter’s five forces model 4- 61 Market Competitors Intensity of rivalry New entrants Suppliers Buyers Substitutes Market level Industry level
- 62. Factor conditions in Porter’s diamond Climate Physical infrastructure Natural resources Educational system Human resources Technological infrastructure Capital
- 63. Demand conditions in Porter’s Diamond Nature of home demand Size of home demand Economies of scale Transportation costs Buyer sophistication
- 64. A Sixth Force Complementors: Example: •Faster CPU chips fuel sales of personal computers. 2- 64
- 65. Complementor A player is a complementor if customers value your product more when they have the other player’s product than when they have your product alone. A player is your complementor if it’s more attractive for a supplier to provide resources to you when it’s also supplying the other player than when it’s supplying you alone.
- 66. Competitor A player is your competitor (substitutor) if customers value your product less when they have the other player’s product than when they have your product alone. A player is your competitor if it’s less attractive for a supplier to provide resources to you when it’s also supplying the other player than when it’s supplying you alone.
- 68. Collaborative Advantage – Burton’s 5 sources 2- 68 Industry collaborators Horizontal strategic alliances Suppliers Buyers Previously unrelated industries Substitutes and complements Prospective diversification alliances Related diversification alliances Relational contracting, quasi-integration Partnering w/ channels., buyers
- 69. Collaborative Strategy 2- 69 Industry environment Five sources model The firm Distinctive competencies vis-à-vis collaborators Strategic Choice Maximize collaborative advantage
- 70. Five forces of competition Five sources of collaboration Firm’s distinctive competencies Sustainable competitive advantage Sustainable collaborative advantage Composite strategy Maximize overall sustainable advantage PORTER BURTON
- 71. Slide 4.16 Figure 4.2 Illustration of customer value (perceived value) Source: adapted from Anderson et al. (2007, 2008); McGrath and Keil (2007); Smith and Nagle (2005)
- 73. The roots of performance and competitive advantage Resources Core competences competences Competitive advantage Performance Intangible Assets Tangible Assets
- 74. 4-74 Illustration of the core competence P 111
- 75. Game Theory & Strategy Game theory is a tool for understanding how decisions/actions by players in the value net affect each other. • - Play out all the actions/reactions into the future and then reason backward to determine appropriate actions today (assumes rational behavior). 1 The main practical use of game theory is to help a firm decide when to compete and when to co-operate. 2
- 76. The Value Net
- 77. Value Neg
- 78. Changing PARTS of the “Game” to Add/Capture Value • Players: customers, suppliers, substitutors (competitors), complementors, you (e.g., HSC asking for pmt to play) • Added Values: what each player brings to the game— raise your value added (e.g., TWA Comfort Class) • Rules: give structure to the game. Laws, customs, practicality, contracts. Using and revising rules to enhance the game. (e.g., MCC clauses) • Tactics: moves used to shape the way players perceive the game and hence how they play. (e.g., IB fee structure) • Scope: the boundaries of the game. It is possible to expand or shrink the those boundaries. (e.g., multi- market competition)
- 79. The Value Net Customers Competitors Complementors Suppliers Company Vertical Alliances Horizontal Alliances
- 80. Slide 4.27 Competitive Benchmarking profile Figure 4.1 Development of a firm’s international competitiveness (Continued)
- 83. Host Country Actions Government subsidies Ownership restrictions Operating conditions Work permits Local content requirements
- 84. Takeovers Takeovers • Host-government actions that result in a firm’s loss of ownership or direct control Expropriation • a formal seizure of an operation Confiscation • an expropriation without compensation
- 85. Home Country Actions Guided by the same six interests as host countries Often home countries seek multilateral actions to increase their bargaining power
- 87. Human Nature Orientation (HNO) • Positive HNO • assume people can be trusted to obey the rules • Negative HNO • assume people cannot be trusted to obey the rules
- 88. Attitudes Toward Rules • Attitudes toward rules are affected by two criteria: 1.Level of power distance 2.Type of human nature orientation
- 89. Managing Regulatory Change Alter Bargain to get government to change regulations Avoid Move to bypass the impact of the regulation Accede Comply Ally Avoid some risks by seeking strategic alliances
- 90. Political Risk Political risk is the possibility that an unexpected and drastic change due to political forces will result in adverse circumstance for business operations
- 91. Regulatory Change Versus Political Risk Regulatory Change More moderate and predictable changes in the business environment Political risk More unexpected and drastic changes
- 92. Managing Political Risk • Fighting the battle on two fronts: 1. Perfect intelligence systems to avoid being caught unaware when changes disrupt operations 2. Develop risk-reducing strategies that help limit their exposure, or the losses they would sustain, should a sudden change occur
- 93. Terrorism Affects International Marketing Starbucks pulled out of Israel because they feared a terrorist attack GE criticized by a senator for taking “blood money” from a state that supports terrorism (Iran) Global tourism and education are affected Governments and companies spend lots of money to protect infrastructure, plant, equipment, and people
- 95. Arguments for Protectionism • maintain employment and reduce unemployment • increase of business size, and • retaliation and bargaining • protection of the home market • need to keep money at home • encouragement of capital accumulation • maintenance of the standard of living and real wages • conservation of natural resources • protection of an infant industry • industrialization of a low-wage nation • national defense
- 96. Impact of Tariff Barriers Tariff Barriers tend to increase: Inflationary pressures Special interests’ privileges Government control and political considerations in economic matters The number of tariffs they beget via reciprocity
- 97. The Impact of Tariff (Tax) Barriers • Tariff Barriers tend to weaken: • Balance-of-payments positions • Supply-and-demand patterns • International relations (they can start trade wars) • Tariff Barriers tend to restrict: • Manufacturer’ supply sources • Choices available to consumers • Competition
- 98. Six Types of Non-Tariff Barriers • (1) Specific Limitations on Trade: • Quotas • Import Licensing requirements • Proportion restrictions of foreign to domestic goods (local content requirements) • Minimum import price limits • Embargoes • (2) Customs and Administrative Entry Procedures: • Valuation systems • Antidumping practices • Tariff classifications • Documentation requirements • Fees
- 99. Six Types of Non-Tariff Barriers • (3) Standards: • Standard disparities • Intergovernmental acceptances of testing methods and standards • Packaging, labeling, and marking • (4) Government Participation in Trade: • Government procurement policies • Export subsidies • Countervailing duties • Domestic assistance programs
- 100. Six Types of Non-Tariff Barriers • (5) Charges on imports: • Prior import deposit subsidies • Administrative fees • Special supplementary duties • Import credit discriminations • Variable levies • Border taxes • (6) Others: • Voluntary export restraints • Orderly marketing agreements
- 101. Three Types of Monetary Barriers • Blocked currency • Blockage is accomplished by refusing to allow importers to exchange its national currency for the sellers’ currency. • Differential exchange rates • It encourages the importation of goods the government deems desirable and discourages importation of goods the government does not want by adjusting the exchange rate. The exchange rate for importation of a desirable product is favorable and vice-versa • Government approval • In countries where there is a severe shortage of foreign exchange, an exchange permit to import foreign goods is required from the government