INTERNATIONAL BUSINESS Ilan Bijaoui 2006 ibii netvision net il

INTERNATIONAL BUSINESS Ilan Bijaoui 2006 ibii@netvision. net. il

THE POLITICAL SPECTRUM Rule people DEMOCRACY Authoritarian Reactionary Islam Control souls Facist Conservative Communist TOTALITARISM Liberal Authoritarian Radical Economy+Politics

COMPARATIVE MEASURES OF FREEDOM POLITICAL RIGHTS Fair elections, representatives with power, political parties, rights of minorities CIVIL RIGHTS Freedom of press, equality under law, social freedom, government-corruption

ECONOMIC SYSTEMS · Market Allocation: Consumers allocate resources. Competition + Consumer Protection (USA) · Command Allocation: State Planners. · Mixed Systems: Governmental Expenditures/GDP 32% USA, 64% Sweden

POLITICS AND MANAGEMENT DECISIONS • Political risks: Micro (population) and Macro (government) • Government intervention: Individualcommunitarian paradigm

INDEX OF ECONOMIC FREEDOM Source: Heritage foundation www. heritage. org

Map of countries by GDP (PPP) per capita, based on the 2005 IMF data.

Rank Country 1 Luxembourg 2 Norway 3 United States 4 Ireland 5 Iceland 6 Denmark 7 Canada 8 Austria 9 Hong Kong 10 Switzerland 11 Qatar 12 Belgium 13 Finland GDP $ per capita 69, 800 42, 364 41, 399 40, 610 35, 586 34, 737 34, 273 33, 615 33, 411 32, 571 31, 397 31, 244 31, 208 • International Monetary Fund, World Economic Outlook Database, April 2006 [1] [edit] See also

14 Australia 30, 897 15 Netherlands 30, 862 16 Japan 30, 615 17 Germany 30, 579 18 United Kingdom 30, 470 19 Sweden 29, 898 20 France 29, 316 21 Italy 28, 760 22 Singapore 28, 100 23 United Arab Emirates 27, 957

24 Taiwan 27, 572 (R. O. C) 25 Spain 26, 320 26 Brunei 24, 826 27 New Zealand 24, 769 28 Israel 23, 416 29 Netherlands Antilles, Netherlands 22, 750 30 Greece 22, 392 31 Slovenia 21, 911 32 Cyprus 21, 232 33 South Korea 20, 590

Leading exporters and importers in world merchandise trade, 2005 (Billion dollars and percentage. )WTO

Sources: US International Trade Commission, US Department of Commerce

Source: PRC General Administration of Customs, China's Customs Statistics

Income Gini coefficients in the world

nk Country Gini Richest 10% Richest 20% Sur index to poorest 10% to poorest 20% yea Denmark 24. 7 8. 1 4. 3 199 Japan 24. 9 4. 5 3. 4 199 Sweden 25 6. 2 4 200 Belgium 25 7. 8 4. 5 199 Czech Republic 25. 4 5. 2 3. 5 199 Norway 25. 8 6. 1 3. 9 200 Slovakia 25. 8 6. 7 4 199 Bosnia and Herzegovina 26. 2 5. 4 3. 8 200 Uzbekistan 26. 8 6. 1 4 200 Finland 26. 9 5. 6 3. 8 200 49 Israel 35. 5 11. 7 6. 4 1997

MOTIVATION PUSHES AND PULLS TO INTERNATIONALIZE TRADITIONAL MOTIVATIONS(Bartlett) · Expand sales, acquire resources, minimize risk. Secure Key Supplies · Access Low Cost Factors · Local Market Saturation-Competition · Market Seeking Behavior · Technology – Vernon Product Life Cycle

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)

NATURAL ENVIRONMENT Raw materials Energy costs Change Pollution Know how Geography Infrastructure TECHNOLOGICAL ENVIRONMENT Improvement PM 4. 4 Natural and technological environments Regulation

DEMOGRAPHIC ENVIRONMENT Age Family Population Education ECONOMIC ENVIRONMENT Economic PM 4. 3 Demographic and economic environments Spending patterns

POLITICAL ENVIRONMENT Legislation Enforcement Interest groups CULTURAL ENVIRONMENT Values Subcultures PM 4. 5 Political and cultural environments Shifts

LEGAL ENVIRONMENT • Public International Law: International conventions, custom International Court of Justice (ICJ) • Private International Law: Common Law-tradition-precedent (English) US, India, Singapore- detailed contracts Civil law(Codified) (Napoleonic Code) Thailand, Japan China. US Uniform Commercial Code. • Theocratic law : Islamic law Sha’riah

Establishment Juridiction 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

ORIENTATION OF MANAGEMENT & COMPANIES Ethnocentric Home Country Superior, Similarities Regiocentric Geocentric Similarities & Differences In a world region In home & host Countries Polycentric Each Host Country is Unique, Differences

INTERNATIONAL STRATEGIES · Domestic · International · Multi-domestic, Multi National · Global · Transnational

INTERNATIONAL STRATEGY-EXPORTS • Local Distinctive Competence Raw Material Know how Manpower • International risks Knowledge protection Investment protection

STAGES OF DEVELOPMENT Strategy/ Stage Domestic Model International Multinational Global Coordinated Decentralized Central hub Extension markets National markets View of the World Home Country Orientation Ethnocentric Polycentric Transnational Integrated Network Global markets and or resources Mixed Geocentric

INTERNATIONAL STRATEGY OF SELECTED FIRMS Global Multidomestic Transnational Ethnocentric Ikea 1 Danone Polycentric Ikea 2 Unilever Regiocentric Geocentric Coca Cola Toyota

(Source: Michael E. Porter, Competitive Advantage (New York: Free Press, 1985), p. 37. ) PM 11. 2 The generic value chain

ILLUSTRATIVE CONFIGURATION Activities US Canada UK France Germany Japan Inbound logistics Operations Components x x x Assembly Outbound logistics Order processing Physical distribution Marketing Advertising Sales force Promotion materials x x x x x x x x x x x x x x x

ILLUSTRATIVE CONFIGURATION Activities US Canada UK France Germany Japan x x x Service x x Procurement x x Technology Dvt Human resource x x x Management x Firm structure

ILLUSTRATIVE COORDINATION Activities Operations Marketing & Sales Service Procurement Technology Dvt Configuration Coordination Location of Tasks allocation, production Networking, Technology transfer Product line Brand worldwide Country Sales coordination AdvertisingPromotion Similar channels Pricing coordination Location Similar standards Location Managing suppliers Location Tasks allocation Knowledge transfer Sequence of products

CONFIGURATION OF ACTIVITIES High Extensive Coordination among subsidiaries Simple Global Country-centered strategy by multinationals operating in one country Export-based strategy, decentralized marketing Strategy Coordination of Activities Low Geographic Dispersed Geographic Concentrated

PORTER’S DIAMOND Chance Firm Strategy Structure & Rivalry Factor Demand Conditions Related & Supporting Government Industries

PORTER’S DIAMOND DISCUSSION Factors Conditions Demand Conditions • Human, Physical resources, Capital, Knowledge, Infrastructure • Hierarchy, factors: Basic-Advanced • Factor Creation • Demand Composition • Demanding Buyers • Anticipatory Buyers • Pattern Growth Firm Strategy, Structure& Rivalry Supporting & Related Industries • Style of Management & Structure • National Norms • Rivalry • Supplier Industries & Development • Related Industries & Market • Related Industries & Production

ITALIAN SUPPLIER INDUSTRIES TO FOOTWEAR Leather Footwear Parts of Design Footwear Services Leather Processed working Leather Machinery

ITALIAN INDUSTRIES RELATED TO FOOTWEAR Leather Athletic Clothing Handbags Footwear Parts of Footwear Leather Processed working Leather Machinery Design Services

PARTIAL CLUSTURING IN DANISH ECONOMY Barley, Malt Food Processing Refrigeration Yeast Equipment Pork Beer Dairy Industry Trypsin Fermentation Purification (Enzyme) Insulin Equipment Technology Fermented Insulin Fermented Enzymes