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Competitive Landscape
Global economy Rapid technological change
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Hypercompetition
Global Economy
Global Economy
Goods, people, skills, and ideas move freely across geographic borders Movement is relatively free-for-all by artificial constraints
Expansion into global arena complicates a firms competitive environment
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2002
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
2003
2 3 2 6 4 7 5 9 8 10 11 12 0 0 10
Country
Colombia Italy South Africa India India Brazil Philippines Romania Mexico Turkey Russia Poland Indonesia Argentina Venezuela
2002
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
2003
20 14 16 0 17 15 18 0 19 23 21 22 25 26 24
Table 1.1
SOURCE: From World Competitiveness Yearbook 2003, IMD, Switzerland. http://www.imd.ch.wcy.esummary, April. Reprinted by permission.
International Environment
General Environment
Dimensions in the broader society that influence an industry and the firms within it:
Demographic Economic
Political/legal
Sociocultural Technological Global
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Industry Environment
The set of factors directly influencing a firm and its competitive actions and competitive responses
Threat of new entrants
Power of suppliers
Power of buyers Threat of product substitutes Intensity of rivalry among competitors
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Competitor Environment
Gathering and interpreting information about all of the companies that the firm competes against. Understanding the firms competitor environment complements the insights provided by studying the general and industry environments.
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Industry environment
Focused on factors and conditions influencing a firms profitability within an industry
Competitor environment
Focused on predicting the dynamics of competitors actions, responses and intentions
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Threat
A condition in the general environment that may hinder a companys efforts to achieve strategic competitiveness.
217
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Technological Change
The Information Age
The ability to effectively and efficiently access and use information has become an important source of competitive advantage
Technology includes personal computers, cellular phones, artificial intelligence, virtual reality, massive databases, electronic networks, internet trade
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Technological Changes
Increasing Knowledge Intensity
Strategic flexibility: set of capabilities used to respond to various demands and opportunities in dynamic and uncertain competitive environments
Organizational slack: the resources that allow the firm flexibility to respond to environmental changes Capacity to learn
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Entrepreneurship: AsiaOceania
Asia-Oceania performs poorly in seeking new market expansion, introducing new products, or using new technologies. New entrepreneurial businesses in the region are driven more by high growth in market opportunities for existing services, and less by the introduction of new services or innovative products
Transition Economies
Asia APEC The Asian Pacific Economic Cooperation China Three types of entrepreneurial ventures have emerged:
Township and village enterprises (TVEs) Sino-foreign joint ventures and wholly foreignowned subsidiaries Collective of privately owned joint ventures
Globalization
Globalization Defined
Globalization: the ongoing social, economic, and political process that deepens and broadens the relationships and inter-dependencies amongst nationstheir people, their firms, their organizations, and their governments
International business facilitates globalization process Four Dimension of Globalization Index are: Economic, Technological, Personal Contact, and Political
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Globalization
Globalization mean is that the whole process is potentially beneficial for development, as it saves resources, otherwise used for low efficient micro-management, but this process needs management by consciously prepared bodies governments, international organizations, and above all, globalization needs a rules-based system, in which the interests of all industrialized and poor nations alike need to be taken into account and managed in a system that provides international public goods.
Globalization
The Bretton Woods institutions are called to play a role in this international regime for the provision of public goods. A key role here belongs to the WTO and its binding rules, which need to take into account the interests of all, including the poorest developing countries. Stiglitz argues, the problem is that the rich industrialized countries have imposed their interests and this is why the international trade agreements have to be rethought.
Globalization
What about e-trade. The same issue - the need for good management of international e-commerce - applies. The WTO has had informal discussions about e-commerce, but there is no real work on binding WTO rules is envisaged in this area. ICTs come as part of other binding agreements services, and now there are negotiations on trade facilitation, which may include obligations to publish all trade procedures on the Internet, build Single electronic Windows for filing trade information, etc. In this sense, the WSIS, managed by other UN agencies has made attempts to establish some basic rules, including governance of the Internet and creation of a Solidarity Fund for ICT development in the developing countries.
Personal contact scores are based on travel and tourism, international telephone traffic, and crossborder remittances.
Political engagement scores are a combination of membership in international organizations, contributions of staff and money to UN peacekeeping missions, the number of international treaties ratified, and government-to-government transfers.
Criticisms of Globalization
Threats to national sovereignty/ independence Economic growth and environmental stress Growing income inequality and personal stress
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Global Governance
Politics/Peace- United Nations Trade- World Trade Organization (WTO) Money/Finance- International Monetary Fund (IMF) Development- World Bank Overall- G8 Nations (USA, Canada, UK, France, Germany, Italy, Japan, and Russia) Other international organizations and bodies
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Why go International?
Resource-rich countries (raw materials) Labor-rich countries (e.g. Mexico, Japan, India, Russia, etc.) Market-rich countries (e.g. China)
Reasons to Internationalize
Proactive Reasons
Increased Profit Unique Goods or Services Technological Advantage Exclusive Market Information Owner-Manager Desire Tax Benefits Economies of Scale
Reactive Reasons
Competitive Pressures Declining Domestic Demand Overcapacity Proximity to Customers Counterattack Foreign Competition
International Entrepreneurship
Venture capital and entrepreneurs fund less than 0.1% of the worlds entrepreneurs High-level VC funding accelerates the commercialization of new products and services and gives the US dominance is world markets. Ninety-one percent of VC invested in the US finances high technology companies, in contrast to only 29 percent in other nations