International Business: Session 5

"International Business: Session 5" The state is responsible for making all decisions: what goods and services the country produces; quantity of production; prices at which they are sold; and distribution.
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International Business: Session 5International BusinessSession 5Understanding and AnalyzingInternational Markets Political P E Economic S Social/Cultural T TechnologicalPEEST, PESTEL, PESTLE, SLEPT,STEEPLED, PEST LIED (L)egal (E)nvironmental (Ecological/Physical) (E)thical (E)ducational (D)emographicUnderstanding and AnalyzingInternational MarketsPolitical P - includes (L)egal,(E)nvironmental law/policy EEconomic S - includes(E)nvironmental climate and TweatherSocial/CulturalKey VariablesPolitics Social / Cultural and Demographic Political System  Dimensions of culture Legal System  Beliefs and Attitudes Laws (affecting business)  Language National Trade Policies  Religion Government Stability and Risk  Population and Age Structure Openness to FDI  Education  Urban/Rural CompositionEconomics and Market Characteristics Economic System Technical Per Capita GDP and Growth Rate  Infrastructure Purchasing Power  ICT levelEconomic SystemsCommand Economies (Centrally Planned)Market EconomiesMixed EconomiesCommand (Centrally Planned) Economies The state is responsible for making all decisions: What goods and services the country produces; Quantity of production; Prices at which they are sold; and Distribution The state owns all wealth, land, and capital, and allocates resources based on which industries they want to develop. Command economies were common in the 20th century; they proved so inefficient that most have gradually died out. Centralplanning is less efficient than market forces in synchronizing supply and demand. Today many countries exhibit some characteristics of command economies- examples- China, India, Russia, and certain countries in Central Asia, Eastern Europe, and the Middle East.Market Economies Decisions regarding production levels, consumption, investment, and savings resulting from the interaction of supply and demand (market forces). Economic decisions are left to individuals and firms. Government intervention in the marketplace is limited. Capitalism (private ownership of production) is closely aligned with market economies. State should establish a legal system that protects private property and contractual agreements.Mixed Economies Exhibitsmarket and command economy features, thus combining state intervention and market mechanisms. Most industries are under private ownership, and entrepreneurs freely establish, own, and operate corporations- but the government also controls certain functions, such as pension programs, labor regulation, minimum wage levels, and environmental regulation. The state usually funds public education, health care, and other vital services and owns enterprises in transportation, telecommunications, and energy. Examples- France, Germany, Japan, Norway, Singapore, and Sweden, government often works closely with business and labor interests to determine industrial policy, regulate wage rates, Laws affecting businessNationalLegal Environment – doingbusiness.orgLaws directed against foreign firms ◦ Restrictions on Income Repatriation ◦ Controls on Operating Forms and Practices ◦ Expropriation, Confiscation, NationalizationEnvironmental lawsMarketing and Advertising lawsLevels of InternationalStrategyInternational StrategicManagement External Analysis Environmental Opportunities Conditions& and Strategy Formation Trends Threats Identify Choose &Evaluate Options Strategy Inventoryof Strengths Distinctive and Competencies Weaknesses Strategy Implementation Internal AnalysisPressures for Global Integration Economies of Scale. Concentrating manufacturing in a few select locations to achieve economies of mass production. Capitalize on converging consumer trends and universal needs. Companies such as Nike, Dell, ING, and Coca-Cola offer products that appeal to customers everywhere. Uniform service to global customers. Services are easiest to standardize when firms can centralize their creation and delivery. Global sourcing of raw materials, components, energy, and labor. Sourcing of inputs from large-scale, centralized suppliers provides benefits from economies of scale and consistent performance. Global competitors. Global coordination is necessary to monitor and respond to competitive threats in foreign and domestic markets. Availability of media that reaches customers in multiple markets. Firms now take advantage of the Internet and International Business: 14 cross-national television to advertise their offerings in Strategy, Management,Pressures for Local Responsiveness Unique resources and capab ...