INTERNATIONAL BUSINESS ENVIRONMENT: Lecture 1

Size: px

Start display at page:

Download "INTERNATIONAL BUSINESS ENVIRONMENT: Lecture 1"

Allen Riley
5 years ago
Views:

1 INTERNATIONAL BUSINESS ENVIRONMENT: Lecture 1 Introduction to IBE and analyzing the IBE environment (PEST, SWOT, 5 forces, C- analysis) Matevž Rašković Ljubljana,

2 Expectations

3 THE INTERNATIONAL BUSINESS THE INTERNATIONAL BUSINESS ENVIRONMENT OF TODAY

4 Global balance of trade?

5 Global FDIs

8 A new FDI trend

9 The rise of China: Exports

10 China: eyeing the no. 1 place

11 China vs. US comparison

12 The rise of the BRIC(S)

13 BRIC(S) as a super power

14 BRIC(S) and Slovenia? Scandinavia represents less than 5 % of EU exports EU-27: > 71 % Germany: > 19 % Italy: > 12 % France: > 8 % Austria: > 8 % Former Soviet Union: < 5 % (Russia < 3 % ) USA: < 2 % Ex-YU: > 14 % (share is slowly declining) Arab markets (without Turkey): < 2 % Turkey: + 1 % Central & South America: < 1 % Mostly Mexico & Brazil)? India: < 0.5 % (1.1 billion market) China: < 0,5 % (1.34 billion market) Total BRIC: < 4 % (almost 3 billion market) Australia & NZ: < 0,2% Brazil: < 0.2 % (196 million market ) Source: Statistical Office of the Republic of Slovenia, 2011

15 World of brands

16 Top brands in 2011

17 Geographical distribution

18 Top brand changes

19 Top industry changes

20 The impact of the crisis

21 Top companies 2011

22 And the little ZARA dress you bought last week Fabric bought in Asia cut in a factory in Spain sown by seamstresses in Portugal printed in Tunisia and sold in Ljubljana!

THE COMPLEXITY OF TODAY http://www.youtube.com/watch?

v=sc4hxpxnrz0&feature=fvw http://www.youtube.com/watch?

23 THE COMPLEXITY OF TODAY

24 MAIN DIFFERENCES: DOMESTIC vs. INTERNATIONAL BUSINESS Geography & distance Information (cause & effect) Additional economic concepts Culture Markets- widespread & fragmented Volumes Politics Governments & regulations Technology

25 THE BASIC APPROACH IN IB Seek & look Spot & target Understand (information) Manage / interact How to do good business?

26 ANALYZING THE IB ENVIRONMENT: AN OVERVIEW

27 WHY IS ANALYSIS IMPORTANT? Ford Pinto

28 ANALYSIS LEVELS MACRO (COUNTRY) LEVEL: PEST / PESTL PORTER S DIAMOND SWOT MEZZO (INDUSTRY) LEVEL: PORTER S 5 FORCES COMPETITIVE POSITIONING C-ANALYSIS 3 KEY ISSUES: 1. APPLICABILITY & RELEVANCE 2. RISK MITIGATION 3. SUPPORT FOR DECISION-MAKING MICRO (COMPANY) LEVEL: INTERNAL COMPANY ANALYSIS (capabilities, resources, etc) DUE DILLIGENCE

29 EXAMPLE: PORTER S DIAMOND Which factors are key for your business venture? What drives demand? Decision-making factors Elasticity? Apply the data so it is relevant to your company and line of business!

30 PEST ANALYSIS 1/3

31 PEST ANALYSIS 2/3

32 PEST ANALYSIS 3/3

33 Always ask What? Why? What do I need to know to make a better and informed decision? Why do I need to know this (cause & effect)? Where? Where do I get this information and data? How much? How much resources are needed for this? How? How will I be able to use and apply this info and data in my business processes?

34 PEST: GINI coefficient

35 PEST: example of population structure Variables: Gender Age Education level Literacy Religion Ethnicity Marital status Children Size of family

36 PEST: example quality of life

37 PEST: example CPI (Transparency Int.)

38 Example: Doing Business (World Bank)

39 12 pillars of competitiveness World Economic Forum, 2010/20101

40 EXAMPLE: WEF (Competitiveness) 2 views: 1) Absolute progress and 2) relative progress World Economic Forum, 2010/20101

41 WEF: Slovenia World Economic Forum, 2010/2011

42 EXAMPLE: Innovation Scoreboard Pro Inno Europe: 2011.

43 EXAMPLE: Innovation Scoreboard Pro Inno Europe: 2011.

of origin effect (COO) & consumer ethnocentrism CET-SCALE

44 EXAMPLE: socio-cultural environment Hofstede s indices PDI UAI IND MAS LTO World Values Survey GLOBE project Country of origin effect (COO) & consumer ethnocentrism CET-SCALE (between 17 and 119; i.e. Slovenia: 53.74) Consumer profiles

45 Schwartz: values Schwartz, 2008/2009.

46 Culture & national character Terracciano et al. (2005): National Character Survey.

47 PORTER S 5 FORCES (quick recap)

48 EXAMPLE: Slovene retail market

49 PORTER S 5 FORCES TOOLBOX The bargaining power of suppliers supplier switching costs ddifferentiation of inputs presence of substitute inputs supplier concentration threat of forward integration cost of inputs importance of volume to supplier The threat of new entrants barriers to entry brand equity switching costs capital requirements access to distribution absolute cost advantages learning curve advantages expected retaliation government policies The intensity of competitive rivalry number of competitors rate of industry growth intermittent industry overcapacity exit barriers diversity of competitors informational complexity brand equity fixed cost allocation level of ad expense The bargaining power of customers bargaining leverage buyer volume buyer switching costs buyer information availability ability to backward integrate availability of substitutes buyer price sensitivity price of total purchase The threat of substitutes buyer propensity to substitute relative price performance of substitutes buyer switching costs perceived level of product differentiation

50 C-ANALYSIS Doing a profile of your main competitors SWOT of your main competitors Brand image Positioning Capabilities Competitive advantage Skills Human capital

51 Understanding the value chain

52 Understanding global value chains

53 EXAMPLE: COMPETITIVE POSITIONING Valicon, 2009.

54 EXAMPLE: Gorenje positioning Gorenje, 2008.

55 MARKET SCREEING MODEL: DECIDING WHICH MARKETS TO ENTER WHICH MARKET TO ENTER? WHICH INDUSTRY TO ENTER? WHICH SEGMENT?

56 EXAMPLE: IDEAS Highest per capita BEER consumption in liters Rank Country Consumption Highest per capita COFFEE consumption in kilograms 1 Czech Republic Ireland Germany Australia Austria United Kingdom Slovenia Belgium Denmark Finland 85.0

57 EXAMPLE: IDEAS Highest per capita GUN ownership in # guns per 100 Top 20 countries in terms of frequency of sex 1st USA: 90 guns per 100 people 2nd Yemen: 61 guns per 100 people 3rd Finland: 56 guns per 100 people 4th Switzerland: 46 guns per 100 people 5th Iraq: 39 guns per 100 people 6th Serbia: 38 guns per 100 people

59 INFORMATION RESOURCES Alibaba: Transparency international: CIA factbook: WTO: w.aspx?language=e&country=si World Bank Doing business: Innovation Scoreboard:

The Innovation Union Scoreboard: Monitoring the innovation performance of the 27 EU Member States

MEMO/12/74 Brussels, 7 February 2012 The Innovation Union Scoreboard: Monitoring the innovation performance of the 27 EU Member States This MEMO provides an overview of the research and innovation performance