abp 2013 INTERNATIONAL BUSINESS Day 1

Governments & MNEs
• Governments - purchase goods & services for defence, education, health, etc - also control participation in local economy by foreign firms. At various points in economic development, governments require additional resources to create employment & diversify the economic base - technology, management expertise, processes, marketing skills, access to overseas markets
• Michael Porter - role of governments can be overstated!.
The Response of Firms
Organisations co-operate – lack resources, cost & risk of new product development, shorter product life cycles, need for economies of scale. Decision is balance between flexibility required, degree of managerial decision making desired (control), & capital available - internal factors against preferences of host government
Module:_ Why organisations become involved in IB (objectives) – How engage in lB (export, joint/wholly-owned) – What influences involvement – internal/external – Conditions that drive trade (economic/behavioural) – Issues facing organisations dealing across national boundaries – Builds on earlier studies of marketing, HRM, operations, finance
Session 1.
International Business Opportunities & Threats
June 2013 Stephen Jones Bangor Business School Bangor University
Selected Recent Developments in IB
Tensions Between Actors
An MNE‟s goal of globalised production for laptop computer may conflict with government‟s aims for national development.
Eg. Singapore‟s dependence on economies in USA & Europe for demand for electronics items.
•
– Build internal/indigenous capacity – Allow inward investment wholly-owned by foreign firms Require co-operative venture between local company & foreign firm
SUMMARY – IB Dilemmas Facing Governments & Companies
– Company motivations to engage in IB vary for different products, in different geographies, over time. How to evaluate range of possibilities? – Should governments ຫໍສະໝຸດ Baiduet market dictate events, or intervene - create artificial restraints to trade, encourage domestic investment or foreign investment? – How should organisations & nations exploit advantages (natural & created)? – No single prescription for governments (or firms) for all circumstances depends on industry & conditions of external environment, & will vary over time. – Analyse each situation, start from first principles, recognise behaviour of the individual as customer, manager in company, & in government.
In Literature - terms MNC or MNE often used interchangeably – “operating in multiple nations”
• • • • • • • • • • • Pakistan goes to China Unrest in Turkey Manufacturing activity fell across Euro zone in May 2013 Special Economic Zones to be created in Japan Risk-averse culture infects US workers, entrepreneurs Abu Dhabi & Dubai to merge aluminium production ventures WalMart India cleared of lobbying charges China‟s old problem Severn Trent water company rejects third takeover by foreign bidders Shale gas revolution to provide 250 years of reserves at current consumption Half UK exports go outside EU – trade with China, India, & US „soaring‟
Session 2. Theories & Modes of International Business
June 2013 Stephen Jones Bangor Business School Bangor University
Introduction to MNEs & Theories
0% Capital Investment (equity participation) 100%
High
High
Desired role Flexibility Control Perceived uncertainty in managerial decisions
Low
Indirect export Licensing/ franchising Contractual arrangements
Globalisation
Globalisation - of Markets - of Production - of Culture - of Labour - of Technology - of the Environment - of Regulation
3Cs - Customers - differences from needs/behaviours existing customers? - Competitors - differ from strategies of existing competitors - Our Company – how should we respond? 3Cs in context of an international environment (PESTER)
Company OBJECTIVES - vs Customers & Competitors
• Possible IB objectives for Company (more than 1 may apply):– Sales expansion – Resource acquisition – Diversifying economic dependence from single nation – Minimising risk of competition Objectives may vary by market &/or product based on:– How customers „value‟ products – Complexity of IB - new competitors, different risks & conflicts. – Orientation of organisation & managers (pro-active or re-active?) – Need to adjust elements of organisation‟s Value Chain – Influences outside organisation - Price competition, Product innovation, govts sheltering domestic producers
-> appropriate adjustment of Company‟s strategy
Core text – Daniels, Radebaugh & Sullivan (2013) “International Business – Environments & Operations”, Pearson, 14ed, 978-0-273-76695-7)
•
Adjusting (Global) Value Chain
Planning a Response by Company
Managers - May (?) need to adapt existing products &/or communications - Will require information gathering about changing global environment, & skills to interpret changes as threats & opportunities
Low
Joint
ventures
Wholly owned production
Governments – a Tale Of Two Nations
There is no single prescription for governments (or firms) for all circumstances – decisions depend on industry & conditions of external environment, & will vary over time.