The Global Business Environment - Elsevier

The Global Business Environment

Topics

Key Learning System Questions

Chapter 1 (end) Questions 1&2 Chapter 6 B4(a), (b) and (c)

. Free trade (and its alternatives) . National sources of competitive advantage . Outsourcing and offshoring . Globalisation . Fiscal policy . Cross-cultural management . Corporate social responsibility (CSR) . Corporate governance . Regulation . Country and political risks

1

Free trade (and its alternatives)

The Global Business Environment

Free trade

Movement of goods, services, labour & capital without barriers likely to distort the exchange

Alternatives to Free Trade policies

? `Balanced trade': country tries to maintain an even

relationship between respective imports & exports so that neither country runs a large trade deficit

? Protectionism (economic nationalism) trying to

protect the local market by restricting imports by one country, or trade bloc

Protectionism methods (barriers)

? Tariffs: customs duty imposed on goods when

they are moved across a political boundary, effectively increasing the cost, making those goods more expensive than locally produced goods, and would discourage their purchase. (also a source of national revenue)

? Quota systems (restrict imports to a particular

level)

? ``Buy national'' advertising campaigns ? Technical barriers. Standards of quality, health &

safety, packaging, etc. to restrict imports

? Subsidies for local manufacturers

2

Free trade (and its alternatives)

The Global Business Environment

Free trade

Advantages

? Society richer, allows for local specialisation ? Nations can develop resources to gain a

competitive advantage

? Communication between nations reduces conflict ? Quality of the goods generally should improve ? Gaining mutual benefits through trade ? Encourages entrepreneurship & investment ? Encourages exports ? Advances political motives

Disadvantages

? Countries concentrate on particular products & do

not develop alternatives

? Less developed countries lacking technology are

disadvantaged

? Can undermine national cultures (e.g. growing

Americanisation)

? Multinationals can undermine political systems ? Encourages outsourcing abroad (off-shoring): with

jobs lost at home & possible exploitation of labour abroad?

? Compromises national security by reducing

border controls

? Cost of transporting goods: damage to the

environment?

? No protection for young firms in emerging

industries

3

National sources of competitive advantage

The Global Business Environment

Firm strategy, structure

and rivalry

Factor conditions

Demand conditions

Related and supporting industries

(Porter's Diamond) Michael Porter asks:

? Why do certain nations host so many successful

international firms?

? How do these firms sustain superior performance

in a global market?

? What are the implications of this for government

policy & competitive strategy?

Conclusion

Nations do not have particular competitive advantages, but firms in specific industries use their national backgrounds to lever world-class competitive advantages

Porter's Diamond explained Demand conditions

? If home market is substantial firm gets economies

of scale & experience

? If falling sales: an added incentive to export

4

National sources of competitive advantage

The Global Business Environment

Related & supporting industries

? Support of world-class producers of components/

related products

? Success in a related industry may be due to

expertise accumulated elsewhere

Factor conditions

? Advanced factors (e.g. infrastructure, levels of

training, skill, R&D experience) help sustainable competitive success. (Not basic factors such as raw materials, semi-skilled/ unskilled labour, capital availability, etc.)

Firm structure, strategy & rivalry

? National cultures & competitive conditions create

distinctive business focuses

Other events

? Role of government (e.g. subsidies, legislation,

education can benefit of the industrial base)

? Chance events (e.g. wars, civil unrest, chance

factor discoveries, etc.)

National competitive advantage

? Successful firms from a particular country have

linkages between them (`clustering') which allows for the transfer of expertise (e.g. through staff movement, concentration of advanced factors, better supplier/customer relations within the value chain, etc.)

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download