Brazil vs. China for Your Business  1. Again, very specifically what is your business? What products/services are you selling? What customers are you targeting? Who are your major competitors or alternative suppliers? (2 slides)  2. What are the ownership (O) advantages you have as a foreign player vs. local competitors/alternative suppliers in Brazil/China? (1 slide) Now we still need more work here. Without a sharp understanding of O, we can’t draw correctly the Rivalry box of the diamond model, without which we have no base for how to assess the other boxes/bubbles.  3. Fill the boxes and bubbles in the diamond model (<5 examples in each box/bubble). (1 slide)  4. Focusing on the country risks (from the ICRG reports), list relevant major uncertainties/changes in economic- and political environments (<3 in each box/bubble) that may most likely affect your components in #3. (1 slide)  5. How do these uncertainties/changes (assuming they do occur in future) affect your components? How do the changes in these components affect your O advantages vs. local competitors/alternative suppliers in Brazil/China? (1 slide)  6. Think about how you collapse these changes in multiple dimensions into a location choice decision. For instance, some boxes/bubbles are becoming better, some worse, what is the overall impact on the final selection, assuming you can only select one? (just think, no worries about the slides/presentations yet).

Your business in Brazil and China: A comparative analysis of country-specific risks Chance Factor Conditions Demand Conditions Structure of firms and rivalry CSAs in certain industries/products

Industry Analysis using Mergent Online

The diamond model: Porter’s explanation of determinants of national competitiveness From Mike Porter’s The competitive advantage of nations. Chance Factor Conditions Demand Conditions Structure of firms and rivalry CSAs in certain industries/products

The diamond model: Porter’s explanation of determinants of national competitiveness Chance Factor Conditions Demand Conditions Structure of firms and rivalry  Human resources  Quality, skills, and cost  Physical resources (Aviation; Edible)  Land, water, mineral deposits, timber, hydro power sources, and fishing grounds  Knowledge resources (Local hire?)  Scientific, technical, and market knowledge  Capital resources (Local funding?)  Amount, type, and cost of financial resources  Infrastructures (Ad, marketing, delivery)  Transportation, communications, health-care, etc.

The diamond model: Porter’s explanation of determinants of national competitiveness Chance Factor Conditions Demand Conditions Structure of firms and rivalry  Composition of the home demand  Various niches, buyer sophistication  The size and growth of the home demand  Internationalization of domestic demand (travel agency)

The diamond model: Porter’s explanation of determinants of national competitiveness Chance Factor Conditions Demand Conditions Structure of firms and rivalry  Competitive downstream industries through efficient, early, or rapid access to cost-effective inputs (marketing/ad channels, transport/warehousing infrastructures, etc.)  Competitive related industries that can coordinate and share activities in the value chain  Competing products/services  Complementary products/services

The diamond model: Porter’s explanation of determinants of national competitiveness Chance Factor Conditions Demand Conditions Structure of firms and rivalry  The competition intensity in the respective industry  Your major competitive advantages vis-à-vis local firms  Ownership advantages comparative tables  The motivations of companies and their employees and managers

The diamond model: Porter’s explanation of determinants of national competitiveness Chance Factor Conditions Demand Conditions Structure of firms and rivalry  Chance events are occurrences that are outside of control of a firm  New inventions  Political decisions by foreign governments (e.g., travel visa for Chinese, etc.)?  Wars  Significant shifts in world financial markets or exchange rates  Surges in world or regional demand (e.g., travel into certain regions, etc.)  Major technological breakthroughs

The diamond model: Porter’s explanation of determinants of national competitiveness Chance Factor Conditions Demand Conditions Structure of firms and rivalry  Government influences  Subsidies  Regulations/policies for your industry  Regulations/polices for foreign investors  The regulation or deregulation of capital markets  The establishment of local product standards and regulations  Tax

Take-home assignment  6 points  1) Revise the diamond model  2) Project the country risks and their effects on each component in the diamond model