ORGANIZATION AND ENVIRONMENT

Trouble at Amana In 1967, Amana introduced the first microwave, and gained 60% of the market. A decade later, its market share declined to 6%. WHY? Mis-forecast: microwave will SUBSTITUTE for traditional ways of cooking Misunderstood the market: assumed that the market DOESN’T care about the price Unprepared for new entrants: Low priced Japanese competitors

In 1990s: The Increase of Gas Price Tesla Motors’s plan: Produce battery in Thái Lan, transport to England to assembly, and sell the cars in US. But now, they produce battery in California. GM: Past several years, SVU and mini-truck were well sold in China. Now, people are looking for more economy cars.

How Gaz Price Affect Strategies Reconsidering global strategy Global strategy suggests that firms can make different components in different countries. High gaz price means that transportation would be very expensive Reconsiderting values of the product Gaz consumption becomes a crital factor

How Current Recession Affect Business Falling stock and slumping dividends Credit impairment and bankruptcy Employee lay-offs and benefit cut Cut to quality Reduce consumer access Small firms would be more vulnerable to the recession

2015: Failing of Oil Price 2014: >$110 June 2015: $60 Jan. 2016: < $30 Who are winners and losers?

How Trump Presidency may affect Vietnamese business? Describe 4 ways Trump Presidency could affect VN businesses, according to the essay? Can you list some more areas that may be affect by Trump Presidency?

Environment Factors … are those that have impacts on the organizational performance but are not directly controlled by the organization

ENVIRONMENT AND STRATEGY Economic Technological Political Social Global Demographic ORGANIZATIONAL PERFORMANCE

Macroenvironment – PEST Political Government stability Taxation policy Foreign trade regulations Social welfare policies Legal framework Economic Business cycles GNP trends Interest rates Money supply Inflation Unemployment Disposable income

Political Factors: Example

Ranking On “Easy To Do Business” Rank 155 countries Based on various indicators Surveys law firms/ organizations

Which indicators make up the ranking? Starting a business • Procedures, time, cost and minimum capital to open a new business Dealing with licenses • Procedures, time and cost of business inspections and licensing (construction industry) Hiring and firing workers • Difficulty of hiring index, rigidity of hours of index, difficulty of firing index, hiring cost and firing cost Registering property • Procedures, time and cost to register commercial real estate Getting credit • Strength of legal rights index, depth of credit information index

Which indicators make up the ranking? (con.) Protecting investors • Indices on the extent of disclosure, extent of director liability and ease of shareholder suits Paying taxes • Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit Trading across borders • Number of documents, number of signatures and time necessary to export and import Enforcing contracts • Procedures, time and cost to enforce a debt contract Closing a business • Time and cost to close down a business, and recovery rate

IFC Rank Countries on “Easy to do Business”, 2005 1. New Zeala 2. Singapore 3. U.S.A. 7. Hong Kong 10. Japan 20. Thailand 21. Malaysia 27. Korea 35. Taiwan 91. China 99. Vietnam 114. Philippines 115. Indonesia 116. India 2006 1. Singapore 2. New Zealand 3. U.S.A. 5. Hong Kon 11. Japan 18. Thailand 23. Korea 25. Malaysia 47. Taiwan 93. China 104. Vietnam 126. Philippines 134. India 135. Indonesia

WB’s Ranking on Corruption 2006 2. New Zealand 71. China 5. Singapore 90. India 16. Hong Kong 102. Philippines 24. Japan 102. Vietnam 35. Taiwan 133. Indonesia 39. Malaysia 47. South Korea 64. Thailand

The Political Environment Map High corruption Indonesia Philippines Vietnam India China Easy Difficult Thailand SK Malaysia Taiwan Japan HK Singapore NZ Low corruption

Macroenvironment – PEST Socio-cultural Population demographics Income distribution Social mobility Lifestyle changes Attitudes to work and leisure Consumerism Levels of education Technological Government spending on research Government and industry focus on technological effort New discoveries /developments Speed of technology transfer Rates of obsolescence

Video: Fake Products in China What impacts do counterfeiting products have on: a) Chinese economy (short and long term)? b) Real products (Chinese and other countries”)? Consumers? Why is it so hard to stop counterfeiting in China (using PEST model)? What should managers (Chinese and foreign) do to protect their real products under this situation?