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International Business Environment & Strategy MOD001148 Determinants of national advantage – and where in the world to locate Market entry © Robert Jones.

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Presentation on theme: "International Business Environment & Strategy MOD001148 Determinants of national advantage – and where in the world to locate Market entry © Robert Jones."— Presentation transcript:

1 International Business Environment & Strategy MOD001148 Determinants of national advantage – and where in the world to locate Market entry © Robert Jones 2010 - 2014

2 Objectives: 1.) To identify factors in national advantage Which nations are the best for business? 2.) To consider factors in international strategy formulation How do senior managers decide which nation to expand to? Market entry considerations Porter, M. (1990)Competitive Advantage of Nations,Macmillan Ellis, J. & Williams D. (1995)International Business Strategy, Pitman

3 http://www.bbc.co.uk/news/business-15573991#tooltip19http://www.bbc.co.uk/news/business-15573991#tooltip19 04nov2011

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5 Factor conditions skills, resources technological base infrastructure Demand conditions Firm strategy, structure & rivalry Related & supporting industries Chance Govt policies Porter M.E. (1990) Competitive Advantage of Nations, MacMillan Porter’s Diamond The Determinants of National Advantage

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7 International research data sources - 2014 © Robert Jones 2011 - 2014

8 http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf

9 http://www.weforum.org/issues/global-competitiveness WEF Global Competitiveness

10 http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf

11 http://www3.weforum.org/docs/WEF_GlobalCompetitiv enessReport_2012-13.pdf 144 nations

12 Which are the most competitive nations?

13 Which are the top 3 competitive nations? Hint: they all begin with an ‘S’

14 http://www3.weforum.org/docs/WEF_GlobalCompetitiv enessReport_2012-13.pdf

15 http://www3.weforum.org/docs/WEF_GlobalCompetitivenessR eport_2014-15.pdf

16 The BRIC nations

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18 The BRICS nations

19 57 (56) 53 (64) 71 (59) 28 (29) WEF GCR rank 2014 The BRICS nations South Africa 56 (53)

20 The MINT nations 2014 Mexico 61 (55) Indonesia 34 (38) Nigeria 127 (120) Turkey 45 (44) WEF GCR rank 2014

21 http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf

22 Example: competitive ranking of Canada

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24 http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf Page 25

25 http://www.youtube.com/watch?v=kzn9-M2umFQ

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27 http://www.doingbusiness.org/~/ media/GIAWB/Doing%20Busines s/Documents/Annual- Reports/English/DB14-Full- Report.pdf 189 nations compared

28 Doing Business 2014 http://www.doingbusiness.org/~/media/ GIAWB/Doing%20Business/Document s/Annual-Reports/English/DB14-Full- Report.pdf

29 116 92 134 96 Doing Business Rank 2014 The BRICs South Africa 41

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31 Doing Business 2011

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33 Doing Business 2014

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35 Risks in entering new nations

36 PwC EM20 Index: 2009 Interim Update http://www.pwc.co.uk/eng/publications/0309_em20_podcast.html Emerging Markets - Balancing Risk & Reward The PricewaterhouseCoopers EM20 Index 2009 Interim Update

37

38

39 PwC EM20 Index: 2009 Interim Update http://www.pwc.co.uk/eng/publications/0309_em20_podcast.html Emerging Markets - Balancing Risk & Reward The PricewaterhouseCoopers EM20 Index 2009 Interim Update

40 Conditions for business around the world

41 http://www.internationalbusinessreport.com /files/global%20economy%20in%202013% 20-%20final.pdf

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43

44

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46 http://www.internationalbusinessreport.com/

47 Tax Who pays the most tax? Where is the best place to do business?

48 http://www.pwc.com/gx/en/paying -taxes/assets/pwc-paying-taxes- 2013-full-report.pdf

49 http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Special- Reports/Paying-Taxes-2014.pdf Total tax rate

50 Time to comply

51 http://www.oecd.org/dataoecd/9/23/48193734.pdf OECD 50TH ANNIVERSARY CHALLENGES IN DESIGNING COMPETITIVE TAX SYSTEMS Paris, 30 June 2011 Tax Reform Trends in OECD Countries

52 The Forbes Tax Misery Index Overall Tax Burden http://www.forbes.com/global/2009/0413/03 4-tax-misery-reform-index.html

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54 Corruption http://www.transparency.org/whatwedo/publication/cpi_2013 Transparency International

55 http://www.transparency.org/whatwedo/publication/cpi_2013

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57 The Economist 2 nd December 2011

58 http://www.transparency.org/topic

59 Objectives: To identify factors in national advantage Which nations are the best for business? To consider factors in international strategy formulation How do senior managers decide which nation to expand to? Market entry considerations Porter, M. (1990)Competitive Advantage of Nations,Macmillan Ellis, J. & Williams D. (1995)International Business Strategy, Pitman

60 Market Entry Mode grid Adapted from:-Ellis, J. & Williams D. (1995)International Business Strategy, Pitman Market entryEntry to nation AEntry to nation BEntry to nation C Key factors – take care whether positive or negative Weight 1-10 [1] Value 1-5 [2] Weighted score [1]x[2] Value 1-5 [3] Weighted score [1]x[3] Value 1-5 [4] Weighted score [1]x[4] Opportunities available Skills availability Resource availability Degree of control req’d Investment required Level of risk Political Level of risk Economic Level of risk Social Level of risk Tech Speed to implement Expected return Total weighted score Rank order

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62 Macroenvironment – PESTEL Exhibit 2.2 Political Government stability Taxation policy Foreign trade regulations Social welfare policies Economic Business cycles GNP trends Interest rates Money supply Inflation Unemployment Disposable income

63 Macroenvironment – PESTEL Exhibit 2.2 Sociocultural 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

64 Macroenvironment – PESTEL Exhibit 2.2 Environmental Environmental protection laws Waste disposal Energy consumption Legal Competition law Employment law Health and safety Product safety

65 Key Aspects of PESTEL Analysis Not just a list of influences Need to understand key drivers of change Drivers of change have differential impact on industries, markets, and organisations Focus is on future impact of environmental factors Combined effect of some of the factors likely to be most important

66

67 Control Risks RiskMap 2011 RiskMap 2011 provides a critical assessment of global, regional political, security and business issues that will prove a challenge in 2011 and beyond http://www.control-risks.com/pdf/Control_Risks_RiskMap2011.pdfhttp://www.control-risks.com/pdf/Control_Risks_RiskMap2011.pdf (04nov2011)

68 Recap: 1.) Where in the world to locate in your international strategy: Porter Diamond logic WEF GCR report 2014 World Bank Doing Business report 2014 Etc 2.) Market entry analysis: Market entry grid (Ellis and Willams) Opportunities Degree of control Risk analysis

69

70 Market Entry Mode grid Adapted from:-Ellis, J. & Williams D. (1995)International Business Strategy, Pitman Market entryEntry to nation AEntry to nation BEntry to nation C Key factors – take care whether positive or negative Weight 1-10 [1] Value 1-5 [2] Weighted score [1]x[2] Value 1-5 [3] Weighted score [1]x[3] Value 1-5 [4] Weighted score [1]x[4] Opportunities available Skills availability Resource availability Degree of control req’d Investment required Level of risk Political Level of risk Economic Level of risk Social Level of risk Tech Speed to implement Expected return Total weighted score Rank order

71 http://www.internationalbusinessreport.com/files/global%20economy%20in%202013%20-%20final.pdf Grant Thornton IBR2013 International Business Report World Economic Forum WEF The Global Competitiveness Report 2012-2013 http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf World Bank Doing Business 2014 http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/ Annual-Reports/English/DB14-Full-Report.pdf Control Risks http://www.control-risks.com/pdf/Control_Risks_RiskMap2011.pdf http://www.control-risks.com/pdf/Control_Risks_RiskMap2011.pdf Emerging Markets - Balancing Risk & Reward The PricewaterhouseCoopers EM20 Index 2009 Interim Update http://www.pwc.co.uk/eng/publications/0309_em20_podcast.html Paying Taxes 2014 – the Global Picture http://www.pwc.com/gx/en/paying-taxes/assets/pwc-paying-taxes-2013-full-report.pdf Porter, M. (1990)Competitive Advantage of Nations,Macmillan Ellis, J. & Williams D. (1995)International Business Strategy, Pitman

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