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    23-0001 (1)

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    38 views45 pages

    3 0001

    Uploaded by

    Emily Teo
    23-0001 (1)

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 45
    ectemngt tonal Busthes SAvoteas) vet ten Week 2+ he c pate va 1 ag tee petals 1B San can ts A pett ve con Hien S- is Velibertlely chooshg a M ifirest as nates fo delvar a Unlgve Ini Organisational cbuekuve — S aAlmeneioNS “Sevalve ci) Vorneat aga — location Of decision making (25 Ai Syaogyis the Yonge ay we cof an or ante ® i aoendaton — ‘tama Alston othe ofan aaeiyes f 27 external wiley " nechanisens —fo coord mate sue nets « (afetnal & @terna se: Se Lie anny ok "age cent n Hope tyilee kok me = chp a ra exert Oe Oe HINA nents alist CORAWSOHIGM rhe bg being flere ove ensue that ae sn gts a en Sate Ww Goals = pele es pies ny poor olecAstOns Conentrake power & —expaindthe mavtet by celing domestic products ( Bea pail ronsiih4.. faint cues + dolegatt ogo For gastsatlo a) roteflne WO rt a a a Din — leverage ble skills aaa 1 we aaa Nt 2 fretons Belo cn oats Sais pelea toer cea, i locaton exons — Depathg indordual value cba on wettest choice depends. oh cand ara fe effiaerely g tested i Aen eA oe ean wn Global lofatons fons whee sey anh be gerfaed ost Stoke advontng.rof greater coct ee eferomies — from oy ~ aia ohh ® kl et tram a Cental jocation >" 1 lies = Brunette ccountel'e-For osk, ee ae ee watt val wate. ne eae Dr. LS, vena | peta od rake by Cotta Cole COM . hen vice se gl vve elle M (4S Fons ASHEN jocgtion * ex Jenene. OU bende de ex. of Corr cont ised Cente over Qlepal pat realise co" £ exponente wulve ebeno“les* a capa) a | Global Mat StUBAre > ae fan along a. cttensons: Pr duct & qeoqradhle © — ibe Fos on rn Yaliese AN — Worlduirde ve —Wrioleto gd Sa eh, if Pome taneel Loyendne clive Coeyntes) Or ean rops-fomn homete-erelgn pa Waaseseyy -W subsdianes Wo ly trans IpnqnnanCa ab ote i Core Con rpeten ca eg alg, dacaeeed nn Welle fn Wo Sub- opertens >) aN Lingidwice ProducrDIISlon> eZ eogasthy He CAIs ati of (ocartion andexpencne cue eto rime colttrol over most qpor AHF baled aphie aven Wd/e ead Sons mr nana Cpa dus ene 4 13 alnarton & Co (operon Hl Hpalitnec Smutoneosly aanieve ts paves ‘e@tamenal Movo-Fiund > rales orn VLE 4 experen ne @ Oe No ref poerareusedatrs ns asthore eZbesses - 2 smeemliy H and ol al zat OK OANA the wed <6 a oval io. eas 2 i vessuveS emmacoten Sroteny — TacaNEHRION (B Weroaevonal dain neta saer Oe yebe'rht (erent ontto ik comme, Ces ont NN _— deartiaise other = Need. or locally * enteral [ acparetion > - z ee ce — | ea ast operating decisions Werks: Theory of 18.Stro peta options > focter’s ganone strategies ; i Ee >Meansof ath ettive advantage v an At foarte 5 eat tes vant Brent ‘he il mlb ay al Potter ier “Toaucr [sera ceil me preniura me oe _ Fi iam unigve prawot / Sef me, Cae bE cespase- fi wary Pry. ierent (ator Gomer cotetenderdp— frm ams + belover woe fluor industry — tng yave Gan GREET A Troe Jo lower west fae a J ee at vganton’ ts af achlttles ee ‘s atthe &: tae (el ants FN A (ot per unite soe i ve ftatege re ee i ae 5 put Gosks (2-9) labonr and raw atenals? of otganls lol vine unten Label” wont “Maver concentration — feed 3 genenc stiokegies ovation avant ~ tua low: aye OG) Ahir gp nor - pee eaten of scale (reduce AGW while ale T) "Rely ° a cal sh npat- euik nrg np Cog: RP D costs ) — Specioivsatte Sihsion oF wwe, by _— ves - 4 (ndwadual s \ = cee ANE atthe’ mrott’s4siakeqy Sat uae ) n AN : es a tig pe i“ 7 iS gs /Sen@s mot — — . __ wel o ala ipo 0 Carn @ L ee meget st Sono | Feitg peer roducr(rest S Jp inno F Sunde eatin of, 2st Ste ae ita oaue (paste ) New apt _—raagetY r rena Gowers. qv weneast somo Be AS EAndustyl mare Reasons for Dive ee 2 Ecqnoriies OF Carteret Porters Ttms foul becca Reet ele eae iets “i a al 2)4 mariet yreke: iN - a) Sprena wists er were eal Tar manafauver Ls ea een detettnes arecoure AoW eof “ehipetttive- (M] 5) Manresa Bape \youe— aby te towel sic deck iet ter ion Uikegraste "ie ORT Sate to Jetuve? SWOT AnaYsle [wee re Fame marker (evel ahaly's (aia Rey wnt cnet wae pao Dual « cHenathe to Fake advantage rimitabiihy set chick fev Campettors Te Ure e: ons thot HSE ae pee uce [ SOG wostrtes- )x(O- pe pions a Ne se Sinshkes: (W)x (Q— Tole wfaiogs pt (w« O- aterm ts hat ranunale ine aleaases ad | Avid set frie duck Le a have over waigehs is, Cé erawe (tas ituble te ame saroulockopy-agpres | ‘guectan eet i 1nd aad vee Palrtcal IAW wegens reaon boc ns Jeane wc fa ie locate ‘i ee addng av al bn ee te ptt picts pPOEAS Le Gatittles sutide thelr nattonal Ue sine eat (ris — feaLrogoral & "idtO al evel ot 7 = Seeic haat neha: Formation in MNESZ SMES 1 wie Sestotagie Naot Theat Nang lien ‘assets unas nitonal mines —organiarton hart owns A tes alfvated subsdiavi es ce focate & oc ganise Aree qioets 4 i poumaaes in phe of More fore eee ih i cpouke_ ey export? > palate baa ale paenton crete san nai en ones (Haig oie A iste eid anode oe Yr — Eynshav pacrrcammalttes , sulssatanies n ts te, fs “francal —cando Well. Vr aie kage Cparlhes spect adeag € tPF Se Manone (hor en Skog vt hale tunic acheeve fetes eh hove! ) compettive advalntonge VIC thigh vepated sate — WEL oc dleoavatrtages of “foretgytecs: Vernon’ International Pe duct Lte Lyele- «tage | (Product Innovation ) — Produces at home for domestic mareet * Staged Canwth> = Increase competion in domestic market — Rapid product adoption —Prohac exported +v developing cournines @ mt “Stage 3 (Matuinty ) Most feuget onsumets — Calc lexdlng fe and prottts declining ° — Mfg operons move 4 developing cour Yo take a Vantage ° cheap abbr. * stage 4 Cdecline) ~ Tasha youth new 4echnologles pat ves este CULtOMaSIN —h adopted Altern " — Lc, extended through sal eveloning Counts: Using Vernon's IPLC, rms ern fe egdle aenals gtionallse +o ¥ , Derlend a product’ I D Gan access te raw Mm 3) G hin Alles Psftehan Ip von sett (ost; INV Twakéy ops Co-prdtluct™ / contac mtg compattment Intemational Entry Medes - £ market * Prowpessive model o a ines gst Wes! Kore Global Mindset, Asian Insights yome “a Peney fh of achatties 2 IMvolvenenr of managemoyet 1) Exporting Direc Expolting — Firen produces domestealy & selbgoods Wn-foreign martets cales branches usig own sales force br Fretgn oyents \ndWwecr exporting using expork MAN equont connpan'es Awe: glalttyto cation & expenence Vue. eConomnles ae te gore lesser trace pasnels, ploblent® De local mareening agents pant barn Us prequiles least amfot comm nt and satest. b Par conpAly whe a NS tte tion Tanda gle - package labelling Coulrtey 6F on gin, Janguages ) approved Ideives Ls Enunpmontal reguurements — phystcal cond Hone of use Ly Cultural /Marvet ad ‘act tof ec ne & |nagequse Sune ly ranges from full (loo% +0 partial) ho tho agit arated que etship & abtiol in Gr overseas 3239 Sales o production Subeidtary L) \nfemacronal — Mutual aqvedmonct Wholly owed subsidtat S$ Fem oums loo% Wethe stock Stock ©- S@ A bere ish 4 po aqui & ety “aia Sikcloly wh aed 4 3 ipain eae wl ~ Fogel, fe, MS soko spate Unertall tees Oh: Wh fice ave Vey Mlows caster acted i uote mpetenss) S fea \row OWS Trequeon wet le enkenpase ae rei ano @o Aa sont _ ae oe oh clash of eres S ant ea ae se ase avchose Cea cae * * Bate Frown 1 vet @ Ag ese SyNab ons Prot SHEA ble, assets We ae eatin ae Gao uhih wx elie maaneagenen tinlenss SEieveaea byiqnovarne® ones ae se — suope, auration & colt CASON ¢ oepotentiat benetts 4 costs ta pudtons } oo po a lish ny Usage Abate Incteasih fond Soles dary 19 count ry 4 — Daven by Feuille ; reponse & time Hetng 0 suai ary ay 4 vn YP , cratooie olances reenent — © eur : eee — New compa recoure vannen ert NEG orate , oF bot 2d of more ivi lo exist ; by oy More Cap betreen host country mandopers £ p& L>Frleey rnanogenaret tne wth County mongers ey mans P oe par opto fy nakonals Pl . 3) ae Sta ples 5 © Fm belleve ~ ks pest people, regarcl fess of & Hout ot qualtied indvioualsen-the host county “fional lity fr font 3 Dy int conor Manngersont ie "ipnastend bath tha ng, 3 chong ® Macntain untied oP es "undying aH Hure & rm al mg 3 © wonttes vale by 10 relay eration via tonal gw ® rompetoncies 2 2 ferel — hom ‘ ples of natona g ye hint hic pee b best "Se of HF try anil tum te parent Coun vi if = es ts it ro rer, has Soy =k a cadre of intl of executives and naeased, ‘fara over among Are geuP- who feel oe rhng > Leads-te cultural mont a fasleteto under Hand Alhek host foundry wun differenes + en cotly - odes mares amg aeckon Gr SAA Mae Afferent app D bel¢-esteem J elt cont henge and nent Dfolycentinic Ky b reat sf nadiona le manag ® estaem | SOT eee lace county 1B D rent at lo — abi let. to fren county padeona fat post tors > ee wer oerac Me cchuals wih npc INO! = minim (sé cult oe ‘ont c 2> Rrcptual ability — abalty ‘a _uneyeotind why hes iat have Imited ofS Foople of other Tantises beh 7 coun 4 gan © ied ‘hor aunty ad a» odin Loushnes ~ aby ahist Mite postg J Glabal mihaset — log pttvé fomple wr A wwsriure oF SINGAPORE iC enarrene ACCOUNTANTS Org anieotional cubfure / Stractue in Goog ke CIT in ductr, ») bie tother thon hterarch ical d 7 b Gen fanned “ep aces” Sates of buctnece bevy relteg on eatery 4 imovation of the ees: _eagioe otfiras Structuve of TF inducty tmilai~ b tehes on fesponsweness! ete 1c pater changes over time. Ora —lect He main vevenue m CaMwas +5 Ki; kon ~ Mist chemical p fme —> Prova f WNE > Itternatonaltcorken by would chosse a vray Pegtholeg call etuilar env. b v2 Fong fo kffuent hanrkets i haclalea a nq Arawoy C ft the (Benv.) bb Ne physical tere) throw ) atrect sellin J : Gace “th Stepped thous from dtrect le mM Chiag and oaks ful he open ph fhysical stores. S lone devotions People — Empleo 2S, tetroteg(es © ap ewrpleea, evupledecs : cin, eats raring, eat a sangercation | > 4 ‘S(cq! LUs(ons ole partnen, Ss Colture — “at aleeont cotuye , zpfains at vale, System s . Neemttves & Cortve|s — eel mda aoe ae app rags ihe Lb. Vosges ~ mailer rhc decks ts Wwe Oe chant, od bal wad set, Asian Insiahts ther. 249 Work (< boron 5 institute oF SINGAPORE i CiarereReD ‘ACCOUNTANTS Global Matinx Grrctule - MO — Dictance vole vather than dilect uhen location under pat Diusion bb &- ma Nua oda” cose. Buk in uc Matix , lo ambined ffort-— expertices th mEt £ ptaduct ky & ™ Muwe expertise pein CL. O60 Performance Amlagurt: be Hanning b& J il Ly Lead gens L Peperdort on tre porformanice «f others .u . by Contolh 4. ? becaleeaton tinea Chtat) — lewest, —Heghest 9 TN. Wie > Ech entity Morteting ‘aap Cconomies of Scop t- t Diwerstfy wrt ate. preduets . Let eae Preven, +t spread Ale fisk . b G. sheuld gp te deff. Marfe-ts. Economies of Expevience 5 Unk Cost. fe pd unt T, workers ave 4 Move ef: T level of 2ff 2 Tefal unt ¢ and foobr flawed pat > unt-co sts LL Global Mindset, Asian Insights S INSTITUTE OF SINGAPORE ie CHaRreneD ‘ACCOUNTANTS: WkK2! vg Otganication fatter one lg ley uel et eh 4 retain ed L Organica ayer fomns 2 Walde sdctems that ute shaled amon the leo af : oh organisation f “ry L Inches — dees uted to beware oippineh oe iy nal behahor LoPrrtesses — manner th which dodsions We made kl werk ce performed, cathy He. orgncsaivon : Oraahrsational Groce arty . spaneronal A Comp 7 SRM TE Rl Tundional_Stuclure SRULVE - 1? Manwfocturng Ly Purchasing Ls trartceting (> HR Chulindn Regoureo . bs Finan Rava nkages - Disads — Groups pects —fay i n w tow -fncton eaphey shan oth te Boral or: —Nlc experticedey- ~ lalecion fistn, Od alte — Gamble 6r indy wer op Artima. small ora, : Qroduct Dasional Stuckuve ~ Gren firm divereity product lire —> farther horrentel A> b> heresy to aang ctutule Awd the vaveus (oducts ee wo! WHemotonal Operations 4 in each Country / intl matlor. > Alnecuond Galle Rerlecadtion 6 the “romestic stuuchure|n every maller S Auasonal ctr. Global Mindset, Asian Insights fotatal or conde WEL comdnation Pleh boween sbmecne 2 wl vee Insture oF SINGAPORE CHarreReD RECOUNTANTS Matax State « tAvantage Disad bend Pr" Pisce hahagenor by ahosses > pun More find Ly te How sufficenr , HHlowe expertse-te be uxed alras Tecomnean of respocp Organist on a tbe Conticl Suskoms Olaeond Carts — cotttol by a a antact Y% Gipordinakes (2 Bureanuatic Cantids — Contveldve ha of of wales £ plocedutes hort atte! ons of Sulauinlts » G Dakput Conticls — Set she is for ri te achceve b wesSlre als intems of ralodwely objective ee mnoctnes~ Ls actad porformnaic. vs targets Ly (ntexvent kee ‘ole corrective. ochre” ® Lktural conrtvel — ext lay erte" the porms & \ ie mo iL Gen | 2 Wms Ww vultuye rave less pees Lor other foeme of Perfomance. kmbegurk \y Commen whon na PeHemance cs epenclent en the performance A othe, subunet . > Lowest — Clo caltcoteon> . Frglest Cimematerald Global stahdardcsoton pee Tahsnoeonel - ean Ly exist when Fe CAUSES 0 04 abies par Prmahce is het by CoS of wrtvol T ac PAT Global Mindset, Asian insights GEE instirure oF SINGAPORE Wy CHARTERED ‘RCCOUNTANTS: inkernaatana | — age vale by +H by Watotonn ey cove. Competencies orn hae & foreign Chsidiahes eheed for catticl 14 moder Is "eel lw S06 Coste contrs| Forenlthe mbt “in pra decd state (s"colmen . “a os on lecal Reponsivehess . ns e eng Hod ker atin - Ley Pie & en (evo Le Global Brea Ghuet Ue cauen. Gobdl tardarkcatan Cy . (Shous5 onthe polisoten fcrten 2 ex penente CWE fom b> HE meet co colfvol Ott gf aaa rz need fo VK04 abe BSNS sc chr ne oturt—~ fio. al cot a ee sthudliah-accdlf Gly oehatrap Teosetinl haley We. ewnohes, o Gobel C#n nn ssn asa Coptraed L herp oot a2 peed por ceothspation Lb Bild f fotienl Z ee fee. L Stich culture ‘ih Global Mindset, Asian Insights L, btn Sftdare . —_lnfetn afton dsc TLecalicagion = Teansnat ona} 387801 International Business Strategy The Theory of IB Strategy (IBS) week 3 rena tl = capital CH nal Z pystcal ayees <> Phy 0 eco S ee (o-sekup 1) one morket a 2 i ate a w sal Quiz ith 1 Si 4 soa SON ensign iat gone St Waetoe, we ew 62. rae. ach emplriee. ik eepotting 1 sure allows fr differentiation Soa iearea (TF) anager. A cfions - ' dmerinseuy feson ee D False. Global ah was on 2 gba! 41 Which ofthe following ino! comrect? Firms operate NAVE I isa stp re ah ratng, no local - _ SSCS aprile ates 04) am ea. shell wich bo.)_gor aonanccratinssten Intemational -Bitish colonsation > fir yigle fyarcets Vesouras. toninn— Same strateny But “sing local legources - "er ordnaen Sts History of IBS ‘ Business strategy developed from the area of ‘economies, industrial organisation, organisational theory & strategy (business policy) ‘Increasingly diffused into other diseiplines — finance, sociology, geography & philosophy i © Bele clouncles) RAD WSS * A Beenie okt. prodmek Lxfe he + @ Maturity — Sabs/ mete Fea Spe al O pede tains bgur pope 4 stratonses for & Company +0 sMadurciand 7 Marke geveation —a f clan Mex chor soa trom competes - New ptt Series —> Eq. Apple - Now pats t Meche. sine MAHek. — Mea Dey. > Indetnortonat, PLE 7 lnglomurate. — Highest duct. of sk. etnptonol ——E— B faack pal bende —Tepntse Morey satan tem USK - stray cles oun iy shave (n US- Weekern enHO@ —fransactiona! CEI Oremtal caltuce — etatrone( da \ Seng Eatin lens te ran Peek : ae l Fm ly 9 Neath loge wed A Wal rany nace 99. HEA Bo ast « expertise et ye FAN aduustly vist Gobel Valee Chan. > © glebalsatin —» outsoure, > & donctheed te develop Fall Yonge 4 compotones ns liad 2 _Speaalecadion =n dveysHf ation + | Vertreal << din. wetitat diva fceeih be 2 Mateat dominant - vn sedi alisation aa = pet co cord cowmpetohee. Transaction al Cost ts lower ' Costlendership strategy ~ Cost drivers (determinants of unit cos: cost per unit of outa) Acevage CAST ~ total Lost mm a given {. many inpais T pe on Cet Co enter ae Any lanovactoy, — Nev tech ren of ans poss Cprductton pro wss> Ly Just In Tene. ost ost) foots lovey lt ele oe Move Grok 5 Hegv w Hig te other company __ ortibedtng ts-fhw clas final pdt Cyalu? 5 The value network Voce. cham ic a trols side cst or P Micha floats stieqes wore 357801 International Business Strategy ‘Staloy oration is NES and SMEs Week + Wat is MINE? Scolar dng on ba efiniton number of employees, rato of Foreign silestotl sales" me + Ranking of largest MNEs changes according to 1 Simple definition —°MINE fs an organisation that ‘owns and operates afiiated subsidiaries n gece snore foreigh counties ‘Distinguished from ‘ntemaional firms’ wo may gags in intemationlscvies (exporting) but ptnor own and operne subsidies oversas Towards a theory of the MNE ‘ Overarching framework ofthe MNE isthe OLI peadigm ‘# Explains the existence ofthe MNE by incorporating ‘an number of complementary ‘theoretical perspectives, ‘Explains why MNEs undertake FDL ‘ Explains how the MNE offsets the disadvantages of forejnness’ and costs a intemationalisaton “¢ Explains where the MINE undertakes investment intemaionlly Loabity f fang Weg a8. Definition of NE 2a Different types of subsidiaries tog 4 fotonftal soulos vale crescten camgdiles We [inured faseures 27/03/2014 The MNE ‘@ Stands for multinational enterprise ‘In the ealier literature the term used was ‘multinational corporation (as used in the US meaning a publicly listed company) 2 ‘@ However some MNEs are also privately listed firms ~so MNE is the more neutral choice ‘¢ The United Nations prefers the term transnational corporation (TNC) ‘Establishment of forcign subsidiaries achieved ough eg deinen (ED) 2 empl ly new UES, ct ‘Either a ‘greenfield investment establishment of new sales of on subsidiary Or the sequistion ofall or part of an xiang tre SoS istth bet ust ae vs grade NE theo i sa Antecedents t + Teaonl va taf ystisactor to expin enistene of MNE. Why iors of production incresingy mobile ‘¢-Chinparatve advantage based on fv labour costs stainable (changes over tine) sre “tf {FE « cmp ten gin on coroner of sae sd economies of cope domagetthve adver BME Oleg takeellyy. “Oak a Ne do note, (uct only on L Ore actioky achieve Bons! abe ued £ bus - 27/03/2014 ® Economic development paths Product Life Cycle © a @ IPLC shows how, through a cycle of activity of 1 Seocrad ea “= Staye I produces at home for domestic market, “(AAs OCHO) Sextet tomes “whe ace" ea Sie es ei, cept areut epee ea eer Drage Troy, } Economic development paths (cont) ——~ Eg, The "Fying Geese” Model sunine nm omt be Rae enteprencushio » Teeny wnaldlets explain Chaar & \ndto Pe ee neers ee omen Location-specific advantages ‘@ Vernon recognised increasing capabilities of subsidiaries ‘MNEs could innovate and launch new products from variety of locations not just original home market ‘Therefore MNEs gain Location (L)-specific advantages by investing offshore, as well as building on their home (L) advantages agen Reeds & wants ? re the rest donand (5 me, boca ansypencfie CG . 3 . Car small lpusness On} 5 hooker Can be acho (f ol Arg & & 4 Explaining the ‘where’ (L = Location) of MNEs. + Intraiionel rede model <= firms produce for domestic market, export surplus and import goods in ohich they have a comparative dlisedvantge + Vernon (1966) developed international prodoct fe cycle (PLC). ‘0 explain the "where" of {ternational production ea) Afaceri SS* Met errand obffers - The OLI framework a Haden Senos — tel pelle meortinn . “tobi LO foceesress & fete 6 feed Economic significance of SMEs Nr 7 bof weg & fr GOr- OL? 6 — enser fo ag ~ cer fe hi? Shee hs & ME o@ cheest Pach shaven | GRE stone 27/03/2014 Internalisation (1) advantages 119705 Buckley and Casson + lotemalston explained the organisations! processes hy which imperfect markets are Imemaised by firms inimalisaion happens when benefits of “ecping itia-bouse” are greater than costs of “outsourcing” iabiiy of foreignes) [eee Gon emeteg pred acer by make $ fame weeds Piet ot “Co males helms put st is fee faba sf —Get ilo OV Fo preyn mM al ket - Strategle choices for SMES ewer © Limitations from size, access, capacity, capability, Loc surthdad ‘@ Focus, differentiation, internationalisation " oe vee 1 OLt advantages? CR esl4) pip irain(eca 7 ‘alah awed oto oad "ae canet a4 Aol ade7 ets free oA vedloh Qantas Case ols 82 Test Aazigrnent? 367801 ~ International Basnes Strategy Weeks Strategie management theares The steategle capabilities and internstional states p fous on fest ines Steateny Ae examining the externa enorme. ow the big ‘Why do compan inthe tame nt providing vimaly the some prodacerce fe the nme at (eet) "hese tine cd up with DIFFERENT prtrsnce ‘357901 ~ International Bases Strategy Cae Hynde! Moor Copan Cont.) -Star ml tthe owen ling ket shires fom “eyes nly domestically plebllyateren Close competion om amcrous competion: pola y gq eb env bass enoren—nt ek env 3S frees $7801 —Inerastiona Busnes Strategy . Reco Cnpetve adqsodiee ate bye cll 357401 - Internationa Basines States (Case: Hyundai Motor Company BD HYUNDAI Fits eter th carn in 1967 Assembled a Tod compact ct Reply assisted frie sch Aegis scent pbs hin 30 yearstodeelop Accent 194, Ava 195, 0 ona 0 ft S781 ~ Iteration sins Strategy (se: yd Moor Company (Coat) 181988 ‘nan wl tape gaa Mane “Can have wei wip fra Hs ps” Pasian “Sic tha ses ike fe sep, <2: “hy Hanshaw?” eis c eat Aerenson es Ayte bese eh My i maakt And * 57901 ~ Internationa Busnes Strategy Cres capitis arm's capaciy to depos resources ge, mange. an HR) or ese end sh {Gucton: what ergo capabiies ea camptive 357801 = Internationa Hosnes Strategy The VRIN framework Can) Does the cpaiiy aes oppor an hens te Fo era peer ai)” Ie vahabl rth estas si hi il? Have he compos declped snr abiy? 57801 ~Ineratanal Busnes Strategy inabti xe the capably? apy covey abies? (2 out) ow eel he oa need ini alts ond Hw dynamic 1/04/2014 357801 - Iterations Business Strategy u0 7 The VN awe vee CE Fett any ini =| ea vesoul es ieee 7 _3S7H01~ International Barnes Strats The VRIN fen (Cont) is pang the eso? Fewrce tear ologl/ 357801 = trerntianal Busines Strategy Non susinaiiy Ave there rose satis inci 1/04/2014 ene Pl plstton Uy Vgt dniaing, OM qo £9 \ coder a ° debe se a bs Pa vance Fond 2 (hlemoflona - Lay nt oe “ldlrawte Ns ehalised vecsrary I ORE FE » as1s01 a TheCAGE » Ht Ling ul “ . Gtlog up in fastralig ome oh lle cy apy 4 fechwes. 357801 International Business Strategy Week 8 Exporting, importing, & countertrade Exporting Expoming sa way 1 inorease markotsze the rest ofthe ‘orl scsi mh ger mare! han the domestic ast + Large finns often prosetvely seek new export opportunities Many sale fms ae eat ‘ome them and wat forthe work to - Many fs hilt elise he potential of the expr sake Smaller fms at fen ininidted by te completo of ‘exptng ad nly rit prablems Improving Export Performance ‘There are various ways to gain information about foreign market opportunities and avoid the pitfalls associated with exporting Some countries provide direct assistance to exporters: Export management companies can also help with the export process 8/05/2014 Introduction Largs and si firms expo. Exporting sn the se thanks wo the dating in ade baros ‘under the WTO at renal economic apeemens such ss he EUand NAFTA. aporting firms need 12 identify anaretoppocuniis ea wit foreign exchange rk -ravigate impor and expo financing “understand he challenges of doing busines in fregn market The Pitfalls of Exporting = Poor matket analysis Poor nderstanding of competitive conditions = Lack of customisation for local markets - Poor distribution program - Poorly executed promotional campaigns - Problems securing financing General underestimation of the diferenc ‘expertise required for foreign market penet - Underestimation ofthe amount of paperwork and formalities involved Utilising Export Management Companies Export management companies (EMC) are expen Spocsalisthat act the export marking dspartenet ot Fvemationa deparnent er elie: rms EMCs normaly acept.2 types of expor assignments = they sia eaportng operations fra rm wih the Understanding tha the fim wil ke ver operation er theyre well eased « they start services wth he understanding tat the EMC wil have continuing esponsibility fr sling the fim's products ‘A Typical International Trade Transaction Export Credit Insurance - Export eredit insurance protects exporters against the risk thatthe importer will default ‘on payment = In the US., export credit insurance is provided by the Foreign Credit Insurance “Association (FICA) = FICA provides coverage against commercial risks and political risks Countertrade Versions 1. Barter 2, Counter purchase 3. Offset 4. Compensation or buyback 5. Switch trading 8/05/2014 Export Assistance There are two forms of government-backed. assistance available to exporters: 1. Financing aid is available from the Export Import Bank 2. Export credit insurance is available from the Foreign Credit Insurance Association Countertrade ‘When conventional means of payment are difficult, costly, ‘or nonexistent, some firms may turn to countertrade Counterrade refers to a range of barter-like agreements that facilitate the trade of goods and services for other goods and services when they cannot be traded for money During the! 960s, when the Soviet Union and the Communist states of Easter Europe had nonconvertible ceurencies,countertrade emerged Barter Trade & Counter Purchase tert a direct exchange of goo anor ries betoen ‘vo partes wihouta cash ransaction Baris the most esrctivecounertrade rangement tvs primi for one-ie-oly dss in anestons ‘ith wang purer who are nt creditworthy or roth ‘Counter purchase isa exproel buying ageement Tocca when a firm apres o purchase a certain amount of Inston tack fom a coun 10 Which a sale made International market entry 357801 International Business Strategy modes 4 main categories: Indirect (using export management companies) & Entry strategy, strategic alliance direct exporting -C*nain Mede bulibess USE ‘ Contractual modes (franchising, licensing ete) & nemorks + Foreign direct investment (FDI) wholly owned » sales or production subsidiaries + Cooperative ventures (joint ventures & alliances) week 6 Congeftive environ ene Vestas Chee ofa Considerations ~ layers of environment ~ retart tive PUGS” D Diferentioveds amrannen SHOT — pofflevel ‘SWOT analysis ~ dual-level ices, Wine eoprenece Hewtonspentceae | Frameworks for environment analysi¢ Sleeparbie apie) ‘Torsion ier) Eepeatime Relationship between PEST and SWOT ‘SWOT Analysis vs PEST Analysis Streneths Poitat ‘Weaknesses Economie Opportunties| Soca “Tveats “Technologal > Asseggiment / Coste giyle Cregentori on) se ie 5 CChinage Invested) ry 7 b He procesaing capolaitles Suhrtabltteste chinal 7 by agi fhe wnoysveuced Market entry (prod and cons) peepee Sa Tracing jobs stay INE Approaches to entry modes ‘© Naive’ approach — using the same mode everywhere ‘Switching between entry modes @ Uppsala mode! suggests that when uncertainty is reduced firms will switch toa higher-commitment operation mode ‘¢ However ‘switching costs’ (costs of changing servicing mode) may prevent firms from doing this ‘ ‘Switching costs’ include contractual restrictions, lass of customers, set-up costs, foreign operations costs Benefits of exporting ‘¢ Favoured by government policy makers ~ because of benefits folocal economy #2 reasons: tings sin xchange eas, oie ~ Gipmct sabiiefrvrd& taki nage domestic firms, & improved stand of Wing ~ expo intensity exports a8 % GDP) postive onc io lonone row GDF pee) ‘# China, Singapore & Island have used export-led industalisation model coupled with FDI — effective mechanism for economic transformation ‘Pragmatic approach — using the mode most appropriate for the market Analytical choice ~ optimal & appropriate mode based on it between choice of mode, requirements & resources of firm 1) Exporting 4 First choice for firms ‘+ Direct exporting — Finn proces domestically & Ses goods in forign marks by sales branches ‘overseas using own sls fore or foreign agen ‘¢ Indircet exporting — using export management ccompaniss Export requires adaptation ‘¢ Mandatory requirements such as packaging, labelling country of origin, languages, approved additives {¢ Environmental requirements — physical conditions of use or transport to markets. Goods eustomised to local requirements (eg. size of refrigerators) ¢ Cultural/marker adaptation - adapting non-verbal cues, colour, packaging & promotion (eg, colour associations) Joint ventures ‘¢ Involves equity contributions by participants 4 Involves establishment of legal entity (company), separate to those of participating companies ‘# New company formed using resource contributions (land, management, R&D & labour plus equity) “# Used when firms want fo reduce risks & “uncertainties associated with entry to foreign ‘markets (or government-imposed policy) “# R&D consortia — shared efforts ~ firms save time -money by collaborating on research efforts Successful ICVs + Longevity used as a proxy for suecess ‘# Meeting partners’ objectives (sel reported) ‘# Objective measures (financial performance) require longitudinal studies ‘# Partner selection: requites selection of competent firms with similar goals / intent on success of ICV ‘ Senior management commitment is erueial ‘ Firms need an ‘exit strategy’ which lys out ceanditions for contract termination or exit Keiretsu structure Motives for ICVs “+ Trac cof st mini smo pin cine 1 gat ng a i oa ers Seppe tie ts mete Failed ICVs ‘ Cultural cashes ~ language, different goals + Inability of pariners to be clear about their strategic fntent when entering into ICV “> following “the herd” + Oppornunistc behaviour -sickng responsibilities, Sidi spenis ‘¢ Formation of ICV to test market > replaced by a subsidiary Japanese management systems 1 Keir > iourlocking neworks, overlapping & inking ‘¢ Based on ido (Snancal lgue)—broken up under Ali! acapation of fpan post WW2 '¢ Governing body for fiver - President's Club, presidents fof member companies ith matsl ase of sacks 1 Beer access to capital — king on higher levels of debt funding with lowe levels of sk '¢ Combined administrative benefits of ge is with fei of sali finns 1 Governent bureaucracy. ruling political pay & private stor formed a powerful mangle ‘System works well when an economy growing & expanding > unfavourable scomomicconions— Rims focked ino system with dificult esuctr or fil sien yp STO WY gry Bubronta ul sto OED coo © 2y2h2 7} syanyend 0 PUayD < 6 0 sanlal| yay uiysead 9) aps (VA apo Aun 12nd |aue? 2 40 — yard Vl lw ‘ w abobvo Aap | FA i rm wo soe byphte se Ey : wsiyrnl4@) 54/7 (OOS Hgts x come, alt y a Nyro base] —f WUE 4 yahobia phiqoul sabi TN yay dyaye . 2 aaj oI ai bapts I upuadxa pw WOH220] 240 Ee dup ayes Atel — aK Maou poser punuleroy MCT Baer” Tian aiyold J aulotsodxa pun UO) Ee sysu 15207 — > oop Cty 2 ayd sp¥25— ides pe WIPE fhe) yw jolanoapyl 4 syn Pp pal Sewvsnie 40 TINLUSN g Guisuean@ st chyynvtn) = Gpjus ono) 12004 apna! 53507 0 Ye yoy a $e ay Map anv ets 4 a i sarwousa amy “sali : A : rien home nt med SS soggy sya} J 00x] bat 29 oysauap yep mloy HP ¥ sapped i. me ; sapow MPU [VUAoYsaLU] “FA IpOUTapA] 5 VOUT fonterra 15/09/2015 357801 International Business Strategy Stratogc esuos in International Human Resource Management Week 9 Strategic issues in HR Management business ferences nour meres, how heya becampenmae 7” ACY how they should be re-riented_ when they return home? ae “peda Ba an eS 7 reer Manes Cre oniepaction’) . Usaclly Human Resources Shaping Organisational Architecture + Firms need to ensure there is afitbetween their strategy and their human resources practices + In order to carry out their duties effectively, employees need et vail 1B Strategy in regard to HR 7 vexed ~ thevght taining — an appropriate compensation package = 3 g00d performance appraisal system Filled up ~ gilt Mere” Eq. huss In wha , rRanapel J" one Kuytravans Strategic Staffing Policy There are three main approaches to staffing policy within international businesses: LL the ethnocentric approach 2.the polycentric approach 3. the geocentric approach The ethnocentric approach > ilkey management goons with parent-country rationas. Fems that pusve an etraecentre poi beeve + there ia lack valid invite host county efi + iis the bem ay to maintain nied corporat cre + value con be casts by transfering core competencies 13 Foreign operation wa parent county nationals > tlimts advancement opportunities or hot county national eeantead “tural myonia® (7 Mart — local employees . Can Bing Pega catronal oAkture 15/09/2015 halayy must - at uN sen Samant ean To Cattuve A markels recruits host county nationals The polycentric staffing policy the owe county and parent courtey nating or postin + host county nations nave ed aang tan 5 ernicionccn nat eSoAey mancsers The geocentric staffing policy > seoks the best people, regardless of nationality for eyjots + This approach is consistent with building a stone, Unifying culture and informal management network + itmakes sense for firms pursuing CMNETS BIDET Oe transnational strategy + Immigration policies of national governments may lie te abit ofa fim to pursue tis pokey Le Hes, offerte reurutl people - The geocentric approach + enables the firm to make the best use ofits human resources builds a cadre of international executives who feel at home working in a number of different cultures + can be limited by immigration laws is costly to implement Comparison of Staffing Approaches ‘oprosch Appropateness Advantages Gatto) best Expatriate Managers + Expatriate failure is the premature return of an expatriate manager to his or her home country + Betweer(6 and 40 Percent ofall American expatriates in developed countries fall to complete their assignments, and afmost 70 percent of Americans assigned to developing Counties etunhameeaty CE>-fo\ > + Each expatriate fallure can cost between $250,000 and $1 milion Expatriate Manager Failure Rates ees Rate Peco Parcent of Companiee Signelicawrt wogs to bucnecces > Lack of trating ; setlls ) Aeveloprotrt ce ~ Wilural sb fro-clop artuve wn-ossigit 4 Been xno" What might be the reasons for ‘Expatriate failure’ ? Main reasons for expatriate failure for US. MNCS + the inability ofan expatrate's spouse to adapt + the inability of the employee to adjust + the manager's inability to adjust ‘other famity-relate reasons the manager’s personal or emotional maturity + the manager's inability to cope with arger overseas responsibilives Main reasons for expatriate failure For European firms + the inability ofthe managers spouse to adjust toa For Japanese firms + the inability to cope with larger overseas responsibilty + sitficultis withthe new environment + personal or emational prablems + lack of technical competence + the inablity of spouse to asst Selection for success 1. salkesteem, self-confidence, and mental wel being 2. othersorientation - the ability to interact effectively with host-country nationals 3. perceptual ability the ability to understand why people of other countries behave the way they do 4. cultural toughness ~the abilty to adjust tothe posting 5.2 global mindset ay be the fundamental attribute (of global manager Training for Expatriate Managers (cxttnraltalooes @ + cultural training + language training + practical training ay Sout 30% of managers sent on one: to fhe yes expatriate assignments reetved waiing Before thei deporte + Preparing and developing expatriate managers for reentry into their home country organisation Management Development Strategy *+ Ongoing management education + Rotations of managers through jobs within the firm to give them varied experiences * Building ofa strong unifying culture and informal management network, both of which ‘are supportive of a transnational and global strategy a toy cuffaront bin fe dep k ren} = Pewer destane 15/09/2015 15/09/2015 onal! Zen wat 4 Performance Appraisal + erfoemance apa systems ae pert of the ams conto sytem G a ECO), svete ly | ee crmananyaonscorsayara Bethhld | campensten ices seccale Ee EN rere noth) eee eens — eae t Compensation Firms face two key issues on compensation: 1. how to.adiust compensation to reflect hee flo Wao yes: Issues with Compensation + Tere are substantal ferences n executive compenstion inthe US, top HR execute mae an serge 525973 inthe 2008200 pring compare indapan and just 158,46inTavan + ms have to decide wheter epay executes in ferent ‘oie according tthe pesaling standards each uy, o eauale pay ora lebl basis, + Theistn especially ealenging sun ems wth pocentle + any rmshave recently meved tard a compensation ‘Svtre that stased on laa! standards, 237587 Labour Relations + In the past, labour relations have usvally controlled by individual subsidiaries + Today, many firms are centralising labour ‘relations in order to enhance the bargaining power of the multinational vis-d-vis organised labour/unions + Good labour relations within a plant can bea ‘major source of competitive advantage by Union ae) L tre! UMiong — re action ty Ain for . bm rosie faster be chor nen pays ven costly br Lg art lors * vista tions « 4R5 15/09/2015 357801 International Business Strategy Stratogi lesves in International Marketing Week 10 Strategic Issues in International Marketing “Marketing Mix’ includes + product attributes + distribution strategy + communication strategy + pricing strategy eaNGGi, oveigi \ arte as: ita Globalised Markets & Brands + Theodore Levit (1588) argued thet world markets were 4 SSeS ranch nec locsnethe mareting i = + The cron consensus iethat wile the worl moving ‘omar gobel markets, culture nd ecanorcaferences ‘Song nations iit any end ward global consumer tastes sad petrences, + Inaéeiton, wade bares ad derences in product na ‘Caine sanded boi» essay sens Sendaeued proguctg 2 globarmanet—— ecedsain ts cu rewind Market Segmentation ore sanction robes desing dine pons consumes whore pursing behave ge om eet a my Migrants Seon + encoctce LyNature of products b p tag tote gies wad Ie wergente 3 geedlisation — ovairatt tert reise pooduty bat consider |acal F25) o uqpooducts — are standardised D Gargarer goods + What are the features of a global product? + Or how should global product look ike? Strongest featave > Condaydisakton Product Attributes + A product has a bundle of attributes + Products selLwell when their attributes match consumer needs Teme country depending on culture and the level of ‘economic development Needs ve Wants. | ig v = Choire of pwodacy Econo we per Tuede prone 18/09/2015 Cultural Differences oun ter grange of a dined nae + ester lorcet + Cen + while theres ome cuturl convergence among nations, Letts won af gota markets stil along way off tule moe about Morefreely Consumer Expectations + National differences in product & technical standard: — ifferent levels of economic development Consumers in highly developed countries tend to k demand atotot ena pertomance atbutes g Nipelow ~ Consumers in less developed nations tend to ” he come ds Psa Vebucles ve Gave hegher standard. Oikforenes Gradvally Olairaaded "7 Vaikewoaen Geanda | 4 cage fe bjarsl« Typical Distribution System TIARA a! Differences in distribution systems between countries: {retail concentration > fwrsteapohman one 2. channel length > w ‘nd teva tongeChnel, whe ouvert conan pant 4. channel quality Teton Mal Distribution Strategy + The optima srateny depends onthe relative css and bene + Sine each intermediary na chan! ads own markup to the products, there's general a tial ink between channel length and the G's pote margin 980, when price important, sshorter channels beter + slong channel can be Beneficial ecoute economies on fesing corte hen the eal retriever fragmented, ad ‘an offer aces tensive channels ii be knag hay her ST ton anal ont oo eta supp din duwAle wsts - Barriers to communication in international markets 4 1. cultural barriers aifficutties to communicate 2, source and-couatry.of origin effects > the ‘entero whieh the place of mandiaeturing uence. product evaluations 3" > she amount other messages competing fora potent consume’ atten fox acing Oy ROE STOTT bos 1 ° as ble ford a 2 oss b rg Com pote CaP pons 15/09/2015 Global Advertising Standardised advertising woridwide hat senean economic advantager ~ scarce create alent and one are efoto develop 2 ‘ampaen wl be more sucesul han numerous smaller Hone = lobat brand names customised advertising ~ cultural ferences among nations are siifiant = cence in advertising requstions Some fs yt capture the Benefit of bal Stendardsation while responding fo ndvdal cut & legal enveanrents ~ $0 some features of campaign are sandarsed while three evstomised to lac marete International Pricing Strategy 2 sues econ: Le In ferent countries cern pcs forthe same product + Strategic pricing > when msset the preein certo ‘utperiom compettors + Regulations that affect pricing decisions-> ~ andumping regulations + Price cscrimination “> when ens checonumer g fn u i Amick 4 ( Configuring the Marketing Mix + Standardisation versus customisation Is not an all or nothing concept + Most firms standardise some things and ‘customise others + Firms should consider the costs and benefits of standardising and customising ead element of the marketing mix R&D + Today competion as much about tehalagl innovation aeanyting ee ——e +The pace of echologial change is faster than ever + Product if cys are often ver short + ew innovations ca make exiting products obsolete, but at the same time, open the door to ahort of new opportunites + ms edey need wo mate product imavation 2 pcoty + Thisregures dor ins hetagen R&D, maretng and mmanufacuing + Tocammerise nee technologies, ferns need a inteprate Dard mareting > tere devel erent product ‘erons for diferent counties Donald — Ree ber germin SApan donald Pest ped f 4 ein |r A - hatenges for ineratine! Marketing on Asl-Pol view) okcres stable Be & Thailand — 1 Sie BE oaial unease - [nvegtore fos cohfeclen Satoh regen guiferent (chet 4 Scan adevia adi) . 2STBOI Wwlemational Busines Strate Case Study - Key Pours for Analysis 4 Diccuss - C Suramar) win ynio Hea ofher Astan counties Ansolls & Strocege for Groth Zi Mode of Entry — concider PEST, eneting eatablishnert . D Global Mathy Stra cure , ravi e grolems —how tp reolve - 2 Corporate Luel Grote: y Ceysting> \riternoett onal Sex on eG 4 Cereb Lope - weacolcotion 4 7? econernees Et Do tdveantage DF Dsadvaitinge os Ope Gest Business level Strocte Dp Sapormarley aha Hypermarteets —3' Food Products 2 Usthing — Ottbeentuahon > Consumor Durable Prodiets — Iroquated Cost leadorchup ( Det 2 HVcccuns Stoves - = (ost leadership. — Focus (22 — Only Sells electronic equip rent 4 p Convene stoves — Rows olcfermnrratto hr - £, D.\ x¢ ) emf Rg sreon ba eeaarenA 2 go : g Analysts — \$ Systems ‘th 7 FH (ssces veth Country wi — VRIN — Loge of C-A- — let allocation = Comperrttwe Strakegy Arralysts: D Fnanaal Ratios - — Curren Ratio > | — Debk te Equtty rakto — fmaneing gronth wy Aab+ . Global Mindset, Asian Insights Governments have also acted +6 protect tpi JOMesHe players Spy (trtroduct (BR vestkctions oh orergh Culeership Of vo retdlers 4 "9 anathoe isthe adattienal ped i ba reausrort S@A ears} fea tape - rk ACCOUNTANTS — Indonesia — Minefield of vedtape and now stove openings are subject 4 amytard of Yegulations Forecgh investors ‘0 establishing laige-scale retai\ operations ove required +e do in co-operation wth aomestic. Companies - Fer example, Carvefours fy permarketz ate 9 F0-30 Tort Vertare cath Consumer products hater Tigavaksa Satng Eoonomic| — Asia’ grouing population of creasingly wealthy, Sophisticated and Vemahdlg consuvers will continue te Arve gery refailng , supported by relatively shble ecnomles & impoodhg vetal —Evonamie guth in Asta will increase demand or wansiiner ploducts Ave 40 nweased spending jouer. \Scao-economie Ceougal atttutes, age prof le, employnen? potens exc) a Higher aduceteen [evle of education, smaller families and urbanisation in Asia - — Consamer Inaeasihaly clomandthg 1 requiring cot only quale ana value for me, but ako ys me rage of poducts, conventence and tomer. J —MYthouah they de price cenettue, they hae embiaced Wee D braids al gusto: cud huctralia — demand br arange o€ (rrteete ond heather optors China — continuovs urbanisation , ath ap nual Avellers priglading 0 fhe ames inthe gest ter wer} Ly consumer preteen es Inked % the 1 Aeglte of Global Mindset, Asian Insights an = fee Us aur as.| nalyoil — core OMT TOR ane Vad wWorss - ACCOUNTANTS CAGE Astana Framework. La @ Allows manoses to rdartity fe weltaval, admmistatve, geagaphic and etrnomie Aifleiehas of Astihes betn ceotrthtt He pew Azu Markets ahd He wKisting B Softer marbet Vepice : While B supermaets do have presene 2 Asia markets, they May exist aifefences befizen Phe Asian counties which wil require chan ges Nn they hucless Stiectegy 2 = Important uch nd the nuanes local demand and the pes of product that walla resonate fh local consumers as higfighted I TJesto fn Chi Mle) Langls+ Tends 7 hdonesa, Walayeca Lh AB poe. . ae of Be muddle class is grung and ts epected to gree her — change m pending halts — rather than buying enly newssar; tems such as food and tuel , they bay discretionary rtems such as smart phones y electonte: Adele and aye mere. willing 6 pay Hemum fer Lrinded ard higher quality product: 2 Urbanacion votes for Asia increasing which meee ES to each 4 these urban Auellers eacter than their rural counter parts- — Cttes have much more developed wnfrasimet wes Lang. Tradtttonal style markets He leading channel for grocety redas | but hasbeeh salec have reduced considerably ver fens. + Hypermartet sector r= Fairly concentrate q led-byxt- abth a han dul of myer papers , led by treign plays Such Global Mindset, Asian Insights s INSTITUTE OF SINGAPORE (€ CHARTERED CCOUNTANTS 2 shortage of wel trated managermort and high att ttinover. Hong Kong Ll, Mature and highl. clevelopeA , elominated by large locally ovred chains — Patkn Shop and Wellcome — Foreign operators yet to take a significant have. lowventenee store — Aonot gperate. Ahe grocery sequent No western hypermarket: have succesctuly gy fered the marley le Carrefour made an ater wn 194 CA ec, ae Deed a High Aperatits cost — (19) (COT) hue fo ie Efere poi te ANA PHIM Peasons or fai lure * be Ee aie, Long, D Lack broage answers — laganalrtiton remot Hepes baying daly products in supermattzcts an nyry dikes th bovtigves . Qoreumer Larretev 8 (rodel hot cuttabe to ada (2 HE. Spending on nwn-bood rterms (cA to ificte tase. — changes ” working hablts — seeking Mere converiterie and of Aacienig — pening podls- small £0 ther playet* ANE CUE Gi Fas ac — Small and Oe buparmaricet porate We fo match for the quand chang, — ‘compete m A Afbere/ Consumer Seqreort, targeting higher mooMe professionals a ea ene — Clustered in Tetast + busrees districts — offers mostly luxury and imported products Eg: Ctfsuper Tapaece coned ony super. Global Mindset, Asian Insights Ee insniTure oF SINGAPORE CHARTERED agg pan pf etcal AWe — fotvortal — Ge fal, localieation( Exstihg Strate Gles | CORPORATE LEVEL STRATEGIES — enshonalisation > L\S+ REM cniny — BPE ree ode 2 EMY ~~ Franchis chain He Policy — felyertinc tea i fusineSs LEVEL STEATEGIES — gerenc strategy eS eo SD Corporate Level Strategy. Organesoctoné stuclure o Vertical Drffeyankation — Centalised Stucwe — “bureaucratic £ authorrtanan ” _» Tension belreen main board — Stick finanaal authovsty levels & the tel ral loatd => Regional oa. unloers feel that hey ove pot aN aed recive, pai iach lace. - —> stifts planning native - |, Hee Cortraliced model nof Surtable fer the lo cakeation Strotegy which emphasise on Tocal responsiveness — Main board ¥ mates thal dedsion + resfucs onal K diveclor & Power local reponsivesseness eA Le Achteved ofectuely DP local (esponswwéNes ippd ja tbe besitass Qh vivoptherf —lonsurol tastes Gad (Were MG be “A df Hom buh ty Te co uh Thy - —Hishil) competetive pfrartets . Henrontal Shuduve 2 iees global MBAR Where the- regional Atision manager reports t the reqiena | MD ahd alse He d(asion dvectors Foual dracon making which would Alloy (08 be, 2 sion Eluid and acheve Hs sbjectie ‘ : IS@A B=. Courts |W Analysts - Issues — Aer to ol ermarte—s? — toneicer BLE Matn- ZGalocntont Bos charge : : — VRIN ee 4 hyper market > Ge Pegi MD CW) G guaent ts false Lhd mad because +he re regal cost 1s sfill INcused even Leh ypertmarbet es Chesed Aoulp « > Sefer nth ger Aigunert we Veacon ob@ ahd lve - Companies Ache — b lrnenapte the retsons tor high regional office L “Zavonal« aii) oe mostly mace up of mana charg 2. gee Cour ana Re ae ee F aalocadion as there 4% fe Awe H/s fire Mareen Anige & foot Ure. Consrdocccten dvep hypermarkeZ, fle BCE rnadtrs shuld be consiAer Leroh - lo market share and Ae marie growth rate dimensions tp Wb fk copeor Pesovrce alle cation betstn The UNE and olse Lan thduetry (fe fable Global Mindset, Asian Insights Teo Emly (BS CASE 5 Qantas in the glol Dallas Hanson University of Tasmania In mid-2009 Alan Joyce, chief executive officer (CEO) of Australia national airline, had a range of difficult decisions to take, Qantas was at a crossroads, still profcable, bur in the middle of a financial crisis that posed a threat to the whole airline industry. What alternatives should he contemplate and what should he do? The history of Qantas Early years Qantas started in 1920 in Winton in outback Queensland ts Queerland and Northern Terry Aer Services! Berwcen 126 and 128 te operated eight srerafe ou of hangerin outback Longreach In 934i merged wih eth fim Imperial Airays to frm Qantas Empie Airways (QEA) From 1935 few internationally Singapore, and then brely provided a servis to Southampton ithe UK ‘his stopped in 1942 veh the alo Singapore in World ‘War Il Aer the war the company was anal! under Chie Sine it begun the fureay service to London elled the Kangavo ro lying wo South ‘Alien ad then Novth America In 1954 tee the Brish Queen Elizabeth ard her husband 1 Ausaia and the Labor government. Using an L749 Constellation and soon after be ar began flying twice weekly to San Francisco via Fiji, Canton Island and Hawaii. By 1956 it had 34 propeller driven aircraft and used them to carry a record number of passengers to the Melbourne Olympic Games. In the same year it entered the jet age, ordering seven Boeing 707-318 jedliners at a cust of $38 million By now Qantas was established as a world airline snd in 1958 this was demonstrated literally when wo Superconstellation aircraft took off of a round the world service. One flew via India and the other via the USA, They took six days co cizcumnavigete the globe. Its leet expanded rapidly and by 1964, 13 ofthe Boeing 707 aireraft \were in action and by 1966 it had 18. Hudson Fysh retired as Chairman in 1966 as did CEO Cedric Turner. hey were by Captain Ritchie as CEO and Roland Wilson {also Governor of the Reserve Bank) as Chairman, Jn 1966 it updated its eet with the larger 707-338C seties Boeings and in December that year opened the Tussiry Wentworth Hotel in central Sydney, adjacent to headquarters Inthe late 1960s it rook the strategic decision to buy bigger aircraft as the basis of the fleet bur carefully decided to buy the second series of the giant Boeing 747 rather than the frst. These were in action by late 1971 and, using the increased capacity fares the era of cheap ar tavel had begun. The record for numbers ina single airraft was established in 1974 when 8 747 carried 673 people out of Darwin alter eyelone Tracy had fattened the city. Qantas finished wil 1079 and at that stage had the worlds only 747 flet, with 17 ‘of them. Ic also started Business Class in that year, a world first. It did not add a new type of aircraft tothe fleet until 1985 when the Being 767-238 ER (for extended range’) was introduced. I then added supplemented 747-438 aircraft 10 the flet. replaced Qantas started to offer lower Privatisation and the aftermath The Australian government sold its domestic carrier Australian Airlines to Qantas in 1992 and then announced the whole group would be privatised. In March 1998 this th Airways (BA) taking 2 25 per cent share, The rest of the float (of shares) followed and the public took advantage of the opportunity and ASLS billion svas raised. In the end, Qantas was 55 per cent Australian ‘owned, just over the 51 per cent required by law 17 1994 Qantas increased capacity In 1998 it started the Oneworld alliance with American Airlines, British Airways, Canadian Airlines and Cathay Pacific, and in 1999 Finnair and Iberia joined, The alliance is an arrangement where airlines agree wo share departure lounges, frequent Ayer pind jin booking of fights so that the traveller hi happened with B veSrama ir the-dorictc market came soon afer deregulation of the market when the big competitor, Ansett, CASE 5 QANTAS IN THE GLOBAL AIRLINE INDUSTRY, MARCH 2010 ‘went on strike in 20098 The background to this was the continved downsizing of Qantas. An announcement in 2005 by then CEO Geoff Dixon thar Qantas would ‘outsource up ro 7000 jobs overseas frightened the unions since this was associated with outsourcing of significant IT work and some maintenance work? (to Lufthansa which has an excellent safety record) In 2009 ie said another 1750 jobs might go across the group! I is therefore probable ‘that there will be more industrial uneest i the fature. This has already cost Qantas: Apart from lost revenue from cancellation of mote than 300 lights during the ten-week standoff between maintenance unions and management, Qanas lost Air New Zealand, which has transitioned’ out ‘of maintenance contracts with Qantas and is instead going 10 use the Cathay Pacife maintenance people in Sys Qantas is exceptionally well branded as she spire of AUNT and MAST Sens of very wel aceeed TV acheter onthe tr ll sppored ddmestealy az Talservice sieline and in international travel as the Australian airline. It remains one of the world’s most proficable airlines, even though in mid-2009 hanagement predicted that profits would fall to as low as ‘AS100 million, down from an earlier estimate of ASSO zillion.” In comparison, the financial year 2008 yielded profits of ASI billion. Part of this was canny strategy by EXHIBIT 1 Qantas balance sheets as at 20 une 2008 436 126604 CEO Dixon who had locked in jer-fuel prices via hedging contracts at around half che going price in 2008. In response tothe 2009 financial risis Qantas has grounded 10 aircraft and has told Boeing that it will defer orders for 737-4 aircraft for up to year and also delay the delivery of| 15 new 787 Dreamliners British Airways (BA) and Qantas underwent lengthy: merger talks in late 2008 The two were, at frst glance, ‘well matched. In December 2008, BA had 245 aircraft and Qantas 224; BA had 45140 employees and Qantas 37000; BA revenue was AS202 billion and Qantas ASIB6 billion, and pre-tax profit for BA was $205 billion and Qantas A$L+ billion, BA had sold a 25 per cent holding in Qantas as recently as 2004 and knows the aieline well. The advantages of the proposed merger were basically in the economies of scale available in buying and flying aircraft, joint IT and joine frequent flyer schemes. Despite these promising indications, difficulties in the negotiations meant that it did not proceed and Qantas executives said they were ‘kicking the tyres'of various airlines withthe idea of possible mergers. ww CEO Joyce said that instead of a merger, Ques weld aon “on core businaksn ordre ‘Et Through the economic ersis® Qantas balance sheets from the 2008 annual report provide devails of its nancial position." CASE 5 QANTAS IN THE GLOBAL AIRLINE INDUSTRY, MARCH 2010 EXHIBIT 1 (Counce) ras 2266 Finance income ean) ss6 sa0rs 279 9097 ons Sieg nas 9690 me 969.7 ona Earrings per share stibutabe fo members of qantas SS ee Sa ae Diktedcmingspershare(cens) 8 soz oso : 5 : = Ss SE ES s * compsraies nave been restated following the ea adoption of mterpretation 13 Customer Lyaty Programmes dnterretstan 13), See Note 2 Change m Accounting Poly: (nt uly 207, the arta Grup eis its courting poy in eation to cccuning fr Gants requet Fier pons and tel associated exy ‘he secur ply cargo eects he ear adaptor of trpetabon 13 The revs sezourng lk cesta a provson fr the cost ofthe Chlgation fo rove tava rewards to merber esr om eve! on pons esing ences. Ts pros excluded tne cost of he nunbe pots ‘ht ere estat to exe. Te pouion wes cleus es the preset value of te xpociad nema cect cost Derg he cost of mel nd. passenger expense) of poveing te ravel rewards. he new accourng pole equtesrevenve receedineltion fo pomtseamig igs tobe Epi the algestonbeteven the ac ote ight a the vale ofthe ats auaUes Is undertaken ata vaue. The ve abuse the Mints ‘en recognises on sescenger ult wt the valu stGute ote aad pots Is ofeed asa fby unl he pons are utmaely use. The ‘ae stud fo the pas tet re expected fo expe recoghsed a eve a De rsk expres babe on Te urbr of os tet have Deh ‘edeeme reve toe total number excectoato be eceemad(antas Aral Report 2008, B. ‘Source: ants, 2008, asl Report itp igs epubest.cm/Repubcasts! ‘ontas Aru Report 2008(Qantas Anal Reps? 2008 pa CASE 5 QANTAS 440 because of environmental and cost considerations. Both -manuiacturers have a suite of aircraft offerings, including, new large craft. Boeing has the 787 almost complete (albeit late) and it offers fuel efficiency and the ability to carry dependingon model, between 210 and 330 passengers up 0 neatly 16000 kilometres. Boeing has around 800 orders for this aircraft and it is effectively bering the company om its success The Airbus 380 seats up to 555 passengers using tswo levels and can earry them almost 10000 kilometres? Conclusion: The report for 2009 ‘The 2009 Qantas Annual Report was not as positive as expected. On revenue of $146 billion the Qantas group had ade profits before tax of only $181 million. Swine fu had cast the company around $45 million and international passenger numbers had dropped 1 per cent. The only reason for the small profit (rather than a loss) was earnings from its fequent flyer division of $226 milion. This money’ mainly comes from sale of seats ~ points ~ to supermarkets and credit card companies, Jetstar, as a relatively new entrant to international routes, using 2 budger model, made good earaings at $107 million Joyce and his executive ceam need to plan forthe next five years, What should they do? The industry isin rouble and while Qantas is currently in reasonable shape, this may not ast. Furure-proofing the aitline will not be easy, given the shape of the industry and che demands of the market. Qantas also has the problem of operating a full- cost and a low-cost airline side-by-side ~ is this a good, long-term proposition? One critic pur it this way: ‘To simplify for my simple mind imagine owning 180

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