PT3 Form

Arab Open University

Tutor Marked Assignment (TMA)-

PT3 Form for B301B

Academic Year 2017 - 2018 Semester:-Summer-2017-2018

Branch: Badaro Program: Business Studies
Course Title: Making Sense of Strategy II Course Code:B301B
Student Name: Mira Abi Mosleh
Student ID: 170075
Section Number: 2409 Tutor Name: Fouad Arnaout
Mark details
Questions 1a b c d e 2a b c d Total Marks
Weight 12 12 12 12 12 5 5 5 5 100
Marks Total Marks
Distribution Earned
Marks Earned

In text Referenci Word E- Maxi.

Penalty Criteri referencin ng Count Librar Penalty
Deductions a g y Deductions
5 5 5 5 20
Marks Total
Deduct deductions
ed
Net Marks

Student’s Net (Total marks earned – Total deductions)= Student’s

Marks Net Marks
Notes on plagiarism:
A. According to the Arab Open University By-laws, “the following acts represent cases of cheating and
Plagiarism:
 Verbatim copying of printed material and submitting them as part of TMAs without proper
academic acknowledgement and documentation.
 Verbatim copying of material from the Internet, including tables and graphics.
 Copying other students’ notes or reports.
 Using paid or unpaid material prepared for the student by individuals or firms.
B. Penalties for plagiarism ranges from failure in the TMA to expulsion from the university.

Declaration: I hereby declare that the submitted TMA is my own work and I have not copied any other person’s
work or plagiarized in any other form as specified above.

Tutor’s Feedback Student’s Signature

Tutor’s Name: Tutor’s Signature: Date returned:

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1- As globalization emerged during the 1820’s international trade policies evolved rendering the ability of firms
in developing countries to survive. The world trade organization imposed technical barriers and SPS measures
that left developing countries as Lebanon facing challenges in protecting their local industries (Ania, S., et al.,
2007). One of the industries facing significant challenges is the agro industry. So how can this industry stand
against international competition?

Besides the international pressure on reducing trade barriers, Lebanon’s agro industry faces a significant
challenge associated with the Syrian crisis. This crisis has blocked some trade transactions between Lebanon
and other countries of the MENA region due to the block of distribution channels. In addition, Syrian
contraband agricultural products are imposing a serious threat to the Lebanese products due to their low
prices. Moving further the neoliberalism policies strictly ban countries to set trade barrier taxes and other
policies that disadvantage international firms against local ones. The Lebanese agro industry sector is one of
the most affected sectors by the new international trade policies. For instance the Lebanese canned food
company “AL Wadi Al Akhdar” faces significant competition from Americana group established in Kuwait and
Lumiere group. Yet, the Lebanese government doesn’t provide sufficient support to protect this industry which
is responsible for 32.03% of the industrial sector (IDAL, 2018). Its support is restricted to the agricultural
calendar where the government purchases crops from farmers and distributes them across the market (LCPS,
1998). Therefore more intervention and setting of domestic policies are required from the government.

One of the major challenges facing Lebanese agribusinesses is the poor infrastructure, mainly energy in
comparison to its costs. Here governments should develop an alternative source of energy such as the
hydroelectric power as for Lebanon is rich in rivers. This would result in a cost-reduction from which
agribusinesses can benefit. Moreover the government could build industrial zones where businesses tend to
share the costs of production elements (Chlouk, G., 2016). Secondly, regarding the contraband products, the
government could close unauthorized producers and stop the illegal import of fruits and vegetables. Another
policy that can be imposed by governments is the anti-dumping policy which is part of protectionism policy.
Here the government can guarantee that the price competition of foreign products is fair (Libraries, 2018).
Another protectionist measure is imposing quotas on the imported agricultural products from Jordan, Syria
and other Arab countries (Libraries, 2018). Moreover, the government could impose a protectionist regulation
related to certain health codes for example for beer similar to Germany. This protects local beer companies
from competition related to lack of certain ingredients not present in Lebanon. Furthermore, the government
might resort to specifying certain quality and labelling requirements to limit agricultural imports. Moreover,
the government must establish a relationship between farmers and industrialists to encourage integration
(Export Gov., 2017). In addition, the government could invest in quality improvement of local products through
financing research and development where there are 3 labs already present. The assistance, in this case could
be in the presence of tax-deductions (Chlouk, G., 2016). In addition, the Lebanese government has established
the AGRITECH program aimed at boosting innovation (Agrytech, 2018).Also, the government should use
strategic trade policy to refine its trade agreements with importing countries (IDAL, 2018). Another form of
government support is placing certain tariffs on imports so that local businesses gain competitive advantage
(Grosse, R., 2003). Meanwhile the government can restrict the transfer of capital out of the country to
guarantee the increased demand on local products and nourish the economy similar to what Dubai does.
Besides Lebanon supports foreign direct investment however, it could restrict the ownership of lands and

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the participation of a joint venture (OECD). Plus, with the increase of unemployment in Lebanon the
government could force foreign firms to employ a certain percentage of locals similar to what happens in
Saudi Arabia. Furthermore, the government could give foreign agribusinesses such as Barilla, Lumiere and deli
preferential treatment on taxes on a condition of exporting their products. On the other hand domestic politics
and the struggle for power and interest are the main reasons behind domestic policies. In the case of Lebanon
it has a special relationship with Arab countries especially Saudi Arabia where the Prime Minister Saad Al Hariri
has a Saudi Arabian citizenship. This fact enables Lebanon to establish trade agreements that encourage the
import of Lebanese products to Saudi Arabia especially with the spread of Lebanese citizens there. In addition,
the Lebanese politicians have strong connections with each of Saudi Arabia, Qatar, France and other countries.
This enables the agro industry sector to attract subsidies and financial support. This was elaborated in the form
of funds received from Qatar during the 2006 war period aimed at reconstructing the business sectors.
However the government could resort to more subtle means such as offering trainings for farmers and
supplying them with the most advanced technologies.

Nevertheless, in 2018 the new trade environment is reforming especially with the election of U.S. president
Trump. His attempts are shifting more toward protectionist trade policies which leaves the trade policy
restrictions ineffective. The U.S. government was the main supporter of the World Trade Organization,
however, its new trade system subjects the articles published by this institution to suspicion. This fact will
result in a major shift in the world trade policies which might benefit developing countries such as Lebanon in
some way so that they could reform their policies for further protection for their industrial sectors (Irwin, D.,
2017).

To sum up, despite the Lebanese government’s efforts to follow international trade policies to be a member of
the World Trade Organization there’s a need to protect its industrial sectors. This strictly applies to the agro
industry sector which is responsible for 3.4% of the GDP. As a result reform of the domestic trade policies
should be done to support and protect this sector.

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2- As globalization imposes certain limitations to firms of developing countries there remains a chance for
these firms to expand their operations internationally through innovation and building skills.

The firms should develop a set of strategies to enhance their ability of moving towards international markets.
The first step in going internationally is for firms to get rid of the inability to succeed internationally mindset
(Bartlett, C., Ghosha, S., 2000). However, the Lebanese government should work on strengthening its local
markets which can be achieved through pushing firms to innovate (Glowik, M., 2016). This is done through
boosting market demand where buyers are very demanding with sophisticated tastes so that agribusiness
could succeed nationally before moving internationally (Glowik, M., 2016). Moreover, with the openness to
fast food chains and multinational food chains in Lebanon customers are refining their tastes. This results in an
extra demand on local companies to translate customer tastes into tangible products. Here comes the role of
innovation where agribusinesses should invest in R&D to create such products like Daher’s product “Masters
Chips” with an Indian taste (Daher foods, 2018). In addition, Lebanese people are known for their
sophisticated tastes regarding food where Lebanese food is demanded in foreign countries such as Europe.
This establishment of a strong relationship with local customers forms a concrete foundation for firms to
expand further. Secondly, the agribusinesses could resort to forming strategic alliances with foreign
agribusinesses where there are clusters of Lebanese citizens. For example, “Al Wadi Al Akhdar” has an
international presence in over 20 countries such as USA. This could occur through the Lebanese restaurants
operating in foreign countries acting as intermediaries which promote the Lebanese culture in food and
encourage exports of Lebanese agricultural products. In addition, Lebanese agribusinesses have strong
distribution channels abroad where they supply international customers’ needs of freshness (Dawar, N., Frost,
T., 1999). Thirdly, companies should respect and examine their local competitors so that they could act as
motivators for innovation (Magretta, J., Porter, M., 2014). For instance Al Wadi Al Akhdar should seek
competition with Lumiere, Deli and Maxim’s in order to come up with innovative products to sustain their
operations. Moreover, the Lebanese trade policies comply with the world trade organization where it is open
foreign direct investment. This fact creates a competitive environment which gives local companies an image
of emerging trends in buyer needs. Furthermore examining the internal operations of international firms that
local agribusinesses are competing with can help in giving them a foresight to possible ways to enter foreign
markets. The presence of such rivalry influences other forces of the diamond which are responsible for
creating national competitiveness. Lastly, firms could shape the forces of the diamond so that they strengthen
the local market which is the key for succeeding internationally. One way to do that is for firms to relocate
their headquarters to the locations of domestic suppliers (Magretta, J., Porter, M., 2014). For example, Daher
foods has located its headquarters in the Bekaa valley where there is a strong supply of the finest potatoes.
Moreover, Daher foods has encouraged local suppliers to go internationally by testing the demand on their
products through exporting to several countries abroad such as Russia.

To conclude, companies of developing countries have strong chances of moving internationally through
innovation and building of skills.

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References:

1. Agrytech. 2018. Agrytech. [ONLINE] Available at: http://agrytech.org/about/. [Accessed 20 July 2018].

2. Aksoy, M., Beghin, J., 2004, Global Agricultural Trade and Developing Countries, Word Bank
Publications, available at: https://books.google.com.lb/books?
id=Fm3bqFbXIEIC&printsec=frontcover#v=onepage&q&f=false

3. Badarraco, J., 1991, The Knowledge Link:  How Firms Compete Through Strategic Alliances [online],
Harvard Business Review, available at: https://books.google.com.lb/books?
id=dw9i6ZkfhZEC&printsec=frontcover&dq=how+firms+compete+through+strategic+alliances&hl=en&
sa=X&ved=0ahUKEwiksba2vLjcAhXGjSwKHVYwBD4Q6AEIJTAA#v=onepage&q=how%20firms
%20compete%20through%20strategic%20alliances&f=false

4. Barlette, C., Ghosha, S., 2000, Going Global: Lessons from Late Movers, Harvard Business Review,
available at:
https://www.researchgate.net/profile/Christopher_Bartlett/publication/40963896_Going_Global_Less
ons_from_Late_Movers/links/00b7d5397391a60c3e000000.pdf

5. Dawar, N., Frost, T., 1999, Competing with giants: survival strategies for local companies in emerging
markets, Harvard Business Review [online],available at:
http://elearning.kocw.net/document/lec/2012/ChungNam/ParkJaeKie/12_13.pdf

6. Glowik, M., 2016, Market Entry Strategies : Internationalization Theories, Concepts and Cases of Asian
High-Technology Firms: Haier, Hon Hai Precision, Lenovo, LG Electronics, Panasonic, Samsung, Sharp,
Sony, TCL, Xiaomi, 2nd ed., . Berlin: De Gruyter Oldenbourg. Available at:
http://091051xv5.y.http.eds.b.ebscohost.com.proxy.aou-elibrary.com/eds/ebookviewer/ebook?
sid=3001f9d0-626e-4ecc-bd2f-f871aefa6bb2%40sessionmgr104&vid=0&format=EK

7. Grosse, R., 2003, “The Challenges of Globalization for Emerging Market Firms.”, Latin American
Business Review[online], Vol.4, Issue 4, pp.21, available at:
http://091051s9h.y.http.content.ebscohost.com.proxy.aou-elibrary.com/ContentServer.asp?
EbscoContent=dGJyMNLe80Sep7c4yOvqOLCmr1Cep7RSsaq4SLOWxWXS&ContentCustomer=dGJyMP
GutFCxqrVJuePfgeyx34fz1d%2BI5wAA&T=P&P=AN&S=R&D=bsu&K=27647603

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8. IDAL, 2018, IDAL [ONLINE] Available at: http://investinlebanon.gov.lb/. [Accessed 20 July 2018].

9. Irwin, D., 2017, The False Promise of Protectionism: Why Trump's Trade Policy Could Backfire,
HeinOnline, available at: https://heinonline.org/HOL/LandingPage?
handle=hein.journals/fora96&div=61&id=&page= [Accessed: 16 July 2018].

10. Libraries, n.a., Restrictions on International Trade, [ONLINE] Available

at: https://open.lib.umn.edu/principleseconomics/chapter/17-3-restrictions-on-international-trade/.
[Accessed 17 July 2018].

11. Magretta, J., Porter, M., 2014, Strategy and Competition: The Porter Collection (3items), Harvard
Business Review Press, available at: https://books.google.com.lb/books?
id=Zw1PBAAAQBAJ&printsec=frontcover#v=onepage&q&f=false

12. Obegi Consumer Products Holding Sal (OCPH), 2009, Food and confectionary. [ONLINE] Available
at: http://www.ocph.com/FoodAndConfectionnary/tabid/66/Default.aspx. [Accessed 14 July 2018].

13. OECD, 2005, Investment for African Development: Making it Happen, [ONLINE] Available
at: https://www.oecd.org/investment/investmentfordevelopment/34783838.pdf. [Accessed 17 July
2018].

14. Porter, M., 1986, Competition in Global Industries, Harvard Business Press, available at:
https://books.google.com.lb/books?
id=vhzv3Dfb8MIC&printsec=frontcover&dq=competition+in+global+industries&hl=en&sa=X&ved=0ah
UKEwjJiobVvLjcAhWMiywKHRKXBDIQ6AEIJTAA#v=onepage&q=competition%20in%20global
%20industries&f=false

15. The Lebanese Center for Policy Studies (LCPS), 1998, Strategic Options for the Agriculture and the
Agri-Food Industry in a Dynamic Global Environment, [ONLINE] Available at: https://www.lcps-
lebanon.org/publication.php?id=76&show=summary. [Accessed 20 July 2018].

16. Wolfrum, R., et al., 2007, WTO: Technical Barriers and SPS measures series, Leiden: Brill. Available at:
http://091051t1z.y.http.eds.a.ebscohost.com.proxy.aou-elibrary.com/eds/ebookviewer/ebook?
sid=c60c40d1-23c4-4ec7-ad56-0bcf5c72db0a%40sessionmgr4008&vid=0&format=EB

17. Yeung, A., 2011, The Globalization of Chinese Companies: Strategies For Conquering International
Markets [online], Singapore: Wiley. Available at:
http://091051s9g.y.http.eds.b.ebscohost.com.proxy.aou-elibrary.com/eds/ebookviewer/ebook?
sid=9e0dadc8-d5cd-4a75-8840-0bfd44b08681%40sessionmgr120&vid=0&format=EK

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