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Global Environments

Muhammad Yusuf Ibrahim


Ahmad Rifqy
Jeremia Michael
Refi Reyhandi

Types of Environments

Legal Environment
Technological Environment
Accounting Environment
Political Environment

Legal Environment
Major Types of Legal Systems:
Common Law
Civil Law
Religious Law
Bureaucratic Law

Domestic Law and Its Effect


Domestically Oriented Law
Laws Directly Affecting International
Bussiness Transactions (ex:
embargo)
Laws Directed Against Foreign Firms
(ex: nationalization, privatization)

International Business
Disputes
4 questions to resolve international
disputes:
1. Which countrys law applies?
2. In which country should the issue be
resolved?
3. Which technique should be used to
resolve the conflicts?
4. How will the settlement be
enforced?

Technological Environment
To increase technology:
1. Investment
2. Technology transfer
Issues: Intellectual Property rights

ACCOUNTING DIFFERENCE

The Accounting
Environtment

PSAK

IFRS

Influences on a Countrys
Accounting System

Legal System
Cultural Values and
Attitutes
International Political Ties
Economic System

Differences in Accounting
Practices
1

Valuation and Revaluation of


Assets

Valuation of Inventories

Dealing with Tax Authorities

Use of Accounting Reserves

Other Differences
Capitalization of Financial Lease
Capitalization of R&D Expenses
Treatment of Goodwilll

POLITICAL
ENVIRONTMENT

The Political Environtment

Ownership
Politic Risk
Operating
al
Risk
Risk
Transfer Risk

Examples of Political Risks

Expropriation & Confiscation


Campaigns against foreign goods
Mandatory labor benefits legislation
Wars, Violence & Threat
Inflation
Repatriation
Currency Devaluation
Increaced Taxation

Degree of Political Risk


Macropolitical Risk
Affects all firms in a country; examples are the civil
wars that tore apart Sierra Leone, Zaire, Bosnia,
and Rwanda in the 1990s or the recent conflicts in
Afghanistan, Iraq, and Liberia.

Micropolitical Risk
Affects only a specific firm or firms within a specific
industry. Saudi Arabias nationalization of its oil
industry in the 1970s, as is the Venezuelan
governments recently announced requirements
that foreign oil companies renegotiate their
contracts with the government.

Entering new country


Any firm contemplating entering a
new market should acquire basic
knowledge of that country, learning,
for example, about its political and
economic structures in order to
control the firms political risks.

Insurance Against Political


Risk
U.S
Overseas private Investment
Corporation (OPIC)

World Bank
Multilateral Investment Guarantee
Agency (MIGA)

CULTURE

Peran Kebudayaan

Kebudayaan
Kebudayaan merupakan kumpulan
nilai, kepercayaan, kebiasaan, adat
istiadat, dan perilaku yang dapat
membedakan suatu masyarakat
dengan masyarakat lainnya.

Karakteristik Budaya

Perilaku yang dipelajari


Saling berhubungan
Adaptif
Dilakukan bersama

Elemen budaya

Tatanan Sosial

Bahasa

Komunikasi

Agama

Nilai dan Sikap

Nilai dan Sikap

Halls Low-Context-High Context


Approach

Country Of Low Context and HighContext Cultures

Cultural Cluster Approach


Countries that share many cultural
similarities
although
differences
do
remain. We grouped countries that have
cultural similarities each other.

Country of Cultural Cluster


Approach

Hofstedes Five Dimensions


Individualis
m

The interests of
the individual take
precedence

Social Orientation

Collectivi
sm

The interests of
the group take
precedence

Example :
Salary
Switching a job

Hofstedes Five Dimensions

Power
Respect

Authority Inherent
in ones position
within a hierarchy

Power
Orientation

Power
Tolerance

Individuals assess
authority in view of its
perceived rightness of
their own personal
interests

Hofstedes Five Dimensions

Uncertainty
Acceptance

Positive
response to
change and new
opportunities

Uncertainty
Orientation

Uncertainty
Avoidance

Prefer Structure
and consistent
routine

Example :
Plane Crash Tragedy(Swissair
111)
The way to Raise the capital

Hofstedes Five Dimensions


Aggressive Goal
Behaviour

Value Material
Possesion, money
and Assertiveness

Goal
Orientation

Passive Goal
Behaviour

Value Social
Relevance,
quality of life and
the welfare of
others

Hofstedes Five Dimensions

Long Term
Outlook

Value Dedication,
hard work and thrift

Time
Orientation

Short-Term
Outlook

Value Traditions,
social Obligations

Investing in Souteast
Asia

GDP Growth

GDP Growth

Big Market

Franchises
YUM! Brands, with KFC and Pizza Hut
have more than 700 location in
Indonesia and more than 500 in each
Malaysia and Thailand.
Restaurant Franchise have had the
most success in entering SE. Asia
market
Most of the franchises enter the
region through agreement with local
companies. (ex: PT. Fastfood

Constraint
Indonesia
New Law that place limit on the number of location that
outside franchises can open

Malaysia
Hard to register a new franchise, government is very involved

Myanmar
Stabilization period after military regime

Vietnam
Lack of companies with the development and operation
experience to handle big franchises

Singapore
Lack of premium spaces (location)

Solution: Marketing Mix


Product
Malaysia
Product

Halal aspect
Focused on Combo
Variety of Burgers
Side dish : buns, mash
potato, fries, wedges
and nugget

Taste : Prefer Spicy


Division
Individual, family,
budget, teen and kids

Indonesia
Product
Halal aspect
Focused on a la carte and
variety
Only two types of burger and
fillets
Side: rice, fries, perkedel &
soups

Taste : Must Have Rice and


healtier food choice
Division
Individual, Family, Budget,
Youth and Kids

Solution: Marketing Mix


Price
Malaysia

Indonesia

Price is quite premium


for Brand Core (main
Dish) , although
cheaper for teen, kids,
combos and time
specific combos.

Price is quite premium


for main dish and
cheaper on combos,
cheaper than malaysia
because purchasing
power and lower price
of raw items in
Indonesia

Solution: Marketing Mix


Place
Malaysia
Types of outlets
include free standing,
mall and food court
The outlets are very
evenly spread
No government
regulation concerning
opening of outlets

Indonesia
Types of outlets
include mobile, in-line,
free standing, mall
and food court
The outlets are very
evenly Spread
There is a government
regulation to protect
small businesses,
issue of supply chain
and lack of proper
infrastructure

Solution: Marketing Mix


Promotion
Malaysia

Indonesia

Methods - With
traditional media with
small presence on
Social Networks
Target and Aims - New
and younger
generation as well as
budget conscious
customers

Methods - Traditional
as well as creating
active social network
and social events
Target and Aims
Active and happening
population, teens,
children, kids and
budget conscious
customers

Conclution
Global companies use of local
company to enter new market.
KFC successfully making proper
changes to suit local customer need
and requirements
Environment can prevent companies
to enter new market if not handled
appropriately, especially law and
political environment

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