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Prepared by: Bucu, Benedict Bryan S. Galaria, Ma. Teodora R. Lacerna, Von Bjon G. Perez, Deo Emmanuel A.
COUNTRY COMPETITIVENESS Chapter five
Competitiveness is the relative strength that one needs in order to win in competition against rivals. Country Competitiveness is the extent to which a country is capable of generating more wealth than its competitors do in world markets. It measures and compares the effectiveness of countries in providing firms with an environment that sustains the domestic and international competitiveness of those firms.
It is the prime determinant of a nation s long-term standard of living and is the root source of national per capita income.Example: the Singaporean government crated several institutions and offshore zones to help local businesses excel I international competition in the information industry. . Productivity is the value of the output produced by a unit of labor or capital. The core of country competitiveness.
. Science. Education. finance.Country-Level Determinants this fundamental includes science. and internationalization. education. and innovation. and Innovation technological innovation has long been seen in all economies as central to the process of raising productivity and thus improving country competitiveness. economic soundness.
Economic Soundness is the key economic foundation and a major source of country competitiveness. It is concerned with economic growth and stability. . It can be defines as the extent to which an economy has been equipped with all the economic prerequisites for sustained economic growth.Example: United States developed a rich set of institutions in both the public and private sectors to support a high level of technological innovation.
solvency of the banking system. Specific finance indictors that affect competitiveness include currency valuation. and thus country competitiveness. .Example: expansionary public policies may initially stimulate economic growth while economic stability is reflected in a low rate of inflation. Finance is an important macroeconomic fundamental affecting economic stability and growth. and short-term external debt.
Currency valuation concerns the extent to which a country s home currency is valued or priced properly to reflect the situation of market supply and demand pertaining to this currency. Example: one of the factors leading to the collapse of the Thai baht and the Korean won in 1997 involved overvaluation of their currencies.
Solvency of the banking system a weak banking system can be a source of instability. Example: While the Netherlands, Luxembourg, and Australia are considered to have the most solvent banks, banks in Indonesia and Thailand are considered the most vulnerable, which is one of the major causes of the banking crisis that began in the region in 1997.
Short-term external debt this indicator is more relevant for a country defending its fixed exchange rate. Example: Taiwan was not considered high risk during the Asian financial crisis because its central bank had enough hard currency reserves to cover these liabilities.
Hong Kong. . Hong Kong also enjoys very high foreign exchange reserves and also benefits from the high reserves held by mainland China. although recognized as one of the world s most expensive cities. its advanced financial markets. and its position as one of the largest financial centers in the world. still remains competitive thanks to its solid financial system.
. It is influenced by a nation s strength in the following areas: exports and related current account balance. foreign investment. foreign exchange reserves. and openness of the economy. exchange rate systems.Internationalization associated with country competitiveness refers to the extent to which the country participates in international trade and investment.
Industry-Level Determinants the industryspecific perspective is especially important for international managers because it is often a target country s industrial.S. commercial aircraft and defense industries have dominated the world market. . environment that directly impacts firm decision and operations. while Japanese semiconductors and VCRs have led as well. Example: U. rather than national.
National protectionism reflects the level of barriers that foreign goods. goods.Openness refers to the extent to which its national economy is linked to world economies through the flow of resources. people. technologies. and other inputs of production are confronted with when moving into the focal country. . and capital. services. capital. services. information.
Example: Examples of these barriers include tariffs. among others. voluntary export restraint. . quotas. and commodity inspection standards.
scientific base. land and natural resources. and information. including basic factors such as labor.There are four broad attributes. and sophisticated factors such as skilled workforce. . capital. which individually and collectively constitute the diamond of national advantage in particular fields: Factor Conditions this concerns the nation s position in factors of production. infrastructure.
Low design costs and growing market demand for copier machines are also major considerations luring foreign companies such as Xerox to invest there.Example: Hungary s optical instrument industry is abundant in skilled workers but lacks a welldeveloped supplier infrastructure. . The same is true for China s copy-machine industry.
crowded homes in a country where humid summers are the norm. most of whom live in small. . This is largely because the firms have responded to the needs of Japanese consumers. quiet air-conditioning units powered by energy-saving rotary compressors. Example: Japanese firms have pioneered compact.Demand Conditions this involves the nature of market demand for the industry s product or service.
Having home-based suppliers that are international competitive can create advantages in downstream industries.Related and Supporting Industries this refers to the presence and support level of a nation s suppliers or other related industries. Example: Switzerland s success in pharmaceuticals evolved from previous international success in the dye industry. .
Rivalry and Business Practice this entails the nature of domestic rivalry in addition to the conditions governing how businesses are organized. managed. . and operated in a nation.
. and operational strategies employed by most firms of the nation. innovational. or approaches should differentiate one country s firms from those of other countries.Firm-Level Determinants the country competitiveness is also associated with firm-level factors that can characterize country-unique organizational. and more importantly. principles. These strategies. create competitive advantages for both the nation and firms to which they belong.
Example: Most Japanese firms have obtained their competitive advantages vis-á-vis American and European companies through superior process innovations. quality control systems. . and unique manger-employee relationships.
designers and engineers. professional managers. entrepreneurs. They include workers.Individual-Level Determinants are people or human resources associated with country competitiveness. educators and intellectuals. . and politicians and government officials.
In Denmark. and Sweden. superior education and passion for work is an important reason for the superior productivity of workers. Finland. . Example: Skillful and diligent workers in Singapore are an important force in improving its country-level productivity.Workers workers productivity affects country productivity.
. They are a special group of businesspeople taking risks in the development of new products.Entrepreneurs ventures into new businesses despite a high degree of risks arising from uncertainty about the future. new markets. Example: Singapore s high level of competitiveness can in large part be attributed to the high percentage of entrepreneurs in its total population. or new technologies.
whether public. play an important role in increasing country competitiveness. This greatly helps to raise the level of national competitiveness in these countries. Example: Several newly industrialized economies such as South Korea and Taiwan have successfully secured and retained a large number of Westerneducated and experienced managers who were educated abroad.Managers experienced and skillful mangers in various enterprises. private. . or state-owned.
which in turn help stimulate the competitiveness of these nations. . industrial experience. and global vision. Example: Engineers in Switzerland and the Netherlands have a strong educational background. They are key players in improving a nation s productivity because they create value through production innovation and process innovation.Engineers they stand at the forefront of country competitiveness.
High competitiveness of an economy requires the creation and dissemination of knowledge needed for improving productivity.Educators they represent a prime force for strengthening education and science. . Politicians the role of politicians and government officials in supporting competitiveness cannot be underestimated simply because government policies and administrative efficiency exert a significant effect on other determinants of country competitiveness.
Example: South Korea in the 1970s is a manifestation of how a national economy can benefit from political leaders with a strong commitment to economic growth even under a non-democratic regime. .
organizational. This foundation provides a general economic and technological environment.Interplay of the Four-Level Determinants country-level determinants provides an overall national foundation for developing country competitiveness. . and individual determinants of competitiveness. which can directly or indirectly influence industrial.
government can impact investment.Example: A nation s education system affects the qualification of workers. managers. Government Role through policy making and intervention. . politicians and officials have the power to change country-level determinants such as economic policies and financial systems. and engineers. savings. and trade. Conversely.
Example: the experiences of several newly industrialized nations in the early 1980s suggest that a certain amount of governmental control over macroeconomic problems is necessary. . Industrial Policies can be defined as all forms of conscious and coordinated government interventions to promote industrial development. Example: A government can shape factor conditions through its training and infrastructure policies.
they should deregulate competition.Principles that governments should embrace in order to play a supporting role in national competitiveness: They should emphasize competitiveness infrastructure. . they should boost goal-setting that leads to sustained investment. they should adopt strong antitrust investment. and.
THE CULTURAL ENVIRONMENT Chapter six .
The knowledge. beliefs. art. and achievement of a particular time or people. the customs. morals. law.Culture the art and other manifestations of human intellectual achievement regarded collectively. . customs and other capabilities of one group distinguishing it form other groups. the way of life of a particular society or group. civilization.
be they products or customs. .Culture is shared it is not an individual but a group property Culture is intangible it is not only about thing. Culture is confirmed by others to understand it. but. importantly. you need to step back and look at it from the outside. about meaning.
Belgium. . Lebanon has large Christian minority while Northern Ireland has both Protestant and Catholic communities. South Korea has large Christian minority.Culture is correlated with other variables that vary cross-nationally. Example: Switzerland. and Nigeria are countries with multiple official languages.
Italian. or especially articulate vocal sounds.Language a systematic means of communicating ideas or feelings by the use of conventionalized signs. Spanish. Lingua Franca comes from the Franks people originating in southern France who traded with other people in the Mediterranean who spoke a variety of languages like Arabic. marks. Greek. gestures. . and Portuguese.
albeit to a lesser extent. The impact of religion extends to the secular segment of the population. and masculinity/femininity. individualism/collectivism. Hofstede s Dimensions of Culture there are four underlying dimensions. power distance. . uncertainty avoidance.Religion contains key values and norms that are reflected in adherents way of life.
Japan is relatively egalitarian in terms of wealth and income distribution yet is relatively high on power distance. Example: Israel is very low in power distance although its income inequality is among the highest in the developed world. .Power Distance (PD) is the extent to which hierarchical differences are accepted in society and articulated. in the form of deference to senior echelons.
counterparts in establishing production facilities in China. Example: Japanese car manufacturers such as Nissan lagged behind their European and U.S. Individualism/Collectivism (I/C) refers to the extent to which the self or the group constitutes the center point of identification for the individual. .Uncertainty Avoidance (UA) refers to the extent to which uncertainty and ambiguity are tolerated.
Masculinity-Femininity (M/F) describes the extent to which traditional masculine values such as aggressiveness and assertiveness are emphasized. Example: Consumers in feminine European cultures preferred coupé cars I 1990 and hatchbacks in 1996. .
. MNEs who hail from cultures high on LTO. It represents such values as thrift and persistence as well as traditional respect of social obligations.Long-Term Orientation (LTO) originally termed Confusion Dynamism because of its anchoring in the Confucian value system. are more likely to be willing to defer return on investment for a long time.
Business culture. Western bias. Partial geographic coverage. Non-exhaustive. Criticisms of Hofstede: A single company s data. Attitudinal rather than behavioral measures. . Time-dependent results. as in the case of the Korean conglomerate Daewoo.Example: This tendency has often led to disregard of basic principles of economic return. Ecological fallacy. not values.
. It is more recent than Hofstede s.Schwartz s Classification he arrived at his classification by a conceptualization of values prior to their sampling and measurement.
.Three dimensions of Culture according to Schwartz: Embeddedness versus Autonomy: Embeddedness implies emphasis on social relationships and tradition while Autonomy implies finding meaning in one s own uniqueness and be encouraged to express one s own attributes.
. Hierarchy versus Egalitarianism: Hierarchy means legitimacy of hierarchical role and resource allocation while egalitarianism means transcendence of self-interests and promoting others welfare. Affective Autonomy the pursuit of stimulation and hedonism. creativity. and.Two kinds of autonomy: Intellectual Autonomy self-direction.
The classification consists of seven dimensions largely drawn from previous literature but validated. .Master versus Harmony: Mastery implies mastering the social environment via selfassertion while harmony implies being at peace with nature and society. Trompenaars and Hampden-Turner s Classification this classification found flowers especially in the practitioner community. by large-scale practitioner surveys. according to the authors.
rules are assumed to apply in all situations and legal solutions are prominent. . Germany. and the Scandinavian countries. relationships) in universal cultures. Example: Countries high on universalism include the United States. the United Kingdom. Canada. the Netherlands.Universalism versus Particularism (rules vs.
India. Nepal. the United States. the individual) in individualistic cultures. whereas in communal cultures they see themselves as members of a group. the Czech Republic. Mexico. Nigeria. . and Denmark. people see themselves primarily as individuals. Countries high on communitarianism are Egypt. Romania. Example: Countries high on individualism are Israel. Canada.Communitarianism versus Individualism (the group vs. and Japan.
and Spain. and New Zealand. they prefer direct. Egypt. Example: Countries high on neutral expression include Ethiopia. interaction are impersonal and objective. emotional response. they prefer indirect. non-confrontational response. and emphasize control. in emotional cultures they are laden with emotions. Poland. .Neutral versus Emotional in neutral cultures. Countries high on emotional expression include Kuwait. and avoid social distance. Oman. Japan.
Mexico. Example: Countries high on specific involvement are United States and Germany allow more outspoken expression and encourage transparency. .Diffuse versus Specific in specific cultures. interaction is confined to a narrow domain and private life is kept separate from work. Countries high on diffuse involvement include Japan. and France.
and make use of detailed technical data to support their position. Example: Countries high on achievement. and Canada. status is bestowed by birth. . make ample use of titles and show respect for superiors. permits individuals to make commitments in the name of their company.S. status is based on achievement and people are evaluated by performance. Countries high on ascription.Achievement versus Ascription in achievement cultures. Kuwait and Saudi Arabia. U. and age. In ascriptive cultures. kinship.
the US. the US. whereas countries not geared towards such control. accept that many life events cannot be controlled. and Brazil. Nepal. Ireland. Israel.Attitudes to Time countries emphasizing the short term. plan for a shorter time horizon than countries with long time horizon. and Russia. Attitudes toward the environment countries geared toward controlling the environment. Portugal and Pakistan. . appreciate control and dominance. Venezuela. and Spain.
Huntington distinguishes seven civilizations: Sinic. and African. Hindu. Latin American. Japanese. Huntington based on historical and political observations. Ronen and Shenkar is based on a synthesis of eight earlier studies. Western. .Culture Clustering is the grouping of cultures based on their relative similarity. The regions presented encompass many regions although some countries are not included. Islamic.
. for an MNE that adopts a global strategy and uses corporate culture as an integrator of its various units. Example: Honda is often described as being different from the typical Japanese firm in that it is less immersed in traditional and more open to change. It can deviate from the national norm. It is of tremendous importance. developed. for instance. and disseminated by a company.Corporate Culture is the culture adopted.
. crating subcultures within the US culture. informal and innovative. Hispanic and various communities have been growing rapidly. Example: the high-tech industry is considered flexible. Industry it is clear that industry is an important layer of culture. Example: in the US.Ethnicity significant ethnic communities exist in many countries.
seniority. age. . and hierarchical level strongly affected differences in values. Example: Ralston found the new generation of Chinese managers to be considerably more individualistic and adhere less to Confucianism than the previous generation.Demographics Hofstede found that education. although not difference in practices.
Example: In China. . Maoist ideology provided many of the beliefs and values on the country from the mid-1950s to the mid-1970s.Ideology an important though less stable layer of culture.
. or the behavior expected outside the workplace and after business hours. be it business negotiations. a supervisor-subordinate discussion of a raise.Cultural or Business Etiquette is the manner and behavior that are expected on a given situation.
Stereotypes are our beliefs about others. Hetero-stereotypes are how we are seen by others. Auto-stereotypes are how we see ourselves as a group distinguished from others. their attitudes and behavior. .
. such measures that are typically built as an aggregate of Hofstede s dimensions are problematic.Cultural Distance is a measure of the extent to which cultures differ from each other. and that with global integration of markets and the diffusion of MNC practices. Convergence hypothesis assumes that combination of technology and economics is making countries more alike. convergence will accelerate.
and that those differences may even be accentuated over time. .Divergence hypothesis assumes that countries will continue to maintain their distinctive characteristics.
THE END :D THANK YOU!!! .
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