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Competing in a global context - Coggle Diagram
Competing in a global context
International operations
Supply Chain Management
Efficiency = total value adding time / total throughput time
Vertical integration
Downside is lack of flexibility and no market forces
Outsourcing
Supplier relationships
Service Level Agreements
Lambert's categorisation
of supply relationships
Partnerships in supply chain
improve performance
Effective when there is no
power imbalance
Bullwhip effect
Greater supplier choice & flexibility
Outputs can't always be standardised across markets
Offshoring
Strategies
Home country operation + export
Multi-domestic operations
Regional operations
Global coordinated operations
Economic and financial flows
(beween countries)
Balance of payments
Current Account (imports vs exports)
Capital Account (capital transfers)
Financial account (direct investments, portfolio investments and reserve assets)
Global imbalances
Foreign direct investments (FDI)
Establish new offices or
plants in other countries
Aimed at operational control
They are not financial instruments (shares, etc.)
Portfolio investments
Are financial instruments (shares.etc)
International Tax
Transfer pricing
Trade mispricing
Mostly happens withing
multinationals
Aims to shift profits to
low tax countries
The arm's-length principle
Market price is used
for the transaction
Difficult to implement
Sometimes difficult to judge
the correct price
Unitary Taxation
Implemented within USA
Proportion of profit/income
allocated to each jurisdiction
Each jurisdiction decides
tax for their own part of profit/income
Obstacles
Path dependency
Vested interests
Technical issues
Exchange rate
Forex
(foreign exchange market)
Price based on currency
supply and demand
influenced by
changes in
Incomes
Interest rates
Sentiment
Goverments can intervene
to make adjustments
Fluctuations
Can be good or bad for
a company
overcome by
Operate only in markets
with same currency
Spread risk accros
multiple markets
Buy curency in advance
at set price
(futures market)
Speculate
Set contracts in own
currency
Financial regulation
Financial reporting
Types
European (Commercial code accounting)
Anglo-Saxon (US/UK)
Required for investors
Used as basis for tax
(especially in commercial code countries)
Differs in each jurisdiction
due to
Different reporting objectives
History
Scandals trigger change
Unintended consequences of change
causes more change
Culture
International Financial
Reporting Standards (IFRS)
Aims to standardise
global accounting
Required so that companies can
be compared across borders
Developed by IASB
IFRS Foundation creates a
profile for most countries (about how IFRS is applied)
IFRS for SMEs
Less complex
Focused on needs of lenders
and creditors
Composed of
Conceptual framework
16 IFRS standards
41 IAS standards
International financial institutions
IMF
Ensure stability of the
international monetary system
World Bank
End poverty
City Leadership
Political Leadership
Managerial Leadership
Civic Leadership
Business Leadership
Large cities have more in common with each other
than with the rest of the countries that they are
part of
Global Culture
Organisations tend to
converge
on
popular and effective ideas and practices
Pressure to contravene global norms due
to local culture is know as
divergence
(culture is seen as being static)
crossvergence
: the ability of an organisation
to respond to and influence their particular context
(culture is seen as being dynamic)
Employment
Shifting from national
to international focus
International labour
market
Shift from unions to
individual 'consultation'
Employee 'empowerment'
is on the rise
HRM
Integrating a multinational
workforce
Working with other business
functions to meet diferent cultural
needs
Marketing in global
context
Triggers for international
expansion
Saturated domestic markets
Small domestic markets
Low-growth domestic markets
Customer drivers
Competitive forces
Cost factors
Portfolio balance
Similar approach as in
local markets, but with
global mindset
Modes of entry
Indirect exporting
Direct exporting
Joint ventures
Strategic alliances (partners may have
previously been competitors)
Global strategic partnerships (companies
from different regions share resources and
ideas, but divide the market between them)
Licensing
Contract manufactoring
Management contracting
Direct investment
glocalisation - think globally, act locally
Requires tradeoff between
standardisation and adaptation
Branding - a shared desirable and exclusive idea
embodied in products, services, places and/or experiences
Brand identity -> inside perspective
Brand image (reputation) -> outside perspective
Kapferer prism
Brand content -> what does the brand have to say
when not talking about its products?
5-step brand naming process (Kohli and LaBahn, 1997)
Building a global brand
Engaging in cultural immersion
Finding and leveraging influencers
Using global frameworks with local relevance
Tribal marketing / The tribal clover
Ethical Issues
Differing standards of consumer protection
The exporting of consumerism and increase
in cultural homogenisation
The targeting of marketing at lower-income
consumers in developing countries
Geographical segregation of business
operations