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Block 2: Competing in a global context (taxes and foreign exchange…
Block 2: Competing in a global context
context to your ideas
operating environment
geographic factors
economic factors
political factors
cultural factors
organisational context
internal context
internal environment relating to organisational sustainability goals
organisation’s governance structures
prevailing culture
internal stakeholders
existing relationships
external context
outside influences relating to organisational sustainability goals
external stakeholders
political regulations
physical resources
cultural norms
STEEPLE
PESTLE
innovation
understanding threats
understanding opportunities
global trade environment
globalisation
trading on an international scale
competition
comparative advantage
absolute comparative advantage
Smith (1776)
if a product is cheaper elsewhere, buy it rather than make it
relative comparative advantage
countries end up specialising in one particular product
Ricardo (1819)
The diamond model (Porter, 1990)
factor conditions
structure of firms and rivalry
demand conditions
related and supporting industries
five forces model (Porter, 1980)
industry competitors
suppliers
potential entrants
substitutes
buyers
economic and financial flow
balance of payments
tracking of transactions
foreign direct investments (FDI)
investments by companies to trade globally
globalisation
taxes and foreign exchange
transfer pricing
Yum! & Yum! China
companies trading between their international branches
arms-length trading
exchange rates
government legislation
regulations
convergence and divergence
Convergence: mirroring global practices
divergence: remaining "local"
crossvergence
embracing divergence and convergence
more diverse
helps innovation
HRM
diversity
leads to innovation
language barriers
must understand strengths and weaknesses
marketing internationally
branding
branding can separate
language barriers
large customer base
chance to innovate new products
branding
suppliers
separate branding can separate issues
logos
ethics and marketing
customer targeting
exploitation
destroy brand image
TMA2
Block 2
globalisation
global trade environment
context