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The Global Market Environment - Coggle Diagram
The Global Market Environment
Barriers in the political and legal environment
Home Country Environment = Exporting Firm
Host Country Environment = Market
Host Country Environment
Politcal Risks
Transfer - encountered when transferring capital between countries
Operating - interference with ongoing operations
Ownership - exposes property and life
Potential Political Actions
Local Content Laws
Import Restrictions
Selective restrictions on essential industry resources
Exchange Control
Controls levied over movement of capital
Market Control
Prevention of foreign companies from competing in certain markets
Price Controls
Used in inflationary periods to control consumer behaviour and cost of living
Labour Restrictions
Influenced by trade unions
Government Change
New governments may not honour existing agreements
Tax Controls
Used to control foreign investments
Nationalisation
Takover by foreign companies
Domestication
Gradual reduction of foreign ownership controls
Trade Barriers
Trade laws that favour local firms and discriminate against foreign ones
To generate revenue
To protect domestic producers
Tariffs
Used by governments to protect companies from outside competition
Specific, ad valorem, discirminatory
Non Tariff Barrier
Non monetary barriers to foreign products (restrictive product standards)
Quotas, embargoes, admin delays, local content requirements
Home Country Environment
Promotional Activities
Sponsored by Gov. Aims to increase competitiveness
Information Services
Information Gov. Provides
Exporting-Facilitating Activities
Aims to Stimulate Trade
Promotion by Private Organisations
Provision of education, training and information.
State Trading
Agreements for limited trading relationships
Three Step Process of Political Risk Analysis
Potential Political Events
Determine: relevant political events, probability of occurrence, cause and effect relationships, gov ability and willingness to respond.
Probable Impacts and Responses
Determine: initial impact of probable scenarios, possible responses and initial and ultimate political risk
|ssue of Relevance to Firm
Determine Critical economic/business issues relevant to firm. Assess the relative importance.
Big Mac Index
Economic Integration in Regional Markets
Customs Union (common external trade policy)
Free Trade Area (free trade among members)
Common Market (Factor Mobility)
Economic union (economic policy harmonisation)
Regional Integration Analysis
Pros
Greater Consensus
Political Cooperation
Cons
Trade Creation
Trade Diversification
Loss of Sovereignty
Employment Shifts
Summary
Regional EI can provide increased trade platforms
Home and Host factors influence market viability
Imposed trade barriers
Political and Economical factors influence new global market attractiveness
Culture
Interrelated
Shared
Learned
Parts of:
Values and Social Morals
Basic Assumptions
Visible
Layers of:
Business/industry (provides competitive framework)
company
National
iIdividual
High VS Low Context
High
High complexity
Focus on elements surrounding message
Japan, china etc
Formal
Business is relationship orientated
Time = relationships, elastic and relative
respect for age
group conformity and harmony
Hierarchical
individuals accept destiny
gender toles
linear logical problem solving mind set
Low
spoken and write, low complexity
Western Europe, US
informal
Business is deal oriented
Time = money, linear and prompt
individualistic
egalitarian, challenging authority
individuals control destiny
gender equity
holistic mindset, accepting life difficulties
elements of culture
Social Institiutions
Education
Technology and Material culture
Valies and Attitudes
Manners and Customs
Aesthetics
Language
Religion
Role of Language
capability is important for company comms
enables context interpretation
provides access to local society
Important to gather info and evaluate
Managing differences
cultural sensitivity and tolerance
reduction of self reference
factual vs interpreted knowledge
Explore and explain diff and sim
Understanding of cult idff is key to meeting new market needs
Hoftsedes used to understand
Hofsteede's deimensions of culture
Long tern orientation (long vs short term)
Masculinity (male/female stereotyping)
Power Distance ( dealing with human inequality)
Uncertainty Avoidance (managing future uncertainty)
Individualiasm (affects way people live together)
Indulgence vs retrains (2007 addition) acceptance of basic drives