International Business Environment & Strategy MOD Determinants of national advantage – and where in the world to locate Market entry © Robert Jones
Objectives: 1.) To identify factors in national advantage Which nations are the best for business? 2.) To consider factors in international strategy formulation How do senior managers decide which nation to expand to? Market entry considerations Porter, M. (1990)Competitive Advantage of Nations,Macmillan Ellis, J. & Williams D. (1995)International Business Strategy, Pitman
04nov2011
Factor conditions skills, resources technological base infrastructure Demand conditions Firm strategy, structure & rivalry Related & supporting industries Chance Govt policies Porter M.E. (1990) Competitive Advantage of Nations, MacMillan Porter’s Diamond The Determinants of National Advantage
International research data sources © Robert Jones
WEF Global Competitiveness
enessReport_ pdf 144 nations
Which are the most competitive nations?
Which are the top 3 competitive nations? Hint: they all begin with an ‘S’
enessReport_ pdf
eport_ pdf
The BRIC nations
The BRICS nations
57 (56) 53 (64) 71 (59) 28 (29) WEF GCR rank 2014 The BRICS nations South Africa 56 (53)
The MINT nations 2014 Mexico 61 (55) Indonesia 34 (38) Nigeria 127 (120) Turkey 45 (44) WEF GCR rank 2014
Example: competitive ranking of Canada
Page 25
media/GIAWB/Doing%20Busines s/Documents/Annual- Reports/English/DB14-Full- Report.pdf 189 nations compared
Doing Business GIAWB/Doing%20Business/Document s/Annual-Reports/English/DB14-Full- Report.pdf
Doing Business Rank 2014 The BRICs South Africa 41
Doing Business 2011
Doing Business 2014
Risks in entering new nations
PwC EM20 Index: 2009 Interim Update Emerging Markets - Balancing Risk & Reward The PricewaterhouseCoopers EM20 Index 2009 Interim Update
PwC EM20 Index: 2009 Interim Update Emerging Markets - Balancing Risk & Reward The PricewaterhouseCoopers EM20 Index 2009 Interim Update
Conditions for business around the world
/files/global%20economy%20in%202013% 20-%20final.pdf
Tax Who pays the most tax? Where is the best place to do business?
-taxes/assets/pwc-paying-taxes full-report.pdf
Reports/Paying-Taxes-2014.pdf Total tax rate
Time to comply
OECD 50TH ANNIVERSARY CHALLENGES IN DESIGNING COMPETITIVE TAX SYSTEMS Paris, 30 June 2011 Tax Reform Trends in OECD Countries
The Forbes Tax Misery Index Overall Tax Burden 4-tax-misery-reform-index.html
Corruption Transparency International
The Economist 2 nd December 2011
Objectives: To identify factors in national advantage Which nations are the best for business? To consider factors in international strategy formulation How do senior managers decide which nation to expand to? Market entry considerations Porter, M. (1990)Competitive Advantage of Nations,Macmillan Ellis, J. & Williams D. (1995)International Business Strategy, Pitman
Market Entry Mode grid Adapted from:-Ellis, J. & Williams D. (1995)International Business Strategy, Pitman Market entryEntry to nation AEntry to nation BEntry to nation C Key factors – take care whether positive or negative Weight 1-10 [1] Value 1-5 [2] Weighted score [1]x[2] Value 1-5 [3] Weighted score [1]x[3] Value 1-5 [4] Weighted score [1]x[4] Opportunities available Skills availability Resource availability Degree of control req’d Investment required Level of risk Political Level of risk Economic Level of risk Social Level of risk Tech Speed to implement Expected return Total weighted score Rank order
Macroenvironment – PESTEL Exhibit 2.2 Political Government stability Taxation policy Foreign trade regulations Social welfare policies Economic Business cycles GNP trends Interest rates Money supply Inflation Unemployment Disposable income
Macroenvironment – PESTEL Exhibit 2.2 Sociocultural Population demographics Income distribution Social mobility Lifestyle changes Attitudes to work and leisure Consumerism Levels of education Technological Government spending on research Government and industry focus on technological effort New discoveries /developments Speed of technology transfer Rates of obsolescence
Macroenvironment – PESTEL Exhibit 2.2 Environmental Environmental protection laws Waste disposal Energy consumption Legal Competition law Employment law Health and safety Product safety
Key Aspects of PESTEL Analysis Not just a list of influences Need to understand key drivers of change Drivers of change have differential impact on industries, markets, and organisations Focus is on future impact of environmental factors Combined effect of some of the factors likely to be most important
Control Risks RiskMap 2011 RiskMap 2011 provides a critical assessment of global, regional political, security and business issues that will prove a challenge in 2011 and beyond (04nov2011)
Recap: 1.) Where in the world to locate in your international strategy: Porter Diamond logic WEF GCR report 2014 World Bank Doing Business report 2014 Etc 2.) Market entry analysis: Market entry grid (Ellis and Willams) Opportunities Degree of control Risk analysis
Market Entry Mode grid Adapted from:-Ellis, J. & Williams D. (1995)International Business Strategy, Pitman Market entryEntry to nation AEntry to nation BEntry to nation C Key factors – take care whether positive or negative Weight 1-10 [1] Value 1-5 [2] Weighted score [1]x[2] Value 1-5 [3] Weighted score [1]x[3] Value 1-5 [4] Weighted score [1]x[4] Opportunities available Skills availability Resource availability Degree of control req’d Investment required Level of risk Political Level of risk Economic Level of risk Social Level of risk Tech Speed to implement Expected return Total weighted score Rank order
Grant Thornton IBR2013 International Business Report World Economic Forum WEF The Global Competitiveness Report World Bank Doing Business Annual-Reports/English/DB14-Full-Report.pdf Control Risks Emerging Markets - Balancing Risk & Reward The PricewaterhouseCoopers EM20 Index 2009 Interim Update Paying Taxes 2014 – the Global Picture Porter, M. (1990)Competitive Advantage of Nations,Macmillan Ellis, J. & Williams D. (1995)International Business Strategy, Pitman