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Cultural and Political Analysis for International Business Planning and Management. Ilan Vertinsky Aviad Pe’er BAIM 502, HA 412, April 20-May 20, 2003 Tuesdays and Thursdays 2: 0 0 – 4:00 p.m . Outline of today’s class. Introductions Course Overview

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cultural and political analysis for international business planning and management

Cultural and Political Analysis for International Business Planning and Management

Ilan Vertinsky

Aviad Pe’er

BAIM 502, HA 412, April 20-May 20, 2003

Tuesdays and Thursdays 2:00 – 4:00 p.m.

outline of today s class
Outline of today’s class
  • Introductions
  • Course Overview
  • Discussion on Globalization and Its Cultural, Political, and Economic Implications
introductions
Introductions
  • Personal Introductions
  • 2 things you would like people to know
    • Past education, experience, accomplishments
    • Something that could be an asset in this class
  • 1 thing others would never guess about you
    • Please use anecdotes, short-stories, and examples if appropriate
course overview
Course Overview
  • Main topics covered
  • New skills and learning outcomes
  • More about the learning method
    • Case study teams
    • Case draws
  • Grading
  • Questions
main topics covered
Main Topics Covered
  • Part I: Cultural Analysis
    • Sources of Cultural Differences
      • a) Sensitivity to Different Cultural Values
      • b) Local Customs (History, Demographics, Social Change)
    • Influences on Managerial Models
      • Business Concepts
      • Internal Practices
      • Inter-firm Transactions
  • Part II: Political Analysis
    • Political Risks, Evaluation and Management
    • Business-Government Interactions
new skills and outcomes
New Skills and Outcomes
  • Culture
    • Develop your own intuition and interpretations
    • Specific applications: changes in organizational design, adjustments in negotiation styles, relevant issues in the formation and management of cross-border alliances
  • Political Risk
    • Identify relevant risks, choosing where to invest and how to reduce or manage risks; strategic decisions.
  • Governmental Actions
    • Observation, anticipation, planning, and management of on-going interactions; strategic decisions.
learning approach
Learning Approach
  • Readings offer rich information -- not a burden
    • Practice sorting out the important facts
    • Identify main actors and their views
    • Look for relevant symptoms, but seek causes
  • Each case = a “Trial Run” of an actual decision (situations are real and frequently encountered)
  • Think of team effort as providing “Expert Advice”
    • Content: Thorough thinking, insights, flexibility
      • formal presentations not required
    • Process: Mutual reliance on class members
learning support
Learning Support
  • Lectures notes posted before class; case comments will only be presented inclass
  • A variety of in-class exercises – opportunities to have fun while learning and practicing specific skills
  • I am available to work with you (specific questions, discuss readings, case preparation, debriefing after class-discussions)
    • Office hours 12-1; make appointments
  • Consultation with your group members is strongly encouraged (cases, class preparation)
grading
Grading

Class Participation (40%)

Presence, Preparation, and Participation

A short journal entry for each week (1 page)

– due the following Tuesday

Case Presentations (30%)

Final Exam (30%)

Comment on a specific aspect of one the four cases

An applied question from the readings

A brief essay (2 pages)

syllabus
Syllabus

Questions?

globalization
Globalization
  • We are moving away from economic systems where national markets are distinct entities isolated from each other by trade barriers, distance, time and culture toward a system of a global marketplace.
  • What factors are “pushing” globalization?
    • Distance is shrinking
    • Lower costs of communication
    • Flows of people across borders
    • Governmental reforms
    • Liberalization of trade and investment flows
international production
International Production

1. GM

$20,000 (paid) to GM for LeMans - An American Car

$6,000 to South Korea for assembly

$3,500 (goes) to Japan for advanced components (engines, transaxles, and electronics)

$1,500 (goes) to Germany for design

$500 (goes) to GB for advertising and marketing services

$100 (goes) to Ireland for data processing services

$7,600 to GM headquarters in the U.S. for financial and legal services, etc.

international production cont
International Production (cont.)

2. Airbus Consortium

Joint ownership (companies from 4 countries):

  • wings from U.K.; fuselage and tail – Germany; doors – Spain; cockpit and final assembly – France

1500 suppliers 27 countries

  • 35% of components from 500 U.S. companies
  • Other suppliers in India and Singapore

3. Vegetable Exports from Zimbabwe to Tesco

Cheap air transport

Modern telecommunications (internet-based; to order)

Open British Market

international trade flows 2001
International Trade Flows (2001)

48%

Latin America

3%

6%

Asia

25%

8%

17%

68%

21%

10%

Western Europe

North America

19%

2%

61%

12%

17%

Latin America

17%

empirical evidence retail chains

Company

US

Outlets

Canada

Outlets

Mexico

Outlets

North American Triad (%)

Intnat.

Outlets

Intnat. %

Total

Kroger

3634

100

3634

Wal Mart

3118

174

499

90.5

398

9.5

4189

Albertsons

2300

100

2300

Sears

2167

511

100

2678

K-Mart

2105

100

2105

Target

1381

100

1381

Empirical Evidence Retail Chains

Source: Rugman & Girod, European Management Journal 21(1), 2003

fdi inward flows in us billions
FDI Inward Flows in US$ billions

1989-94 1997 2000 2000

World 200.1 447.9 1270.8

Developed Countries 137.1 271.4 1005.2 79%

Developing Countries 59.6 187.4 240.2 21%

Africa 3.9 7.2 8.9 1%

Lat America 17.5 71.2 86.2 7%

Asia/Pacific 37.9 107.3 143.8 11%

C & E Europe 3.4 19.2 25.4 2%

LLDCs 1.4 3.0 4.4

China 14.0 44.2 40.8 3%

Source: WIR 2001

discussion globalization
Discussion -- Globalization
  • What is globalization?
  • What are the characteristics of the “new economy” and how do they promote globalization?
  • What are the dimensions of globalization?
  • How can we measure the extent of globalization?
  • What are the implications to businesses along the different dimensions?
discussion canada
Discussion -- Canada
  • How is globalization reflected in the Canadian experience?
  • Does the border with the US matter?
    • In what ways?
  • What are the values underlying globalization?
    • Are these “American” values?
    • Are these values typically associated with modernization?
discussion national identity
Discussion – National Identity
  • What defines “national identity”? What does it mean to you to be a “Canadian”, “Chinese”, “Japanese”, “Italian” etc.?
  • How important is it to you that your national identity be preserved?
  • Do you think that different aspects of globalization might influence your national identity? In what ways?
discussion protectionism
Discussion – Protectionism?
  • How does the government try to protect culture in Canada? Are governmental actions effective?
  • What are the forces that prompt or promote protection attempts? What are their effects?
  • What are the implications of globalization?
    • for domestic businesses?
    • for multinationals?
    • for government-corporate relationships?
summary comments
Summary Comments
  • Dimensions: economic, social and cultural
    • Cannot separate economics from culture
  • Values: efficiency and standardization
    • American “melting-pot” values
  • Canada made several indirect politic choices (e.g. immigration policy) that effectively counterbalanced these globalization values
    • “Mosaic”; tolerance and diversity
  • However, Canadian protectionist attempts have been rent-seeking (domestic lobbying for local interests) rather than culture-driven.