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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: 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

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  1. 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.

  2. Outline of today’s class • Introductions • Course Overview • Discussion on Globalization and Its Cultural, Political, and Economic Implications

  3. 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

  4. Course Overview • Main topics covered • New skills and learning outcomes • More about the learning method • Case study teams • Case draws • Grading • Questions

  5. 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

  6. 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.

  7. 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

  8. 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)

  9. 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)

  10. Syllabus Questions?

  11. 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

  12. 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.

  13. 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

  14. Changes in Trade Flows

  15. 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%

  16. 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

  17. 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

  18. 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?

  19. 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?

  20. Foreign Content in Canada’ Cultural Goods and Services

  21. 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?

  22. 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?

  23. 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.

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