Mgmt 510 International Management Doha, 2011 Class 2

1. Mgmt 510 International Management Doha, 2011 Class 2

2. Content of this course • Economics and Sustainability • Clusters • Sustainable Development • Economic Development • Regional Competitiveness • Inbound FDI • Global Business Strategy • FDI Decision-Making • Foreign Market Entry Processes and Criteria

3. Determinants of Competitiveness

4. Why do clusters matter? • Clusters increase productivity and operational efficiency • Clusters stimulate and enable innovations • Clusters facilitate commercialization and new business formation • Clusters reflect influence of linkages and spill-oversacross firms and associated institutions in competition

5. Why do clusters matter? • Macroeconomic environment • Creates the potential for high productivity, but is not sufficient • Productivity – the key outcome • Depends on improving microeconomic capability of the economy and the sophistication of local competition

6. Why do clusters matter? • Concentrated communication made possible by a cluster increases learning and innovation • Contributes to the dynamic, technological efficiency of firms in the cluster • Trust increases over time which facilitates contracting and exchange among firms • Common business culture develops which reduces uncertainty

7. Why do clusters matter? • Industries participating in clusters have: • Higher employment and wage growth. • Greater number of establishments. • Higher number of patents. • Industry and cluster growth increases with: • The strength of related clusters in the region. • The strength of similar clusters in adjacent regions. • Presence of strong clusters in a region: • Enhances growth opportunities for other industries and clusters. Delgado, Porter & Stern, 2011

8. Life Sciences in Massachusetts

9. Determinants of Cluster Competitiveness • Porter • Diamond

10. Determinants of Cluster Competitiveness • Access to high quality business inputs • Natural endowments • Human resources • Capital availability • Physical infrastructure • Administrative & information infrastructure • Scientific and technological infrastructure

11. Determinants of Cluster Competitiveness • Stresses three factors • Demand composition • Sophisticated, demanding, and anticipatory home demand contributes to firms’ success • Demand size and pattern of growth • Large, rapidly-growing, and early home demand are positive aspects of the home base • Degree of internationalization • The more home demand is synchronized with international demand trends, the more it contributes to firms’ competitiveness

12. Determinants of Cluster Competitiveness • Supplying industries in the home base has several advantages in downstream industries • Efficient, early, rapid, and sometimes preferential access to the most cost-effective inputs • Ongoing coordination • Innovation and upgrading • A competitive domestic supplier industry is better than relying on well-qualified foreign suppliers

13. Determinants of Cluster Competitiveness • Countries differ in managerial systems and philosophies as well as capital markets • Institutional environments that allow firms to take a long-term view contribute positively to competitiveness • Presence of a large number of competing firms or rivals in the domestic industry • Competition among firms is necessary for allocative efficiency in a market system, but domestic rivalry contributes to dynamic, technological efficiency

14. Determinants of Cluster Competitiveness • Vigorous local competition • Openness to foreign competition • Competition laws • Local rules and incentives that encourage investment and productivity • Examples: salaries, incentives for capital investments, intellectual property protection, corporate governance standards

15. Determinants of Cluster Competitiveness • Interactions—all related to rivalry • Domestic rivals • Contribute to the creation of factors, especially specialized, advanced factors • Enhance presence of specialized and sophisticated suppliers • Produce differentiated products • Enlarges home demand and makes it more sophisticated

16. Leading Footwear Clusters

17. Clusters and Competitiveness • Cluster based economic development • Collaborative programs by companies, public sector entities and other related institutions • Collaboration to upgrade • Company operations and strategies • Business environment conditions • Strength of networks, spill-over linkages

18. Clusters and Competitiveness • Institute for Strategy and Competitiveness • Cluster Mapping Project • Global Competitiveness Report/WEF • How does Qatar fair?

19. Clusters and Competitiveness • Qatar • - Global Trade • 60% of GDP, oil and gas • 10% of GDP, manufacturing, mostly related to downstream O&G operations • Significant investments in “knowledge economy” • Education City

20. Clusters and Competitiveness • Qatar – Knowledge Economy Index 2009

21. Clusters and Competitiveness • Qatar • Global Investment • Qatar Investment Authority (“Sovereign Wealth Fund”) • Invests domestically and internationally to minimize exposure to energy price volatility. • Example investments: • US$65B, domestic infrastructure; US$60B, national development (03/11) – “World Cup related” • US$700M, CityCenterDC, 10 acre project (04/11) • US$1B, Morocco infrastructure (11/11) • US$2.3B, purchased Harrods

22. Clusters and Competitiveness • Qatar • Global Engagement • WTO “Doha Round” – launched 11/01 • Al-Jazeera • US military base • Doha Masters (golf) host • First annual The Hague International Model United Nations • 2006 Asian Games host • 2011 Asian Cup (football) host • Contributed fighter jets and Special Forces to Libyan rebellion • World Cup 2022 host

23. Clusters and Competitiveness • Qatar • World Cup 2022 Bid • 12 new stadiums • Lusail Iconic Stadium – skinned with solar panels • 2 15,000 seat, 8 10,000 seat, 12 5,000 seat stadiums will be given away • “…environmental protection plan foresees the generation of excess renewable energy sources which would contribute to a carbon-neutral event and be used to offset all unavoidable emissions.” • “…the activities would firstly concentrate on water and waste management…”

24. Clusters and Competitiveness • Jennifer Blanke, World Economic Forum

25. Clusters, Competitiveness and Sustainability • 3 Major Challenges for Clusters: • Globalization • New competitors v. new Customers • Climate Change • Potential economic costs v. New business opportunities • Social Equity • Productivity v. Income inequality

26. Clusters, Competitiveness and Sustainability • Cluster Life Cycles • Long term viability linked to: • Maintaining innovation cycle • Leading or quickly reacting to disruptive market and technology shifts • Connecting to global networks

27. Clusters, Competitiveness and Sustainability • Sustainable Industry Clusters: • Knowledge-intensive subset of existing industry clusters • Energy • Building • Food • Discover new ways to accomplish existing functions • Create energy • Build a structure • Grow food Martin, 2009

28. Clusters, Competitiveness and Sustainability • Sustainable Industry Clusters: • Green Building Cluster, Oregon • Demand conditions – sophisticated and anticipatory customers • Factor conditions – natural endowments, intellectual capital • Competitive rivalry – development, architecture, construction • Supportive policies - renewable energy portfolio, business energy tax credit Martin, 2009

29. Clusters, Competitiveness and Sustainability • Sustainable Industry Clusters: • Green Building Cluster, Oregon • Major regional players • Development - Gerding-Edlen • Architecture – SERA, ZGF • Construction – Howard S Wright, others • Government – BETC, REP, Cities • Universities – energy, construction materials • Technology - SoloPower • Major global players • Construction – Skanska • Technology – SolarWorld Martin, 2009

30. Clusters, Competitiveness and Sustainability • Sustainable Industry Clusters: • Green Building Cluster, Qatar??? • Major regional players • Development – Qatari Diar Real Estate Investment Company, Barwa Real Estate Company • Government - Qatar Sustainability Assessment Systems, Qatari General Electricity and Water (“KAHRAMAA”) • Architecture – QPM Qatar Project Management • Construction – ??? • Major global players • Architecture – Green Building Services, Interface Engineering • Universities – U of Pennsylvania (Technical Training)

31. Making the pitch • Day 2 – Pitch concept • Day 3 – 2 minute pitch focused on cluster assessment • Day 4 – 5 minute pitch focused on Day 3 + “Fit-1” (Solar PV Mfg and Qatar) • Day 5 – 7 minute pitch focused on Days 2 and 3 + “Fit-2” (The Company + Qatar Industrial Policy) • Day 6 – 10 minute pitch focused on Days 2, 3 and 4 + “Fit-3” (The Company + Qatar Market)

32. Making the pitch • Pitch concept – what is the angle you will take? • Financing • Education • Labor force • Market opportunity • Government support • Etc.

33. Making the pitch • Getting to the 10 minute pitch • Build a logic to your presentation • Integrate key frameworks with research • “SELL” the company on Qatar as a beachhead for solar PV manufacturing in the Middle East