Mgts7301 - lecture 3 - external and international analysis
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Covers the "4 C" risk framework, PESTEL analysis and cross-cultural analysis.
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Mgts7301 - lecture 3 - external and international analysis
- 1. Lecture 3 External & International Analysis Lecturer: Dr. Preston Teeter MGTS7301 Tools and Techniques for Business Analysis
- 2. Course admin 1. Form simulation groups next week in class, absent students will be randomly assigned to a group 2. Week of Sept. 23 will be an additional simulation practice week (in groups, no formal lecture), entire graded simulation after break 3. Monday class: holiday on October 7, class moved to Friday 11 October, 3pm-6pm, same room.
- 3. Outline • Risks of internationalisation • Cross-cultural risk • PESTEL analysis
- 5. Risks of internationalisation In the mid to late 1990s, foreign investment poured into Southeast Asia, particularly the economies of Thailand, South Korea, Indonesia and the Philippines. By 1997, however, a financial crisis gripped this region, a crisis that raised fears of a worldwide economic meltdown due to financial contagion. Watch video And see the following reports…
- 8. Based on this information, and anything else you’ve read previously, answer the following: 1. What categories or types of risk were involved in the Asian financial crisis of 1997? Be specific and use examples. 2. For each risk that you identified, what are one or two ways in which companies can mitigate such risks in the future, in Asia and elsewhere? Risks of internationalisation
- 13. Mitigating risks • Cross-cultural risks – Hiring local managers – Investing in similar cultures – Localise product/service • Country risks – Joint ventures – Invest in ‘safe’ countries – Portfolio approach • Currency risks – Options contracts/etc. – Move products/not cash – Portfolio approach • Commercial risks – Use referrals – Learn from best practice – Hiring local managers
- 15. • Efic – Finance for Australian Exporters – https://www.efic.gov.au/resources-news/news- events/latest-news/2017/april/four-risks-for- exporters-and-how-to-overcome-them/ • World Bank Country Profiles • IMF Country Information Risks of internationalisation
- 17. Cross-cultural risk Wal-Mart was one of the most successful corporations of the 1980s and 1990s. Part of their success in these decades can be traced to a strong corporate culture that energized staff and gave customers a unique shopping experience. See video 1 See video 2
- 18. Cross-cultural risk However, despite their success in the U.S., Wal- Mart has encountered several difficulties in foreign markets. One such difficulty was in Germany, where employees and customers found Wal-Mart’s culture to be a little ‘different’. See the following articles…
- 21. In small groups, discuss the following: 1) Why do you think Wal-Mart failed in Germany? Did culture play a part? If so, how? Use Hall’s cultural typology and Hofstede’s cultural dimensions to explain your answer. 2) Wal-Mart also experienced difficulties in countries such as South Korea, India and China. Why do you think that’s the case? We will reconvene in 10 minutes to discuss as a class. Cross-cultural risk
- 22. Culture: System of values and norms that are shared among a group of people and that when taken together constitute a design for living. – Values: abstract ideas about what a group believes to be good, right, and desirable – Norms: social rules and guidelines that prescribe appropriate behavior in particular situations Cross-cultural risk
- 23. The Determinants of Culture Culture Religion Political orientation Economic orientation Education Social norms and values Language
- 26. Wal-Mart Culture/strategy • Warm and friendly • Loud and energetic • Unique experience • Large suburban stores • “Everyday low prices” • Selective best prices • Low wages Germany’s culture • Down-to-business • Calm and serious • Efficient • Buy locally/daily • Very competitive • Strict regulations • Strong unions
- 28. Wal-Mart E-Mart
- 31. PESTELANALYSIS
- 32. PESTEL analysis Consider the case of the ‘Big Three’ US auto companies: Ford, GM (General Motors) and Chrysler (now Fiat Chrysler). These three companies dominated US and global auto sales and market share for several decades, but a myriad of issues forced all three companies to seek an emergency bailout from the US government in 2008. Watch video And see the following articles…
- 35. PESTEL analysis So what happened to the US auto industry? 1) What is PESTEL analysis? Please be specific and give examples of each category. 2) What would a PESTEL analysis of the US auto industry have looked like in the years before the bailout? What factors should have been identified as the most influential?
- 37. PESTEL analysis • Tool used to analyse and monitor macro- environmental factors that have an impact on an organisation – Understand and predict market growth and decline – Informs strategic positioning (next class) • Often used in conjunction with SWOT analysis • Can be used for industries, companies, departments, products, etc.
- 40. Mon – Quiz #3 1. True or False: Cultural differences were at the root of the SE Asian crisis in 1997 and 1998. 2. Which of the following dimensions caused the biggest problem for Wal-Mart in Germany? (choose one) A. Power Distance B. Masculinity C. Individualism 3. Which element of PESTEL (choose one) was most influential in the fall of the Big 3? Please explain why in one or two sentences.
- 41. Questions?
Notas do Editor
- Take class to site, show link to country profiles and go through one example