Transcript ENVIRONMENT AND STRATEGY

ORGANIZATION AND
ENVIRONMENT
Trouble at Amana
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In 1967, Amana introduced the first
microwave, and gained 60% of the market. A
decade later, its market share declined to 6%.
WHY?
Mis-forecast: microwave will SUBSTITUTE for
traditional ways of cooking
Misunderstood the market: assumed that the
market DOESN’T care about the price
Unprepared for new entrants: Low priced
Japanese competitors
The Increase of Gas Price
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Tesla Motors’s plan:
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Produce battery in Thái Lan, transport
to England to assembly, and sell the
cars in US. But now, they produce
battery in California.
GM:
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Past several years, SVU and mini-truck
were well sold in China. Now, people
are looking for more economy cars.
How Gaz Price Affect Strategies
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Reconsidering global strategy
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Global strategy suggests that firms can
make different components in different
countries.
High gaz price means that transportation
would be very expensive
Reconsiderting values of the product
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Gaz consumption becomes a crital factor
How Current Recession Affect
Business
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Falling stock and slumping dividends
Credit impairment and bankruptcy
Employee lay-offs and benefit cut
Cut to quality
Reduce consumer access
Small firms would be more vulnerable to
the recession
Environment Factors
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… are those that have impacts on the
organizational performance but are
not directly controlled by the
organization
ENVIRONMENT AND STRATEGY
Political
Social
ORGANIZATIONAL PERFORMANCE
Macroenvironment – PEST
Political
• Government stability
• Taxation policy
• Foreign trade
regulations
• Social welfare
policies
• Legal framework
Economic
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Business cycles
GNP trends
Interest rates
Money supply
Inflation
Unemployment
Disposable income
Political Factors: Example
Ranking On “Easy To Do Business”
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Rank 155 countries
Based on various indicators
Surveys law firms/ organizations
Which indicators make up the
ranking?
Starting a business
• Procedures, time, cost and minimum capital to open a new
business
Dealing with licenses
• Procedures, time and cost of business inspections and
licensing (construction industry)
Hiring and firing workers
• Difficulty of hiring index, rigidity of hours of index, difficulty of
firing index, hiring cost and firing cost
Registering property
• Procedures, time and cost to register commercial real estate
Getting credit
• Strength of legal rights index, depth of credit information
index
Which indicators make up the
ranking? (con.)
Protecting investors
• Indices on the extent of disclosure, extent of director liability
and ease of shareholder suits
Paying taxes
• Number of taxes paid, hours per year spent preparing tax
returns and total tax payable as share of gross profit
Trading across borders
• Number of documents, number of signatures and time
necessary to export and import
Enforcing contracts
• Procedures, time and cost to enforce a debt contract
Closing a business
• Time and cost to close down a business, and recovery rate
IFC Rank Countries on “Easy to do
Business”, 2005
2010
1. Singapore
2. New Zeala
3. Hong Kong
4. U.S.A.
12. Thailand
15. Japan
19. Korea
23. Malaysia
46. Taiwan
89. China
93. Vietnam
122. Indonesia
144. Philippines
145. Cambodia
167. Laos
2014
1. Singapore
2. New Zealand
3. Hong Kong
5. Korea
7. USA
18. Malaysia
19. Taiwan
26. Thailand
29. Japan
78. Vietnam
90. China
95. Philippines
114. India
135. Cambodia
148. Laos
TI’s Ranking on Corruption 2014
2. New Zealand
7. Singapore
15. Japan
17. Hong Kong
35. Taiwan
50. Malaysia
43. South Korea
85. Thailand
100. China
90. India
85. Philippines
119. Vietnam
133. Indonesia
156. Cambodia
The Political Environment Map
High corruption
Indonesia
Philippines
Vietnam
India
China
Easy
Difficult
Thailand
SK
Malaysia
Taiwan
Japan
NZ
HK
Singapore
Low corruption
Macroenvironment – PEST
Socio-cultural
Technological
Population demographics
Income distribution
Social mobility
Lifestyle changes
Attitudes to work and
leisure
• Consumerism
• Levels of education
• Government spending on
research
• Government and industry
focus on technological effort
• New discoveries
/developments
• Speed of technology
transfer
• Rates of obsolescence
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Figure 22. Forms of corruption, in terms
of enterprises’ viewpoints, in last twelve
months
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2.2. Firms’ experiences
Firms pay informal fees
Firms pay IF > 2% of
revenue
80
70
80
60
70
50
40
HCM
60
Can Tho
50
Dong Thap
40
30
North
20
Central
10
HCM
Can Tho
Dong Thap
30
North
20
Central
10
0
0
2009
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2010
2011
2009
2010
2011
In HCM City and Can Tho, a big % of firms paid
informal fees each year, and also many firms paid
more than 2% of revenue
Some sign of decrease in corruption in HCMC and
Dong Thap.
(Source: PCI)
3.2. Transparency: Negotiation with tax
was still an important business practice
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30 – 40% of firms
in Can Tho and
HCMC admitted
negotiation with
tax.
The number
fluctuated greatly
in Dong Thap
Some sign of
improvement in
Can Tho 2008 –
2011
Video: Fake Products in China
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What impacts do counterfeiting products
have on: a) Chinese economy (short and
long term)? b) Real products (Chinese and
other countries”)? Consumers?
Why is it so hard to stop counterfeiting in
China (using PEST model)?
What should managers (Chinese and
foreign) do to protect their real products
under this situation?