Brooke, M.Z. and Remmers H.L. (1977) di dalam Bridget C Kenny (2009)
Holmlund & Kock, (1998, p. 48) di dalam Bridget C Kenny (2009)
"Globalisation requires new relationships both across companies and
in companies. To compete effectively in the global economy, companies
must strengthen their internal unity as well as become more adept at
external
learning“
- (Kanter, 1994)
a network involves “
sets of two or more connected exchange
relationships
”
-
Axelsson and Easton (1992)Nooteboom (1999) defined a network as
a pattern of
more or less lasting linkages between firms or divisions
within firms (departments, subsidiaries).
Vertical
–
constituting flows of products (goods or services) from
suppliers to users, in intra-firm value chains or inter-firm value systems
(Porter 1985);
Horizontal
-
where similar, competing products (substitutes in
consumption) are pooled to share a common resource of production or
distribution, in a scale strategy;
Diagonal
–
or diversified, where dissimilar products, which may be
complimentary in research, marketing, or distribution, are pooled to share a
common resource.
Three types of linkages:
Vertical Integration/
Main approaches to firm-level internationalisation
The Network Model of Internationalization
The
network model of internationalisation
(Johanson and Mattsson, 1988)
allows for the influence of external actors or organisations on the internationalisation of
the firm. Comprising two dimensions,
the degree of internationalisation of the firm
and
the degree of internationalisation of the market
, the network model enlarges on
the process model by allowing for multilateral influences on the international decision
making of the firm.
Richard D Hadley and Heather I M Wilson
The Early Starter
firm possesses a low degree of internationalisation, with its network
sharing this characteristic
The Late Starter
has a low degree of internationalisation, but is positioned in a highly
internationalised market.
Although
the Lonely International firm
resides in an internationally inexperienced
network, its greater degree of commitment to the internationalisation process, as
reflected by its relatively high degree of internationalisation
Internationalization process and the role of business networks and learning in it (Meyer, Skak 2002) di dalam Marge Seppo (2007), The Role of Business Networks in The
Internationalization of the focal firm by establishing new
business network or through existing network (Marge Seppo, 2007)
Pengukuran
Variabel?
Foreign Sales as
Percentage of Total Sales
Foreign Employees as
Percentage of Total Employees
The number of countries
in which the firm operates.
Foreign Owners as Percentage
of Total Ownership
DOING BUSINESS 2012
INDONESIA
DOING BUSINESS 2012
Starting a business
Time and cost to
start a business in
Indonesia
—
fastest
in Gorontalo and
Palangka Raya;
cheapest in
Regionally, big cuts in the time
The company registry is the information
exchange hub for business and
government
What are the time, cost and
number of procedures to comply
with formalities to build a
warehouse?
Dealing with
construction permits
What are the time, cost
and number of
procedures required to
transfer property
between 2 local
companies?
Where is it easy to
register property
—
and
where not?
Foreign Direct Investment
World Investment Report
Global FDI inflows
Top 20 host economies, 2009 and
2010
Global FDI outflows, Top
20 Home Economies, 2009
and 2010
(Billions of dollars)
Top host economies
Harrigan’s Generic Vertical Integration Strategies (1985)
Vertical Integration/
Convergence Media Value Chain
Organizational Structure and International Revenue
Model of International Managerial
Competitiveness
Hofstede’s
Cultural Value
Scores for 30 Selected
Cultures
National Cultural Differences and Multinational Business. Pankaj Ghemawat and Sebastian Reiche
East European Business
Networks
East European Business Networks: A Review of Dependencies and Strategies and Their Influence on Company Success. Emanuela Todeva, Research Papers in International Business
The dependency of firms on government
decision
The dependency of firms on inter-firm, inter-
and intra-industry linkages
Professional and political networks
Intra-firm dependencies
The accumulation of resources
Uncertainty of resources
Strategic behaviour
The adjustment behaviour of
firms during the
transition is pre-determined
by the macro-economic
conditions, the position
that each firm occupies in a
particular industry, and its
control over the value
chain.
7
Chinese Business
Network in Southeast
Asian Markets
Facing The Chinese Business Network In Southeast Asian Markets – Overcoming The Duality Between Nordic And Chinese Business Networks. Hans Jansson and Joachim Ramström
The New Global Challengers
The RDE 100
Company A
We are multinational firm. We distributed our product in about 100 countries. We
manufacture in over 17 countries and do research and development in three countries. We
look at all new investment project
–
both domestic or overseas
–
using exactly the same
criteria.
What ‘s Senior Executive Speak?
Company B
We are multinational firm. Only 1% of the personnel in our affiliate companies are
non-nationals. Most of these are US executives on temporary assignments. In all major market,
the affiliate’s managing director is of the local nationality.
Company C
We are multinational firm. Our product division executives have worldwide profit
responsibility. As our organizational chart shows, the United States is just one region on a
par with Europe, Latin America, Africa, etc. in each product division.
Company D (non-american)
We are multinational firm. We have at least 18 nationalities represented at our
headquarters. Most senior executive speak at least two languages. About 30% of our staff
at headquarters are foreigners.
An enterprise operating in
several countries but managed from one
(home) country
www.businessdictionary.com
MNC?
MNC is a parent company that :
1. Engages in
foreign production
through its affiliates located in several
countries,
2. Exercises
direct control
over the policies of its affiliates,
3. Implements
business strategies
in production, marketing, finance and staffing
that transcend national boundaries (
geocentric
).
Franklin Root (1994)
A corporation that has its facilities and other assets in
at least one country other than its home country
Three Stages of Evolution
1. Export stage
•
initial inquiries => firms rely on export agents
•
expansion of export sales
•
further expansion þ foreign sales branch or assembly
operations (to save transport cost)
2. Foreign Production Stage
DFI versus Licensing ?
Licensing
is usually first experience (because it is easy)
e.g.: Kentucky Fried Chicken in the U.K. it does not require any
capital expenditure
;
it is
not risky
; payment =
a fixed % of sales
the mother firm cannot exercise any
managerial control
over the licensee (it is
independent)
The licensee may
transfer industrial secrets
to another independent firm, thereby
creating a rival.
3. Multinational Stage
The company becomes a multinational enterprise when it begins
to plan,
organize and coordinate
production, marketing, R&D, financing, and
staffing. For each of these operations,
the firm must find the best
location
.
Rule of Thumb
A company whose foreign sales are 25% or more of total sales. This ratio is high
for small countries, but low for large countries, e.g. Nestle (98%: Dutch), Phillips
(94%: Swiss).
Examples: Manufacturing MNCs
24 of top fifty firms are located in the U.S.
9 in Japan
6 in Germany.
Petroleum companies: 6/10 located in the U.S.
Food/Restaurant Chains. 10/10 in the U.S.
Organization Design
Ethnocentric
Polycentric
Geocentric
Complexity of
organization
Complex in home country,
simple in subsidiaries
Varied and independent
Increasingly complex and
interdependent
Authority; decision
making
High in headquarters
Relatively low in
headquarters
Aim for a collaborative approach
between headquarters and
subsidiaries
Evaluation and
control
Home standards applied for
persons and performance
Determined locally
Find standards which are
universal and local
Reward and
punishments;
incentives
High in headquarters, low in
subsidiaries
Wide variation; can be high or
low reward for subsidiaries
performance
International and local executives
rewarded for reaching local and
worldwide objectives
Communication;
Information flow
High volume to subsidiaries
orders, commands, advice
Little to and from
headquarters, little between
subsidiaries
Both ways and between
subsidiaries. Heads of subsidiaries
part of management team
Identification
Nationality of owner
Nationality of host country
Truly international company but
identifying with national interest
Perpetuation
(recruiting, staffing,
development)
Recruit and develop people of
home country for key positions
everywhere in the world
Develop people of local
nationality for key positions in
their own country
Develop best men everywhere in
the world for key positions
everywhere in the world
Three Types of Headquarters Orientation Toward Subsidiaries in an
International Enterprise
Forces Toward Geocentrism
Obstacles Toward Geocentrism
Environmental
Intra-Organizational
Environmental
Intra-Organizational
1. Technological and managerialknow-how increasing in
availability in different countries
1. Desire to use human vs material resources optimally
1. Economic nationalism in host and home countries
1. Management inexperience in overseas market
2. International customers 2. Observed lowering of morale in affiliates of etnocentric company
2. Political nationalism in host and home countries
2. Nation-centered reward and punishment structure 3. Local customers demand for
best product at fair price
3. Evidence of waste and duplication in polycentrism
3. Military secrecy associated with research in home country
3. Mutual distrust between home country people and foreign executives
4. Host country desire to increase balance of payment
4. Increasing awareness and respect for good men of other than home nationality
4. Distrust of big international firms by host country political leaders
4. Resistance to letting foreigners into the power structure
5. Growing world markets 5. Risk diversification in having a worldwide production & distribution system
5. Lack of international monetary system
5. Anticipated costs and risks of geocentrism
6. Global competition among international firms for scarce human and material resources
6. Need for recruitment of good men on a worldwide basis
6. Growing differences between the rich and poor countries
6. Nationalistic tendencies in staff
7. Major advances in integration of international transport&
telecommunication
7. Need for a worldwide information system
7. Host country belief that home country get disproportionate benefits of international firms profits
7. Increasing in mobility of staff
8. Regional supranational economic & political communities
8. Worldwide appeal of product 8. Home country political
leaders’ attempts to control firm’s policy
8. Linguistic problems and different cultural backgrounds
9. Senior management’s long term commitment to geocentrism as related to survival and growth
9. Centralization tendencies in headquarters
International Executives View of Forces and Obstacles Toward Geocentrism
What reasons lie behind the comparative success of
McDonald’s franchise outlets over the company
-owned ones?
In the franchise outlets, the franchisee invests more of his or her
own resources and has a more entrepreneurial approach to the
business. Managers of the company-owned outlets, by contrast,
have less sense of ownership and a lower level of
entrepreneurial drive. This question can be broadened into a
discussion of an entrepreneurial approach generally, which can
bring in country differences in entrepreneurial environments.
Studi Kasus MNC (1)
Studi Kasus MNC (2)
Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
What were the causes of the crisis at Ericsson?
Two causes are mentioned in direct connection with the crisis:
•
Heavy investment in 3G licences left the large telecoms
companies financially weakened, causing them to cut back
in capital investment.
•
Chinese manufacturers, with their lower costs and ability to
undercut Ericsson on price, gained market share.
Studi Kasus MNC (3)
Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
How has PepsiCo’s diversification strategy proved to be
advantageous in comparison to the strategy of
Coca-Cola?
PepsiCo has been able to add new businesses and products by its strategy of
diversification, allowing it to respond to changing consumer needs with a wide
portfolio of products. In particular, it has added bottled water, snack foods
(through the acquisition of Frito-Lay and Quaker Oats), juices (through the
acquisition of Tropicana), and the sports drink Gatorade (as part of the Quaker
Oats portfolio). These products reduce its dependence on traditional
carbonated drinks. They also diversify the range of products for
health-conscious consumers.
Studi Kasus MNC (4)
Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
What problems which have beset VW in global car
markets?
VW is a mass-market car producer, and has found its competitiveness
slipping away in key markets, largely because of high costs in
Germany, where it is based. It has traditionally been reluctant to use
low-cost locations for components, unlike rival global carmakers.
High wages and job protection in Germany have been priorities for
the powerful trade union, IG Metall
, which is influential on VW’s
supervisory board. In the US, VW’s sales slumped for several reasons:
the weakness of the US dollar, the lack of appealing new models and
the unwillingness of the company to use local suppliers of
components for its Mexican factory. In China, where VW was a
Studi Kasus MNC (5)
Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
What problems have Japanese companies had to overcome in order
to regain competitiveness in global markets?
•
The jobs-for-life guarantee
–
Japan’s large companies have prided themselves on their
employment system which guaranteed a job for life to permanent, full-time employees.
This was an important element in Japanese corporate culture, giving employees a strong
sense of identity with the company, along with high levels of loyalty. Following decades of
rapid economic development, Japan
went into a period of economic downturn in the
1990s, and in the same decade, Japan’s companies came under competitive pressures
from other East Asian economies which were catching up in terms of economic
development. Although Japanese companies needed to restructure and abandon the
jobs-for-life policy, they were reluctant to take drastic steps to slim down workforces.
•
Core technology and innovation capacities
–
Japan’s large companies were famous for
their innovations, but in embarking on joint ventures with companies in the rising
Globalization and
Business Network
Globalization
is the ongoing process that deepens
and broadens the relationships and interdependence
among countries. International Business is a
mechanism to bring about globalization
International Business Environments and Operations, 13/e, Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
International business
consists of all
commercial transactions
—
including sales,
investments, and transportation
—
that take place
KOF Index of Globalization
A. Economic Globalization [36%]
2012 KOF Index of Globalization
2012 KOF Index of Globalization
Indices and Variables Weights
B. Social Globalization [37%]
i) Data on Personal Contact (34%)
iii) Data on Cultural Proximity (31%)
Number of McDonald's Restaurants (per capita) (44%)
Number of Ikea (per capita) (45%)
2012 KOF Index of Globalization
Indices and Variables Weights
C. Political Globalization [26%]
Embassies in Country (25%)
Membership in International Organizations (28%)
2012 KOF Index of Globalization
Globalization Index:
87
dari 208
Indonesia
Economic Globalization:
76
Social Globalization:
146
What’s Wrong with Globalization
•
Threats to national sovereignty
•
Economic growth and environmental stress
•
Growing income inequality and personal stress
•
Offshoring
–
the transferring of production abroad
–
is controversial in
terms of who benefits when costs are reduced and whether the process
exchanges good jobs for bad ones.
International Business Environments and Operations, 13/e, Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
Export-import trade
Foreign direct
investment
Licensing
Franchising
Management contracts
International Business, 7e. Czinkota, Ronkainen, and Moffett
Global Network Strategy
Create
network
of customers, suppliers,
partners
Use
network
to achieve global size and reach
Use
network
to provide local customization
Network
relationships generate competitive
advantage
Global Network Strategy
•
Communications: Wired and mobile telephone systems
•
Internet
•
Transportation: Railroads, Airlines, Shipping, Intermodal
systems
•
Energy: Oil and natural gas pipelines, Electric power
transmission and distribution
•
Logistics: Postal systems, Wholesale and retail distribution
© Professor Daniel F. Spulber
Physical networks:
Business networks:
The Global Factory
•
Hong Kong manufacturers own or
contract with more than 40,000
factories in South China employing
four million workers
•
To take advantage of specialized
sources in different countries - best
quality
•
To take advantage of cost variations
across countries - least cost sources
•
To take advantage of location -
minimize transport-costs, transaction
costs, and tariffs
The Global Store
Examples: Dairy Farm, Shell, Zara
Growth: access to additional customers
Develop global brands
Coordination economies from
centralized regional warehouses and
production facilities
Provide access to sourcing network
–
Enhances value of supplier contacts by
expansion of distribution
Lower transaction costs for suppliers
who deal with fewer distributors
Lower risk from pooling demand
fluctuations
Partner Networks
•
Achieve global
scale
•
Members
focus
on their region
•
Reduce competition by
avoiding duplication
of
facilities and operations
•
Avoid government restrictions
on ownership
and market dominance
•
Technology standard
setting
•
Complements in
production
•
Complements in
demand
(game players and games)
•
Provide 60% of all transatlantic services
•
"Alliance that Revolves Around You"
•
ONEWORLD members: Iberia, Cathay Pacific, Quantas, Finnair, Aer
Lingus, Lan Airlines (Chile)
•
The airlines cooperate on scheduling and ticketing, frequent flyer
programs, airport clubs, baggage handling, customer service
•
Competitive response to the STAR ALLIANCE from United, Lufthansa,
SAS, Air Canada and Thai Airways (210,000 Employees, flights to 578
cities in 106 countries)
•
600 destinations in 135 countries around the world, operating over
8000 flights daily, 230 million passengers/year
British Airways / American Airlines
© Professor Daniel F. Spulber
Franchise Networks
Advantages
•
Rapid international growth
•
Local ownership
•
Local management
•
Lower capital outlays
Disadvantages
•
Search cost of finding franchise
owners overseas
•
Costs of monitoring performance
across borders
•
Transaction costs of forming franchise
contracts in other country remains
Matchmaker
Brings buyers and sellers together across
international borders
Market maker
Creates and operates markets that cross
international borders
Agent
Provide representation in other countries
Global Intermediary
Strategy
Matchmaker
•
Bridge international differences in goods and services,
business practices, law and regulations, currencies,
languages, time zones
•
Provide value-added activities
•
Representative agents in sales, distribution, purchasing,
financing, contracting, and supply chain managers
•
Match offers to buyer and seller needs: product features,
location, time.
•
Avoids costs of search for buyers and sellers
•
Reduces buyer and seller risks from dealing with few
trading partners,
•
Language
: Seller speaks
Chinese, buyer speaks Spanish,
intermediary speaks both
•
Currency
: Seller wants pesos,
buyer has dollars, intermediary
changes dollars to pesos
•
Distance
: Seller is in Thailand,
buyer is in Brazil, intermediary
arranges transportation
•
Trust
: Buyer and seller both trust
the intermediary without having
dealt directly with each other
•
Time
: Seller is in Japan, buyer is
in Mexico, intermediary operates
in both time zones
•
Knowledge
: Seller in Germany
knows production technology,
buyer in US knows preferences of
US customers, intermediary
combines knowledge of supply
and demand across borders
•
Culture
: Seller and buyer are in
different countries, intermediary
adapts products, services,
contract terms and negotiation to
diverse social customs
Matchmaker
Mitsui
Market Maker
Cemex
Mittal
Cargill
BP Amoco
eBay
The global market maker aggregates demand
across countries and aggregates supply
across countries
•
Wholesales 280,000 computer hardware and software
products
–
think of number of prices!
•
Sources in US and many other countries from 1,700
manufacturers
•
Serves 175,000 resellers in more than 100 countries
•
Serves through operations and affiliates in 35 countries
•
Establishes prices, coordinates sales and purchases, clears
the market, allocates products
Ingram Micro
The leading international wholesaler of
technology products and services
•
Creates and operates international markets
•
Chooses prices, conveys information
•
Adjusts sourcing and serving to clear markets
–
avoids
efficiency losses from market imbalances
•
Provides immediacy: ready to buy and sell
•
Allocates goods and services across countries
•
Gathers and aggregates information about customers and
suppliers on an international level, inventories, orders, and
production
•
Applies IT to international coordination
•
Earns returns from international risk pooling
Market maker
Agents
•
Export Marketing Company
(EMC) represents
sellers
,
can be broker or dealer, bears risks, arranges resale,
transportation, credit
•
Export Trading Company
(ETC) represents
buyers
,
handles imports, usually takes title to goods
•
Act as international agent: provide expertise in negotiation,
market knowledge
•
Provide trust to buyers and sellers
•
Allows principal to delegate authority for distant
transactions
•
Provides market expertise, often to smaller firms
Ethics in
International Business
Prof. Robert Chapman Wood, San Jose State University,
www.cob.sjsu.edu/wood_r/
Business ethics
are
principles of right or
wrong governing the conduct of business
people
The text says,
“
the accepted principles of
right and wrong
”
But there are many
differences of opinion
among highly ethical businesspeople
Prof. Robert Chapman Wood, San Jose State University,
Prof. Robert Chapman Wood, San Jose State University,
www.cob.sjsu.edu/wood_r/
The world has
many different
ethical systems
mostly derived from different religions
Prof. Robert Chapman Wood, San Jose State University,
Prof. Robert Chapman Wood, San Jose State University,
www.cob.sjsu.edu/wood_r/
Ethical Issues in
International Business
Many ethical issues and dilemmas are rooted in
differences
in political systems, law, economic
development, and culture
Some key ethical issues in international business
…
Employment Practices
When work conditions in a host nation are clearly
inferior
to those in a multinational
’
s home nation,
what standards should be applied
?
Prof. Robert Chapman Wood, San Jose State University,
www.cob.sjsu.edu/wood_r/
Human Rights
Basic rights are not respected in many nations
‘What is the
responsibility
of a foreign firm in a country
where human rights are trampled?’
Environmental Pollution
Environmental regulations (or enforcement) in host
nations may be inferior to those at home
Multinationals can produce
more pollution
than at home
The
tragedy of the commons
occurs - The water in Mekong River
- freedom of speech
- freedom of association
- freedom of assembly
Prof. Robert Chapman Wood, San Jose State University,
www.cob.sjsu.edu/wood_r/
Corruption
International businesses can, and have, gained economic advantages by making payments
to government officials
US passed the Foreign Corrupt Practices Act
Organization for Economic Cooperation and Development (OECD) adopted the
Convention
on Combating Bribery of Foreign Public Officials in International Business Transactions
Social responsibility
Multinational firms have
power, wealth
from control over
resources and ability to move production
Moral philosophers argue that with power comes the
responsibility to
give something back
to the societies that
enable them to prosper
Advocates argue that businesses need to recognize their noblesse oblige
(benevolent behavior that is the responsibility of successful people and
Prof. Robert Chapman Wood, San Jose State University,
