Marketing Research Mktg 368
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WASHINGTON STATE UNIVERSITY World Class Face to Face Introduction and Overview of Strategy Agenda Personal Introduction Team Formation Course Website mswsuedu Course Details SquotPP NT Overview of Strategy Business Headlines 2012 Germany warns it could not save the eurozone alone Wall Street slides on rising Europe worries Standard Chartered to pay 340 mn over Iran probe BlackBerry maker RIM facing critical test this year Apple became the most valuable company in terms of market value Series of lawsuit between Apple and Samsung Electronics Microsoft reported a quarterly loss for the first time in its 26 years on the market on June 19 Yahoo CEO Scott Thompson is out after it was found he padded his resume with an embellished college degree Softbank make a deal to purchase 70 of Sprint Agenda Overview of the Course Does strategy matter Yes it does 2 Define strategy strategic competitiveness competitive advantage aboveaverage returns and the strategic management process 3 Explain the strategic management process Does Strategy Matter SampP 500 Review Of the original Fortune 500 companies 1957 only 74 remained on the list 1997 The number was 86 in 2007 The remaining 414 companies were either taken over went bankrupt or were othenvise removed from the index Only 12 outperformed the market up to 1997 Forbes 100 Of the original 100 companies 1917 61 failed by 1987 Of the remaining 39 only 18 were still on the list Only 16 of 100 largest US firms in 1900 remained competitive by 19903 About 15000 to 20000 businesses fail every year in the US 16150 in year 2004 1 5 Do Strategies Work Yes they do Crush Adidas 19603 Do Strategies Work Yes they do Crush Adidas 19603 Penetrate into soccer 19903 Do Strategies Work Yes they do Become the company most known for changing the worldwide poor quality image of Japanese products 19503 Do Strategies Work Yes they do Become the company most known for changing the worldwide poor quality image of Japanese products 19503 Top brand equity Do Strategies Work Yes they do Become the Harvard of the West 19403 Do Strategies Work Yes they do Become the Harvard of the West 19403 Eg Top business school Do Strategies Work Yes they do Become a 125 billion company by the year 2000 1990Hint Retailer Do Strategies Work Yes they do Become a 125 billion company by the year 2000 1990Hint Retailer quotTo give ordinary folk the Chance to buy the same thing as rich peoplequot waimart 1 Save money Live better The etvmolociv of strateqv Origins in military history strategus a military commander in ancient Athens and a member of the Council of War stratos monog army agen ocysw to lead Strategy the intelligent use of individual battles for the design ofa sustainable campaign Business Strategy the intelligent use of ResourcesProducts during quarters for the design of longterm success for years tactics invove the use of armed forces in the engagement strategy is the use of engagements forthe object of war Carl von Clausewitz On War 1832 Important Definitions cont d Strategy An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage Core Competencies Capabilities that serve as a source of competitive advantage for a firm over its rivals Strategic Competitiveness When a firm successfully formulates and implements a valuecreating strategy Competitive Advantage When a firm implements a strategy that its competitors are unable to duplicate or find too costly to try to imitate 1 15 Important Definitions cont d Average Returns Returns equal to those an investor expects to earn from other investments with a similar amount of risk 0 Aboveaverage Returns Returns in excess of what an investor expects to earn from other investments with a similar amount of risk Excess of opportunity costs of capital risk adjusted Important Definitions cont d Example Borders Boarders failed to capture the change in retail sales of books Stock price at its peak in the 19905 35share Stock price on the day of bankruptcy 23 centshare Borders was not competitive unable to achieve strategic competitiveness it was unable to earn aboveaverage returns Stock Price Performance Amzancom Inc um sham zuuu mus mm mm lVdume MWLIHHMH Mm mde MLJHMMMM L Lm amazoncom v7 Mums Compared to the Industm FINEN Meek l y IIH Uolume 03 05 BlgChartscom 405 06 5002 4002 3002 2002 1002 200 150 100 I lillions Compared to SampP 500 6003 400K 2002 HHZN Oz 500 80 E 50 D I 40 E 20 0 Copyright 2006 Yahoo Inc httpHFinancegahoo omx amazoncom m Important Definitions cont d Strategic Management Process Strategic Inputs Actions and Outputs for Above Average Returns The full set of commitments decisions and actions required for a firm to achieve strategic competitiveness and earn aboveaverage returns 39gt Important Definitions cont d Strategic Management Process Study external and internal environments Identify marketplace opportunities and threats Determine how to use core competencies Use strategic intent to leverage resources capabilities and core competencies and win competitive battles Integrate formulation and implementation of strategies Seek feedback to improve strategies FlGURE 1 The Skamgic Management Process swam Imam 51mm mam Manic Gamma Fundamental Questions of Strateclv Why are some rms more successful than others What determines sustainable pro tabilbP Fundamental Questions of Strateciv 1 Why are some firms more successful than others 2 What Determines Sustainable Profitability Macroeconomic factors Firmspecific Factors Overall competitive capability strategy implementation GlobalNational markets Industry factors Productivity through ef cient Industry growth Competitive rivalry Entry barriersNew entrants Technological innovation Customer tastes and effective resource allocation Adaptability to changing market conditions IIO Model Resource Based Model Michael E Porter Jay Barney 1 26 FlGURE 1 The Skamgic Management Process swam Imam 51mm mam Manic Gamma Thank you Nortel bankruotcv Januarv 14 2009 1200 51mm 5800 5600 SH 15200 Sn 96 93 an 02 CBC NEWS BUSINESS Save Netflix Mr Reed Hastinqs 3L39IIIIIIJ E EIIIIJ EUIJIID l l 1EII39J x EIIIEI HFLll lular May Jul Soap llmr Jan Mar May Jul Sep l39luzru Jan liftIr b1131 Jul Elep lluu EL39IUEI quot2010 2011 quotutnlume in luillilznnsj 25 m 1 ummmm 1 30 I L IEI Food for Thought What is Strategy about 1 Could it be about Where to be and how to compete ie positioning 2 Could it be about an integrative pattern of decisions and actions engaging all the levels of the firm 3 Could it be about how resources should be acquired and combined in order to achieve higher returns Or all of the above Economic Performance Operating expenses of net sales Tomlsales 14 5 69 I2 g 1 5 10 4 8 6 3 4 2 I 0 o Fumlrmem MWkerQ TECW D OQY 997 1995 1999 2000 20m 2002 2003 Operating prom Na income u 04 a 05 g 02 E E a 0 O2 705 7 D4 71 06 08 45 1997 1998 1999 2000 2001 2002 2003 1997 1998 1999 2000 2001 2002 2003 amazoncom m FINFIEUN CDH INC Splits 139 as 0F 25 Hug 2009 I I I I 15E 39 39 100 5E3 I I 1998 2000 2002 mimic I I I E 10000 1 P1111 SEIJDO 300 Copyright 2009 Yahoo Inc httpHFinanceyah0000mH 1 33 CISED SYSTEMS INC a3 BF 25 Hug 2009 I 35 30 25 20 15 Splits T WMWWM SIWI I I H HJ JL L M WWW quot l I Jan B I Jan05 Copyright 2009 Tahou Inc httpHHFinanceyahuacumf 1 34 20130828 Social Systems I Family institutions and kinship systems 0 Economic systems for the production and distribution of food and material goods 0 Educational and instructional systems 0 Disciplinary or social control systems I Belief systems that attempt to explain the unexplainable Frontstage Culture Includes the standard normal proper ways of doing things that may be evident to the observer and that insiders are willing to share with outsiders Also referred to as surface structure Backstage Culture Refers to knowledge and ways of doing things that are not evident to the observer and that insiders may not be willing to share with outsiders Also referred as deep structure Determinants of Culture Social structure Religion Language Education Economic philosophy Political philosophy Culture norms and value systems Onion Model of Culture Artifacts and symbols NEXPLICIT Norms and values Basic assumptions and behaviors 4MPLC1T Kluckhohn amp Strodtbeck s Value Orientations Variations in Value Socnal s tructu re Palitical p I Rehgio hilcsophy CLMU re norms and value systems Economic Langua philasoph y 9e as and 5 Is EXPL T Anifa ymba I Norms and val Basic assumpti ons and beh v inquot IMPLCIT Orientation 1961 Relationship of humans to nature N do people believe that their environment controls them that they control the environment or that they are part of nature Time orientation N do people focus on past events on the present or on the future implications of their actions Beliefs about basic human nature N are people easily controlled can they be trusted or not do they act freely and responsibly Kluckhohn amp Strodtbeck Activity orientations N do people desire accomplishments in life carefree lives or spiritual and contemplative lives Relationship of humans to other humans N do people believe that individuals or groups are responsible for each person s welfare Do people prefer to conduct most activities in private or in public Hofstede s Value Survey Model 4 Dimensions or Indices of Culture Culture s Consequences 1980 Individualism vs collectivism Power distance Uncertainty avoidance Achievement vs nurturing originally masculinity vs femininity Longterm orientation was added later Hofstede s Dimensions Individualism versus Collectivism I Degree to which people in a country prefer to act as individuals rather than in groups I The relations between the individual and hisher fellows Power Distance I Degree to social inequality considered normal by people I Distance between individuals at different levels of a hierarchy I Scale is from equal small power distance to extremely unequal large power distance Uncertainty Avoidance More or less need to avoid uncertainty about the future I Degree of preference for structured versus unstructured situations I Structured situations have tight rules may or may not be written down high context society I High uncertainty avoidance people with more nervous energy vs easy going rigid society what is different is dangerous Achievement vs nurturing originally masculinity vs femininity I Division ofroles and values in a society I Masculine values prevail assertiveness success competition I Feminine values prevail quality of life maintenance of warm personal relationships service care for the weak solidarity 20130830 LongTerm Orientation I Originally called Confucian Dynamism I Represents such values as thrift persistence and traditional respect of social obligations I Organizations likely to adopt longer planning horizon with individuals ready to delay gratification Problems with Hofstede s Findings Assumes onetoone relationship between culture and the nationstate His research may have been culturally bound39 Western bias which values western business ideals Survey respondents were from a single industry computer and a single company IBM Doesn t identify all the cultural dimensions possible just a few Culture is not a constant39 it evolves over time Trompenaars Cultural Dimensions Trompenaars and HampdenTumer 1997 classif1ed cultures along a mix of behavioral and value pattems They identify seven value orientations Some of these can be regarded as nearly identical to Hofstede s dimensions Others offer a somewhat different perspective Universalism vs Particularism I Universalism belief that ideas and practices can be applied everywhere in the world without modification O Focus on formal rules and rely on business contacts I Particularism belief that circumstances dictate how ideas and practices should be applied and something cannot be done the same everywhere O Focus on relationships working things out to suit the parties Individualism vs Communitarianism I Individualism people regard themselves as individuals Rely on individuals to make decisions I Communitarianism people regard themselves as part of a group Seek consultation and mutual consent before making decisions Neutral vs Emotional I Neutral culture in which emotions are held in check People try not to show their feelings I Emotional culture in which emotions are expressed openly and naturally People smile talk loudly greet each other with enthusiasm Specific vs Diffuse I Speci c culture in which individuals have a large public space they readily with others and a small private space they guard closely and share with only close friends and associates People often are open and extroverted Work and private life are separate I Diffuse culture in which both public and private space are similar in size and individuals guard their public space carefully because entry into public space affords entry into private space as well People often appear indirect and introverted and work and private life often are closely linked Achievement vs Ascription I Achievement culture in which people are accorded status based on how well they perform their functions I Ascription culture in which status is attributed based on who or what a person is For example status may be accorded on the basis of age gender or social connections Time I Seguential approach to time people do one thing at a time keep appointments strictly follow plans to the letter I Synchronous approach people do more than one thing at a time appointments are approximate 20130904 Environment I InnerDirected People believe in controlling environmental outcome Cultural Pattern or Clusters I Defined groups of centuries that are similar to each other in terms of the five dimensions and the orientations toward time and the environment Edward T Hall s LowContext highContext Approach An approach to understanding communication based on the relative emphasis on verbal and nonverbal cues to transmit meaning I US I Germany HighContext Cultures what is said and how or where it is said are signi cant I Asia I Latin America I Middle East LowContext Cultures 9 HighContext Cultures LowContext in Business Business before friendship Credibility through expertise amp performance Agreements by legal contract Negotiations fast HighContext in Business No business Without friendship Credibility through relationships Agreements founded on trust Negotiations slow amp ritualistic A Combined Model Basic human nature good bad mixed capable of change Human relationship with nature amp the environment mastery harmony subjugation Human relationships individualism collectivism Activity orientation Time orientation past present future39 polychromic monochromic F ormality amp informality Age amp youth orientation Competition amp cooperation Gender roles Materialism Communication verbal amp nonverbal ReligionFaithB elief Often used to I Underpinit39t 6H1 I Explain I Rationalize I Justify The cultural values a people adhere to Religion Aspects Working hours daysweeks holidays Relations between individuals I Islam ampJudaism I Hinduismamp Islam I Protestant amp Catholic Diet Food prohibitions I Kosher1 r EH What is Religion Belief and ritual concerned with supematural beings power and forces I Probably existed since Neanderthal times according to archaeological evidence Recognizing Religion It is difficult to distinguish between sacred and secular rituals as behavior can simultaneously have sacred and secular aspects Americans try to maintain a strict division between the sacred and the profane but many other societies do not Religion A system of thoughts feelings and actions that is shared by a group and that gives the members and object of devotion39 a code ofbehavior by which individuals may judge the personal and social consequences of their actions and a frame of reference by which individuals may relate to their group and their universe 20130909 What is Language Language is a symbolic code of Communications Meanings attached to any word are totally arbitrary Major languages of the world are Mandarin Spanish English Bengali Hindi Portuguese Russian Japanese German Language Defined A set of symbols that expresses ideas and allows people to think and communicate with each other What we say in uences what we think what we feel and what we believe Can be verbal or nonverbal Human Language In human language a limited number of sounds are combined to refer to thousands of different things and experiences Hardly any language uses more than 50 sounds It is the ability to recombine sounds to create new meanings that makes human language such an efficient and effective communication system ls capable of recreating and complex thought patterns and experiences in words Without human language human culture would not exist Plays a crucial role in the maintenance of human social relationships Because language is a creative and open system it is extremely exible and can communicate new ideas and abstract concepts Acquiring Language A human being would speak no language if he or she were taught none Critical period of language development for humans before the age of sixthereafter leaming language skills become increasingly difficult Spoken Language A most apparent cultural distinction Spoken languages demarcate cultures I Switzerland four separate cultures Many languages can exist in a single country but one usually serves as communication vehicle I Lingua franca or link language I English primary language of business The Need to Understand Language Language is the key to culture and without it people find themselves locked out of all but a culture s perimeter Spoken languages demarcate cultures there is a close relationship between language and culture I Switzerland four separate cultures Many languages can exist in a single country but one usually serves as communication vehicle I Lingua franca I English primary language of business Language and Culture Language is an important way to transmit culture I Humans learn their culture through language I Culture is transmitted through language The in uence of culture on Language The vocabulary of a language depicts what is considered important in that culture Industrialized societies have more technological terms Example 7 words for bamboo in South India but none for snow Language in uences perception categorization and worldview Language re ects values of the group example I Individualism in the US 7 so many words pertaining to self I In Japan we always comes before I indicating the collectivist approach Language and culture As a result of differences in language people in different cultures will think about perceive and behave toward the world differently Reality itself is already embedded in language and therefore comes performed Language determines enabling and constraining what is perceived and attended to in a culture as well as the upper limits of knowledge Language amp Business The US is the only country where business people don t think its necessary to learn a foreign language We must try to speak the local language BUT I Still need translators I Use back translations to avoid errors I Technical words do not exist in all language Usually resort to English I Many cultures avoid saying anything disagreeable Avoiding Misunderstandings acrossLanguage Barriers Recognizing the symptoms blank stares unnatural stopping points in conversation feeling of not connecting What to do explain the message in several different ways use visual aids slow down avoid slang and idiomatic expression listen to the other person s entire message don t assume anything keep good notes follow up Translating Translation I The ability to speak the language well does not eliminate the need for translator Black translation I To avoid translation problems Japanese hotel You are invited to take advantage of the chambermaid Bangkok dry cleaner Drop your trousers here for best results 20130906 Religions fill many social and psychological functions and needs To explain death To give hope To explain the natural realm1 E and help copeEH 6H with it To after enlightment As a survival function As a boundary maintenance mechanism Religions All has feast and fast days or longer periods associated with major historical events andor people andor goods Easter limbic Ramadan Chinese New Year Holi Passover Communication with the Divine Prayer to ask a supematural for something Magic an instrument of control supematuraltechniques intended to accomplish specifications a way to compel a supernatural to do somethingisorcererswitches People Communicate with the Supematuralin Many Ways Spontaneous or rehearsal Aloud or thought Possession Divination I Seeking specific advice from the supernatural Trance I Physical trauma hallucinogens and onuses I Over 90 of all natures trance in worship Rituals Rituals are formal acts performed in sacred contexts Rituals convey information about the culture of the participation and hence the participants themselves 20130911 Practical Difficulties Orthography the written representation of spoken language Accent the way we sound or pronounce words Dialect systematic differences in language demonstrated by specific groups of speaks Often the result of geographic separation andor foreign origins Slang words and usages not accepted as proper or dignifiedl RAE Diacritics an ancillary glyphg E XH added to a letter which affect pronunciation andor meaning English A Global Language You hear it on TV spoken by politicians from all over the world English is used in the media the press advertising broadcasting cinema and popular music in intemational travel and intemational safety Hotel receptionists and waiters in a foreign city understand you when you speak English English is one the official languages used in the UN and is used in most proceedings of most other major intemational political gatherings There has never been a language so widely spread or spoken by so many people as English The present status of English is primarily the result of two factors I The expansion of British colonial power which peaked towards the end of the 19 11 century I The emergence of the United States as the leading economic power of the 2039h century 70 of all English mother tongue speakers in the world English English is the medium of a great deal of the world s knowledge esp in science and technology A 1980 study of the use of English I 85 ofpapers in scientific periodicals were written in English In 1995 nearly 9 of the 1500 papers listed in the journal LinguisticsAbslracls were in English English has become the normal medium of instruction in higher education for many countries English Language Training ELT has become one of the major growth industries around the world Three quarters of the world s mail is in English American English The USA has come to be the dominant element in many domains so that the future status of English must be bound up to some extent with the future of the U S The USA has been more involved with intemational developments in the 20thcentury technology than any other nation and is in control of the new industrial that is electronic revolution 80 of the world s electronically stored information is currently in English The first protocols devised to carry data on the Net were developed for the English alphabet using character set called Latin 1 The USA exercises a greater in uence on the way English is developing worldwide than does any other regional varietyioften of course to the discomfiture uneasiness of people in the UK Australia NZ Canada and South Africa What Makes a Global Language The speakers nothing to do with the number of speakers but who those speakers are Power political military economic technological and cultural power I Eg Latin during the Roman Empire when the roman military power declines Latin remain as the intemational language due to a different sort of power the ecclesiastical power of Roman Catholicism Why Do We Need a Global Language People using different languages need a lingua franca to communicate eg a pidgin a simplified language adopted by several ethnic groups along the West African coast to do trade Mandarin Chinese an indigenous lang emerged as a lingua franca among the Chinese because it is the language of the most powerful ethnic group International academic and business communities need a lingua franca to communicate eg to converse over the Internet between academic physicists in Germany Italy and India or to discuss a multinational deal involving the Japanese German and the Saudi Arabian businessmen People become more mobile both physically and electronically What are the Dangers of a Global Language Those who have such a language as a mother tongue will be more able to think and work quickly in the language and to manipulate to their advantage A global language will hasten the disappearance of minority languages the danger that some people will celebrate one language s success at the expense of others Within little more than a generation we have moved from a situation where a world language was a theoretical possibility to one where it is an evident reality Languages of identity need to be maintained but access to the emerging global languageilanguage of opportunity and empowermentineed to be guaranteed Govemments should allocate resources for language planning whether to promote English or to develop the use of other languages in their community or of course both It is Taken for Granted That Innovations make the use of the language as a primary or sole means of expression The first radio station used English and no one questioned about it There was no competition from other languages lfthere is a language that needs protection the dominant power would take measures to preserve the language Some countries use English as an official language to avoid the problem of having to choose between the con icting local languages 201 3 09 l 3 Unspoken Language Nonverbal communication I Gestures vary tremendously from one region to another Closed doors convey different meaning Office size has difference meanings in various cultures Conversational distance small in East Gifting giving has specific etiquette in each culture Gift or bribe Questionable payments How Does the Body Speak Like any spoken language body language has words sentences and punctuation Each gesture is like a single word and one word may have several different meanings According to the social anthropologist Edward T hall in a normal conversation between two persons less than 35 of the social meanings is actually transmitted by words So at least 76 of it is conveyed through the body nonverbal channel Body Language Speaks Volumes Up to 93 of communication is nonverbal Including tone of voice eye movement posture hand gesutres facial expressions and more The pressure of body language can especially be felt in emotional situations Body language usually prevails over words Are you good at reading body language Nonverbal Communication N Helps convey feelings and emotional states Elaborates on verbal messages Governs the timing and tum taking between communicators Concerns I Same nonverbal cue carries different meanings in different cultures I Different nonverbal cues carry the same meaning in different cultures Nonverbal Cues l 2 3 4 5 6 7 Facial expression smiles head movements frowns Hand gestures handshakes the wai Posture Touching Scents or smells perfume Color symbolism Clothing hairstyles cosmetics 8 Artifacts jewelry y Whisks 9 Graphic symbols 10 Silence Examples When you shake hands look them straight in the eye and give em a good firm grip Asia Mid East gentle handshake MexicoLatin America palm slipgrasp thumb Never shake hands with a woman in the Middle East and parts of India unless she makes the move Slight bows are appreciated in Asia Staring at someone is intimidating and disrespectful in many areas of the world especially Japan Presenting business cards Vocalizations Nonverbal soundnot words but convey a meaning I Examples laughing sighing crying belching inhaling excessive groaning whining yelling whispering The Eyes Communicate More Than Any Other part of the Human Anatomy Staring or gazing at others can create pressure and tension in the room Gangs have fought over the way someone looked at them Research suggests that individuals who can routinely out gaze another develop a sense of control and power over others not so inclined Maintained eye contact can show if a person is trustworthy sincere or caring Shifty eyes too much blinking can suggest deception People with eye movements that are relaxed and comfortable yet attentive to the person they are conversing with are seen as more sincere and honest Eyebrow muscle draws the eyebrows down and toward the center of the face if someone is annoyed lfsomeone is empathetic and caring during dialogue the eyebrows will not show the annoyed facial grimace The Smile There are 50 or so different types of human smiles I By analyzing the movements of over 80 facial muscles involved in smiling researchers can tell when a smile is true I Look for the crinkle in the skin at the middle outside comer of the eyes and if it is not there the smile is probably fake I Authentic smiles are smiles that crest or change rapidly from a small facial movement to a broad open expression Body Language is the Most Reliable in Identifying Deception A person generally has less conscious control over these than other signals Springer 199639 Ekman amp Friesen 1974 Handtoface gestures and shrugs are strong markers of deception Playing with or touching things nearby during conversations has been found to be associated with deception Cody amp O Hair 1983 Deceivers also are likely to have increased illustrator activityiquick and animated use of handsarms during speech Vocal Cues canalso predict Deception More and lengthier pauses during conversation A lot of such sounds as uh gt7ltlt um word repetitions lntruding sounds not part of the actual speech Less lengthy answers or explanations where they would be expected to be 20130916 Silence Silence is also viewed as a part of nonverbal communication that depending on the situation and usage canin uence conversation in appositive or negative way On one hand silence may create tension and uneasiness while on the other it may give another person time to collect his thoughts and calm down Silence can also be an indicator of agreement of disagreement depending on other nonverbal aspects such as facial expression body language or eye contact Chronemics The study of the use of time in nonverbal communication Time perception realty affects our lifestyle movements speed of speech and the amount of time set for listening It is also closely linked to a person s social status The higher the status the more control the person has over his time For example a boss can talk to an employee whenever he chooses to do so while the employee has to make an appointment to see the boss In business communication it is very important to remember that various cultures have different perception of time For example in North America Germany of Switzerland you often hear statements such as Time is money We re running out of time The deadline for the project is tomorrow In South America or Arabian countries people believe that they have all the time in the world and the word deadline does not exist in their language Kinesics The study of body movements facial expressions and gestures Kinesic behaviors include mutual gaze smiling facial warmth or pleasantness childlike behaviors direct body orientation and the like Emotions Psychologist Paul Ekman devised a list of basic emotions from crosscultural research He concluded that the expressions associated with some emotions where basic or biological Ekman s 1972 List ofBasic Emotions Anger disgust fear happiness sadness surprise ProxemicsSpace Proxemics is the study of how people use and perceive the physical space around them The space between the sender and the receiver of a message in uences the way the message is interpreted Personal space is needed and if it is invaded intentionally and at times by oversight can cause an individual to feel uncomfortable or threatened Studies show that individuals who do not respect the space of others are less popular and often rejected Haptics The study of touching as nonverbal communication Touches that can be defined as communication include handshakes holding hands kissing check lips hand back slapping high fives a pat on the shoulder and brushing an arm The meaning conveyed from touch is highly dependent upon the context of the situation the relationship between communicators and the manner of touch Gestures Communicate Hand signals can communicate without the use of any speech Touching communicates it can be friendly or it can be aggressive The way a person stands re ects their level of confidence and comfort level If a person stands tall so to speak they are seen as more confident If someone is standing with their hands on their hips that can indicate aggression or alertness Olfactics A nonverbal communication study of smell We tend to react to people based on their smell For both men and women body smell is one of the most important subconscious factors of choosing a life mate During interaction body odor or too much perfume an make even the most attractive person seem repulsive Appearance Appearance plays an important role in nonverbal communication Clothes makeup accessories hairstyle choice of colors and uniforms usually offer signals relating to person s individuality status wealth occupation and even attractiveness People we nd attractive are perceived as more credible sociablesuccessful interesting sensitive kind and popular However you have to remember that forming stereotypes based on other people s physical characteristics and attractiveness may lead to false assumptions and communication barriers 20130918 National Differences in Political Economy How do political economic legal systems I Differ among countries I In uence economic progress I Change during our times I In uence benefits costs risks of business Politics The art or science of government or governing especially the goveming of a political entity such as nation and the administration and control of its internal and external affairs The activities or affairs engaged in by a government politician or political party Political systems Capitalism a system of social organization where individuals have the right to own property Socialism a system of social organization where major resources are held in common Communism a system of social organization where all property is held in common39 ie with ownership being ascribed to every individual in the community System of national government Varies by country on the basis of values and beliefs about I Collectivism and individualism I Democracy and totalitarianism Collectivism Primacy of collectivist over individual goals Emphasis good of society39 common good Plato 427347BC to Socialist Marx 181883 C r x lnh39 n socialrl m r f A m r Hp outlook Individualism Individual freedom over economic and political action I Individual diversity and private ownership are desirable I Private property is more productive whereas communal property receives little care Political Participation who participates and to what extent Wide participation occurs when people capable of in uencing the political system make an effort to do so Narrow participation occurs when few people participate Indicators of political rights Degree to which fair and competitive elections occur Ability of voters to endow representatives with real power Ability to organize political parties Existence of safeguards o the rights of minorities Indicators of civil liberties Existence of freedom of the press Equality under the law for all individuals Extent of personal social freedoms Degree of freedom from extreme govemmental indifference or corruption Democracy Govemment is by the people exercised either directly or through elected representatives Accessibility to the decisionmaking process High regard for individual rights amp respect for property Safeguards hold elected representatives accountable Freedom of opinion expression press and organization Elections amp limited terms for elected officials lndep endent court system Totalitarianism Polit39 S our Typically theocratic or secular Opposite end of the political spectrum from democracy Order is often imposed through military power Single party group or individual monopolizes political power Lack of constitutional guarantees Neither recognizes nor permits opposition Fascism Authoritarianism tribal rightwing Communismsocialism Communist totalitarianism PRC Vietnam Laos North Korea Cuba Theocratic totalitarianism Iran S Arabia Tribal totalitarianism Zimbabwe Tanzania Right wing totalitarianism Nazi Germany 1cal risks for international business Political riskcaused by political instability I Promotes fear that operating position will deteriorate I Tends to be higher in totalitarian regimes ces of political risks Unstable political system Political involvement of religious or military leader Frequent changes in government Corrupt or poor leadership Civil disorder due to I Economic conditions I Human rights violations I Con ict among races religions amp ethnicities I Group animosity Political risk Can cause I Procurement difficulties I Work stoppages I Shipment delays I Property damage Types ofpolitical risk I Micropolitical actions are aimed at specific foreign investments Eg Pakistan France Macropolitical actions affect a broad spectrum of foreign investors I Eg Cuba Con ict and violence Arises from I TPeople s resentment toward government I T Territorial disputes between nations I T Ethnic racial or religious disputes Reduces ability to I l Obtain materials and equipment I l Manufacture and distribute products I l Protect employees lives and firm s assets Terrorism and kidnapping Kidnapping and other terrorist activities are means of making political statements Kidnapping and the taking of hostages may be used to fund a terrorist group s activities Executives of large international companies are prime targets Security checklist for mangers on business abroad Fly nonstop when possible and avoid unsecured areas of airports During your stay vary your routines and means of transportation Keep a low profile and refrain from loud ashy behavior Give friendly but cautious answers to personal questions Know local emergency procedures before trouble strikes Property seizure Confiscation The forced transfer of assets from a company to the government without compensation Expropriation The forced transfer of assets from a company to the government with compensation Nationalization 20130920 When expropriation involves one or a small number of companies in an industry the government may take over an entire industry States in Transition Democratic systems spread in the 80s and 90s Totalitarian regimes failed to deliver economic progress Spread of information through new communication technologies Emergence of prosperous middle classes Nature of economic transformation I Deregulation legal changes I Privatization transfer of state propertyindustries to private individuals I Evolution of legal systems I The road to transformation is rocky Implications for international business Country s political economic and legal environment I In uence attractiveness I Raise ethical issues Country attractiveness I Balance longterm risks with shortterm benefits for business I Benefits depend on size wealth future economic growth First mover advantages Identify star future economies I Costs are affected by Economic sophistication may be more costly to operate in LDCs no infrastructure Legal framework impact on costs Political payoffs The subject matter of international economics International trade theory International trade policy International monetary theory International monetary policy Major economists theories Adam Smith David Ricardo John Stuart Mill Alfred Marshall Friedrich Hayek John Maynard Keynes Milton Friedman and Paul Samuelson Importance of international economics Economic interdependence Globalization of economic activities International competition Consequences of increased openness Economic interdependence In today s world no nation exists in economic isolation All aspects of a nation s economy are linked to those of its trading partners I Industry service sectors levels of income and employment living standard This linkage takes the form of international movements of goods and services labor business enterprise investment funds and technology International competition Firm industry competitiveness I The extent to which the goods of a firm or industry can compete in the market place39 depends on the relative prices and qualities of products A nation s competitiveness I Refers to the achievement of high productivity of its employed resources and the increasing of living standard for its people Consequences of increased openness Curtailed in ationary pressures at home eg US dollar Increased constraints on those sectors facing intense foreign competition eg Wage concession Reduces or eliminates the crowding out of private investment 1 1 1 Makes the domestic u w u law to di tui 39 39 overseas eg gasoline prices Economic freedom The freedom to choose how to produce sell and use your own resources While respecting others rights to do the same Rankings of economic freedom among countries I Free mostly free mostly unfree repressed Variables considered include such things as Trade policy Taxation policy Capital ows and foreign investment Banking policy Wage and price controls Property rights Black market Economic freedom Stages of market development World bank has defined four categories of development I Highincome countries I Uppermiddle income countries I Lowermiddle income countries I Lowincome countries Based upon gross national product GNP Economics The social science that deals With the production distribution and consumption of goods and services and With the theory and management of economics or economic systems Economic systems Market economy What is produced in What quantity determined by supplydemand and through a price system Command or planned economy planned by government Mixed economy a mix ofboth of the above Micro and macro economics Microeconomics the study of individual unites Within an economy industries firms specific products etc Macroeconomics the study ofa nation s economy as a Whole The four Whats of an economic system What determines What and how much is produced What determines how it is produced What determines how the economy s output is divided among its people What determines the rate of growth the economy is expected to achieve Measuring an economy Gross domestic product GDP the value of all goods and services produced within a country regardless of the nationality of the company producing them Gross national product GNP the value ofgoods and services produced by the companies of a country regardless of where in the world those companies are operating Ways of reporting GDP and GNP Both GDP and GNP are generally given in US and may be expressed in terms of absolute total value or per capita literally per head total value divided by the number of people in the country s population They may also be shown as Read GDPGNP that is they have been adjusted for in ation or as nominal unadjusted gures
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