Analyzing intl environment

• Free interplay of demand and supply
• No restrictions on supply

Government moderates the activities of different economic systems

• 
  Economic growth; stage of economic development
  
• Per capita income
  
• Fiscal and monetary policies, interest rates, taxation, inflation
  
• Balance of payments; foreign debt
  
• “Hard” currency reserves
  
• Exchange rate fluctuations
  
• Unemployment level

• 
  Creates or diminishes market opportunities
  
• Redefines rules of competition
  
• Increases or decreases the risks of doing business

• 
  Import tariffs
  
• Quotas
  
• Voluntary Export Restraints (VER)
  
• Domestic content legislation
  
• Monetary barriers
  
• Stringent standards
  
• Subsidies/ “Buy national” programs
  
• Boycott/Embarg

• 
  Promote domestic production; save jobs
  
• Help “strategic” industries
  
• Protect infant industry
  
• Old industry argument
  
• Level playing field; combating unfair competition
  National security reasons
  
• Political reason

• International markets are more interconnected
• The world has become a much more volatile place and that has changed risk calculations everywhere
• Offshoring results in shifting of operations to countries with potential for unrest
• Increased dependence for energy on states troubled by considerable political risk

Change in ease of transfer of capital, goods, technology and people in and out of the countr

Impact on operations caused by changes in government’s policie

Change in the proportion of equity owned by a company in a foreign subsidiar

• Competing political philosophies
• Civil wars, armed conflicts 
• Social unrest and disorders
• New international alliance

• Confiscation, expropriation or nationalization
• Damage to property, persons
• Loss of transfer freedom

• 
  Changing social values
  
• Unstable economic conditions
  
• Vested interests
  Quasi-political
  Local business
  
• Latent hostility towards foreigner

• High inflation, increased taxation, currency instability
• Breach/revision of contracts
• Discrimination
• Mandatory labor benefits, Operating restriction

• 
  Stay ahead -- technical and managerial capabilities
  Multiple sourcing of products
  
• Raise political costs of intervention
  JVs with politically connected local companies
  
• Maximize debt investment from local sources
  
• Significant exports
  “Good citizen” -- public services
  Hedging via insurance (e.g., OPIC, MIGA

Customs Union that also allows free movement of factors such as labor and capital

Member countries eliminate trade barriers on trade among member countries

Common Market wherein national economic policies of member countries are also harmonized

• 
  Stimulates economic growth in countries
  
• Countries specialize in those goods and services efficiently produce.
  
• Additional gains from free trade beyond the international agreements such as GATT and WTO

• 
  Economic interdependence creates incentives for political cooperation 
• Reduces potential for violent confrontation.
  
• Together, the countries have more economic clout to enhance trade with other countries or trading bloc

“A system of values and norms that are shared among a group of people and that when taken together constitute a design for living."

• 
  Policies and procedures
• Formalization and standardization
  
• Systems and controls
• Structure
• Planning systems
• Reward systems
  
• Information and communication
• Openness and informality
  
• Decision making
• Who makes decision
• Level of participation

Concluding that new culture is bad, “stupid” or ineffective simply because it is differen

• Culture evolves over time
• Changes can be painful for society
• Is not unidirectional

• Enforcement
• o Likely to be short-lived if demand is high
• Education
• o Educating IPR law enforcement officials
• o General public on the perils of counterfeits
• External Pressures
• o Confronting host governments (carefully)
• o Explaining cost of non-enforcement
• Economic growth
• o Growth and home grown brands

• Natural resources
• Climate
• Geographic location
• Demographics

• Communications
• Skilled labor
• Research/technology
• Education

• Porter’s theory should predict the pattern of international trade that we observe in the real world
• Countries should be exporting products from those industries where all four components of the diamond are favorable, while importing in those areas where the components are not favorabl