Understanding international context Flashcards
List external demands
- Need for cross-market integration
- National responsiveness
- Worldwide innovation and learning
What are the forces for global integration and coordination
- Economies of scale and scope
- Factor cost differentials
- Increasingly liberalized environment for trade
- Global competitors as agents
List reasons for changes in employment and solutions
- Protectionism
- Automation
- Change in technology
- Economic changes
Solutions
- Government relief
Three pillars impacted by deglobalization
- Technology
- Global recruiting
- Finance function
What is splinternet
consequence of deglobalization
- issue of data privacy
- choose between country camps
- filter information
- disrupts supply chain
What is the intensifying war for talent
consequence of deglobalization
- reduction in diversity as a competitive adv
- fewer knowledge spillovers
- less understanding of cultures and norms
What are More complicated corporate finances and regulatory regimes
consequence of deglobalization
- Raising capital
- Return profits to shareholder
- independent jurisdiction
Why do firms need to be locally responsive?
Cultural differences: Cust behavior/preferences
National infrastructure: Technical standards/ Distribution channels
Government demands: laws and regulations
Local Competitor success: Culturally sensitive flexibility / Appeal to nationalism
Customer: Income, habits, preferences
Economy: GDP, inflation/growth
Forces behind political risk
- Politics: policy changes, crowded and uncertain
- Supply chain: disruptions from far
- Technology: collective action
What is the political risk framework
- Understanding risks
- Analyzing risks
- Mitigating risks
- Responding to crises
What is meant by understanding risks?
- What is my organization’s political risk appetite?
Influenced by the time horizon of major investments/availability of alternatives / exiting investments. - Is there a shared understanding of risk appetite?
is it a concern for everyone in the org - How can we reduce blind spots? Future does not look like present
What is meant by analyzing risks
- Good information
- Rigorous analysis
how risks might happen, which assets are most valuable/vulnerable - Integrate political risk into business decisions
Trends search, risk analysis
What is meant by Mitigating risks
- How can we reduce exposure to risk identified
Disperse critical assets
surge capacity/slack in supply chain
share political risk assessment - Do we have a good system for timely warning / action
- How can we limit the damage
Build relationships with external stakeholders
List techniques of mitigating political risks
- Recruit local partners
- Limit R&D in nations with leaky intellectual property protection
- Diversify FDI across different countries
What is meant by Responding to crises?
- Good crisis management
assess situation, response team, lead with values - Continuous learning
what to keep/stop/start doing
