Mgmt 510 International Management Doha, 2011. Content of this course Economics and Sustainability...
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Transcript of Mgmt 510 International Management Doha, 2011. Content of this course Economics and Sustainability...
Mgmt 510 International Management
Doha, 2011
Content of this course• Economics and Sustainability
• Clusters• Sustainable Development
• Economic Development• Regional Competitiveness• Inbound FDI
• Global Business Strategy• FDI Decision-Making• Foreign Market Entry Processes and
Criteria
Determinants of Competitiveness
Porter, 2009
Why do clusters matter?• Clusters increase productivity and
operational efficiency• Clusters stimulate and enable innovations• Clusters facilitate commercialization and
new business formation
• Clusters reflect influence of linkages and spill-overs across firms and associated institutions in competition
State of Cluster
Development
Why do clusters matter?
Macroeconomic environment• Creates the potential for high productivity,
but is not sufficient
Productivity – the key outcome• Depends on improving microeconomic
capability of the economy and the sophistication of local competition
State of Cluster
Development
Reinert, 2005 6
Why do clusters matter?
• Concentrated communication made possible by a cluster increases learning and innovation• Contributes to the dynamic, technological
efficiency of firms in the cluster• Trust increases over time which facilitates
contracting and exchange among firms• Common business culture develops which
reduces uncertainty
State of Cluster
Development
Why do clusters matter?
Industries participating in clusters have:• Higher employment and wage growth.• Greater number of establishments.• Higher number of patents.
Industry and cluster growth increases with:• The strength of related clusters in the region.• The strength of similar clusters in adjacent regions.
Presence of strong clusters in a region:• Enhances growth opportunities for other industries and
clusters.
Delgado, Porter & Stern, 2011
State of Cluster
Development
Life Sciences in Massachusetts
9
Determinants of Cluster Competitiveness
Porter Diamond
Determinants of Cluster Competitiveness
Access to high quality business inputs• Natural endowments• Human resources• Capital availability• Physical infrastructure• Administrative & information infrastructure• Scientific and technological infrastructure
Factor Conditions
• Stresses three factors• Demand composition
• Sophisticated, demanding, and anticipatory home demand contributes to firms’ success
• Demand size and pattern of growth• Large, rapidly-growing, and early home demand are
positive aspects of the home base• Degree of internationalization
• The more home demand is synchronized with international demand trends, the more it contributes to firms’ competitiveness
Demand Conditions
Determinants of Cluster Competitiveness
• Supplying industries in the home base has several advantages in downstream industries• Efficient, early, rapid, and sometimes
preferential access to the most cost-effective inputs
• Ongoing coordination• Innovation and upgrading
• A competitive domestic supplier industry is better than relying on well-qualified foreign suppliers
Related and Supporting Industries
Determinants of Cluster Competitiveness
• Countries differ in managerial systems and philosophies as well as capital markets
• Institutional environments that allow firms to take a long-term view contribute positively to competitiveness
• Presence of a large number of competing firms or rivals in the domestic industry• Competition among firms is necessary for allocative
efficiency in a market system, but domestic rivalry contributes to dynamic, technological efficiency
Firm Strategy, Structure and
Rivalry
Determinants of Cluster Competitiveness
Vigorous local competition• Openness to foreign competition• Competition laws
Local rules and incentives that encourage investment and productivity• Examples: salaries, incentives for capital
investments, intellectual property protection, corporate governance standards
Firm Strategy, Structure and
Rivalry
Determinants of Cluster Competitiveness
Interactions—all related to rivalry• Domestic rivals
• Contribute to the creation of factors, especially specialized, advanced factors
• Enhance presence of specialized and sophisticated suppliers
• Produce differentiated products • Enlarges home demand and makes it more
sophisticated
Determinants of Cluster Competitiveness
Leading Footwear Clusters
Cluster based economic development• Collaborative programs by companies,
public sector entities and other related institutions
Collaboration to upgrade • Company operations and strategies• Business environment conditions• Strength of networks, spill-over linkages
Clusters and Competitiveness
Clusters and CompetitivenessInstitute for Strategy and Competitiveness• Cluster Mapping Project
Global Competitiveness Report/WEF• How does Qatar fair?
Qatar- Global Trade
- 60% of GDP, oil and gas- 10% of GDP, manufacturing, mostly
related to downstream O&G operations
- Significant investments in “knowledge economy”- Education City
Clusters and Competitiveness
Qatar – Knowledge Economy Index 2009
Clusters and Competitiveness
Rank Country KEI
Economic Incentive Regime Innovation Education ICT
1 2 Denmark 9.52 9.61 9.49 9.78 9.21
9 -3 United States 9.02 9.04 9.47 8.74 8.83
12 3 Germany 8.96 9.06 8.94 8.36 9.47
44 5 Qatar 6.73 7.05 6.45 5.37 8.06
45 5United Arab Emirates 6.73 6.75 6.69 4.9 8.59
49 -6 Bahrain 6.04 6.75 4.29 5.82 7.3
66 0 Oman 5.36 7.15 4.94 4.47 4.9
68 13 Saudi Arabia 5.31 5.94 3.97 4.89 6.43
81 13 China 4.47 3.9 5.44 4.2 4.33
99 -3 Morocco 3.54 4.12 3.72 1.95 4.37
109 -2 India 3.09 3.5 4.15 2.21 2.49
131 -6 Nepal 1.74 2.11 2.27 1.79 0.8
Qatar- Global Investment
- Qatar Investment Authority (“Sovereign Wealth Fund”)
- Invests domestically and internationally to minimize exposure to energy price volatility.
- Example investments:- US$65B, domestic infrastructure; US$60B,
national development (03/11) – “World Cup related”
- US$700M, CityCenterDC, 10 acre project (04/11)- US$1B, Morocco infrastructure (11/11)- US$2.3B, purchased Harrods
Clusters and Competitiveness
Qatar- Global Engagement
- WTO “Doha Round” – launched 11/01- Al-Jazeera- US military base- Doha Masters (golf) host- First annual The Hague International Model United
Nations- 2006 Asian Games host- 2011 Asian Cup (football) host- Contributed fighter jets and Special Forces to
Libyan rebellion- World Cup 2022 host
Clusters and Competitiveness
Qatar- World Cup 2022 Bid
- 12 new stadiums- Lusail Iconic Stadium – skinned with solar panels- 2 15,000 seat, 8 10,000 seat, 12 5,000 seat
stadiums will be given away- “…environmental protection plan foresees the
generation of excess renewable energy sources which would contribute to a carbon-neutral event and be used to offset all unavoidable emissions.”
- “…the activities would firstly concentrate on water and waste management…”
Clusters and Competitiveness
Jennifer Blanke, World Economic Forum
Clusters and Competitiveness
Clusters, Competitiveness and Sustainability3 Major Challenges for Clusters:• Globalization
• New competitors v. new Customers• Climate Change
• Potential economic costs v. New business opportunities
• Social Equity• Productivity v. Income inequality
Clusters, Competitiveness and SustainabilityCluster Life Cycles• Long term viability linked to:
• Maintaining innovation cycle• Leading or quickly reacting to
disruptive market and technology shifts
• Connecting to global networks
Clusters, Competitiveness and SustainabilitySustainable Industry Clusters:• Knowledge-intensive subset of existing
industry clusters• Energy• Building• Food
• Discover new ways to accomplish existing functions• Create energy• Build a structure• Grow food
Martin, 2009
Clusters, Competitiveness and SustainabilitySustainable Industry Clusters:• Green Building Cluster, Oregon
• Demand conditions – sophisticated and anticipatory customers
• Factor conditions – natural endowments, intellectual capital
• Competitive rivalry – development, architecture, construction
• Supportive policies - renewable energy portfolio, business energy tax credit
Martin, 2009
Clusters, Competitiveness and SustainabilitySustainable Industry Clusters:• Green Building Cluster, Oregon
• Major regional players• Development - Gerding-Edlen• Architecture – SERA, ZGF• Construction – Howard S Wright, others• Government – BETC, REP, Cities• Universities – energy, construction materials• Technology - SoloPower
• Major global players• Construction – Skanska• Technology – SolarWorld Martin, 2009
Clusters, Competitiveness and SustainabilitySustainable Industry Clusters:• Green Building Cluster, Qatar???
• Major regional players• Development – Qatari Diar Real Estate Investment
Company, Barwa Real Estate Company• Government - Qatar Sustainability Assessment Systems,
Qatari General Electricity and Water (“KAHRAMAA”)• Architecture – QPM Qatar Project Management• Construction – ???
• Major global players• Architecture – Green Building Services, Interface
Engineering• Universities – U of Pennsylvania (Technical Training)
Making the pitch• Day 2 – Pitch concept• Day 3 – 2 minute pitch focused on cluster assessment• Day 4 – 5 minute pitch focused on Day 3 + “Fit-1” (Solar
PV Mfg and Qatar)• Day 5 – 7 minute pitch focused on Days 2 and 3 + “Fit-2”
(The Company + Qatar Industrial Policy)• Day 6 – 10 minute pitch focused on Days 2, 3 and 4 +
“Fit-3” (The Company + Qatar Market)
Making the pitch
• Pitch concept – what is the angle you will take?• Financing• Education• Labor force• Market opportunity• Government support• Etc.
Making the pitch
• Getting to the 10 minute pitch• Build a logic to your presentation• Integrate key frameworks with research• “SELL” the company on Qatar as a beachhead for
solar PV manufacturing in the Middle East