Industry Analysis

Industry Analysis
Required Reading
• Wilson, Dominic and Purushothaman, Roopa, (2003). Dreaming With BRICs: The Path to 2050. Goldman Sachs Global Economics Paper No: 99. Goldman Sachs | BRICs – Dreaming with BRICs: The Path to 2050 http://www.goldmansachs.com/our-thinking/topics/brics/brics-dream.html
•
• Bremmer, Ian, Managing Risk in an Unstable World. (2005) Harvard Business Review, R0506B-PDF-ENG ). (Custom Textbook (2012), Managing Strategy in the Global Marketplace. Chapter 25 pp 589-599.)
• Custom Textbook (2012), Managing Strategy in the Global Marketplace. Chapters 12 Global Strategy: Competing Around the World pp 278-309, Chapter 13 International Competitive Strategy pp 310-335, Chapter14 Assessing International Markets pp 336-356.
Multimedia
• eBay and PayPal: Going Global | Stanford Entrepreneurship Lecture
• Goldman Sachs | BRICs Videos and Stories
• Harvard FSS: Billions of Entrepreneurs: The Yin and Yang of China and India
(Optional)
• Business Management: What Is International Business?Learn the basics of what International Business encompasses with this video.
• Global Economics – Global Exchange: Free Trade & Protection. Discover why international trade has grown over the past 35 years and how this explosion in trade has affected the global economy.
• Global Economics – Global Resources: Management and Competition. This video explores the history of the distribution and exploitation of global resources and offers suggestions for managing resources in the future.
• Global Economics – Global Capital Market: Risks and Rewards. Find out how the world economy has become integrated and why it has been the center of controversy for many.

MBA Reference Guides
• PEST Analysis
• Global Strategy
• Porter’s Diamond of National Advantage
• Foreign Market Entry Modes
• Hofstede Cultural Dimensions of International Business
• Three Levels of Culture

 

The Team Project of this seminar involves your writing a proposal for a foreign direct investment by a major real company into one of the BRIC countries. This Assignment is designed to provide the country and industry comparative analysis that will support your decision as to which country to do the foreign direct investment.
1. Your team should select one of the following industries to analyze for your Team Project.

Consumer Goods Industry: Coca-Cola

Note: For a breakdown of each industry into its major sub-sectors, refer to the Industry portals in the Economist Intelligence Unit Database in the UMUC Online Library.
1. Your team should select one major company in the industry that you have selected, to be your hypothetical client company for whom you are doing the Team Project.
Coca- Cola
Please post which industry and client company you have selected into your Team Study Group Area as early in the week as possible.

Team Project Part I: BRIC Country Assessment Analysis
BRIC refers to Brazil, Russia, India and China. The term BRIC was created by the Chief Economist of Goldman Sachs Investment Bank in 2001 and is now widely used in business and academia to refer to the four countries that are likely to have a profound impact on the global economy and business environment in the twenty first century. As part of the globalization theme of this Strategy Seminar we want you to become familiar with these countries and their potential role in corporate global business strategy.
• For a more recent commentary on the BRIC countries view the following: Goldman Sachs | BRICs Videos and Stories
Examine each of the BRIC countries to determine their projected economic growth, country business environment and country risk. We have gathered assessments of the Country Risk and Business Environment (Opportunity) from the Economist Intelligence Unit database in the UMUC library. These assessments are posted as EIU BRIC Country Assessment Ratings in Course Content.
BRIC COUNTRIES
BRAZIL
Brazil EIU Country Information
CHINA
China EIU Country InformationRUSSIA
Russia EIU Country Information
INDIA
India EIU Country InformationRead the rationale behind these ratings and dig deeper by reading other EIU news stories about the political, economic, financial, business and regulatory environments in each country.
Also, take note of the Personal Disposable Income (PDI) available in each country as an indicator of market size. (you will find the PDI in the 5 Year Economic Forecast) , PDI is defined as the income households receive from firms, plus transfer payments received from the government, minus direct taxes paid to the government. It is the income that households have available for spending or saving.
Post the resultant ratings for each country in a summary table comparing the country ratings for risk, business environment (opportunity). Include a brief summary of the main country conditions that contribute to the ratings.
Also create a table comparing the Gross Domestic Product (GDP), the Personal Disposable Income (PDI), Exports (in U.S. $), and Imports (in U.S. $) for both 2011 and 2017 and calculate the amount of growth for each item.
Discuss the following business strategy questions.
• How would you tradeoff the degree of country risk versus the business environment ratings, taking into consideration the market size as expressed by the PDI in 2017?
• How would you tradeoff the degree of country risk versus the business environment ratings, taking into consideration the market growth as expressed by the PDI in 2017 versus 2012?
• As a result of answering the above two questions, how would you prioritize the BRIC countries in terms of developing a global business strategy?
Note: Write this up, integrating your answers in a way that demonstrates your critical reasoning supporting your prioritization of the BRIC countries.

Team Project Part II: Global and BRIC Industry Analysis

Select the industry that your team wants to research for the Team Project and research it from the global industry forecasts below and comment on the strategy implications of what you have read.
Also, select a real multinational company from this industry to be your hypothetical consulting client, for which you will be making a strategic recommendation for investment into one of the BRIC countries.
Then, for each of the BRIC countries that you have examined in the Country Assessment Analysis above, use the EIU country information to discuss how your selected industry is doing in each country. Start by clicking on the Industry World Outlook, but also read some of the other articles to better understand the industry.
Note: When you click on these, you may get a message requesting a special ID and password. Ignore this request and just click on the industry again in the left hand column.
• EIU Global Automotive Industry World Outlook
• EIU Global Consumer Goods Industry World Outlook
• EIU Global Energy Industry World Outlook
• EIU Global Financial Services Industry World Outlook
• EIU Global Food, Beverage and Tobacco Industry World Outlook
• EIU Global Healthcare Industry World Outlook
• EIU Global Telecoms and Technology Industry World Outlook

Based upon your research and analysis, select the BRIC country that your team will be looking to make an acquisition or joint venture in. Provide reasons for your decision based upon your research and on the various assigned readings so far this semester or from prior semesters (properly cite these)
Use the following outline to structure your Week 5 Paper

International Acquisition Proposal

I. Background Information and Analysis
A. The global structure and environment of the selected industry.
B. The home country structure and environment of the selected industry.
C. The importance of the BRIC countries to the selected industry.

II. Determination of the target BRIC country for the proposed acquisition.

A. Comparative risk, opportunity and overall business climate of the BRIC countries.
B. Comparative industry market potential and structure of the BRIC countries.
C. Selection, with rationale of the target BRIC country.

In developing your rationale, discuss the following business strategy questions.
• What is the comparative market size of the industry in each of the BRIC countries by 2017? (Hint: Use something like the number of passenger car registrations to size the automobile industry, other metrics for other industries) and how might that impact your decision on prioritizing the countries in your global business strategy?
• What is the comparative growth, both in absolute terms and in percentage terms from 2013 to 2017 for the industry you have selected in each of the BRIC countries and how might that impact your decision on prioritizing the countries in your global business strategy?
• Who are some of the key company players (both multinational and local) in your selected industry in each of the BRIC countries and how competitive is the industry in each country, and how might that impact your decision on prioritizing the countries in your global business strategy?
• Finally, how would you take “country risk” into consideration in the formal capital budgeting process that the company would have to go through in order to justify a foreign direct investment?

Personal Application Conference Topic Discussion

Discuss in this week’s PA
• Your organization’s international business, if any (where, what, how, etc.). Based upon this week’s other assignments, can you think of areas of additional global opportunity for your company?
In the news – This is a course on strategic management issues. The learning experience will be greatly enhanced by your looking at current business events from a strategy perspective. As part of your Conferences participation, each week you will be asked to post a link to at least one news story in Conferences and to explain briefly how the news stories bear on the topics for the week.
Be sure to include references to the course text items described below:
A. Industry structural characteristics rationale. Five Competitive Forces (Porter)
B. Competitive advantage rationale. Competitive Advantage (Porter)
C. Resource Based View of the firm rationale. Resource Based View of the Firm
D. Value Chain rationale Value Chain Framework (Porter)
E. Vertical integration rationale Vertical Integration
F. Horizontal integration rationale Horizontal Integration
G. Financial rationale Risk Management and RAROC
H. Political, Economic, Social, Technological Factors PEST Analysis
I. Other rationales
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