THE INDUSTRY STRUCTURE AND THE FIVE PORTER'S FORCES

1) CONCEPT:

INDUSTRY:"Economic activity concerned with the processing of raw materials and manufacture of goods in factories"*

FORCE:"Strength or energy as an attribute of physical action or movement"**

STRUCTURE:"The arrangement of and relations between the parts or elements of something complex"***

GLOBAL INDUSTRY:"A global industry is one in which a firm's competitive position in one country is significantly affected by its position in other countries"****

2) QUESTION: Which are the five Porter's forces and why are relevant for the industry?

ANSWER: The five Porter's Forces is a holistic model that allows the analysis of any industry in terms of profitability. It was developed by the economist Michael Porter in 1979, according to Porter, the rivalry with competitors is determined by four elements or forces that combine to create a fifth force: rivalry among competitors.

"This model holds that the nature of competition in an industry is the combined outcome of the competitive pressures generated by (1) the moves of rivals battling for market share, (2) the entry of new rivals seeking market share, (3) the efforts of others companies outside the industry to convince buyers to switch to their own substitute products, (4) the push by input suppliers to charge more for their inputs, and (5) the push by outputs buyers to pay less for products. Collectively, the five forces model develops a picture of the structure and competition in an industry that prepares managers to figure out what fundamental forces shape strategic conduct, how strong each force is, what forces are driving changes in the in the industry, what strategic moves rivals  are likely to make next and what the key factors are for future competitive success."*****       

If you like to know more about this image, you can check this video where M. Porter explains clearly his theory about the five forces  http://sciencestage.com/v/13871/the-five-competitive-forces-that-shape-strategy.html

The five Porter's forces are very important because allow the asessment and the analisis of an industry structure and provide to the company the basis for estimating the kinds of strategic moves for implementing in the industry.

Strategies must be very dynamic because the traditional sources of advantages do not provide long-term security, the traditional barriers to market entry are being overcome by competitors fastly. The strength of a strategy is not determined by the initial movement, for this reason companies must anticipate and face the strategies and reactions of competitors and changes in customer demands over time.

3) POINT OF VIEW: I believe that all companies should make a thorough analysis of the industry in which they are, this model that M. Porter raises, is very important to determine the advantages and disadvantages that can have an industry, and to raise and implement appropriate strategies.

The success of the strategy depends on how effectively it can manage the changes that occur in the competitive environment, flexibility and adaptability are very important. Globalization and technological change are creating new forms of competition, deregulation is changing the rules of competition in many industries of many countries, markets are becoming more complex and unpredictable, flows of information in a highly interconnected world are allowing companies detect and react to the competitors much faster.

In conclusion I would say that the rapid competition is telling us that it is not possible to wait for the action of the competitor for us to decide how we will react. What we must do is to anticipate and prepare to face any eventuality, every movement has to face competition quickly, because any advantage is temporary.

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*Oxford Dictionaries.(2010).Industry.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1257864#m_en_us1257864
**Oxford Dictionaries.(2010).Force.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1248351#m_en_us1248351
***Oxford Dictionaries.(2010).Structure.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1295059#m_en_us1295059
****Daniels, John D (2004). International Business:Environments and operations.Chapter 11: The Strategy of International Business.p 375.
*****Daniels, John D (2004). International Business:Environments and operations.Chapter 11: The Strategy of International Business.p 378.




-Image 1: GettyImages.Elements of global communication.(2010).Available at: http://www.gettyimages.com/detail/10013540/The-Image-Bank
-Image 2: Quickstep. The Five Forces That Shape Industry Competition.(2010).[Online]: http://qwickstep.com/search/porter-five-forces.html  

view this video http://sciencestage.com/v/13871/the-five-competitive-forces-that-shape-strategy.html

THE IMPORTANCE OF POLITICAL SYSTEMS IN INTERNATIONAL BUSINESS

1) CONCEPT:
POLITICS:"The activities associated with the governance of a country or other area, especially the debate or conflict among individuals or parties having or hoping to achieve power"*

SYSTEM:"A set of principles or procedures according to which something is done ; an organized scheme or method "**

IDEOLOGY:"A system of ideas and ideals, especially one that forms the basis of economic or political theory and policy"***

POLITICAL SYSTEM:"Structures, processes, and activities by which a nation governs itself"****

2) QUESTION: Which are the most important Political Ideologies and which of them is better to do business?

ANSWER: John D. Daniels explains clearly, in his book International Business:Environments and operations, the three types of political ideologies in the world:
"TOTALITARIANISM:The belief that every aspect of people's lives must be controlled for a nation's political system to be effective.
ANARCHISM:The belief that only individuals and private groups should control a nation's political political activities. An anarchism views public government as unnecessary and unwanted because it tramples personal liberties.
PLURALISM: The belief that both private and public groups play important roles in a nation's political activities. Each group serves to balance the power that can be gained by the other"*****

These political ideologies are in a horizontal scale but at the same time each one can be divided according on how it manifests.

As to which of the three streams is the best to do business? I would say that everything depends on the type of business to be done, the market and needs to be covered, and the analysis of the advantages and disadvantages of each ideology presents according to the country in which it develops.

But for most companies is better to have operations in a country that has by political system the pluralism, because under this system, the economic, financial, cultural, legal and business environment is better.


3) POINT OF VIEW: In the field of international business is very important to know the cultures of the countries and with them the ideologies and political systems of each country, this is because in all countries, politics and culture are Closely related. Although in the before point I mentioned that each political ideologies may be the best or the worst for business, according to the analysis of several dimensions in this point I will explain more fully the ideology of pluralism and I will give some reasons to support why I think it is the best ideology to establish international business.

Because pluralism is between totalitarianism and anarchism, it can provide a balance of power, where the participation of government and people will be equal.

In my opinion one of the best way of seeing the pluralism is with the democracy, because this is a "Political system In which Government Leaders are elected directly by the wide participation of the people or by their representatives."******

The reasons why I think it's the best political ideology in a country to do international business, are basically related to: freedom of expression in which all citizens can express their political disagreements without any problem, periodic elections to ensure that nobody take the power for a long time, full civic and property rights, nonpolitical bureaucracies, and the most important thing in democracies maintaining stable business environment where capitalism, the private sector and the Government interact to ensure a stable and healthy economy. Countries with strong democracies are well regarded in the eyes of foreign investors, since them rely on in these countries because their capital and their investment will be safe, and producing better profits.

To give an example, I will talk about my country Colombia, although Colombia is a developing country,it is seen internationally as one of the countries with strong democracy in Latin America, as in recent years citizens has participated massively in the electoral processes, and the results have been very good because terrorism that made the guerrillas and groups outside the law has decreased significantly, which results in an increase in foreign investment, today Colombia is among the top 5 countries for investing in Latin America.

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*Oxford Dictionaries.(2010).Politics.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1279217#m_en_us1279217

**Oxford Dictionaries.(2010).System.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1296611#m_en_us1296611

***Oxford Dictionaries.(2010).Ideology.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1256937#m_en_us1256937

****Wild, John j. 2010.International Business The challenge of Globalization.Chapter 3: Politics, Law, and Business Ethics.p 80.

*****Wild, John j. 2010.International Business The challenge of Globalization.Chapter 3: Politics, Law, and Business Ethics.p 81.

******Wild, John j. 2010.International Business The challenge of Globalization.Chapter 3: Politics, Law, and Business Ethics.p 84

-Image 1: Education server dadalos.Teaching politics:political system.(2010).Available at: http://www.dadalos.org/politik_int/politik/systemtheorie.htm

-Image 2: Photobucket.Totalitarianism vs anarchism pictures.(2010).Available at: http://media.photobucket.com/image/TOTALITARIANISM%20vs%20ANARCHISM/drshrink/no-exit-libertarianism-anarchy-for-.gif

THE IMPORTANCE OF CULTURAL AWARENESS IN INTERNATIONAL BUSINESS

1) CONCEPT:

CULTURE: a) "The customs, arts, social institutions, and achievements of a particular nation, people, or other social group"*
b)"Culture is the relatively stable set of inner values and beliefs generally held by groups of people in countries or regions and the noticeable impact those values an beliefs have on the peoples' outward behaviors and environment"**
AWARENESS: "Knowledge or perception of a situation or fact"***
CULTURAL AWARENESS: "Cultural awareness recognises that we are all shaped by our cultural background, which influences how we interpret the world around us, perceive ourselves and relate to other people. You don’t need to be an expert in every culture or have all the answers to be culturally aware; rather, cultural awareness helps you to explore cultural issues with your care recipients more sensitively".****
2) QUESTION: Which are the most important tips on US business protocol?ANSWER: David Cotton, David Falvey and Simon Kent wrote in their book Market Leader, Intermediate Business English Course Book, the following tips:

"US business protocol

Timing

- You must arrive at business meetings on time. Only a 15-minute delay because of traffic problems is allowed.

Greetings and polite conversation

-You must shake hands during introductions.

- You don't have to make a lot of small talk. Americans like to get down to business quickly.

- You musn't ask about a businesswoman's marital status. It is considered rude.

Business cards
- You don't have to exchange business cards unless there is a reason to get in contact later.
Smoking
- You musn't smoke in many public, spaces. Most business, cabs and many restaurants nowadays have a no-smoking policy.
Gift-giving
- Business gifts shouldn't be given until after the business negotiation are over.

- You musn't give an expensive business gift. It may cause embarrassment.

Entertaining at home.
- You should write a short thank you note to your host and hostess if you are entertained at their home. You don't have to give a gift but flowers or wine are appeciated."*****

As we can see the form of doing business with the United States' people , is very similar to that practiced in our culture, you only have to pay much attention on certain key aspects such as punctuality and objectivity in the meetings, please be careful with these two points, despite U.S. people are direct in business, they have a good sense of humor and they are very open to dialogue outside of a meeting.

3) POINT OF VIEW: Cultural awareness becomes central when companies and business people have to interact with people from other countries and other cultures in order to make international business. Cultural awareness is important because people see, interpret and evaluate things in a different ways. What is considered an appropriate behavior in one culture is frequently inappropriate in another one. Misunderstandings arise when I use my meanings to make sense of your reality, for example if you compare the US protocol business with the Colombian protocol business, you can see that in many ways our culture is different to American culture. For all the things mentioned before, International companies must evaluate their business practices to ensure that they are doing the correct process acording with the foreing norms and behavioral characteristics, because international business includes people from different cultures. This means that problems arising every day as a managing workforce, marketing output, purchasing supplies, dealing with regulators, securing funds, and many others.

At this point is important to mention some of Peterson wrote in his book Cultural Intelligence: "Professionals need a communication strategy that is appropriate for each task and specific culture they do business with. This is true for writting simple letter and e-mails, but it is also important for bigger issues such as designing marketing pieces, selling product, dealing with complaints, making decisions, building workplace and social relationships, and managing people. Communicating appropriately with your international business partners certainly should not be left to intuition!" To summarize I am totally agree with this opinion and with the companies that awareness their employees about the importance of learning foreign cultures in order to make a successful business.

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*Oxford Dictionaries.(2010).Culture.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1237613#m_en_us1237613
**Brooks, Peterson.(2004).Cultural intelligence.Defining Culture.p 27.
***Oxford Dictionaries.(2010).Awareness.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1414010#m_en_us1414010
****Centre for Cultural Diversity in Ageing.(2010).Cultural Awareness.[Online]: http://www.culturaldiversity.com.au/NationalResources/ServiceProviderResources/CulturalAwareness.aspx

***** David, Cotton; David, Falvey and Simon Kent.(2007).Market Leader, Intermediate Business English Course Book, New Edition.p 58.

******Brooks, Peterson.(2004).Cultural intelligence.Overlapping the five Scales.p 60.

-Image 1: Gettyimages.Globe with people.(2010). Available at: http://www.gettyimages.com/detail/77384030/Imagezoo

-Image 2: Gettyimages.United States businessmen handshape.Available at: http://www.gettyimages.com/detail/84228339/Photographers-Choice

"THE WTO IN THE INTERNATIONAL BUSINESS"

1) CONCEPT:

INTERNATIONAL BUSSINES: "International business is all commercial transactions between two or more countries."*
TRADE: "The action of buying and selling goods and services."**
ORGANISATION: "An organized body of people with a particular purpose, specially a business, society, association."***

2) QUESTION: What is the WTO?
ANSWER: On the website of the WTO, the WTO is defined as: "The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their busines" ****

On the website (Our World Is Not for Sale OWINFS) of the global network of organizations, activists and social movements, which are committed with combat trade and investment agreements that promote transnational globalization and benefit the world's most powerful corporations at the expense of the people and the environment, they talk more deeply about the WTO:"The World Trade Organisation was established in 1995. It includes 153 countries and is headquartered in Geneva, Switzerland. The WTO has been used to push an expansive array of policies on trade, investment and deregulation that exacerbate the inequality between the North and the South, and among the rich and poor within countries. The WTO enforces some twenty different trade agreements, including the General Agreement on Trade in Services (GATS), the Agreement on Agriculture (AoA) and Trade-Related Intellectual Property Rights (TRIPS). The WTO is inherently undemocratic. Its trade tribunals, working behind closed doors, have ruled against a stunning array of national health and safety, labor, human rights and environmental laws, which have been directly challenged as trade barriers by governments acting on behalf of their corporate clients. National policies and laws found to violate WTO rules must be eliminated or changed or else the violating country faces perpetual trade sanctions that can be in the millions of dollars. Since the WTO's inception in 1995, the vast majority of rulings in trade disputes between member nations have favored powerful industrialized countries. Consequently, many countries, particularly developing countries, feel enormous pressure to weaken their public interest policies whenever a WTO challenge is threatened in order to avoid costly sanctions"*****

As we can see the WTO has a great number of countries adopting the required standards that it imposed, here is a great opportunity for the companies that use Globalization as a mean to obtain the maximun benefits in the countries that are adopting the standards proposed by this organisation.

3) POINT OF VIEW: Nowadays the WTO is very important in all the world and in all International Business in order to get an excellent and reliable fair trade.In a globalizing economy, the WTO agreements determine more and more national trade rules and policies. This organization help countries in the process of handling trade disputes . For business, it is vital to be familiar with the present and future trade rules in their markets. For these reasons I think that the world trade organisation is very, very important for the health of the world's economy, especially in countries with economies in developing, because thanks to this organization these countries have a legal support when it will make international business, have technical assistance and training and have cooperation with other international organizations.

____________________________________________________________________ * Daniels, John D(2004). International Business: Environments and operations.Chapter 1: Globalization and International Business. p7.

**Oxford Dictionaries.(2010).Trade.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1299768#m_en_us1299768

*** Oxford Dictionaries.(2010).Organisation.[Online]: http://oxforddictionaries.com/view/entry/m_en_us173880#m_en_us1273880

**** World Trade organization.(2010).What is the WTO?.[Online]: http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm
***** Our World Is Not for Sale.(2010).What is the WTO?.[Online]: http://www.ourworldisnotforsale.org/es/node/4

-Image1: Gettyimages.The people's silhouette and the earth .(2010).Available at: http://www.gettyimages.com/detail/102871357/Photodisc
-Image2: Gettyimages.Three businessmen turning the earth around.(2010).Available at: http://www.gettyimages.com/detail/83479373/Imagezoo