The emerging

and global
environment
GLOBAL STRATEGIC MANAGEMENT
(CHAPTER 2)
Signpost for today
1. Understand the characteristics of emerging
countries
2. Identify the market and opportunities for global
firm
3. Understand the strategic development of
competitors coming from emerging market
Why do we need to study?
Prior 1960s: USA - dominance role in global
economy; trade….
Developed countries got hit by two crisis: twins
towers and 2008 financial crisis
Other countries: China, Brazil, Mexico….
=> witness a huge development
=> the rise of huge global firms
=> huge proportion in global economy
Why do we need to study?
Why do we need to study?
Emerging countries
There is no clear definition of an “emerging
country”. We use some characteristics to identify it.
 Four categories of emerging
countries
5 emerging giants
EU newbie; moving
toward standard of living
of WESTERN

EMERGING INDUSTRIAL
ECONOMIES DEVELOPING ECONOMIES
Least development;
High level of industrilization achive high level of
Market economy industrialisationl; market
economy
Who are they?
BRICS: 5 countries Brazil, Russia, India, China, South
Africa
Transition economy: is an economy which is
changing from command to market or mixed
economy
Emerging industrial economies: Latin, Asia… - high
level of industrialization and market economy
Developing economies: Philippines, Egypt… - least
developed countries, significant level of
industrialization and market economy
Characteristics of Emerging
countries
1. High growth: Economic growth; the rise of middle class, high
degree of infrastructure and education investment; open to
IB
2. Shift from agriculture to industry and services
3. Market mechanism
4. Governance
5. Market imperfection
6. Ease of doing business
7. “Bottom-of- the-pyramid” segmentation effects
 Growth
International trade
Middle class and International
business
Infrastructure
investment
Economic growth
Economic growth in 2021?
Middle class

(Brookings, 2019)
Middle class
- Middle in population chart
- Purchasing power increase
- Pass the subsistence need
- Demand for FMCG (hang san xuat va tieu dung nhanh) and
durable products (hang tieu dung lau ben)
Worldbank report, 2019)
Take a look on fig. 2.4
Take a look on fig. 2.4
Who are they?
VIETNAM, please identify some characteristics of middle class in terms
of
- Their income? (1) above $410/month; (2) above 15-20mil/month
- Their consumption habits? F&B, tourism; healthcare (organic…); quality
food, education
- Their demand? Buy in new channels; aging population needs=>
healthcare, food-> quality;
Infrastructure investment
Let’s take a look at China
Let’s take a look at China –
digital transformation
2021: 2.5 trillion dollars
https://www.china-briefing.com/news/how-foreign-technology-investors
-benefit-from-chinas-new-infrastructure-plan/
1. Innovative infrastructure
Science, technology in public sectors, education and industrial parks
2. Information infrastructure
5G; IoT; Industrial internet, AI, cloud computing, blockchain, data
centers, internet communication network
3. Integrated infrastructure
ultra-high voltage power transmission electric vehicles, inter-city
high speed rail and system
Let’s look at a developed
economy to see the signpost
SUSTAINABLE INFRASTRUCTURE - BROADBAND
- ROAD, BRIDGE, WATER, ENERGY
TRANSIT – GREEN AND AUTO
SYSTEM
- BUILDING RE-NOVATE
- INNOVATION TO INTEGRATE
SYSTEM

INVEST ON MIDDLE CLASS COMPETITIVE

CREATE JOBS FOR

MIDDLE CLASS
International Business
 Agriculture -> Industrial
and service
THERE IS A SHIFT FROM AGRIGULTURE -> INDUSTRIAL AND SERVICE

(WorldBank, 2019)
 Market mechanism
- Free market system

- Private business

- Decline in gov-owned firm

DISCUSS SOME DRAW-BACKS

OF GOV-OWNED FIRM?
 The doing business index
The
friendliness
to conduct
of business

TIME and COST

=> Benefits/
outcomes
Lets find some information
related to Vietnam and
China market to determine
which market offer more
opportunities to start a firm?
 Governance
- Even the quality of the gov is improved: more stable regulations and
judicial systems
BUT: despotism (chế độ chuyên quyền) ; favoritism (thiên vị), corruption
(tham nhũng) …..=> UNCERTAINTIES in doing business
CHINA has recovered $519mil
in a year from the campaign
 Market imperfection
- Thông tin (information problem)
- Quy định (misguided regulations)
- Luật pháp (inefficient judicial system)

SELF STUDY: table 2.2

The bottom pyramid
Global firm’s strategy for
emerging market
(1) Kind of product/service redesign and adaptation needed
according to the segment – CONCENTRATE OR MULTI (eg: 2.1)
Read example 2.1: identify kind of product; identify the level of
adaptation according to selected segment!
(2) Localisation capabilities (purchase products or relocating
manufacturing) => cost advatage
(3) Engage in strategic partnerships with local firm
 • Protect domestic market
• Competitiveness based on low cost manufacturing
based on law costs and financing or in some cases on
Step 1: natural resources
Domestic • Technology acquired through licensing and joint
players and ventures
• Activities based on original equipment manufacturing
exporters
for international customers
• Invest in modern manufacturing and
processing technologies
Step 2: • Start to build own branded products and
Moving up the distribution
value chain • Start to develop R&D
• Start to set up foreign subsidiaries
• Global brand
• Proprietary Technology
Step 3: Global • Global network of subsidiaries
EMERGING COMPETITOR players • Compete head on with
traditional global players
 For practice
Read case study about Ethiopia and answer the following question:
- Identify and explain the opportunities and challenges for firms when
entering Ethiopia market

- Duration: total 30 mins

- Discussion in class- 10mins
- Solution: 10mins
External factors
analysing and
accessing countries’
attractiveness
CHAPTER 6 TEXTBOOK AND CHAPTER 3
READING BOOK
Signpost for today
Understand the significant role of countries
assessment
Explain some factors to determine country
attractiveness degree
Apply tools to analyse market attractiveness
What is external audit?
Assessment flow EXTERNAL
MARKET ATTRACTIVENESS
How can we call the market as attractiveness
RETURN>= Risk + cost of capital
How?
1. Are the market and resources prospects, and the competitive conditions,
in a particular country such that given that company’s pre-existing
competitive advantages, the business is likely to generate a return equal to or
higher than the cost of capital?
2. What are the favorable or problematic characteristics of the socioeconomic
and political context within that country for achieving an economic return
3. Are the risks of operating in this country acceptable for the shareholders
and employees?
INVESTMENT FRAMEWORK
Too simplistic?
 Culture distance

PROFIT?

EASE
Of RISK:
doing Political risk
busin Economical risk
ess Competitive risk
Operational risk
Part 1: culture distance
1. Variety of culture difference on business perspectives
2. Cross culture differences
3. Implications for global management
 Timeline
1. Variety of culture difference on business perspectives
2. Cross culture differences
3. Implications for global management
CULTURE
Định nghĩa văn hóa
NHẤT
QUÁN
CHIA SẺ

LƯU TRUYỀN
Model of culture
 Three levels of culture

Tầng cơ bản:
ít hiển thị
Basic Giá trị, niềm
nhất assumptions/
meaning: tin và thái
least visible độ/sở thích
Value, beliefs,
preferences

Behavior:
most visible

Hành vi: thể hiện rõ

4 dimensions
1. National and ethnic culture: derived from the national, religious or ethnic origin
of citizens or social groups.
2. Corporate culture:
Theaccumulatedassumptions,values,beliefsandbehavioralnormsresultingfrom
the history of the company
3. Industry culture: any accepted values and codes of conduct derived from the
professional norms of a particular industry such as heavy manufacturing,
services, oil and gas and so on.

4. Professional culture: derived from the training and professional norms and
constraints of different corporate functions such as accountants, researchers,
production personnel, sales and marketing people and so on.

Different dimensions indicate different perspectives

CULTURE IN BUSINESS
LANDSCAPE
 Four streams of culture
difference analysis
Ethnological Managerial
research: values and
Nghiên cứu về assumptions:
dân tộc – silent các nghiên cứu
language về giá trị khác
nhau của văn
hóa - work-related
Country Economic clusters: value difference
clusters: cách thức hệ
Những đặc thống kinh doanh
điểm được
giống tổ chức và tương
nhau - the Tác - how business
grouping of systems are organized
nations
according to and interactions
similarities in governed
cultural traits
 ETHNOGRAPHIC RESULT (Dân
tộc Những
kết quả
phi ngôn
)- Một số quốc gia coi thời gian có tính tiếp nối/tuần tự, nhưng một số
1. Thời gian
(Time)
ngữ

khác lại coi thời gian như dòng chảy (fluid)/đồng bộ - Time can be seen
as sequential and scarce
VIETNAM?
2. Không gian (Space)
Social distance – khoảng các trong xã hội
-High- social distance: AVOID - physical + emotions
-Low – social distance: NO OBJECTION - physical + emotions
3. Friendship (mối quan hệ XH)
- Dễ dàng, thời
hạn
4. Agreement
- Black and White

-Conversation implicit
5. Societies (xã hội)
- In high-context societies – mostly Asian, South American or
Latin – the important part of an interaction is the person (with
whom) and the emphasis given to the setting, the ambiance and
ceremonials.

- In low-context societies – Anglo-Saxon, Nordic or Germanic –

the what dominates the communication, hence the importance
attached to written documents and technical specifications.

6. Material goods:
the importance attached to financial wealth as a sign of status – a
materialistic trait of Americans – as opposed to other status
signifiers such as family, education or seniority.
BUSINESS ACADEMIC
RESEARCH
1. HOFSTEDE: các chiều cạnh văn hoá của
Hofstede
 Power distance is the extent to which people in certain societies
accept inequality in power distribution or, on the contrary,

High-power distance societies will accept hierarchical control and

respect authority
egalitarian societies will have a more democratic view of social control,
with no particular
 Uncertainty avoidance is typical of society in which uncertainties are not
accepted

Nước có mức tránh sự không chắc chắn cao: nhu cầu cao đối với an ninh, tin
tưởng vào các chuyên gia và kiến thức của họ; hoạt động tổ chức cấu trúc,
quy tắc viết nhiều hơn, chấp nhận rủi ro quản lý ít (ví dụ, Đức, Nhật Bản) -
There is a continual search to codify, plan and regulate the environment
(Japan, Spain)
Nước có mức tránh sự không chắc chắn thấp: những người sẵn sàng chấp
nhận rủi ro của điều chưa biết, các hoạt động tổ chức có cấu trúc ít, quy tắc
viết ít hơn, chấp nhận rủi ro quản lý nhiều hơn, tỷ lệ người giám sát/nhân
viên thấp, nhân viên nhiều tham vọng hơn (ví dụ, Đan Mạch và Anh) - At
the opposite end of the scale are social groups in which tolerance and
risk taking is accepted and rewarded
 Individualism vs. Collectivism (cá nhân vs. tập thể): the
preferences towards personal matters?

Nước có chủ nghĩa cá nhân cao: cá nhân hoá(ví dụ như

Mỹ, Canada, Thụy Điển)
Nước có chủ nghĩa tập thể cao: hướng tới nhóm/tập thể
(Nhật, Hàn, Trung Quốc)
 Masculinity (nam tính vs. nữ tính): assertive,competitive behavior

Nam tính: sự quyết đoán, có hoài bão lớn, sức cạnh tranh lớn.
VD: Nhật – hoài bão, sức cạnh tranh lớn, tích cóp sở hữu vật
chất được đánh giá ccao. Thuỵ Điển – các mối quan hệ và chất
lượng cuộc sống được xem trọng hơn.
 TASK
Truy cập trang:
https://www.hofstede-insights.com/product/compare-countries/
So sánh mức độ của các chiều văn hoá Hofstede:
Vietnam, Úc, Mỹ, Anh, Đức, Trung Quốc,
Hongkong
BUSINESS ACADEMIC RESEARCH (2)
2. Trompenaars
Research questions on 15000 managers from 28 countries
Universalism vs. Particularism
(Phổ quát vs Đặc thù)
Universalism Particularism
Tuân thủ các nguyên tắc Hoàn cảnh sẽ ảnh
pháp lý và đạo đức, ý hưởng tới việc áp dụng
tưởng thực hành được thực hành, mang tính
ứng dụng rộng rãi – Follow đặc thù cao –
the rules and obligations => Situational factors
application impact
(Hồng Kông, Hà Lan)
Q:
Tính chất nào sẽ khiến doanh nghiệp tuân thủ chặt chẽ hợp
đồng
kinh doanh???// Which characterisitcs will make firms follow the
contracts’ requirements?
Individualism vs. Communitarism
-Chủ nghĩa cá nhân: quyền cá nhân được đề cao, nhấn mạnh
sự riêng tư, trách nhiệm cá nhân cao. – individual freedom -
-Chủ nghĩa cộng đồng: quyền của nhóm/cộng đồng được đề
cao, các vấn đề liên quan tới nhóm giá trị, ra quyết định chung
- common good
Specificity vs. Diffusion
-Cụ thể: theo đuổi mục tiêu, phân tích, ít lý lẽ
VD: Đức
-Khuyếch tán: rộng, lý lẽ và chặt chẽ
VD: Châu Á
Thành tựu – achieved status vs. gán ghép –
ascribed status
-Văn hoá thành tựu: địa vị mội người dựa trên
việc người đó đạt được bng việc làm ntn “doing”
-Văn hoá gán gép: địa vị dựa trên việc người đó là
ai “being” (Birth order,..)
Sequential time vs. Synchoronous time
- Straight line (tuần tự) vs. Circle (Dòng chảy)

Inner direction vs. outer direction

Đúng và sai tồn tại ở từng cá nhân (mặc cảm) hoặc
mang khuynh hướng xã hội (outer)
VD: Brand crisis management in Western vs. Vietnam
PRACTICE:
FOLLOWING TROMPENAARS’ VALUE, PLEASE IDENTIFY THE VALUE
CHARACTERISTICS OF VIETNAM!
(ADD WITH REASONING AND EXPLANATION)
P3: COUNTRY CLUSTERS
 COUNTRY
CLUSTERS
The clustering approach consists of grouping countries according to their
degree of geographical, linguistic, religious, historical and social proximity.
Several approaches have been proposed

1. 9 clusters: anglo,germanic…
2. Based on values, beliefs, social strutures…
3. GLOBE project: (1) shared motives, values (2)Cultural leadership
VD: Charismatic, team-orientation, participative…
P4: ECONOMIC CULTURE
and BUSINESS SYSTEM
Economic culture and business
System
QT công
ĐẶC
TÍNH
CỦA TỔ
CHỨC

VĂN HÓA
1. Governance (quản trị)

-Chế độ/mức độ kiểm soát, phụ thuộc lẫn nhau và quyền lực trong
doanh nghiệp// dominant mode of control, interdependencies and
exercise of authority in business firms
Ba yếu tố:

Ownership system: hệ thống sở hữu được phân chia như thế nào? (gia
đình, tập đoàn…)
Networking system: Doanh nghiệp hợp tác và thoả thuận với nhau ra
sao (hợp đồng…, MQH)
Management system: Nhân viên tham gia vào quyết định cuối?
2. Social culture (khía cạnh về văn hoá; giá trị
hoặc chuẩn mực văn hóa): the norms, values and
social codes which form the basis of social interactions and
shared beliefs.

-Rational: phương thức đặt mục tiêu, và mối liên

hệ với quy trình
- Authority: quyền lực (khoảng cách quyền lực)
-- Identity: cách định danh (các cá nhân gắn với
nhau theo phương pháp gì
Hàn Quốc - Korea
- Rationality: Autocratic – Chuyên quyền
- Authority: State, centralization -
- Identity: nationalism, Cultural, collectivism
Institutional fabric: doanh nghiệp, phát triển và phân bổ nguồn lực -
organization, development and allocation of resources, and
comprises four components
-Financial capital: phân bổ tài chính
-Human capital: phát triển nguồn nhân lực
-Social capital: niềm tin giữa các tổ chức

-Role of the state: quy định và kiểm soát hoạt động kinh doanh
IMPACT OF CULTURE ON
GLOBAL MANAGEMENT
IMPACT

NEGOTIAT
MULTI I ONS
CULTURE
S TEAM

BUSINESS
PRACTICES

GLOBAL
MANAGEMENT
Multi-culture team
Business practices
LETS RELAX AND WATCH
SOME CLIPS ^^
Why is Starbucks struggling in Australia and Vietnam Markets?
Any similarities?
What about other
components?
1. Market– POTENTIAL DEMAND
a. Broad assessment: macro-economic indicators => estimate
size of market
Overall economic standard
drives smartphone ownership
 Some factors impacts on market
size
Purchasing
power

Differences between Who will be your customer?

groups <= financial How big is it?
situation
Worth to invest?
Middle class role in market
opportunities

Strong demand elasticity Purchasing

=> FMCG and durable goods power

MARKET GAP FOR MD_CLASS

Middle –class effect
 Some factors impacts on market
size
Purchasing
power

Differences between Who will be your customer?

groups <= financial How big is it?
situation
Worth to invest?
Quality of demand
Quality of demand describes the nature and diversity of market
segmentation prevalent in a country, and the profile of the
customer value curve in each segment
- Two generic segments: ‘low end’ and ‘high end’
 Quality of the market
Pros Cons: market
Profit margin size
high
High switching
cost

cons
Price sensitivity
Pros
Market size
Cost=> competitive
advantage
Quality of the market
Low end High end

Price Low Price

sensitivty sensitivity

Low Value; medium to

switching high switching
cost cost

Customer
Standardised
loyalty
need
Branding
Main: lower end
product:
- Un #
- Price sensitive
- Co-existing with
middle class
Diverse segmentation
=> diverse middle-
class group
Four basic markets
Developing countries, characterized by low income per capita and
low growth: most sub-Saharan nations.
Emerging countries such as Indonesia, Thailand, Nigeria, with high
growth rate and still relatively low income per capita, but growing
fast
Fast industrializing economies, characterized by high growth and
moderate to high wealth: China, Brazil, Mexico, South Africa
Relatively low-growth/high-wealth industrialized OECD countries
such as North America, Western Europe and Japan.
So, to sum up
When assess the market factor, you need: Invest or not
” Does ”the demand” exist in this market? Degree of importance
and the size?”
BY:
- Market size (growth=> identify the size)
- Quality of demand
=> match with current competitive advantage to assess the FIT
2. Resources
Three factors to identify
◦ Natural resources
◦ Human resources
◦ Infrastructure and support industries resources
Natural resources
We consider:
◦ Raw materials: resourses-rich
◦ Location - geographic

◦ EG: VIETNAM
◦ Located in center of Southest
Asia, share borders with nations
Long coastline; Great sea-shipping
routes
Human resources
Based on 2 criteria:
- Labor cost (productivity related to the cost of labor)
- Quality of labor: skill, education
⇒Production Cost
⇒Competitive Advantage
 Labor cost LOW-LABOR COST:
Attract labor-
intensice; low value
production

Industry -> required high

tech, high level of
education => high level of
labor cost-> shift to other
countries
Let’s take a look –
infrastructure – WHY?
3. Cạnh tranh - Five Competitive Forces
in Porter’s Model
1. Industry
2. New Entrants
competitors

Intensity of Threat
rivalry Industry

Company
3. Suppliers or 4. Buyers
Organization

Bargaining power Bargaining power

Threat

5. Substitutes High, medium or

low?
 PORTER’S FIVE FORCES ANALYSIS
▪ The collective strength of these forces determines the ultimate
profit potential in the industry and the firms’ ability to earn rates
of ROI in excess of cost of capital

▪ the stronger the force is, the more limited the companies are in
raising prices and earning greater profits

▪ a strong force may be regarded as a threat as it reduces the

company’s bargaining power and is likely to affect profit

▪ a weak force maybe viewed as an opportunity as it gives the

company a higher bargaining power and earns greater profit
The Company’s Microenvironment
Suppliers
Provide the resources to produce goods and services
Treat as partners to provide customer value
Capture more of the value for themselves by charging higher prices, limiting quality or
services, or shifting costs to industry participants. Powerful suppliers, including suppliers
of la- bor, can squeeze profitability out of an industry that is unable to pass on cost
increases in its own prices
Determinants of Supplier Power
⚫ Differentiation of supply – supply concentration
⚫ Switching costs of suppliers and firms in the industry
⚫ Importance of volume to supplier
=> Influence buying power of ORG towards FIRMS
⚫ Threat of forward / backward integration within the industry
Degree of
dependence on
1 industry
The Company’s Microenvironment
Competitors
Firms must gain strategic advantage by positioning their offerings against
competitors’ offerings => Rivalry among existing competitors takes many famil-
iar forms, including price discounting, new product introductions, advertising
campaigns, and service improvements. High rivalry limits the profitability of an
industry.

Industry Competitors
Identify company competitors
Understand competitors’ objectives
Identify competitors’ strategies
Assess their strengths and weaknesses
Estimate their reactions
Select which competitors to attack and which to avoid
 Slow=> fight
for MS

cut prices below

their average
costs, even close
to their marginal
costs, to steal
incre- mental
customers

High- losing
Potential – large MS
great
gains
These barriers
keep companies in
the market even
though they may
be earning low or
negative re- turns.
Kotler’s Market Structure
Market
Followers (20%)
Market Market
Challenger Nichers(10%)
(30%)
Market Leader
(40%)
The Company’s Microenvironment
NEW ENTRANTS
New Entrants – entry barriers
Proprietary product differences
Brand identity
Switching costs
Capital requirements
Access to distribution
Absolute cost advantages
Learning curve
Access to low-cost product design
Government policy
Expected retaliation

=> BARRIER TO ENTRY!!

BARRIER TO ENTRY
Supply and volume
increase=> down
cost

Network efect – quality

of customer base

CA can be
bypass
Buyers

Powerful customers— the flip side of powerful suppliers—can cap-

ture more value by forcing down prices, demanding better quality or
more service.

This group will be an influencer on business profit

Customer insights
The company’s microenvironment
Substitutes
Determinants of Substitution Threat

⚫ Relative price performance of substitutes (Hiệu suất giá của hàng hoá
thay thế)
⚫ Switching costs (Chi phí chuyển đổi)
⚫ Buyer propensity to substitute (Xu hướng người mua thay thế)
=> Đối thủ gián tiếp
ENVIRONMENTAL IMPACT MATRIX:
Competitive Environment
Practice
Choose 1 factor in 5 forces, conduct an assessment for a company in
Ecommerce/Coffee industry

Lecturer will directly check and revise for each group

4. Business incentives
In order to attract investment, GOV have designed and implement a
series of incentives.
5. Country risk
 Political risk
a. Threat to shareholders value
◦ Capital loss – inability to exchage; asset-lock; un-able to
transfer

b. Threat to employees
◦ Gangsterism, crime, kidnap

c. Threat to operation
◦ Market disruption

Hongkong
 Economic risks
- Low economic growth
- Economic unstable
- Inflation
- Input cost
- Exchange rate
=> Push profitability at risk
Competitive Risk – think back about
market imperfection last week
Rủi ro hoạt động
2 terms
Analysing the Business Environment

MACRO
PESTEL
External micro
Interna
l Marketing Function
SWOT
+ HR, Finance, Production, etc.
Customers, Suppliers, Competitors,
Public, Distributors, Outside Agencies
Socio-Cultural, Economic, Political/Legal, Technological and Environmental
Giới thiệu công cụ PESTEL
The Company’s Macroenvironment
Political and Legislation Environment

Political environment
laws, government agencies, and pressure groups that
influence or limit various organizations and individuals in a
given society
International market
-Consumer laws in China: all skincare products need to test
on animals/human
-Vietnamese: land lease, tax incentives for foreign investors
(attract external investment)
-UK: Food importing- certain food of non-animal origin from
non EU-countries=> only can enter the UK through specific
ports and airports=> control.
Let's take a look
Facebook, Google and Australia legislation
1. Luật mới của Úc đối với Facebook và Google là gì
2. Hành động đáp trả của Facebook và Google
3. Đánh giá hành động của hai doanh nghiệp
How to measure properly