Michigan State “Global” University

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					Michigan State University
     Global Online
   Michigan State University
        Global Online
The Structural Analysis of Industries
Forces that Determine Industry Profitability
 Rivalry among current competitors
 Rivalry among substitute products
 Bargaining power of suppliers
 Bargaining power of buyers
 Threat of new firms
   Michigan State University
        Global Online
Sub-forces that Impact Industry Structure
 Economic conditions
 Political environment and considerations
 Regulatory issues
 Demographics
 Technology
 Business Culture
       Traditional Country Risk
   Political Stability         Regulatory/ Legal
   Quality of Government        System Effectiveness
    Leadership                  Prospects for Economic
   Macro Economics Policy       Growth
    Management                  Level of External Debt
   Participation of the         and access to Foreign
    Private sector in the        Capital
    Economy                     Strength of the Domestic
                                 Financial System
          Country Risk Models
   Mid 1970’s                     Early 1980’s
    – Countries Don’t Fail          – Country Cash Flow
    – Focus on Political Risk       – External Debt Service
      and Competence of               Capacity
      Political Leadership         Mid 1980’s
   Late 1970’s                     – Comparatives Country
    – Macro Economic                  Risk Models
      Policy                        – Risk vs. Opportunity
    – Data Gathering                  Assessment
         Country Risk Models
   Late 1980’s                   Mid 1990’s
    – International Monetary       – Differentiation of
      Fund Seal of Approval          Countries
    – Sources and Uses of
                                   – Financial Engineering
   Early 1990’s                  Late 1990’s
    – Global Capital Markets       – Differentiation by
      Analysis                       Industry
    – Structural                   – Financial Deepening
                             Early 2000
 Measures Country Risk
 Measures Country Opportunity
                Country Risk- Quantitative Measure
    -    Index to measure an action’s capacity to service debt based upon size of
         external debt and short term financing requirements
    -    Index to measure impact of economic growth, inflation, and fiscal &
         monetary policy on debt service capacity
                        Economic Potential Index
    -   Measures attractiveness of an overseas market from a macro perspective
    -   Major variables include a country’s structural competitiveness, strength of
        the financial system, quality of economic policy management, stability
    and effectiveness of the political institutions
    -   Market Attractiveness can be measured on an individual and comparative
    Projected Rapid Growth in
     Internet Activity and E-
 Growing Computer Usage
 Rapid Infrastructure Development
 Dropping telephone and Access Charges
 Customer Base Willing to Consume
 Increased Number of Local Content sites
 Influx of New Market Entrants
 Technological Innovation
    Tips for Successfully Establishing
        Business in Latin America
 Evaluate Risks and       Consider the Current
  Opportunities in Each     Level of Technology
                           Study and Closely
 Prioritize Which
                            Monitor Government
  Markets to Enter
 Be Sensitive to Local
  Social and Cultural      Be Aware of the
  Traits                    Competition – Current
 Form a Partnership        an Future Players
  with a Local Company
    Traits of Successful Firms
 Plan Around Existing Economic Conditions
 Understand and Monitor the Regulatory
 Focus on the Cultural Nuances of Each
 Be First Movers
 Develop Brand Name
 Maintain Access to Financing

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