Globalization

In less than two decades, Beijing has taken advantage of the disappearance of its Soviet neighbor to launch its program of development of the “Great West” and open up Gaining to border actions, while the states of Central Asia, seeking new partners, have sought to benefit from China’s dynamism by integrating themselves into the Asia-Pacific zone of prosperity.

While the Chinese authorities may make a point of honor in establishing cordial relations with the five states of the region, Astrakhan partnership with China is termed “strategic, confirming Stand as a major political ally of Beijing in a post-Soviet climate in which the Khaki government is displaying balanced and diversified policies in the face of Moscow heavy- handed presence. This privileged China-Astrakhan partnership is based on a alliterated economic reality. These days, China-Astrakhan trade represents more than two-thirds (about 70 percent) of all China-Central Asia trade.

Unlike the other historical power in the region, Islam Karamazov Uzbekistan, Astrakhan, under the leadership of President Nursling Nazarene since 1989, has undertaken important economic liberalizing reforms that, despite their limitations, are now succeeding in attracting foreign investment. Astrakhan has thus become the second richest country in the post-Soviet space: with a GAP estimated at $9,400 per capita in 2006, it sits Just behind Russia (with approximately $12,000) but ahead of the other Central Asian countries (between $8,500 and $1,300).

In 15 years, it has succeeded in dramatically halving the portion of its population living below the poverty line (now less than 25 percent), whereas in the other four states of the region, more than half of the population is still considered “poor. ” In addition, the country has seen the emergence of a middle class, a guarantee of longer-term stability. The exponential growth in economic relations with China since the beginning of the sass has not once been challenged.

Astrakhan even opened a consulate in Hong Kong in 2003 and one in Shanghai in 2005 to facilitate contact. Nevertheless, economic relations between the two countries reveal multiple imbalances that are increasingly raising questions within Astrakhan’s political class and among local experts. While the official Chinese position extols the complementarily of the two economies and the mutual benefit of trade, this optimistic view is largely disputed on the ground. Khaki concerns over possible Chinese domination are based not only on economic arguments .

They need o be situated in a social context in which fear of China remains very real: the general lack of knowledge about China, and fear of too great a difference in demographic power, might well be important factors influencing Khaki reactions to China’s growing presence. With the increasing integration with the global world, Chinese trade along with world trade as a whole is dominated by trade between major trading blocs, such as East Asia, the North American Free Trade Area (NONFAT) and the European Union (ELI) each of which includes economically advanced market economies.

Of these partners Chinese trade with the EX. has increased significantly in importance . In 2008, the EX. imported IIS$378 billion of commodities from China (IIS$ 293. 1 billion reported by China), making China the largest supplier of EX. merchandise imports. These imports included merchandise from EX. companies that had relocated parts of their global production systems in China. The SEIZE exported IIS$ 113 billion of goods to China (IIS$ 132. 8 billion reported by China) making the EX. China’s second largest source of imports (after Japan).

The result was a IIS$ 265 billion trade deficit for the SEIZE. This deficit is a major source of contention between these two major riding partner. The last 20 years of china economy has been dramatic. World exports from China are growing dramatically to industrial country markets . This process could continue for some time because of huge youth population. However, by some indicators, China’s experience is less dramatic than that of Japan and Korea during their period of industrialization and integration with the global economy.

Generally speaking trade between developed and developing economies involves a vertical division of labor in which developed economies produce high value-added goods and services and exchange them for low value-added goods and services from economically less-developed countries. When China embarked on a path of export-led growth, it accordingly specialized in sectors producing relatively simple, labor-intensive and mass-produced goods and services.

To maintain sustainable economic growth, China’s ambition is however to upgrade its industrial structure moving into more advanced sectors and functional roles including in its trade with economically advanced countries . The Chinese-Astrakhan regional economic cooperation, according to national interests of the Republic of Astrakhan, has good conditions for institutional semantics. Astrakhan is rich with oil: the proved stocks of oil of 24 billion tons on a land, and stocks of continental seas of 70 million tons.

Astrakhan though has a stable and safe outlet to the sea and access to the international markets according to national interests practically it can’t provide. To construction Chinese-Astrakhan the oil pipeline and the gas pipeline, practically export by Astrakhan of crude oil, gas and oil products depended on Russia. The Chinese-Astrakhan regional economic cooperation promotes distribution of Astrakhan structures of radioactivity and optimization of distribution of available resources . 1. 2 Astrakhan Trade Research Status Astrakhan for 21 years was deeply integrated into world economy, actively involved in globalization process.

Now the republic does business practically all countries of the world. His trade partners are 212 states and territories on all continents. The volume of the foreign trade commodity turnover for 1994-2010 grew from bal. Dollars to 90,1 billion. The highest volumes in 109,1 bal. Dollars were reached in 2008. In the history of the foreign trade relations of the country positive lance in 39,8 bal. Dollars, received for January – Seep. 2011, it is reached for the first time. It is expected that following the results of 2011 the volume of external commodity turnover will be the highest in the history of the country and will make about 115 bal. Lars. It should be noted that excess of export over import remains same as 1995 so far. In foreign trade of Astrakhan for years of Independence there were changes. Character and the maintenance of the external economic relations led to shifts in a geographical orientation of commodity streams . Two groups of partners were rated. With one steady growth is observed, with others recession was outlined. So, for 1995-2011 in a foreign trade turnover of the country the share of Europe grew from 26% to 31,6%, Asia from to 24%, including China from 4% to 21%, America from 1% to 5, Africa from to 0,22.

Growth of deliveries of fuel and energy resources, mineral raw materials to these regions and growing volumes of purchases of the latest cars and the equipment from the developed countries became defining. From Africa, especially from Kenya, import of tea, Ghana cocoa increased, Tunisia and Egypt got wheat, Morocco sulfur. In export structure the greatest share is the share of EX. countries (48,5%), despite its decrease in comparison with 2010 for 3%. The main products of export are energy carriers and oil.

The share of export to the Countries in a total amount of export for the last year decreased from 9,4% to 8,6%. Export to China, other countries of the world and other CICS countries for the last year, on the contrary, increased, having made 18,5%, 18,5% and 5,9% respectively. Geography of Astrakhan’s exports In structure of import of ARK the greatest share is the share of the Customs union countries – 445% or 16,9 billion USED. This indicator is times more, than import volumes from EX. countries, it is 3,4 times more than a volume of import from China and in 5,7 times more import volume from other CICS countries.

The share of deliveries from China, the countries of the Customs union and other CICS countries grows in import of ARK whereas from the others the direction decreases. As a whole volumes of export and ARK import in mutual trade increase, however it is difficult to give an unambiguous assessment of influence of the Customs Union on foreign trade of Astrakhan as process of administrative settlement of functioning of he Customs Union, harmonistic and unification of various procedures at implementation still proceeds mutual trade between participant countries.

Further the analysis of structure of export and import in a section of raw and processed production will be carried out, and also specification of processed production on intermediate, consumer and means of production is presented. Export of the processed goods of ARK grows, having outstripped in 2011 volumes of 2008 for 10,6% or for 2,1 billion USED. At the same time, the specific weight of the processed export decreases. It is connected by that cost the volume of raw export rows quicker in connection with a rise in prices for energy resources.

In 2011 the ratio of processed and raw production in import made 89% and 11% respectively, and the gain of import of processed production (24,4%) is more, than the gain raw that can promote a competition aggravation between foreign and domestic producers who and so are in rather vulnerable situation . Export grew so quickly mainly thanks to increase in physical volumes of deliveries and prices of oil, oil products, natural gas and radioactive elements uranium. The main buyers of these goods are EX. and China therefore their shares in the total amount of export increased.

Volumes of export of other important export goods (ferrous and non-ferrous metals, including gold, and also grain and wheat flour) too increased, but in less than export of energy carriers that led to decrease in a share of these goods in a total amount of export in 2010 in comparison with 2000. It also led to decrease in shares of Russia and Switzerland which are large import-shooting galleries of metals from Astrakhan. During 2000-2010 Astrakhan practically stopped supply of oil and oil products to offshore zones (The Bermuda and British Virgin Islands).

Astrakhan exports very few other goods besides energy resources, metals and grain; the share of such goods in the total amount of export decreased from 14% in 2000 to 6% in 2010; if to measure in absolute expression in the prices and at an exchange rate of 2010, this export decreased by 21%. 1. 3 China and Astrakhan on trade Development For Astrakhan, the future of economic relations with China is bilateral. The China-Astrakhan relationship will be strengthened even further by accession to the World Trade Organization (WTFO), which will enable Chinese companies to invest more in the Khaki market.

Economic relations are also developing to a certain degree in a multilateral context through the Shanghai Cooperation (SOC), even if China’s presence by way of the SOC is considerably greater in Gyrations and Atkinson. Thus, the $900 million of credit proposed by in 2004 – and implemented from 2006 onwards -was destined primarily for the region’s poorest states, not for Astrakhan. Nevertheless, the Organization has instigated projects involving all the Central Asian states, such as the Caspian Sea-China highway that starts in Russia and crosses Astrakhan, rail connections, and the construction of hydroelectric power stations.

However, despite the measures adopted by the SOC Business Council to strengthen linkages between the Central Asian states, government-to-government disagreements often delay their implementation. Several Khaki specialists also complain of the Co’s inability to promote its economic strategies in business circles; some of its decisions are said to remain declarations of intent due to a lack of information among business leaders.. It is difficult to obtain a precise assessment of China-Astrakhan trade figures.

The official statistics consider a little extent of cross-border trade, and cannot measure he amount of illegal trade, particularly in metals, or contraband, such as acetic anhydride, the chemical required to turn opium into heroin. Some local specialists point out significant differences between the Chinese and Khaki statistics. Thus, when Astrakhan claimed $550 million of trade with China in 1999, Beijing was already confirming more than $1 billion. In 2005, the discrepancy grew wider: Astrakhan, according to Stand, apparently achieved imports from China with a total value of $1. Billion, compared to almost $4 billion according to Beijing, and Stand reported exports to China worth nearly $2. Billion, exceeding the Chinese figures by more than $500 million. The discrepancy can be attributed partly to political reasons: Stand seeks to overvalue its exports and undervalue Chinese imports in order to reduce a trade balance skewed too greatly in China’s favor. In 2006, Astrakhan’s trade deficit in relation to its neighbor was at least $1. 14 billion, 15 percent more than in 2005.

On the other hand, the discrepancy can be explained by differences in accounting; Khaki businessmen have every reason to undervalue their trade flows in order to avoid taxes, unlike their Chinese counterparts, who receive tax concessions on exports. China’s progress is so great that Beijing will soon catch up to Astrakhan’s main trade partner, Russia. In 1992, China-Central Asia trade, two-thirds of which is China-Astrakhan trade, was barely $422 million, reaching $512 million in 1993. It plummeted in 1994 as a result of stricter visa processes, then rapidly climbed again, reaching $699 million 1997.

It experienced a decrease ($588 million) again as a result of the Russian economic crisis of the summer of 1998, which similarly affected Central Asia, then began to grow at a rate that seems unstoppable now. Trade passed $1 billion in 2000 before rising tenfold to more than $10 billion in 2006. The volume of trade tripled between 2002 and 2005, but continued to largely favor Chinese exports, which represented two thirds compared to Central Sais’s one third. Thus, in 2006, China represented 15. 5 percent of Astrakhan’s foreign trade (almost $9 billion), nearing Russian’s 18. Percent (almost $11 billion). China’s Trade Ministry quoted a figure of $10. 8 billion, which would put Moscow and Beijing on an equal footing, while Vladimir Paramount and Aliases Strokes add another $2 billion or more in illegal read, which would give China trade supremacy over Russia. According to Khaki experts, the bilateral trade figure is expected to reach $15 billion in 2008. The imbalance of power between China and Astrakhan remains glaringly obvious. In 2006, Astrakhan represented only 0. 49 percent of China’s foreign trade (the whole of Central Asia representing 0. 60 percent).

This imbalance is shifting to foreign investment: in 2005, China injected $1. 2 billion into the Khaki economy (82 percent in the hydrocarbon sector and 14 percent in the construction sector), whereas Astrakhan invested only $7. Million in China. The Chinese and Khaki economies are, however, proving to be complementary to a large degree. More than 80 percent of China’s exports to Astrakhan are finished consumer items (textiles, shoes, appliances, toys, electronics, spare parts, pharmaceutical products, foodstuffs), while 85 percent of Astrakhan’s exports to China consist of raw materials (petroleum, ferrous and non-ferrous metals).

In some sectors such as aluminum, the unidirectional nature of trade flows is impressive: more than 95 percent of Astrakhan. 1. 4 Research Purpose and Science Contribution . 4. 1 Purpose This thesis aims to bring some conclusion like how the Bilateral relations between the countries have proved to be mutually beneficial to both for strategic reasons. The two economies are highly complementary. This thesis has tried to figure out how China can help Astrakhan in many areas since it has a lot of experience in how to develop.

And to successfully overcome the negative aftermath of the global financial crisis, also managed to significantly increase the volume of trade and economic cooperation. At the same time the thesis has tried to figure out the active aspects and threat that has arisen in Astrakhan side because of heavily depended on consuming Chinese products and not developing the self-sustainable producing and manufacturing culture. 1. 4. 2 Science contribution With these research questions in mind, the purpose of this dissertation is to investigate how China and Astrakhan will make a business in the future.

Keywords: export, import, GAP, Trade, development, bilateral relation. 2 Content and methodology 2. 1 Main content In the research we will analyze the main problems in Trade between China and Astrakhan and how to solve it. Despite stability of trade and economic, more detailed analysis of the Astrakhan-Chinese cooperation revealed a number of the main problems in system of the bilateral economic relations. First, prevalence of a raw orientation in structure of commodity turnover of Astrakhan with China.

The analysis of export-import streams shows that about 98% of the Astrakhan export to China are made by strategically important raw materials. The special attention in March, 2008 in Beijing a business forum “Astrakhan -? China was paid to discussion of this problem: partnership for success”. In speech of the Prime minister of Astrakhan Karri Misaims it was noted that “the structure of the Astrakhan export to the People’s Republic of China keeps a pronounced survey orientation” .

The main articles of the Astrakhan export to China -? goods of survey group: hire of ferrous and non-ferrous metals, scrap metal, oil, and also raw leather, cotton raw, wool. Astrakhan imports from China finished goods, first of all, goods of routinely demand, mechanisms, electric equipment, production of transport mechanical engineering, etc. And the Chinese import to Astrakhan is hardhearted in most cases by goods of not high quality which competes with domestic producer owing to the low price and quantity.

During the research we will prove or disprove all our assumption. The thesis will be divided into three parts: 1) The remainder of part I contains a review of the relevant literature, an introduction to the theories used to answer the research questions and a detailed description of the method. These sections focus on the research area and research approach, providing an overall context for the thesis. 2) Part II includes the main analysis of the research subject. ) Part Ill contains a conclusion and recommendations. It summarizes the key findings from the dissertation.

It also includes a further scenarios and suggestions for future. 2. 2 Methodology and data The researcher approaches the object subjectively based on their prior understanding of the object. Therefore the authors have chosen the descriptive approach. The descriptive approach does not mean that the authors will find an absolute truth, but rather form an understanding of the investigated subject. This study does not aim to measure the exact phenomena; in contrast we aim to receive a greater understanding of bilateral trade.

Since the purpose of this paper was not to find any absolute truths, this approach will give us more freedom to interpret the information we have collected based on the frames of references. We have chosen a qualitative approach in order to be able to collect detailed information from the secondary data regarding the topic. This is of great importance in order to sustain answer to our purpose. This will lead to a greater understanding for their choices regarding our questions and enables us to discuss among those.

According to Holmes and Solving (1997) a qualitative approach will help the authors to research the problem more closely and also provides opportunities to ensure validity and reliability of the study . The authors need to interpret and understand the usage of how the area of interest works and how it can be used. It is an advantage if those who will implemental research of qualitative approach have knowledge about the area (Patella & Davidson 2003). According to Barman and Bell (2007), there are researchers who are critical to the qualitative approach due to subjectivity. However, we have tried to be as objective as possible in our study .

International Business Strategy FALL 2010 Course Outline 1. motivation and description of the course Companies today confront an increasing array of choices regarding markets, locations for key activities, outsourcing and ownership modes, and organization and processes for managing across international borders. This course focuses on the international dimensions of strategy and organization, and provides a framework for formulating strategies in an increasingly complex world. The goal of this course is to provide the foundations for taking effective action in the multi-faceted world of international business. 2. ourse structure The structure of this course follows a logical sequence where first the international environment is analysed in relation to the international strategies of firms. Next, we study the optimal scope of the firm across geographic markets, and whether a firm should diversify – or expand its scope across different geographic markets. Such a scope economy can either be demand side, when the firm can replicate a strategy that works well domestically in a country that was previously missing that product or service, or supply side, when a firm seeks to exploit a valuable resource from within a new market.

In the first case, a firm arbitrages a product or a strategic capability into a new market whereas, in the second case, it arbitrages the factor cost advantage of a new market. We will also see that in order for the firm to extend the scope of activities under its own management to a foreign country, there has to be some market failure present preventing that firm from simply licensing or selling its valuable resource to an indigenous firm – or buy it from an indigenous firm in the case of supply-side scope economies. As most cross-border expansion of significance currently occurs through M&A or alliances, we look at the particular hallenges such operations entail for the firm. Finally, we examine how the off-shoring of activities may help firms to better compete in the global economy. Method The course proceeds through a combination of lectures, readings, and making use of the case method. You should have completed the set readings prior to a class and be prepared to answer the case questions in class. This means that you should have read the assigned case for a class and be prepared to answer the questions on that case. Some classes have Optional Readings, which are simply listed in case you have particular interest in reading further on a topic.

Case analysis involves an enhanced role for class discussion, supplemented by lecture material. Generally, the goal of class discussion is to arrive at a collective analysis of the issues presented by the materials. Analysis of international strategy issues is not accomplished through the routine application of formulas, but rather through reasoned analysis under conditions of limited information, uncertainty, by individuals and groups from different backgrounds and with particular schemas and ways and structures of organizing knowledge.

With a case, you should be able to identify the key issues, problems, and opportunities facing the central protagonists, to articulate and evaluate alternative approaches to tackling the problems, and to describe the course of action that you recommend and the reasons for your recommendation. Case selection criteria in part includes variation across contexts and you should be able to port and apply the frameworks, concepts and tools from one case, context and part of the course to another. Course Readings The principal textbook for the Course is:

Hill, Charles W. L. 2011. International Business: Competing in the Global Marketplace. NY: McGraw-Hill International Edition (Eighth Edition). Readings from this textbook are supplemented by cases and other readings. 3. assessment Individual grades for this course have two components: – Class attendance + assignments(25%) – Written exam (75%) 4. course overview and materials 27 September Introduction and course structure Globalization and regional integration Learning Objectives: • Explain the phenomenon of globalization; Explain why managers today need a global perspective; • Describe the effects of globalization on markets and production; • Explain how technology and innovation support globalization; • Globalization versus regional economic integration; • Business strategies and regional integration. Reading: Hill, Chapter 1. Globalization Chapter 8. Regional Economic Integration. Optional Reading: P. Dicken. 2007. Global Shift mapping the changing contours of the World economy, 5th edition, London: Sage Publications. October What makes countries and regions different? The role of culture, institutions and political and economic systems. Learning Objectives: • Identify the business and economic implications of differences in culture; • Understand differences in political and economic systems of countries; • Discuss the role of public policies in relation to the competitiveness of a country; • Explain how indicators of a country’s competitiveness can help firms decide where to locate production activities.

Reading: Hill, Chapter 2: National Differences in Political Economy. Chapter 3: Differences in Culture. Optional Reading: E. Thompson, National Competitiveness: A Question of Cost Conditions or Institutional Circumstances, British Journal of Management, Vol. 15, 197–218 (2004). 11 October International trade theory, foreign direct investment and competitiveness Learning Objectives: • Explain the evolution of different trade theories; Discuss the relevance of the New trade theory and Porters diamond; • Discuss the importance of foreign direct investment (FDI) in the world economy, and the changing patterns of FDI over time; • Present different theories that explain why a company would undertake an acquisition rather than a Greenfield investment; • Explain horizontal FDI, and suggest the conditions under which it may be most applicable; • Explain vertical FDI, and suggest the conditions under which it may be most applicable. Reading: Hill, Ch. 5, International Trade Theory,

Ch. 6. The Political Economy of International Trade Ch. 7. Foreign Direct Investment . Optional Reading: Dunning, John. 2009. Location and the multinational enterprise: A neglected factor? (+ Comments). Journal of International Business Studies, vol. 40, No. 1, 5-41 The Global Competitiveness Report, 2010-2011, World Economic Forum, Geneva 18 October Successful FDI promotion: how regions seek to influence corporate FDI For corporate FDI to be successful, it should pre-empt or be aligned with the FDI priorities of the host country and region.

International businesses cannot achieve durable advantages if it is out of sync with the aspirations of policy makers in the ‘go-to’ locations. Hence executives should seek to understand such aspirations and the related strategies. This module explores how policy makers seek to make their constituencies more attractive for FDI. It addresses the challenges that both National Investment Promotion Agencies (IPAs) and Regional Development Agencies (RDAs) face to develop successful strategies and to see these through to implementation.

In this context, the module will cover both the offer that IPAs and RDAs can provide to corporate FDI decision makers, as well as the delivery thereof. Real life examples will be used to understand what works and what doesn’t work today – both for mature economies (e. g. Western Europe), transforming economies (e. g. Central Europe) and emerging economies (e. g. Asia). Learning Objectives: • Understand the prevailing economic development concepts and FDI promotion strategies; • Explore the pro’s and con’s of the strategies; • Understand the prevailing incentive schemes that regions use to attract corporate FDI; Understand the EU’s policies towards incentives; • Distil common guidelines for policy makers; • Understand what corporations can and should do to capitalize on local economic; development concepts and FDI promotion strategies. Optional Reading: Michael E. Porter, 1990. The Competitive Advantage of Nations, Free Press 25 October The Strategy of International Business: Creating value from internationalisation Learning Objectives: • Understand how internationalisation can create value; • Measure the contribution of an internationalisation strategy; • Assess the business model of the firm in an international context. Discuss how firms should handle the complex international environment; • Suggest the reasons why firms may decide to enter international business, and identify the benefits from international strategies; Case: CEMEX Reading: Hill, Ch. 12, The Strategy of International Business, pp 419- 447 Extra note: “The value of a global strategy: the ADDING framework”. Extra note: “Adapting the business model to international markets”. Discussion Questions: 1) What benefits have CEMEX and the other global competitors in cement derived from globalization?

Use the ADDING framework in answering this question. 2) What explains the better than average performance of CEMEX? How does this relate to industry specific factors and the competition within the industry? 3) What makes CEMEX’s internationalization process so effective? What procedures and techniques are used? 4) In what other countries could CEMEX profitably expand its business? What are important factors to be considered for entering new markets. 1 November Holiday 8 November The Strategy of International Business: Design and implementation

Learning Objectives: • Outline the basic strategies undertaken by MNEs, and specifically focus on how they relate to the needs for local responsiveness and cost minimization; • What are the advantages and disadvantages of using a global strategy? • Discuss how firms should handle the complex international environment. Reading: Ghemawat ,P. “redefining Global Strategy, Chrossing Borders in a World Where Differences Matter”, Harvard Business School press, Cambridge, MA, 2007. Chapter 3 – Global Value Creation. Case: BRL Hardy Discussion Questions: ) What are the driving forces behind BRL Hardy to become a global company? 2) What is the source of tension between Stephen Davies and Christopher Carson? How effectively has Steve Millar handled the differences? 3) Should Millar approve Carson’s proposal to launch D’istinto? Why or why not? 4) What recommendations would you make to the organization concerning the conflicting proposals for Kelly’s revenge and Banrock Station? What would you decide to do as Carson? As Millar? 15 November The Organization of International Business: Organizational architecture of the International firm. Learning Objectives: Identify the different kinds of organizational structures and internal control mechanisms that international businesses can use to manage global operations; • Discuss the advantages and disadvantages of centralized and decentralized decision systems; • Present the basic types of organizational forms that multinational firms use; • Describe the control systems and integrating mechanisms available to multinational firms; • Show how the organizational architecture, control systems, integrating systems, and decision making choices multinational firms have available must be consistent with their strategy and industry environment.

Case: BRL Hardy Reading: Hill, chapter 13, The Organization of International Business, pp 449-484. Optional Reading: Verbeke, Alain, Kenworthy,. Thomas. 2008 . Multidivisional vs metanational governance of the multinational enterprise, Journal of International Business Studies, 39( 6) : 940-956 22 November Growing internationally to become a world leader. The case of AB InBev. Invited lecture by Mr. Beni Roos, former executive director Interbrew 29 November Entering foreign markets

Learning Objectives: • Present the advantages and disadvantages of six different modes of entering new countries and markets; • Bring together the issues of FDI theory and the issues of strategy and organization to better understand why different firms may make different decisions regarding the best modes of entry; Case: Lincoln Electric Reading: Hill, chapter 14, Entry Strategy and Strategic Alliances, pp. 487-518 Optional Reading: Kim, W. Cha, Hwang, peter. 1992.

Global Strategy and Multinationals’ entry mode, Journal of International Business Studies, 23, 29-53. Discussion Questions: 1. Put yourself in CEO John Stropki’s shoes. Should Lincoln Electric expand into India by investing in a major production facility there? 2. If you were to expand into India, would you enter through acquisition, a greenfield site, or some type of joint venture? Which factors would inform your decision among these entry mode choices? 3. In which countries is Lincoln Electric likely to be most successful or least successful? Why?

How would this guide your own choice of where to place Lincoln Electric’s production facilities abroad? 4. When Lincoln Electric goes to India and other countries, what factors should determine how much it adapts its core incentive pay-for-performance management practices to local labour market norms? Should Lincoln Electric follow the adage “when in Rome, do as the Romans do,” or should it seek to always replicate the recipe behind its success in the home plant in Cleveland? 6 December Cross-Border Arbitrage and Outsourcing Learning Objectives: Understand cost, resource, and market-based advantages of on-shore, near-shore and off-shore locations and their implications for “roles” of operating units, and how to exploit differences across countries to directly create value; • Present the phenomenon of outsourcing jobs from “advanced nations,” such as the United States or Western Europe; • Understand that while much attention is paid to the economic differences across countries – such as through offshoring and outsourcing – there may be important arbitrage differences based on cultural, administrative, and geographic differences.

Reading: Hill, chapter 16, Global Production, Outsourcing and Logistics, pp 562-586 Optional Reading: Ferdows, Kasra, 1997. Making the most of foreign factories. Harvard Business Review (March): 73-88. AT Kearney, 2009. The shifting geography of offshoring Lewin, Arie Y. e. a. , 2009. Getting Serious About Offshoring in a Struggling Economy, Shared Services News (February): 19-23 Discussion Questions: 1) What are corporate risks associated with outsourcing, and what can be done to mitigate these risks? 2) Are wage arbitration based outsourcing tactics soon to become redundant as result of global wage cost escalations? 3 December Setting up international strategic alliances Learning Objectives: • Discuss the role of strategic alliances, their advantages and disadvantages, • Highlight the factors critical to making alliances work Reading: Hill, chapter 14, Entry, Strategy and Strategic alliances, pp 487-518 Optional Reading: Reuer, Jeffrey. (2004). Strategic alliances: Theory and evidence. New York: Oxford University Press. Case: Lasserre, P. ; Flament, A. ; Fujimura, S. ; Nilles, P. , Renault and Nissan – A marriage of reason. INSEAD (2001) 20 December Review session

The Influence of Globalization on movies Nowadays, movies, which are the most important entertainment of people, has spent much more money and time than before by a growing number of people. Different kinds of new movies play nearly everyday; and the way to watch a movie isn’t confined to the cinema. Along with the improvement of digital postproduction and digital effect is applied to the movies, they make people to be personally on the scene when you watch a movie. In the past twenty years, the changes of the ways to watch a movie and the movie technology have already influenced entertainment for people deeply.

As we know, globalization on movies and films’ changes in the past twenty years had an effect on people’s daily life, so it was the reason for choosing this topic. We worked out six questionnaires about the project after deciding on the topic. We had 3 yes/no questions, for instance, do you like watching movies, how many movies do you watch per month and traditional movies are more valuable than commercial movies. In addition, we had a multiple choice in our survey, it is “Which kind of films do you like”.

Besides these, two open questions were chosen, one is “What aspects of movie do you think have changed? ”, another is “Which ways do you often watch movies? ”. Our group planned to ask 12 people to answer the questions when we were finishing the questionnaires, so each group’s member needed to ask 3 people about the questions. Only my roommates were asked, and all questions were answered by a pencil. These men who were asked to answer the questions because of convenience; I could take up too much of their time to explain the project, the topic and the detail of the questions, too.

The result was collected together when we finished asking the questions. The outcome of our survey is that all the interviewees like to watch movies. However, half of them watch movies less than 5 per month, nearly half of the interviewees watch 6 to 10 movies per month . Only one interviewee watches movies more than 20 per month. Disaster film and comedy film are the most popular movies among the interviewees, many people watch science fiction film and cartoon film as well.

Fewer interviewees like watching crime film. A majority of people consider that movies’ theme need to change most because they want to watch a variety of movies. Meanwhile, the way to watch a movie is infinite variety, such as internet, at home by a DVD, cinema and web TV phone. Most interviewees also believe that traditional movies are more valuable than commercial movies. It can be seen from the survey’s figures that the ways to watch a movie and the movie technology have changed most in the past twenty years.

Over the past days, only cinema was supplied for people who wanted to watch a movie. But now, more and more people watch movies at home through Family Cinema and computer because they make people comfortably. People can sit on the sofa even or lie in bed to watch a movie, and they are able to have some food and drink at the same time. However, in my opinion, movies’ changes which affect entertainment of people most is movie technology, particularly is computer digital special effects’ appearance.

Digital special effect is not only a supplement for film editing, it have already penetrated into every aspect of movies, such as , scene, stage-ties and postproduction. The directors’ imagination is also at liberty to gallop on through the digital special effect. It makes people to be personally on the scene and shock each audience’s ghost. There is no doubt that people’s daily life is closed related to movies, and they play a very significant role in people’s entertainment life. Movies’ changes have never terminated in the past twenty years, and film industry has undergone enormous changes.

Marketing in the world today is affected by so many factors in the environment. The factors include political and legal issues, which are the most important. Some other environmental factors that have a major effect on the marketing world are social, cultural economics, technological, and competitive. These factors surround the basis of the decisions made within marketing. Most organizations in the world today start out to function as domestic organizations. Domestic organizations aim to sell within their own country.

According to love to know (2006-2010) the four P’s of marketing- product, price, place and promotion- are often easier for companies to determine within the domestic market (Business, para. 1). Operating in a global market means that the organization has begun to offer their goods and services worldwide to expand the market and increase sales. Globalization presents a huge opportunity for success for many organizations. Domestic and global marketing helps to promote the organizations success and continue the expansion of the business by redesigning marketing plan to fit certain aspects.

Toyota Corporation is an organization affected by these environmental factors because of the choice to operate domestically and globally. Global Economic Interdependence Marketing in the world today is highly dependent on global economic interdependence. Organizations that conduct domestic and global marketing are the automobile industries such as the Toyota Corporation. The Toyota Corporation uses its economic interdependence to help increase the sales revenue. The increase occurs because of the purchasing of vehicle parts and materials from other countries.

The purchase from other countries is a key component that increases the countries market share. The effect of trade practices and agreements plays a large role in Toyota’s strategies and operations within the boundaries of the countries. Toyota has many factors they must consider different tariffs, taxes, trade barriers and agreements when pricing and selling products globally. The World Trade Organization is an organization that helps to ensure and promote world trade by reducing tariffs and their international trade barriers.

Demographics and Physical Infrastructure Demographics and physical infrastructure are very important factors that affect the marketing decisions of the organization. Demographics relate to race, gender, age, ethnicity or the income guidelines of a particular target market. Physical Infrastructure relates to the setting in which marketers are promoting the organization. These settings include roads, schools, bridges, offices buildings, and other various developments. The two factors are important because they help to determine what target market to advertise for.

Once this is in place the marketing plan and marketing strategy can be put into place. Cultural Differences Cultural differences are very important in every organization whether it functions domestically or globally. Cultural differences can be the barrier between the failure and the success of a business. Each country has its own folkways, norms, and taboos. When designing global marketing strategies, companies must understand how culture affects consumer reactions in each of its world markets (Armstrong ; Kotler, 2009).

The organization has to conduct several studies to understand the way the customers in other countries may be affected by the organizations promoting the sale of their product or service. This factor is very important in marketing globally because it is very easy to offend other countries unintentionally. In the end this leads to unwanted publicity and legal issues for the organization. Social Responsibility and Ethics versus Legal Obligations Social responsibility and ethics plays an important role in marketing decisions.

When making and promoting a good quality automobile, Toyota must be careful not to violate their social and ethical responsibilities to its consumers. According to Toyota (2010), Toyota believes that helping people improve the quality of life in their communities is an essential corporate responsibility (about philanthropy/guideline, para. 1). Violations of the corporations’ social and ethical concerns lead to legal issues. According to Armstrong and Kotler (2009), Companies can in good conscience do whatever the market and legal systems allow.

A second philosophy puts responsibility not on the system but in the hands of individual companies and managers. The role ethics plays in marketing is personal integrity, corporate conscience, and consumer welfare. The Toyota Corporation standards are set on a level where they balance out and stay in compliance to avoid legal obligations. In relation to social responsibility and ethics the two factors work hand in hand to ensure Toyota stays above standard. Toyotas’ responsibility lies in providing its customers with more informed choices to ensure a better quality product.

Political Systems and International Relations The political system set up today in the world of marketing also plays a major role in choosing to do business abroad. Political systems weigh heavy on marketing because the organizations must follow the political systems of the country. The political system and international relations have complete control over the foreign affairs. Political systems all over the world operate under difference influences. International relations provide an influence of power.

Within the Toyota Corporation these two factors play an important part in Toyotas’ decision to do business in the United States. Today Toyota is one of the top-selling brands in America, and they are committing themselves to continual improvement in everything they do, along with breakthrough products for the future (Toyota, 2010). Foreign Corrupt Practices Act of 1977 The FCPA is a law enacted in 1977 and revised in 1988. This law prohibits the bribery of foreign government officials by the United States persons and prescribes accounting and record-keeping practices.

This is highly an influential factor in Toyotas’ marketing decisions. Toyota is a company that began in Japan. When the company decided to do business abroad the rules changed. Toyota had to develop certain aspects of the business that would allow the company to be sustainable functioning globally. Toyota is dealing with influences from FCPA, local, national, and international legislation. Local legislation influences the way the business affairs are run within the local boundaries. The national legislation influences the way all national business affairs are run abroad.

International legislation creates the rules and laws that govern over international business affairs. The rules, laws, and regulations put into place by these agencies help the domestic and global functioning organizations maintain compliance and maximize their profits. Technology Technology and innovation have brought on such a promising future for Toyota Corporation. Technology has taken Toyota by storm by creating a breakthrough in the automobile industry. Toyota is well-known for its management philosophy and the world’s first mass-market hybrids (Toyota, 1995-2011).

Technology has managed to play a part in Toyota Corporation becoming the worlds’ second leading automobile industry. Through the continued advances of technology Toyota Corporation will increase its market shares and continue to maximize its profits. Conclusion Toyota is a major automobile industry that operates domestically and globally. Marketing in the world today continues to be affected by so many factors in the environment. Those major factors include political and legal issues, social, cultural economics, technological, and competitive.

These factors surround the basis of the decisions made within marketing. Most organizations in the world that function domestically have the opportunity to go global if the opportunity presents itself. Choosing to go global is a huge risk for any company. Toyota is a company that tried and stayed true and has proven that through all hardships they rose above the challenges. Toyota Corporation is an organization affected by these environmental factors because of the choice to operate domestically and globally their success continue strong today.

Support Globalisation: Some argue that falling barriers to international trade and investment are the twin engines driving the global economy toward greater prosperity. Increased international trade and cross- border investment will result in lower prices for goods and services. They believe that globalisation stimulates economic growth, raises the incomes of consumers and helps create jobs in all countries that participate in the global trading system. Anti- Globalisation: In December 1999, more than 40000 protesters blocked the streets of Seattle in an attempt to shutdown a WTO meeting held in the city.

The demonstrators were protesting against a wide range of issues, including job losses in industries, downward pressure on the wage rates of unskilled workers, environmental degradation and the cultural imperialism of global media and multinational enterprises. Critics of globalisation view that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economics such as the US & West Europe. The falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower.

In the service sector, many Multinationals Corporations have outsourced to nations with low labour costs (E. g. Dell, IBM have “exported jobs”) to more manufacturing activities to low wage nations and contributing to higher unemployment and lower living standards in the home nations. The whole concept of fair trade is specialising in the production of those goods and services that they can produce most efficiently, while importing goods and services that they cannot produce as efficiently.

It is also seen as when a country embraces free trade, there is always some dislocation; lost call centre jobs in Dell (but the whole economy is better off as a result). Lost textile jobs at Harwood Industries. According to this view, it makes little sense f or the US to produce textiles at home when they can be produced at a lower cost in Honduras as China (which unlike Honduras is a major source of US textile imports). Importing textiles from China leads to lower prices for clothes in the US, which enables consumers to spend more of their money on other items.

At the same time, the increased income generated in China from textile exports increases income levels in that country, which helps China purchase more products produced in the US, such as Boeing Jets , Microsoft software etc. The same argument can be made to support the outsourcing of services to low wage countries. By outsourcing its customers service call centres to India, Dell can reduce its cost structure and thereby its prices for PCs. The United States consumer benefit from this development. As prices for Cps fall, Americans can spend more of their money on other goods and services.

Moreover, the increase in income level in India allows Indians to purchase more U. S goods and services, which helps create jobs in the US. In this manner, supports of globalisation argue that free trade benefits all countries that adhere to a free trade regime. If these critiques are correct, three things must be shown: first, the share of national income received by labour, as opposed to the share received by the owners of the capital (e. g. shareholder) should have declined in advanced nations as a result of downward pressure on wage rates.

Second, even though labour’s share of the economic pie may have declined, living standards need not deteriorate if the size of the total pie has increased sufficiently to offset the decline in labours share if economic growth and rising living standards in advanced economies make up for labour’s smaller proportion of the world (this is the position argued by supporters of globalisation. ) Third, the decline in labour’s share of national income must be due to moving production to low wage countries, as opposed to improving production and productivity.

As noted earlier, globalisation critics argue that the decline in unskilled wage rates is due to the migration of low wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers. However, supporters of globalisation see a more complex picture. They maintain that the apparent decline in real wage rates of induced shift within advanced economies away from jobs where the only qualification was a willingness to turn up for work every day and toward jobs that require significant education and skills.

They point out that advanced economies report a shortage of highly skilled workers and an excess supply of unskilled workers. Thus growing income inequality is a result of the labour market bidding up wages for skilled workers and discounting the wages for unskilled workers. In fact, recent evidence suggests that technological change has had a bigger impact than globalisation on labour’s declining share of national income. This indicates that the solution to the problem of stagnant incomes among the unskilled is to be found not in limiting free rade and globalisation but in increasing society’s investment in education to reduce the supply of unskilled workers.

Finally it is worth noting that the wage gap between developing and developed countries is closing as developing nations experience rapid economic growth. For example, it is estimated that China will approach Western level wages in about 30yrs. To the extent that this is the case, any migration of unskilled jobs to low –wage countries is a temporary phenomenal representing a structural adjustment on the way to a more tightly integrated global economy.

It is also a concern that free trade encourages firms from advanced nations to move manufacturing facilities to less developed countries that lack adequate regulations to protect labour and the environment from abuse by the unscrupulous. Critics often argue that adhering to labour and environmental regulations significantly increases the cost of manufacturing enterprises and puts them at a competitive disadvantage, the theory foe by moving their production facilities to nations that do not have such burdensome regulations as that fail to enforce the regulations they have. If this were the case, one might expect free trade to lead to an increase in pollution and result in firms from advanced nations exploiting the labour of less developed nations.

This argument was used repeatedly by those who opposed the 1999 formation of the NAFTA between Canada, Mexico and the United States. They painted a picture of US manufacturing firms moving to Mexico in droves so that they would be free to pollute the environment, employ child labour and ignore workplace safety and health issues all in the name of higher profits. Globalisation critics argue that despite the supposed benefits associated with free trade and investment, over the past hundred years as so the gap between the rich and poor nations of the world has gotten wider.

In 1870, the average income per capita in the world’s 17 richest countries was 2. 4 times that of all other countries. In 1990, the same group was 4. 5 times as rich as the rest. ( L, Pitchett, “ Divergence, Big Time,” Journal of Economic Perspective 11 No. ) * Globalisation is the spread of worldwide practices, relations, consciousness and organisation of social life. Nearly every nation and the lives of billions of people throughout the world are being transformed, often quite dramatically, by globalisation. The degree and significance of its impact can be seen almost everywhere one looks. ( Thomas, 2007) * Globalisation encompasses many things; the international flow of ideas and knowledge, the sharing of cultures, global civil society and the global environmental movement.

The great hope of globalisation is that it will raise living standards throughout the world: give poor countries access to overseas markets so that they can sell their goods, allow in foreign investment that will make new products at cheaper prices, and open borders so that people can travel abroad to be educated, work and send home earnings to help their families and fund new businesses. * “The evidence is overwhelming that it has failed to live up to this potential” (Stiglitz, 2006: 4) Economics has been driving globalisation, especially through the lowering of communication and transportation costs.

But politics has greatly shaped it. The rules of the game have been largely set by the advanced industrial countries and particularly by special interests within those countries. They have not sought to create a fair set of rules, let alone a set of rules that would promote the well- being of those in the poorest countries of the world. * The distribution of health has been uneven in the world today. The agreement signed in Morocco regarding the cure for AIDS is also very controversial.

The United States negotiators were mostly interested in having it their way; and they wanted the new agreement to support U. S drug companies. What the companies fail to realise is that the profits were against the lives of people. The U. S government too supported the agreement in favour of the drug companies by including provision that would delay the introduction of generic drugs. One of the main reasons in delaying the introduction of generic drugs is that once the generic drugs are introduced in the market, profits will tumble for these companies as in Morocco generic drugs cost a fraction of brand name drugs.

Many strategies have been introduced including restricting the use of data that proves the safety and effectiveness and preventing the generic firms from even beginning to produce the drugs until the patent expire. The argument here is that these delays can affect the human population as the drugs can be available only in selected countries with prices only affordable for wealthy families which would leave most patients unable to afford medicines that could save their lives.

The patent protection right can stop the drug from being introduced in the market until the patent expire which could be thirty years. Also the agreement on Trade –Related Aspects of Intellectual Property Rights (TRIP’s) showed that the developed nations were more interested in increasing their profit margins rather than saving the lives of people. TRIPs was specifically designed by the developed nations to ensure higher priced medicines. This reflects the victory of corporate interests over the lives of millions of people. The Clinton administration also supported the TRIP’s reducing access to affordable drugs for poor people around the world.

Asahi Glass Company

Introdaction

Asahi Glass Company was founded in the early 1900’s to relieve Japan’s dependence on foreign imports. It was the first successful endeavor into the flat glass industry. The company was able to continue to succeed through mergers, acquisitions, and organic growth. The company’s core businesses are:

1. Glass and related products,
2. Chemical products,
3. Ceramics and refractory products,
4. Electronic products, and
5. All other miscellaneous products

Company structure

The synergies that were created by combining management’s expertise with the company’s knowledge, resources, and technologies have contributed to the success of Asahi Glass Company throughout the years. The organizational structure of Asahi Glass’ domestic productions are effective for their business’. There is a top down management system, with each division having its own managers and balance sheet. However, globalization efforts have been depleting company resources in past years. Management has yet to be able to perfect their foreign operating organization.

The company is unable to establish mutual trusting relationship with several overseas joint ventures? Asahi Glass Company was founded in 1907, by Toshiya Iwasaki, a nephew of one of the founders of the Mitsubishi business group. Iwasaki wanted to ease Japan’s dependence on imports, by establishing a flat glass industry. It took three years after production started in 1909 to make a profit, but the endeavor was well worth it; Asahi Glass Company established themselves as the dominate player in the market and has remained that way ever since.

Decisions and objectives

Throughout Asahi Glass’ existence, their decisions and objectives have been focused on growth. They achieve this by exploring new technologies and growing organically, as well as acquiring companies, and merging with others. Their management style is also a key factor to their success. Recognizing Opportunities During the First World War, Asahi Glass was having trouble importing the soda ash they needed for manufacturing, so they started producing it themselves. This led the company into the exploitation of the raw-materials scope economies.

They soon developed technological expertise in ceramics and alkali chemicals, which became two of the three core business “pillars. ” After World War II, management made a sensible strategic decision to license a new float glass process from the Pilkington Brothers in order to maintain their market position. In the 1960s, Asahi Glass took advantage of growing TV and auto industries, and moved into them, becoming a domestic leader in both industries. Soon after, they progressed into producing construction materials.

When the chemical industry took off in Japan, Asahi Glass merged in with their alkalis, halogen, and other petrochemical additives. They were market leaders in every industry they infiltrated. Asahi Glass created new, unique markets and took the lead in many specialty markets. In the 1970s, the current president, Takeo Sakabe, took the initiative to introduce a fourth “pillar” to the company’s core businesses: electronics. He chose electronics because management had some expertise in it and the industry had room for growth.

Asahi Glass Company on the global market

Asahi Glass began penetrating the global market in 1956, when they built a plant in India. Then, the company entered into joint ventures in Thailand and Indonesia in 1964 and 1972 respectively. Not long after establishing their presence in those markets for glass, Asahi Glass’ chemical business followed into the areas. Once the company began to expand, they accelerated their efforts through the 1990s. Company Structure Asahi Glass had “a matrix style organization structure. ” Each of the six general divisions and the five individual divisions had their own managers and kept their own balance sheet.

Asahi Glass had an International General Division, which communicated with domestic product divisions, and monitored the subsidiaries and affiliates who were abroad, as well as help formulate business plans. The company tried to localize their oversea activities, and let them manage day-to-day operations and only held executive meetings about once every four months. Issues Facing Asahi Glass In 1993, Asahi Glass’s domestic glass business was declining due to the Japanese economy. The answer for the company was to continue globalization efforts.

However, the company’s quick response and accelerated efforts caused the company to lose focus of their traditional international practices. The company’s domestic operational structure was not the same as their international operating structure. Because many of the international were joint ventures, and still relatively fresh, the two companies still lacked trust and coordination. Asahi Glass was still realizing that moving into foreign markets took more integration and stronger efforts than operating domestically. Questions to Answer In 1993, president Seya was faced with a decision for the electronics department.

He was analyzing a report of long term strategy for the business, and the position of its major products. The report offered proposals ranging from intense divesting, to rigorous investing. Mr. Seya needed to decide if investing the capital needed to ascertain a dominant position in the electronics business was worth the risk. His decision would be the foundation of the business’ strategic direction and he felt that direction should be aligned with Asahi Glass’ other divisions, and their overall objectives for the years to come. Conclusion Asahi Glass Company has always been an aggressive, dominant company.

Conclusion

They exhort their knowledge, expertise, and technology in order to gain a leading position in whatever industry or market they endeavor. In the latest years, it seems that the company is trying to spread themselves too thin by globalizing. Until Asahi Glass finds a better way to organize and operate their foreign affairs, they should focus on domestic mergers, acquisitions, and internal growth.  I believe that Asahi Glass has had an excellent history of creating successful synergies that have propelled the company to success.

From its beginnings in the early 1900s, the company’s management has recognized opportunities to expand their core businesses and grow organically. As their core businesses expanded, so did the company’s knowledge, experience, and technology. As these assets have interacted over the years, they have combined to make synergies that allowed the company to expand into new markets, products, and industries. Asahi Glass has an excellent foundation in the way of management as well as financial prosperity.

Recommendations

I recommend that Asahi Glass invest in the establishment of the electronic business as a dominant position. Looking at the electronics business’ history shows that the division is among the top three in relative market position already, despite that they have a low share in the market. They are also already well established, having joint ventures with at least five companies, three of which are in the top six market positions. The electronic division contributed 5. 6% to sales in 1992; compared to ceramics contribution of 2. 4%.

Qantas dispute heads to umpire, more pain possible Kelly Burke, Matthew O’Sullivan, Jessica Wright November 22, 2011 [pic] Alan Joyce… “the winners out of this are our customers”. Photo: Dallas Kilponen THE Qantas dispute will drag into next year and there is a threat of further legal action, with negotiations between the three unions and the airline collapsing within hours of the mandated deadline.

Despite a push by the Transport Workers Union to extend the 21-day negotiation period, yesterday afternoon airline management walked away from talks with its ground crew, including baggage handlers and catering staff, less than an hour after doing the same with its long-haul pilots. Late in the afternoon, Qantas and the third union locked in dispute, the Australian Licensed Aircraft Engineers Association, agreed to call it quits and hand the remaining unresolved issues – the use of contractors and hiring staff from outside Australia – over to the industrial relations umpire.

The process of binding arbitration under Fair Work Australia is expected to take months as the umpire gathers evidence and calls for expert witnesses and written submissions. Although unlikely, disruptions to the holiday plans of thousands of Qantas passengers cannot be ruled out, with the TWU to decide on Thursday whether it will mount a legal challenge to Fair Work’s order on October 31 to terminate industrial action. The union has said it will seek a stay if it decides to challenge, which would allow its members to resume work stoppages over the Christmas and New Year period.

The pilots’ union has already begun legal action against Fair Work’s decision with the first directions hearing in the Federal Court set down for December 1. But industrial law experts are skeptical about the likely success of the TWU and pilots’ legal challenges. Emeritus Professor Ron McCallum, from the Sydney Law School, said it was highly unlikely the Federal Court would grant the TWU a stay, which would allow its members to take legal strike action. ‘The [union’s case] would have to successfully argue that Fair Work acted contrary to the law, that they misconstrued their powers … and that will be very hard to do,” he said. The Transport Minister, Anthony Albanese, said there was a lack of goodwill and respect from all sides and the government’s position on union moves to take legal action was iron clad. ”We don’t support people taking legal action. We have an umpire and the umpire should be allowed to make their decision. We’re confident the courts would uphold that,” he said.

The Workplace Relations Minister, Chris Evans, warned that further industrial action by any party would be unlawful. The federal secretary of the TWU, Tony Sheldon, said Qantas had decided to drag its employees through the courts rather than agree to an extension of the conciliation period, where the issue of job security, including the number of contractors Qantas wanted to use, were the sticking points. ”Qantas has not displayed good faith in these negotiations. The TWU wanted a sprint to the finish but Qantas just hopped on the treadmill.

It looked like they were moving but they weren’t going anywhere. ” The vice-president of the Australian and International Pilots Association, Richard Woodward, said negotiations had ended after the two sides failed to agree over the terms for efficiency gains of up to 20 per cent in areas such as pilot rostering. ”Management obviously believes that a decision achieved through arbitration is preferable,” he said. “It is a pity that Qantas as an airline will have to be subjected to this long, drawn-out process when a negotiated outcome was possible. ‘ Qantas’s chief executive, Alan Joyce, conceded that binding arbitration could take months but said it would eventually lead to agreements that could last as long as four years. He dismissed claims from the pilots’ union that Qantas never intended to reach an agreement during the 21 days. ”Passengers can now travel with confidence. The winners out of this are our customers. The winners out of this are employees and our shareholders. They have certainty,” he said. http://www. smh. com. au/business/qantas-dispute-heads-to-umpire-more-pain-possible-20111122-1nrgj. tml Overview This article is a well-publicized national dispute between Qantas and it’s employees about; pay, job security, and working conditions. The Qantas employee’s involved in this dispute are; pilots, baggage handlers, engineers and the catering department. Analysis This industrial dispute between Qantas and its employees has been dragging on for quite some time now, and I would have to agree with some of the comments made in the article by the Transport Minister, Anthony Albanese, when he said, “there was a lack of goodwill and respect from all sides”.

I agree with those comments made by the Transport Minister, because there appears to have been very minimal progress made during the bargaining process, prior to Fair Work Australia’s (FWA) intervention. Now that the dispute is going to arbitration it will be extremely interesting to see how the term bargaining in good faith will be justified and measured. I believe the term bargaining in good faith to be quite open to disagreement, and it will be rather difficult to prove that any particular party was not acting in good faith. On the FWA website there is a description for good faith bargaining which explains that; the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet: • attending, and participating in, meetings at reasonable times • disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner • responding to proposals made by other bargaining representatives for the agreement in a timely manner • giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining • recognising and bargaining with the other bargaining representatives for the agreement. The good faith bargaining requirements do not require a bargaining representative to: • make concessions during bargaining for the agreement • reach agreement on the terms that are to be included in the agreement”. (http://www. fwa. gov. au/index. cfm? pagename=agreementsdeterminations#good) I believe that globalization may have played a part in the lack of good faith bargaining in this EBA dispute, because the major sticking point in this dispute is job security for the employees, and Qantas can’t guarantee this whilst pursuing its organizational strategic objectives.

Part of Qantas’s long-term strategic plan is to increasingly use contractual part time employees within Australia, as well as establishing some offshore workforces to fulfill roles such as engineering. Therefore, I think that Qantas had always intended to eventually use FWA to intervene and assist in settling this dispute. I can completely empathize with the employee’s desires to ensure job security into the future, but I can also understand the strategic organizational needs of Qantas management. Some people would argue that globalization is just a convenient management excuse for cost cutting, but there are definitely global pressures in today’s economic environment that make issues such as this extremely delicate to strike a balance. Left-wing critics, however argue that the demon of globalization is just a convenient management excuse for cost-cutting and anti-union behavior designed to decollectivize the workplace and promote market forces. The real problems for Australia’s competitiveness, according to such critics, are not in unproductive workplaces, but in the boardrooms of banks, large corporations and other centers of financial power”. (Stone. R – pg. 541, 2008) Conclusion It is hard to know whether there was good faith bargaining displayed from both Qantas management and the unions during these negotiations, and that is some thing that the FWA tribunal will decide on.

However, I do believe that if there were more consultation, honesty and eventually trust built between both parties, there would have been more progress made before the FWA intervention. I would have also recommended that both parties begin these negotiations by deciding which issues that they agree on going forward, and then start trying to negotiate the more difficult issues. By doing this both parties will slowly build some small amounts of trust, which helps to facilitate more consultation. References Book Stone. J Raymond -Human Resource Management 6th Edition, 2008. John Wiley & Sons Australia, Ltd. Milton, QLD 4064 Online http://www. smh. com. au/business/qantas-dispute-heads-to-umpire-more-pain-possible-20111122-1nrgj. html http://www. fwa. gov. au/index. cfm? pagename=agreementsdeterminations#good