International Structures

1
International Structures

• Structure and Strategies Mgt 455, Spring, 2007
  Galbraith

2
Future Strategies?
Production Trends
Economic Trends
Consumption Trends
Technology Trends
3
Barriers to Trade

• Physical Barriers
• Border checks for goods (health)
• Border checks for people (immigration)
• Fiscal Barriers
• Tariffs
• VAT
• Excise taxes
• Exchange

• Technical Barriers
• Goods (standards)
• Professions (certification)
• Services (banking)
• Legal (mergers, patents)
• Human Barriers
• Labor market

4
5 Levels of Integration

• Trade Agreement
• Maquiladora
• Free Trade
• NAFTA
• Countries act independently in trade
• Customs Union
• Union acts together in trade

• Economic Community
• EC
• Community integrates other economic issues
  (people, labor, trade)
• Integrated Market
• Standardized products and laws

5
Mexico
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Mexico Statistics - Economic

• 73 Mexico imports from U.S. (average)
• 89 Mexico exports to U.S. (average)
• Stable exchange rate (to )
• GDP growing over 5.0 per year (1995-2000)
• Slowed since 2000
• Trade increasing 17. per year (1995-2000)
• Slowed to 13.5 recently

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NAFTA and Maquiladoras

• History-Maquiladoras
• Initiated 1965 by Mexican Government
• Replaced the Mexican Labor Program (Bracero
  Program)
• Essential Points
• Permits up to 100 Foreign Ownership (v. 49)
• Percentage of Labor can be non-Mexican

• Temporary import of components without duties
• Goods returned to the U.S.
• Taxes paid only on Value-added

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NAFTA

• Implemented 1994
• Targeted toward inter-industry trade and finished
  goods
• Eliminate tariff's by 2008 (Mexico/US)
• Eliminates other non-tariff barriers, such as
  import licenses
• Uniform export/import procedures
• Side agreements to improve working conditions in
  Mexico (NAALC) and environmental conditions
  (NAAEC)

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Integrated Markets

• European Union
• Standardizing v. Harmonizing
• Impact on Entrepreneurial Strategies

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Economic Trends --Into the 21st Century

• Reduction of barriers to trade - efforts for
  market integration as an economic incentive (vs.
  political)
• Autarky - natural drive to self-contained
  economies

• The 3rd wave of the post-industrial society -
  the electronic cottage
• Competitive Advantage of Nations -Porters
  diamond and cascading technologies

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Modern Production

• Floating Factories
• Flexible Manufacturing
• System Integration
• Technology Integration and Artificial
  Intelligence
• Non-protective Technologies

OR
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Modern Trends in Consumption

• MTV Generation -- attention
• Surfing the Channel - choices
• Role Stress - time constraints
• Interactive Communication - relational contracts

• Informed Consumption
• Redefinition of Service Quality

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International Strategies