Instructors Manual Section -3

 

 

  Global Logic  

Section 3:

 

Global-Minded Business

 

Chapters 8 – 12


Chapter 8:  Redefining Competition

 

Chapter Summary

 

In the global information era the nature of business is changing in direct correlation to the changing nature of competition. Market demand rather than market supply now drives business growth. Accordingly, this chapter argues that competition in the global era is not defined by production efficiencies or product sales, but by the significance of its interactions with others – customers, the general public and business associates. This chapter reviews the history of the changing understanding of business competition and with the realization that customer demand now drives the market, suggests that SE Asian economies can no longer rely upon TNC inspired growth. 

 

Theme

 

Supply side approaches to business and competition are to be replaced by an appreciation of the power of market demand, In the global era of ‘virtual business’, business is faced with a kaleidoscope of competitive options and accordingly must focus on developing interaction-based competitive strategies. 

 

Key Ideas

 

  • In the industrial era, competition was based upon finding and using advantages in production and supply of product to the market: A supply-side logic. 

  • In the global information era, competition derives from the quality, or significance, of the businesses interactions: A demand-side logic.

  • Economic theory has developed with a focus on the movement and production of product. In the virtual global information world, economics is science in need of repair.

  • Competitive options for a business are now far more varied and dynamic.

  • The idea of a level playing field in business is a superceded idea.

  • The idea of nation-state economies is also a superceded idea.

  • Each new business situation and competitive environment requires assessment and the application of a global-minded strategy to suit the situation.      

  • Competitive advantage is to be found in the eye of the consumer and the significance of business interactions.

Word List

 

  • Competition

  • Capitalism

  • Comparative Advantage

  • Competitive Advantage

  • Collective capitalism

  • Product life-cycle

  • Created factor endowments

  • Interaction-based competition

Teaching Objectives  

 

  • To review the development in the way businesses seek to be competitive. 

  • To demonstrate that nature of competition has been centred of factors of production.

  • To expose SE Asian growth as also being a production focused analysis.

  • To explain that the dynamics of global business options in finance management, image and communication management, along with cultural and regional factors, have created not only a ‘virtual’ world of business opportunities by changed the very nature of competition.

  • To suggest that interaction-based competition accepts that both the customer and change itself, are now factors in the marketing equation.

Overview of the Chapter

 

Traditional models of economic and business practice

Were never designed to accommodate the dynamism of

contemporary global business.  

 

Production-driven Competition

 

Capitalism and Competition

 

In writing the Wealth of Nations in 1776, Adam Smith proposed that the wealth of a nation was not found in its holdings of gold and treasure but in the production of its citizens. Thus, competition was seen to be the means by which a economy developed.

 

From Comparative Advantage to competitive Advantage  

 

The shift in emphasis away from the comparative advantages found in national trade to business competitiveness moved the emphasis on national endowments to a broader understanding of factors of production efficiencies. The comparative advantage of natural resources and capabilities was replaced by the idea of the competitive advantage of production and supply efficiencies of one business over another.

 

 

TNCs and International Competition

 

The assumption behind international business growth has been that the business, and its strategy, usually develop at home and then extends into other environments as competition in the domestic market forces them to seek competitive advantages in foreign locations. The approach emerges from a product life cycle paradign and perceives the world as providing market and production opportunities to support domestic business growth. 

 

 

Competitive Advantage by Production Efficiencies

 

With efficiency as the goal, technology improvement became the most important contributor to ongoing competitiveness – as a production capability.  Competitiveness, while encompassing the idea of output-over-cost, involved increasing the capabilities of firms, or countries, to add value to their production by way of technological innovation and development. Thus competition could be understood as essentially a value-add exercises to produce that bigger, better low cost product.

 

Created Factor Endowments

 

Over time, and with increasing international business opportunities brought on by improvements in transport, communication, along with changing government policies, TNCs came to see the value of ‘created’ factor endowments over against cheap resources in achieving production efficiencies. The broadening of the notion of resources and factors of production in the search for production efficiency has certainly changed the way businesses perceive and interact with their environments. Instead of perceiving nations as having fixed natural endowments – where countries competed against countries – companies now seek ‘environments’ that offer them competitive advantages. 

 

New Approaches to Competition

 

Market Forces

 

The ideas of a level playing field, identifiable inter-business and customer relations and arm’s-length trading, are now superceded ideas. The emergence of the GIS and the borderless world of business make for more complex and dynamic competitive options and motivations. The competitive landscape , as part of the business landscape, is now a kaleidoscope of options, avenues and alliances in an environment of time sensitive arrangements and changing consumer demand.

 

The Virtual Business   

 

For the industrial firm, the factors of production have generally consisted of land, labour, raw materials and capital. For the global era business, assets now consist of intangibles such as information, images, perceptions, strategies, customer preference and worker imagination. Accordingly, knowledge, as a combination of information and imagination, becomes not only the most valuable of a business’ assets, but the determining force for a business’ growth and operational patterns.  

 

Interaction-based Competition  

 

It is suggested here that competitive advantage does not equate with cheap sales and high turnover. Competitive advantage is found in the eye of the consumer and the significance of business interactions.

   

Study Review Questions

 

1.      What did Adam Smith have to say about competition? 

 

2.      What was Ricardo’s theory of comparative advantage?

 

3.      Explain Michael Porter’s theory of competitive advantage.

 

4.      What is product life-cycle theory?

 

5.      What is meant by production efficiencies?

 

6.      What are created factor endowments?

 

7.      How has globalisation changed the market and market forces?

 

8.      What is customer capital?

 

9.      What are considered to be a company’s assets in the global era?

 

10.  In the global era, how is competitive advantage to be defined?   

 

Essay and Discussion Questions

 

1.      Competition and the nature of business in the industrial era seemingly went through a number of stages but did business activity really change or was it that intellectuals just saw things differently?

 

2.      Explain the concept of competitive advantage and how the emergence of customer-power has challenged the value of the concept.

 

3.      SE Asian economies have developed in the shadow of TNC production success but how can SE Asian business develop competitive advantages of their own?

 

Key References for Study

 

 

Dunning J. (1993) The Globalization of Business, London: Routledge.

 

Galbraith, J.K. (1977) The Age of Uncertainty, Boston: Houghton Miffin.

 

Hope, J. & Hope. T. (1997) “Competing in the Third Wave”, Harvard Business School Press, Boston.

 

Krugman, P. (1996) Pop Internationalism, Massachusetts: MIT Press.

 

Porter, M. (1991) “The Competitive Advantage of Nations”, The National Competitive Advantage, Boston: The Harvard Business Review.  


Chapter 9:  A Global Management Approach  

 

 

Chapter Summary

 

In the global era there will be a fundamental change in management practice from directing the flow of things to directing the flow of information. The enterprising use of resources will become first and foremost the enterprising productivity of knowledge. Accordingly, there is a need for a new paradigm of management that takes dynamic change as its core value. It is argued here that concepts of management need to move beyond structural and functional management models that organise and control resources to an approach of management that encourages and stimulates interaction. Indeed, management is to be redefined in terms of interactive thinking, where knowledge is power. Thus, in rejecting industrial era models of management, I present a new  paradigm of management by interaction whereby  global-minded management is fundamentally about the stimulation of good ideas.  

 

Theme

 

Change is now a factor in the management equation. Thus, the global-minded business manager seeks to stimulate creativity and significant change in and for their business by way of managing core constituencies in an environment of reflexive and flexible interaction.

 

 

Key Ideas

 

  • In the industrial era, management was characterised by the enterprising use of resources but in the global era this fundamental is superceded by the need for the enterprising productivity of knowledge.

  • Management, as understood in the industrial era, is cumbersome in the dynamic world of change.

  • The practice of management in the global era become a teleological exercise as the perceptions and goals of the future dictate the actions of the present.

  • The practice of management is an exercise in managing the business’ core constituencies of: Flexibility, authority, responsibility, knowledge, efficiency, innovation and communication.

  • Management is a pro-active exercise of engagement.

  • The management-act is to stimulate the contingencies in order to reach designated ends.

Word List

 

  • Management

  • Core value

  • Teleological

  • Kaizen

  • Constituencies

  • Management-act

  • Alliance management

  • Collaborative competition

  • E-management

Teaching Objectives  

 

  • To challenge the assumptions foundational to the practice of management in the industrial era.   

  • To argue for a teleological approach to business management based upon the realization that change is now a constant in business activity.

  • To suggest that the management-action is to create positive change throught the stimulation of creativity and significant interactions.

  • To present a model of management practice: a management matrix of core constituencies.

  • To illustrate how the practice of management with reference to alliance management, collaborative competition and e-management.  

Overview of the Chapter

 

Business models of linear causality, where orderly events cause

predictable outcomes, do not work in a non-linear world.  

 

The Practice of Management

 

Management: The Decisive Factor 

 

Everything in business and commerce is evolving simultaneously. Accordingly, business management has become an exercise in change control. Whether it is the American, Japanese or Chinese model, a structural functional approach to management is antiquated in the context of global commerce and global business alliances. In making the claim that management itself is the decisive factor to business success, the financial crisis is to be understood as essentially a crisis of management.  

 

A Teleological Approach   

 

The practice of management in the global information era rests upon a new set of business assumptions. First, information is more valuable than capital. Second, capital flows are both versatile and volatile. Third, competition has no borders. And, fourth, management is redefined in terms of interactive thinking.  

 

Management by Interaction

 

The Management Mix

 

It is proposed here that the management-act be understood as contingent upon ideas and opportunities. Instead of management roles, duties and functions, it is more appropriate in the global era to speak of the management’s core contingencies. These contingencies are in essence the dynamic principles or focus of the management-act. The management-act contingencies are presented here as a management matrix and identified as:

 

·        flexibility

·        authority

·        responsibility

·        knowledge

·        efficiency

·        innovation

·        communications.  

 

Challenges for Global Management 

 

Alliance Management

 

The old style of competition based on mass production and a Taylorist work organisation, is being replaced by a new style of competition of flexible management, continuous product improvement and inter-firm alliances.

Management by interaction is seen to have decisive benefits for both the multiplication of capabilities and the increase in significant interactions, producing adaptation and innovation. Hierarchical capitalism is being replaced by alliance capitalism.  

 

Collaborative Competition    

 

Global commerce requires bigger, stronger and more diversified teams of

businesses in order to remain competitive and further, it requires business to compete not just on a spatial plain but also through time as management innovations determine a business’ success.  

 

E-Management   

 

Management in the e-world requires a different and rapid ability for decision making. It requires an inclination towards partnership building and global

interaction. And it requires the creation and maintenance of a learning

environment for the business to grow. For SE Asia, e-management may

prove to be the space where East meets West.  

 

Study Review Questions

 

1.      How is it that the nature of management practice is changing?  

 

2.      Why will SE Asian business management evolve?

 

3.      Explain a teleological approach to management.

 

4.      List and explain the three new assumptions to the practice of management in the global era.

 

5.      Why is the practice of management for the global-minded manager depicted as a matrix and not as a model?

 

6.      What are the seven constituencies of the management matrix?

 

7.      What are the benefits of management by interaction?

 

8.      What is e-management?    

 

Essay and Discussion Questions

 

1.      It is proposed that the global era will change the assumptions of management practice. How will new assumptions affect global business?

 

2.      Compare and contrast the interaction management approach with that of the industrial era model of management by regulation and control.

 

3.      Discuss the emergence of alliance capitalism and how it is that the ‘Asian’ model of business may become a leading model of business management in the global era.

 

Key References for Study

 

 

Bartlett, C. and Ghoshal, S. (1989). Managing Across Borders, Boston:

Harvard Business School.

 

Drucker, P. (1995). Managing in a Time of Great Change, Oxford:

Butterworth-Heinemann.

 

Dunning, J. (1997). Alliance Capitalism and Global Business, London:

Routledge.

 

Toffler, A. (1990). Power Shift, New York: Bantam Books.

Chapter 10: A Global Marketing Approach    

 

Chapter Summary

 

Marketing theory has moved through a number of stages in orientation since the 1950s moving to an appreciation of the market as a whole. In consideration of global marketing, concepts used in the industrial era to stimulate international business expansion are lost in the world of the global-minded consumer.  In the market-space companies exist in a virtual world of access and image. Yet, this does not mean that cultural distinctions are to be discarded in consideration of marketing practice. To the contrary, it is argued here that every service and product is given a cultural-value by the potential consumer and that cultural. In the global era, marketing needs to be appreciated as an exercise in interaction management and the model of the 4Ps abandoned for the management of marketing constituencies with the purpose of creating significant interactions.

 

Theme

 

Products and services have value as and when a customer perceives that they have significance and meaning to their life. Marketing is an exercise in interaction to provide meaning and value for the consumer. 

 

Key Ideas

 

·        As marketing cannot be disassociated from the history of business and commerce that created it, so it cannot be disassociated from the environment and culture

of the consumer.

 

  • As the culture of the consumer assigns meaning and therefore value to a product or service so consumer behaviour is to be understood as a process of interaction by the consumer with a market of cultural-value laden products and services.

  • In appreciating that the consumer is central to the marketing process there is a need to move from monologue to dialogue with the customer.

  • Interaction-focused marketing aligns with the business management approach of relationship building common across SE Asia.

  • Issues of adaptation and standardization are misplaced in the global market-space of virtual realities as defined by consumer sentiment.

  • Consumption is a form of meaning transfer.

  • As societies ascribe value and meaning to a product or service, so it is important to appreciate the process of cultural transmission of the acceptance and demand for a thing.

  • The goal of marketing communication is one of infection rather than influence.

  • Marketing management is the consideration of the marketing constituencies in an effort to promote products, services, people or ideas to create and satisfy customer-perceived needs and wants.

  • Marketing is an exercise in creating value.

Word List

 

  • Marketing Concept

  • Market-orientated Concept

  • Marketspace

  •  Cultural value

  • Value-laden

  • Meme

  • Marketing Mix

Teaching Objectives  

 

  • To review the development of the marketing concept.  

  • To suggest that abstract ideas of international marketing divorced from an appreciation of the consumer as a member of a society are of little value. 

  • To argue that the consumer is to be appreciate as a member of society, and indeed, a number of societies (identifiable psycho-social interest groups) all at the same time.

  • To introduce the idea that the consumer perceives and interprets their interactions and market opportunities for their significance and culturally ascribed value. All products and services have a culturally ascribed value.

  • To introduce a new model of marketing – a matrix of managing marketing constituencies.

Overview of the Chapter

 

While customers are not the same the world over, they are not confined

or restricted by borders and traditional cultures either.

   

Marketing Theory

 

The Marketing Concept 

 

Marketing for Western economies has tended to move through four phases: product-orientated; growth-orientated; marketing strategy; and customer orientated.

 

 

The Market-orientated Concept   

 

The market-orientated approach essentially builds on two previous orientations: strategy and customer focus. It seeks to analyse the market by way of gaining information about the behaviours and expectations of customers and market participants, to design market-orientated plans of action and then involve the whole organisation in implementing the plan.

 

 

Consideration of a SE Asian Model of Marketing

 

The differences in the culture and philosophies, and accordingly, the business systems of SE Asia in comparison to Anglo-American societies necessitate assessing marketing from a SE Asian perspective. The collectivist nature of Asian societies makes relationship-focused business and marketing an important

consideration for all SE Asian business systems.

 

 

Marketing in the Global Context 

 

Globalisation of Markets

 

The flow of information and finance has transgressed the borders that divided nations and markets, and in the borderless world, business managers need to overcome their shortsightedness and develop an equidistant view of the world – to see and think globally first.  

 

Adaptation    

 

In contrast to the global customer school which advocates marketing to a universal or common customer, consumers do not have homogenous personalities, lifestyle, life cycle or product selection and purchasing behaviours. Major trends in consumer behaviour in response to global commercial opportunities mean that businesses have to adapt to ever changing market demand and customers search for value. 

 

Marketspace   

 

Every business now competes in two worlds: a physical world of resources that managers can see and touch and a virtual world of information.  In the arketspace, business is driven by its marketing strategies and communication capabilities. Companies need to develop value-adding steps that allow for faster, better and more flexible product distribution management at a lower cost. They need to move their product development programme from the marketplace and the factory, to the marketspace and the virtual shop-front on the internet.

   

SE Asian Consumers

 

The Importance of Culture to Consumer Behaviour.

 

It is suggested here that Asian and Western societies place different values upon time, organisation, tradition and the importance of relationships. Where Asians (to use the Hofstede generalisation) are generally holistic, valuing relationships and traditions, Western (here taken as equivalent to Anglo-American) societies are

generally task- and achievement-focused, placing great emphasis on time and organisational structure. Naturally, these different paradigms are expressed in business and consumer behaviour.  

 

Trends in SE Asian Consumer Behaviour

 

The fundamental market trend in SE Asia is in the area of demographic change as the rate of population growth declines. Next to demographics is the growing economic and social freedom of women. Further, with increased affluence and consumer spending (not withstanding the financial crisis-initiated recession) have come increased consumer credit and the use of credit cards.  

 

Rethinking Cultural Value

 

It is proposed here, that the behaviour of the consumer be understood as an interaction with a market of culturally value-ladened products. It is the culturally-enhancing value of the product that gives it meaning and significance to the consumer. That is, the products they are seen to possess or wear enhance people’s

relationships and perceived status within their community.

 

Marketing Implications

 

Regional Marketing and Markets

 

The successful marketing of products and services will depend upon an understanding of the customers’ value system or strategies. When it comes to importing global products, the first rule is: You cannot take it with you. While the product may remain the same, in each market segment, regional or national, the cultural value of a product has to be recreated.  

 

The Marketing Mix

 

Like the development of a management mix, a marketing mix for a global-interactive business consists not of a number of principles that inevitably become laws of operation, but consists of managing a number of marketing constituencies. The marketing-interaction constituencies are suggested here to be access, image, message, significance, value and service (see Figure 10.1).

 

 

Vietnam: A Case Study

 

Since the Vietnamese government’s decision in 1986 to implement market reform and economic renovation, or Doi moi, Vietnam has moved, although unevenly, towards becoming essentially a free market economy.  However, the continued

uncertainty of political environments, legal support or banking facilities, to name a few, means that the development of business relationships is of vital importance to maintaining business operations.

   

 

Study Review Questions

 

 

1.      What is the marketing concept? 

 

2.      What is the market-orientated concept?

 

3.      What is marketing?

 

4.      How is it that the market belongs to the customer?

 

5.      What is the style of marketing common to SE Asia? How odes it work?

 

6.      What is adaptation?

 

7.      Why is standardization a good idea but bad marketing practice?

 

8.      Explain how the marketplace has become the marketspace?

 

9.      Explain the concept of culturally laden value?

 

10.  Explain the idea of marketing as a process of ‘social infection’.    

 

Essay and Discussion Questions

 

4.      Since the 1950s, the marketing concept has evolved, but what has caused the change in marketing perspective? How has globalisation affected business and marketing?

 

5.      With reference to the significance of culture upon consumer behaviour, explain the idea of the mind virus and marketing by social infection.

 

6.      Discuss the application of the marketing interaction model to business practice and explain how managing the marketing constituencies enables a business to be market interactive.

   

Key References for Study

 

 

Buttery, E.S. and Wong Y.H. (1999). “The Development of a Guanxi

Framework”, Marketing Intelligence and Planning, Vol. 17, No. 3.

 

Lambin, J.J. (1996). “The Misunderstanding About Marketing”, CEMS

Business Review, Vol. 1.

 

Marsden, P. (1998). “Memetics: A New Paradigm for Understanding

Customer Behaviour and Influence”, Marketing Intelligence &

Planning, Vol. 16, No. 6.

 

Webster, F. (1988). “The Rediscovery of the Marketing Concept”,

Business Horizons, May–June.

 

 Chapter 11: Global Business  Strategies for Southeast Asian Business    

 

Chapter Summary

 

By way of review of the military, political, public relations influence upon the development of strategic planning, the chapter turns to focus on the concept that change is a constant for business and the need for strategic planning to be future-directed. The chapter looks at SE Asian strategies of the past, particularly the strategic development of Singapore,  and the need to develop a global logic to future planning. This chapter breaks new ground in strategic planning by proposing a radically different approach – an Action-Response model for a global era, and places special emphasis on communication management and image creation. 

 

 

Theme

 

In accepting that change is a factor in the management equation, management must become a teleological exercise in marshalling present business activity to serve perceived future goals. A future-determined strategy must at the same time be interactive, allowing the business’ goal to give meaning and create significant interactions. 

 

Key Ideas

 

  • Strategic planning and strategic thinking is not an isolated activity left to the privileged few, as experienced in the industrial era, but the determining factor for all business activity.

  • In both Eastern and Western thinking, competition and conquest have been foundational to business strategic planning.

  • Strategies by business and governments that in essence have been supply-side strategies to increase production and distribution, are restrictive ans shortsighted in the global information era.

  • Complexity, risk and uncertainty, as characteristics of change, render industrial era supply-side strategies useless.

  • The action-response strategy for the global-minded business emerges from a dialectic with its future that gives way to a flexible, and perhaps one could say, living strategy.

  • In seeking success, it is the future that determines the perspective and activity of the present.

  • The task for business everywhere is to seek to create knowledge capital, or value, by obtaining information and stimulating interaction that serves the purpose and the motion of the business strategy.

  • The image of the business and its products, its theme and the issues addressed in the communication are all determined and disciplined by the strategy in response to an ongoing process of interaction with its audience.

Word List

 

  • Strategic planning

  • Outsourcing strategies

  • Bingfa

  • Complexity

  • Dialectic

  • Kaizen

  • Strategic value

  • Strategic knowledge

  • Strategic communication

Teaching Objectives  

 

  • To suggest that global-minded management is strategy driven. It is strategy-driven as the business seeks to interact with people and its environments in order to create and proactively management change.  

  • To explain the strategic planning of both Eastern and Western business practice in the past.

  • To explain how it is that a business interacts – in dialogue – with others and therefore is in a state of change, constantly.

  • To suggest that change can be managed, indeed, it can be created.

  • To introduce a radical new paradigm of strategic planning – a Action-Response Strategy Model. 

Overview of the Chapter

 

While much is made of information as the engine

of the new era, information lies dormant unless knowledgeable

people determine to use it..

 

 

Strategic Planning

 

Western Strategic Approaches 

 

In an environment of emerging opportunities, there has arisen new proposals of strategic management, strategic thinking and mental mapping – all efforts to try to overcome the problems of implementing and managing change.

 

 

SE Asian Strategies of the Past    

 

There are three predominant strategies that operate in SE Asia – the industrialisation-for-export, or outsourcing, strategies of the TNCs; the collective capitalism strategies of governments and business; and the family-business-growth strategies of the Overseas Chinese.

 

 

The Singapore Experience: A Binfa Approach

 

Singapore has sought to present itself as a stable, predictable and efficient economy for companies to conduct regional and global operations. It now seeks to incorporate itself into a global economy and position itself as an e-centre offering e-capacities for the new avant-garde of commerce.  

 

Managing within Change 

 

Complexity, Risk and Uncertainty 

 

Uncertainty schemes and factor analysis suggest that traditional analytical and long-range methods of strategic planning need to be scrapped in favour of more responsive and teleological assessments.  

 

Change as a Constant

 

Comparative advantage and competitive advantage theories which were fundamental to industrial era logic of limited supply and abundant consumer demand – a principle that drove SE Asian development. In contrast, the global era is characterised by abundance; a seemingly never-ending flow of information, imagination and creative opportunities. Change is what happens every day.

 

 

An Action-response Strategy for the Global Era  

 

A global-minded business strategy is built on the premise that a business is in a process of action-response with its society – both present and future. It is in dialogue, with them. The action-response strategy for the global-minded business emerges from a dialectic with its future that gives way to a flexible, and perhaps one could say, living strategy.

 

 

Strategic Knowledge

 

A firm’s knowledge and ability to manage knowledge is to be seen as an asset and, yet, more than an asset. Indeed, businesses can be differentiated on the basis of what they know and how they manage what they know. It is even possible to talk of the competitive advantage of knowledge.

 

 

Strategic Communication     

 

Strategic communication transmits the message of the strategy. Specifically, it seeks an action-response from its target audience in correlation with the business’ strategy. Thus, strategic communication is audience specific. A business has to project a message that an audience is willing, and wanting, to hear. That is, the message might be determined and styled by the strategy, but the creation of the significant value of the interaction is determined as much by the audience as it is by the business.  

 

Study Review Questions

 

1.      What is corporate planning and why did it lose acceptance in the 1980s?

 

2.      Briefly explain the three predominant strategies that operate in SE Asia.

 

3.      Why did Singapore need to develop a global mindset?

 

4.      Explain complexity theory.

 

5.      Briefly describe the five change-certainties that Drucker identifies.

 

6.      Explain how a business is involved in a process of dialectic thinking with society.

 

7.      How does Aristotle’s ethical theory of the pursuit of excellence contribute to strategic planning?

 

8.      What is the value system of a business community/

 

9.      Explain the concept of the strategic use of knowledge.

 

Essay and Discussion Questions

 

1.      A business strategy is like a rudder that steers a ship. But how is it that a strategy can be both a plan of action as well as a process of interaction?

 

2.      If knowledge is the new standard of wealth, how can a business both create and management knowledge?

 

3.      The strategy of a business is discovered in the image it creates for itself. Explain.

 

Key References for Study

 

 

Courtney, H., Kirkland, J. and Viguerie, P. (1997). “Strategy Under Uncertainty”, Harvard Business Review, November–December.

 

Drucker, P. (1995). Managing in a Time of Great Change, Oxford: Butterworth-Heinemann.

 

Drucker, P. (1999). Management Challenges for the 21st Century, Oxford: Butterworth-Heinemann.

 

Nonaka, I. (1998). “The Knowledge Creating Company”, Harvard Business Review on Knowledge Management, Boston: Harvard

University.

 

von Krogh, G. and Roos, J. (1996). Managing Knowledge, London: Sage

Publications.

Chapter 12: Engaging the Future:

Critical Conversations for Southeast Asian Business   

 

Chapter Summary

 

The SE Asian financial crisis of 1997-98 exposed the inherent problems of industrial and feudalistic management strategies in a global era. While there has been much talk about structural reform to SE Asian economies, the changes are superficial because the logic of industrial style production growth and export remains. Yet, the growth of business capacities in China and Indochina, along with changing dynamics in business interrelationships across the region, mean that structural reforms will not improve SE Asia’s predicament. There needs to be a change in the way business and government ‘think’. Instead of imposing limits and controls – to control the economic weather, as it were, governments would better serve their economies by seeking to create the right economic climate for business innovation and significant interaction. 

 

Theme

 

The logic of the industrial era and the strategy of industrial growth for export need to be abandoned in favour of adopting a teleological world view that will excel business into the global era. Businesses evolve through the pursuit of perceived benefit. It is, accordingly, in an environment of creative engagement that businesses will grow.  

 

Key Ideas

 

  • The growth of SE Asian economies has come as a by-product of TNCs serving foreign market. SE Asian economic well-being was dependent foreign market volatility.

  • SE Asian structural reforms in the aftermath of the crisis were but fiscal and monetary exercises to industrial economics.  

  • China’s economic development, Japan’s economic stagnation along with movements toward liberalisation of trade and investment procedures, all mean that SE Asian businesses can not rely on TNC export-led growth strategies for their survival.

  • Managing innovation and interaction is the responsibility of every business.

  • As businesses exist within a multitude of context communities, so they face the challenge of stimulating creative engagements for their people. 

Word List

 

  • Mergers and Acquisitions

  • Contagion

  • Structural reform

  • Dysfunctional

  • Sovereignty

  • Adaptation

  • Matrix of Engagement

  •  Context-communities

Teaching Objectives  

 

  • To examine the efforts made by SE Asian governments to deal with the problems arising from the financial crisis.

  •   To suggest that structural reforms, in the form of fiscal and monetary policies, of themselves will not alter the nature of business dynamic now inherently part of these regional economies.

  • To point out that the dynamics of the macroeconomic environment of the region is changing as China develops market strength, Japan interest in SE Asian economies declines and international economic agendas influence export demand for SE Asian products.

  • To suggest that governments and business need to create innovative and engaging environments and opportunities for growth to occur.

Overview of the Chapter

 

It is what athletes call reaching for their PB – their Personal Best –

going all out to improve beyond that which they have achieved before.  

 

Economic Liberalisation

 

Living in Denial 

 

The fantasy of endless unfettered capital was not to last. In the period of export-led industrialisation, governments were able to attract the industries and investments they wanted by offering tax exemptions and low production costs. But the novelty has waned as a range of economies, especially China, can now effectively compete with location-based incentives.

 

 

Structural Reform  

 

In general, SE Asian economies witnessed sweeping reforms in an effort to control the damage of the financial crisis but this was mostly regulatory and administrative reform. Of course, such structural and regulatory changes do not change the business systems of the region, but they would certainly improve its business environment and make investing in SE Asia attractive again.

 

 

The Dynamics of the Macroeconomic Environment

 

A primary message of the financial crisis is that the economic environments of regional and global commerce are changing. Industrial business models, like feudalistic models with their special privileges for the special few, are dysfunctional in the global era. The problem is one of economic control, and, indeed, of economic sovereignty. Nations are no longer in control of their own financial and commercial agendas.  

 

A World of Conversations

 

Changing our Minds

 

As the knowledge base for the world is growing in breadth and

depth, so the perceptions and interactions among people across the world

are creating a new civilisation as new modes of thinking and action take

place. It is not just what we know that is making the difference, but how

we are managing what we know that is making the difference.2  

 

Perceived-benefit Adaptation Theory

 

It is proposed that businesses advance and develop their adaptation towards their perceived benefits – A theory of perceived-benefit adaptation. This theory is based on three premises.

 

•Premise 1 – Businesses have a natural desire to progress.

 

 •Premise 2 – Businesses will seek to change as there is a

perceived advantage to do so.

 

•Premise 3 – Each business has a different perceived set of goals

towards which it is moving.

 

Perceived-benefit adaptation theory suggests that it is as companies are involved in a social-commercial dialogue with others that significant interactions reveal perceived advantages for them to make changes and adapt to meet new opportunities.  

 

A Matrix of Engagement   

 

The ease of movement, the multi-avenues of involvement and the limitless capabilities of global communication, mean that people and business can belong to and move through many context-communities and through their interaction are agents for their communities to participate in the reflexive appropriation of knowledge that is so important for adaptation and improvement. This continual exchange of knowledge and reflexive adaptation brings about a condition of

interfacing contexts and extended meaning reach.

 

 

Study Review Questions

 

1.      How was it that SE Asia’s economic and business recession resulted from global contagion rather than regional contagion?  

 

2.      Why were world leaders so critical of SE Asian economic management?

 

3.      how has Thailand tried to structurally reform its economy?

 

4.      How has political turmoil added to the economic troubles of the SE Asian region?

 

5.      How has Singapore adopted a different strategy to other SE Asian economies?

 

6.      How are the dynamics of the SE Asian region changing?

 

7.       How are governments and business to ‘change their minds’?

 

8.      Explain the concept of context-communities/ 

 

Essay and Discussion Questions

 

 

1.      Historically, governments have used economic policy to control the well being of their economies,  but in the global era, governments have for the most part been reduced to the role of mere spectators in a world of hyper-change. Discuss. 

 

2.      Examine the strategies used by the Singapore Government to develop the information management infrastructure of the country and comment upon the challenges it faces.

 

3.      Explain Perceived-benefit Adaptation theory and discuss how interaction management in a world of context-communities will stimulate creative engagement.

 

Key References for Study

 

 

Drucker, P. (1995). Managing in a Time of Great Change, Oxford:

Butterworth-Heinemann.

 

JETRO – Japan External Trade Organisation (2001). “Trends in Global Foreign Direct Investment (FDI)”, White Paper, http://www.jetro.go.jp

 

Joo, H.J. (2000). “Giddens’ Theory of Modernity and Globalisation: A Critique”, Department of Sociology, Lancaster University, UK, http://www.lans.ac.uk

 

Singapore Trade Development Board (2001a). “Review of First-Half 2001 Trade Performance and Outlook for Second Half 2001”, press release, 17 July, http://www.stdb.com

 

Toffler, A. and Toffler, H. (1995). Creating A New Civilization, Atlanta:

Turner Publishing.

 


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