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East Asian Growth ModelEast Asian Growth Model
Macroeconomic stability and export growth
- low government budget deficits
- stable interest rates
- export promotion
Government - private sector cooperation
- shared growth principle (low Gini)
- deliberation councils - lobbying
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East Asian Growth ModelEast Asian Growth Model
Accumulation of Human and Physical Capital
- educational development
- increased savings opportunities
- infrastructure development
- increased agricultural productivity
- low duties on capital goods imports
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East Asian Growth ModelEast Asian Growth Model
Government Allocation and Promotion Policies
- targeting selected industries/companies
- focus on international competitiveness
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Developing Country Growth Developing Country Growth
Impact on Unilever’s StrategyImpact on Unilever’s Strategy
Up to 1997: Anglo-Dutch consumer goods and specialty chemicals producer focused mainly on EU and North America
1997: - EU revenues flat - Growth expected in targeted
developing countries - Developing country growth in
consumer goods
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Developing Country Growth Developing Country Growth
Impact on Unilever’s StrategyImpact on Unilever’s Strategy
Decisions
- Shift emphasis to: China, India, SE Asia, southern Latin America, Central/Eastern
Europe
- Sell specialty chemicals business and focus on global consumer goods products
- Reduce the number of product lines
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Developing CountriesDeveloping Countries Labor Cost Scenarios Labor Cost Scenarios
Labor cost x hours* = labor cost
hour unit unit
* U.S. Labor Department records productivity = output per hour
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Cultural vs. Market-orientedCultural vs. Market-orientedBusiness EnvironmentsBusiness Environments
Culturalist Market-oriented
Buyer-seller Norms of Bargaining and
relations reciprocity exchange
and allegiance (horizontal)
(vertical)
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Cultural vs. Market-orientedCultural vs. Market-orientedBusiness EnvironmentsBusiness Environments
Culturalist Market-oriented
Competitor Trust networks Jockeying relations (horizontal) for market
dominance (vertical)
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Developing CountriesDeveloping Countries
Labor Cost ScenariosLabor Cost Scenarios
Labor cost Hours Labor cost
per hour per unit per unit
(U.S. = 100)
Scenario A High Low 100
(USA)
Scenario B Low High 115
(Philippines)
Scenario C Low Moderate 80
(Mexico)
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Market Size & Growth Market Size & Growth PotentialPotential
Market size – Total population Market growth rate – Average annual growth
rate for the industry Market intensity – Private consumption
expenditure per capita Consumption capacity – Size of middle class Market receptivity – average annual growth
rate of imports from home country
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Large Low IncomeLarge Low Income Market Scenario (China)Market Scenario (China)
Characteristics Marketing Strategy Strong: Set up local market size production for growth rate export
Weak: market intensityconsumption capacity (?) receptivity
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Small Middle IncomeSmall Middle Income Market Scenario (Chile)Market Scenario (Chile)
Characteristics Marketing Strategy
Strong: Export to country market growth
consumption capacity
receptivity
Weak: market size
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Large Middle IncomeLarge Middle Income Market Scenario (Brazil)Market Scenario (Brazil)
Characteristics Marketing Strategy
Strong: Set up local market size, production forConsumption capacity local middle
class consumers
Weak: market growthintensity, receptivity
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Developing CountryDeveloping Country Subsidiary Subsidiary
ManagementManagement Type of Manager Primary Function
Business managers Carry out global market &
cost rationalization plans Country managers React to local economic &
(coordinates) legal conditions Functional managers Worldwide and local
learning and innovation