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

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

East Asian Growth ModelEast Asian Growth Model

  

Government Allocation and Promotion Policies

- targeting selected industries/companies

- focus on international competitiveness

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

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

 

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

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)

 

Cultural vs. Market-orientedCultural vs. Market-orientedBusiness EnvironmentsBusiness Environments   

 

Culturalist Market-oriented

Competitor Trust networks Jockeying relations (horizontal) for market

dominance (vertical)

 

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)

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

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

 

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

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

 

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