Finale Int Biz

8/8/2019 Finale Int Biz

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INB5607: International Business V

Sri Minawati Rokhmin (10155187) Page 1

Table of Contents

1. Introduction ............................................................................................................. 2

2. Literature Review .................................................................................................... 2

2.1. The World is flat ............................................................................................... 2

2.2. The World is spiky............................................................................................ 3

3. Analysis and Discussion .......................................................................................... 4

3.1. Singapore Environment Strategic Analysis ....................................................... 4

3.1.1. SWOT analysis model ............................................................................... 4

3.1.2. PESTEL analysis model ............................................................................ 7

3.2. National Competitive Advantage: Porters Diamond ......................................... 8

3.2.1. Factor endowments .................................................................................... 9

3.2.2. Demand conditions .................................................................................. 10

3.2.3. Relating and supporting industries ........................................................... 10

3.2.4. Firm strategy, structure, and rivalry ......................................................... 11

3.3. The two competing arguments applied to Singapore ....................................... 11

4. Conclusion ............................................................................................................. 12

Reference List ............................................................................................................... 13


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1. IntroductionThe twenty-first century is an era of globalization whereas modernization advances in

communication and the rise of information technology emerges. Globalization allows

faster mobility, eliminating boundaries and place does not really matter again,

whereby nowadays people can conduct business at their convenience based on the

Friedman arguments the world is flat. On the other hand, according to Porters and

Florida on their arguments the world is spiky, even though the world is globalized,

place and national competitive advantage are still important in order to compete in the

business environment. Taking Singapore as an example to look on the implications of

both arguments, where Singapore itself known as a small country with limited natural

resources but consider being the most developed country in Asia. At the end of the

report it would finally found out in which argument Singapore will stand for.

2. Literature Review2.1. The World is flatFriedman (2006) in his bestseller book The World is Flat has argued that

advancement in technology and communications has made the world smaller and

flatter. Geographic locations, foreign policy and economic issues as well other

restrictions are no longer barriers to international trade and collaborations. In

addition, the availability of low cost computers including hardware, software, and

standardized file formats have allow information to flow easily across the globe and

run even faster by just to stay in place. Friedman then believes that the prevailing

forces in the world is flat are not just governments and corporations, but also


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individuals with brilliant ideas and have access to capital. Another important point

where Friedman has stated in his book (2006, p. 50) about how the world become flat

is due to the ten forces which includes, creativity, connectivity of web, work flow of

software, uploading, outsourcing, off shoring, supply chaining, insourcing, informing,

and lastly the emergence of steroids (digital, mobile, personal, and virtual). Finally,

nowadays we see a new era of a global business whereby competition of talent can

come from anywhere and many countries are seeing their economies transformed.

2.2. The World is spikyIn contrary to Friedman arguments, Porter and Florida (cited in Feiock, Moon, &

Park, 2008) believe that place does matter, the world economy is spiky, and the

industry characterized by clusters. In the spiky world, globalization may generate

inequalities among the societies whereby in Floridas research shows that economic

power, innovation, and creative talent clustered in few regions. Therefore, only some

places experience economic wealth or it called economic peak while others falls

into term called economic valley. Florida also concerned about the quality of

peoples life and countrys economic development which basically determined by

public service including transportation, health care, recreational opportunities, and

public safety. Additionally, enhancing peoples quality of life means actively

developing the community that embrace diversity in terms of race, ethnic, gender,

ethnic and sexual preference.


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3. Analysis and Discussion3.1. Singapore Environment Strategic AnalysisIn order to evaluate the competing arguments and assess the implication for

Singapore it would be firstly screening Singapores environment both macro and

micro using SWOT and PESTEL model. However, for the purpose of this assignment

the scope of the analysis will only emphasize on related field which is Singapore

business industry in relationship to international business.

3.1.1. SWOT analysis modelStrengths

Singapore has been consistently ranked as one of the best places for doing business in

the world based on the news from Time (2007) and Forbes (2008). As a small country

that only has a total area of 697 square foot and limited natural resources (CIA- The

World Factbook, n.d.), makes Singapore based its prosperity on a favorable business

environment according to several reasons. Firstly, Singapore is stable in terms of the

economic and political conditions (transparency of laws). Secondly, Singapore has

outstanding education system as well highly skilled and multi lingual labor force.

Thirdly, having excellent infrastructure and strategic locations that allows global

connectivity makes it easy to do business especially in the Asia Pacific region.

Weaknesses

Having a small land with without natural resources can be seen as weaknesses to

Singapore. As a result, Singapore is highly dependent on other countries like


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Malaysia, Indonesia, and Thailand for agriculture products. For example, rice,

vegetables, fruits and milk.

Opportunities

According to doing business 2009 report (cited in EDB Singapore, n.d.) Singapore is

the worlds easiest place to do business.

Country Economy 2009 Rank

Singapore 1

New Zealand 2

United States 3

Hong Kong 4

Denmark 5

Ireland 7

Canada 8

Australia 9

Norway 10

Source: adapted from EDB Singapore

http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/singapore_rankings.html#

rank_chart


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Additionally, the world economic forum ranked Singapore in the third position for its

global competitiveness.

Source: adapted from World Economic Forum

http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/in

dex.htm

Country Rank

Switzerland 1

United States 2

Singapore 3

Sweden 4

Denmark 5

Finland 6

Germany 7

Japan 8

Canada 9

Nederland 10


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Based on the two data above, Singapore shows significant achievements. As a result

it gives huge opportunities whereby companies are willing to invest and do business

in Singapore.

Threats

The rise of developing countries which eligible to produce lower labor rate and also

advancement in technology with cheaper cost such as India and China are the major

threats for Singapore since business venture might consider their business to shift

away from Singapore. Recent pandemic issues such as swine flu, bird flu, SARS as

well terrorist attack are also serious threats for Singapore, whereby it affected the

national economy.

3.1.2. PESTL analysis modelPolitical

Singapore is adopting parliamentary democracy system whereby the political stability

itself is quite good with very low risk to business. The governments emphasize on

efficiency on their bureaucracy and excellence in the public services. Furthermore,

written in entrepreneur guide (2005), Singapore has created pro business environment

by performing favorable tax laws and offering funding for business venture.

Economic

As a highly developed and a successful country has made Singapore having its GDP

per capita higher than other developed countries. Based on the latest data from


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Singstat (2009), its GDP per capita at current market price is S$ 61, 204.4 whereby

previously was S$ 59, 237.2.

Social

Business enterprises operate within social communities. Factors such as education

level, working patterns, leisure activities, and the role of women in the workforce

may affect the viability of a business entity. For instance, how people react to a

product or service depends on the individual lifestyle.

Technological

According to Entrepreneur guide (2005), Singapore ranked as the third most wired

nation in the world, and the most wired in Asia. Within Singapore itself, a broadband

network reaches 99 percent of the population and has excellent IT infrastructure. This

condition allows greater mobility and flexibility for business and information to flow.

Legal

Like most other countries, doing business in Singapore must consider and follow

government laws. For instance; tax, wage, working hour and CPF (Central Provident

Fund)

3.2. National Competitive Advantage: Porters DiamondPorter (cited in Hill, 2009, p. 189) attempted to determine why some countries

succeed while others are not able to compete in international competition. To look

beyond this issue he therefore come out with a theory called competitive advantage

and famously known as Porters Diamond. The aim of the theory is to explain why a


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nation achieves international success in a particular industry and promote the creation

of competitive advantage. Porters Diamond consists of four broad attributes which

will be discussed below.

3.2.1. Factor endowmentsBeing a small country with limited natural resources, Singapore has been recognized

that its strengths in dealing with global competition depend mostly on its human

resources. According to IDA (2006), there are two main elements that helped

Singapore obtained a distinguished reputation in the business world which are

Singapores connectivity to the world and reliable workforce.

The first element which is having connectivity to the world means, Singapore is

locate in a strategic geography location and has excellent infrastructure. In terms of

technology, Singapore has outstanding internet connectivity. Moreover, Singapore

also sign free trade agreements (FTA), ASEAN Free Trade Area, and European Free

Trade Association, thus make it easier to do global business in Singapore.


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3.2.4. Firm strategy, structure, and rivalrySince there are many MNCs in Singapore which also competing in Singapores

business field and providing the same service or product for consumers, thus leads to

high competitive rivalry and is almost acceptable to have competition everywhere.

However, Singapore government has sets of rules and regulations that need to be

follow for every MNCs.

3.3. The two competing arguments applied to SingaporeSingapore as a small country, with almost no natural resources and actually can only

highly depend on the capability and creativity of its human resource in order to stay

in the peak. Furthermore, before stepping into the global business, it would be

necessary if companies would firstly adopted some fundamentals in the local market,

for example; company rules and regulations, standard operation procedure, trainings,

risk allocation (Shih, 2002). Accordingly, with the rise of globalization whereby

borders are now being eliminated enables Singapore to expand business and attract

investment according to their national competitive advantage. The implications of the

two competing arguments will be explained using outsourcing and offshoring

situation.

According to Chapman & Andrade (1998), outsourcing can be defined as

subcontracting a service to a third party company. Singapore is well known for its

healthcare, and its standards of medical practice ranks the best in the world whereby

Singapore has the right mix of ingredients to create a recipe to success (IDA, 2006

and EDB, n.d.). As we know that biomedical research may cost a lot of money and

not every country are expert, therefore other country may engage Singapore


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healthcare for outsourcing. On the other hand, Singapore manufacturing companies

may outsource their factory and labor engaging China third party company that has

lower labor cost.

The second situation is offshoring whereby offshoring itself is transferring of service

operations to foreign countries in order to take advantage of its skilled labour,

improve quality of service and finally to increase business revenues. Based on IDA

(2006) Singapore is an ideal place for companies to base their hub for their offshoring

operations such as financial and banking companies. There are over 60 percent of

MNCs offshoring their hubs in Singapore including Citigroup, Sony, and Dell. On

the other hand, Singapore Company may offshore their business in terms of the

factory or warehouse activity to countries that have bigger land.

Based on the two situations, it can be identified that even though Singapore business

seen as global, however it still holds its competitive advantage in order to stay in the

peak.

4. ConclusionThe success of the growing industries becoming global in Singapore which includes

service, outsourcing, offshoring, IT, healthcare, banking and finance, travel and

tourism is due to the impact of globalization whereby the world is flat.

Nevertheless, even though the world has globalized we also need to consider national

competitive advantagethe world is spiky that support each product or service being

distinct and able to compete in the global world. In conclusion, the implications of

both arguments are necessary for country like Singapore.


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Reference List

Article

Feiock, R, C., Moon, M, J., & Park, H, J. (2008). Public administration review: is the

world Flat or Spiky? rethinking the governance implications of globalization for

economic development. [Electronic version]. The premier journal of public

administration, 68(1), 1-19.

Book

Chapman, R, B,. & Andrade K, R. (1998). Insourcing after Outsourcing.New York:

Amacom.

Friedman, L, T. (2006). The World is Flat: a brief history of the twenty-first century.

New York: Farrar, Straus and Giroux.

Hill, C, W, L. (2009). International Business Competing in the Global Marketplace,

(7th ed.). New York: McGraw-Hill.

Shih, S. (2002). Growing Global: a corporate vision masterclass. Singapore: John

Wiley & Sons.

Internet

Business Singapore (2005). Entrepreneurs guide to planning, starting, and running a

business in Singapore. Retrieved November 1, 2009, from

http://www.business.gov.sg/NR/rdonlyres/06030A45-6CCF-45BC-8F2C-

F2833D5D44B4/6514/entrepreneurguide.pdf


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Economic Development Board [EDB]. (n.d.). Singapore is the worlds easiest place

to do business. Retrieved November 1, 2009, from

http://www.edb.gov.sg/edb/sg/en_uk/index/why_singapore/singapore_rankings.html#

rank_chart

Infocomm Development Authority of Singapore [IDA]. (2006). Industry

Development. Retrieved November 1, 2009, from

http://www.ida.gov.sg/doc/Infocomm%20Industry/Infocomm_Industry_Level1/BPO/

BPO%20Brochure.pdf

Singapore Statistic [Singstat]. (2009, November 6). Statistics latest data. Retrieved

November 1, 2009. From http://www.singstat.gov.sg/stats/latestdata.html.

Viomose, K (2007, November 15). Best countries for global business. Time partners

with CNN. Retrieved November 1, 2009, from

http://www.time.com/time/magazine/article/0,9171,1684526,00.html

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