STEN 1000 Chapter Notes - Chapter 3: Initial Public Offering, Canadian Natural Resources, Protectionism
20 Jun 2018
School
Department
Course
Professor
CHAPTER 3 – THE GLOBAL MARKETPLACE
Initial Public offering (IPO) – is the sale of a company’s stock for the first time in the public
marketplace with the intent to raise equity (money) to fun company operations and growth
Today’s growth continues to rely on significant US economic capacity ! but in the next few
decades will see a significant shift ! as China, India, Brazil, and other economies are maturing
and will benefit form the significant foreign direct investment (FDI) currently underway within
these countries ! overall development of their monetary banking systems, intermodal
transportation facilities, and competitive business models and operating platforms.
Whether it’s through operational growth, strategic alliances, formal partnerships, mergers, or
acquisitions, the global marketplace is become home to an increasing number of businesses
seeking to operate via an international business model.
BRIC countries – Brazil, Russia, India, China – up and coming nations, becoming more
influential in the global marketplace
Overall improved standard of living in the world, increase demand in Canadian natural
resources, Canadian manufacturing challenged by BRIC and other countries due – must improve
its cost competitiveness
Why Go Global?
Attractiveness to global markets (Fig. 3.2)
1. New market opportunities
- Markets mature and new opportunities for untapped markets are needed
- As domestic markets become saturated, organizations will begin to look beyond
their current countries and markets in an effort to discover and leverage new
markets for the products and services they offer
2. Cost reduction opportunity
- Organization are sensing an increasing pressure to use prices as a weapon of
competitive rivalry
- Organizations facing increasingly competitive markets will seek the most efficient
and cost-effective product/service delivery systems as a methodology for
maintaining cost competitiveness and earning higher margins and profits. An
additional side benefit is that by investing in these markets, foreign firms can also
diminish concerns relating to protectionism, duties, and other tax levies designed
to protect domestic economies
- Offshoring – is transferring a component (operations, service, support) of a
firm’s business system to another country for the purpose of reducing costs,
improving efficiency or effectiveness, or developing a competitive advantage
- Outsourcing – is contracting out a portion of, or a component of, a firm’s
business system for the purpose of reducing costs, improving efficiency or
effectiveness, acquiring expertise, or developing a competitive advantage
3. Resource base control
- The key fundamental resource base acquisition strategies lies in seeking to control
supply sources or influence the use of such sources, as well as being able to
generate lower costs or better value by having more control over resource-based
factors of production
- Especially common in the energy and commodity-based resource industries
4. Closeness to markets
- Establishing facilities within developing economic regions enables companies to
operate closer to these emerging markets and to react more quickly to market
opportunities and trends
- Also enables companies to create a stronger affiliation for thei products and
services and overall brands, thereby reinforcing the value of their presence to the
local market
5. Economies of scale
- = Reductions in the cost base of an organization as a result of greater size, process
standardization, or enhanced operational efficiencies
Global Market Stability: The Role of the Government
Liquidity – The cash position of a company and its ability to meet its immediate debt an
operational obligations. Also refers to the ability of the company to convert existing assets to
cash in order to meet such obligations.
Solvency- refers to the long-term stability of the company and its ability to meet its on-going
debt and operational obligations, and to fun future growth
G20 – 20 most powerful countries, rules and regulations for countries to maintain stability and
economic growth
Financial and regulatory fundamentals – essential in ensuring that the global marketplace
grows in a manner that minimizes economic disequilibrium from occurring within singular
economies, avoids an over dependency toward protectionist-based marketing practices, and
manages financial and market risk in a manner than minimizes the potential for unsustainable
growth (ex. Economic bubbles) or counterproductive practices.
Fundamentals of Global Economic Stability (fig. 3.3)
1. On-going commitment to international trade system
- The need for countries to commit (and adhere) to the trade policies and agreements
overseen by the WTO (World Trade
Organization).
- WTO’s main role – to establish the parameters
for multilateral trading now and for the future
- Administers trade agreements; ensures
trade flows smoothly, fairly and
predictably
- Acts as a forum for trade negotiations
- Settles trade disputes
- Reviews national trade policies
Document Summary
Initial public offering (ipo) is the sale of a company"s stock for the first time in the public marketplace with the intent to raise equity (money) to fun company operations and growth. Whether it"s through operational growth, strategic alliances, formal partnerships, mergers, or acquisitions, the global marketplace is become home to an increasing number of businesses seeking to operate via an international business model. Bric countries brazil, russia, india, china up and coming nations, becoming more influential in the global marketplace. Overall improved standard of living in the world, increase demand in canadian natural resources, canadian manufacturing challenged by bric and other countries due must improve its cost competitiveness. Markets mature and new opportunities for untapped markets are needed. As domestic markets become saturated, organizations will begin to look beyond their current countries and markets in an effort to discover and leverage new markets for the products and services they offer: cost reduction opportunity.
