COMPETITIVE ADVANTAGE IN ISRAEL

Factor Conditions & Government

• High Education Level • Motivated Labor Force • Well Developed Infrastructure • Knowledge • Capital Resources • Lack of Transparency • Incentives for Investment

Strategy, Structure & Rivalry

• High Exposure to Competition • Targeting Export markets • Good Work Relations • Planning Short Term

Demand Conditions

• Public Sector Dominance • Concentration in Private Sector • Decreasing Role of Government

Related & Supporting Industries

• Micro Electronics • Industries Related & Supporting Agriculture • Defense

Factors driven Investment Driven Innovation Driven

COMPETITIVE ADVANTAGE IN EGYPT

Factor Conditions & Government

• Physical Resources • Strategic Location • Moderate Climate • Low Cost labor Force • Shortage of Skilled Labor • Weak Infrastructure Services • Bureaucracy • Weak Financial Sector

Demand Conditions

• Lack of Sufficient Market Information • Weak Marketing & Distribution

Strategy, Structure & Rivalry

• Vertical Integration • State Owned Enterprises • Increasing Private Sector Participation

Related & Supporting Industries

• Textiles • Household Equipment • Food Processing • Tourism • Engineering Construction

COMPETITIVE ADVANTAGE IN JORDAN

Factor Conditions & Government

• Few Natural Resources • Shortage in Skilled Labor • Young Population • Well Developed Transportation • Good Banking System • Stabilization Policy

Demand Conditions

• Lack of Sophistication • Concentration, 80% Amman/Jordan Valley

Strategy, Structure & Rivalry

• Monopolization in Key Sectors • State Owned Companies • Gradual Privatization • Support to Export/Investment

Related & Supporting Industries

• Potential Cluster in Phosphates • Limited Specialized Manufacturing

BASIC MODELS OF DEVELOPMENT The Free Economic Zone (FEZ)

is “a geographic economic area in which goods enter duty free for processing and export, and in which investors are offered a variety of incentives (WEPZA)”.

Industrial District:

Firms consciously network with each other and active trade associations provide shared infrastructure.

Firms merge with Community

Porter’s cluster

is a “geographic concentration of an array of linked, competitive firms that either have close buy-sell relationships,

QUALIFIED INDUSTRIAL ZONE (QIZ)

Emilia-Romagna at a glance

• Area: 22,120 km

2

• Population: 4,000,000 • Per capita GP: 25,733 € • Municipalities: 341 • Enterprises: 415.000 2

•Cooperatives make up over 40% of the GDP of the ER region •In Bologna two out of three citizens are members of a cooperative •In Bologna over 85% of the city's social services are provided by social co-ops •Per capita income in ER has risen from 17th to second among Italy's 20 regions •Per capital income is 50% higher than the national average •Of the European regions, ER is number 11 of 122 regions in terms of GNP per inhabitant •Bologna has the highest disposable income of any of Italy's 103 provinces •Bologna has the highest per capita expenditure on the arts of any city in Italy •The unemployment rate of 4% is virtually full employment •70% of Bologna's households have home ownership

Models of Industrial Development

Strong

Industrial District

Hybrid Industrial District Cluster Community Industry Synergy Hybrid ID-FEZ

Free Economic Zone Porter’s Cluster

Hybrid FEZ-C

Weak

Clustering Specialization Process

Strong

COMPETITIVE ADVANTAGE IN THE MIDDLE EAST

Factor Conditions & Government

• • Egypt lowest labor cost PA highest labor cost • Jordanian universities not adapted to needs.

• Israeli high skilled labor, • Knowledge sharing (QIZ) • •

Strategy, Structure & Rivalry

Competition between Jordan, Egypt and PA on Israeli contracts Israeli new specializations, product differentiation

Demand Conditions

• Mutual impact of demand sophistication (irrigation) • Economies of scale for Israeli producers • Arab software

Related & Supporting Industries

• Textiles (Egyptian upper level) • Mining ,Chemicals(Phosphates) • Tourism

SOCIAL AND CULTURAL ENVIRONMENTS Culture = Way of Living

Culture universals

: George P. Murdock, common denominator of culture:

global not uniform

Athletic sports, body adornment, cooking, rituals, religion, family feasting, medicine, meal time. Edward T. Hall: Low context culture (paper work, US), High context culture (persons’ value, Japan Saudi Arabia)

CONTEXT ORIENTATION IN MAJOR CULTURES

High Context

Japan China United States Arab Germany Scandinavia

Low Context

THE CULTURE ENVIRONMENT

ESSENCE OF THE CULTURE Artifacts hearm smell, taste, touch Human Nature Values Rules Assumptions Roots Relationship Environment Lazy Value Activity Rights Obligations Dominate Submissive Create Plan React Truth Objective Social

IMPACTS OF CULTURE ON MANAGERIAL BEHAVIORS

Culture Context

Explicit Implicit

Negotiations Time, Location

Planning Short Formal

Participants Decision Making

Same Level Large Position Non Task Time Long Informal Relevant level Small Consensus

HOFSTEDE’S CULTURAL TYPOLOGY

Power Distance Individual Masculinity Uncertainty Equal Power Distance Unequal Collectivist Femininity Predictability

HOFSTEDE INDEX

Germany U.K.

France Japan USA Arab Countries Israel Power Distance Individualism

35 35 68 54 40 80 67 89 71 46 91 38 13 54

Masculinity

66 66 43 95

Uncertainty Avoidance

65 35 86 92 62 53 46 68 47 81

EMERGING CULTURAL PROFILES

Uncertainty Avoidance Low(Formalization)

Village Market

( Anglo-Nordic) Decentralized, Entrepreneurial, Flexibility, Delegation, Output Control

Family

(Asian) Centralized, Paternalistic, Loyalty, Personal relations

Well-oiled Machine

(German) Decentralized, Narrow Control, Compartmentalized, Routines & Rules

“Pyramid of People”

(Latin) Centralized, Elitist, Less Delegation, Input Control High Low `` Hierarchy High

HOFSTEDE’S MAPS

Uncertainty Avoidance Low DEN SEW IRE GBR NZL NOR USA CAN SIN HOK IND MAL PHI AUT SWI FIN GER, ISR High Small IRA THA PAK JAP SPA KOR TUR FRA MEX POR Power Distance Large

CULTURE & BUSINESS PROCESSES

Policy & Procedures

: US, low u.a., high formal reporting UK, low u.a., detailed jobs description Germany, high u.a., well internalized

Systems & Controls:

French = control(hierarchy), British=coordinate) US-UK reporting procedures French: hiring elites German operational planning Planning strategic(UK)

Information & Communication:

French: Compartmentalized Sweden: Communication open informal, transparency

Decision Making:

Participation in decision making (Sweden, Germany less hierarchy) PDG in France –Italy (Zanussi)

CUSTOMS IMPACTS TAX LOCAL CUSTOMER PURSHASING POWER LOCAL MANUFACTURER PROTECTION INCOME ALLOCATION CHANGE

Price

PARTIAL EQUILIBRIUM ANALYSIS OF A TARIFF

S D Pw1 Pw2 Sw1 Sw2 Q2 Q4 Q4 Q1 Quantity

IMPACT OF CUSTOMS UNION AGREEMENTS

Results Product A Cost Prior CU After CU B Cost Prior CU After CU Local Country

20 20 20 17 17 17

Foreign Partner Country

14 21 14 12 18 12

Foreign Third Country

12 18 18 14 21 21

Trade Flow

Import Source Change Import Trade Diversion Trade Creation

INTERNATIONAL ECONOMIC INTEGRATION

FREE TRADE AGREEMENT Abolition of Tariifs & Quota CUSTOM UNION Abolition of Tariffs & Quotas Common External Tariffs COMMON MARKET Removal of Restrictions on Factors Movements ECONOMIC UNION Harmonization of Economic Policy MONETARY UNION Common Monetary Policy

THE EUROPEAN UNION MILSTONES

• • • • • •

1945 Two Super Powers 1948-52 Marshall Plan 1951 Schuman Declaration 1951 Paris Agreement ECSC 1957 Roma Agreement EC 1968 Custom Union

• • • • • • • •

1985 Cockfield’s White Paper 1987 Single European Act 1991 Maastricht Treaty 1992 SEA Implementation 1997 Amsterdam Treaty 1999 Monetary Union 1999 Nice Treaty 2002 Euro

ENLARGEMENT OF THE EUROPEAN UNION

   1956: Germany, France, Benelux, Italy   1971: UK, Ireland, Denmark 1981: Greece 1986: Spain, Portugal 1995: Sweden, Austria, Finland  2004: Poland, Hungary, Tchek Republic, Cyprus, Slovakia, Malta, Slovenia, Lithuania, Latvia

THE INSTITUTION OF THE EUROPEAN UNION THE COUNCIL

• Commission Proposals • Legislative Power • Co-decision with the Parliament • Foreign & Security • Ministers • The European Council • • • • •

THE COMMISSION

Executive Power Proposes Amendments Manages Policies Controls Policies Implementation President(Prodi) + 20 Ministers, 24 DG

From 1 November 2004, a qualified majority will be reached if the following two conditions are met: 1. if a majority of member states approve in some cases a two-thirds majority);a minimum of 232 votes is cast in favour of the proposal, i.e. 72.3 % of the total (roughly the same share as under the previous system).

2. In addition, a member state may ask for confirmation that the votes in favour represent at least 62% of the total population of the Union. If this is found not to be the case, the decision will not be adopted.

Distribution of votes for each member state (from 01/11/2004)

Germany, France, Italy, United Kingdom 29 Spain, Poland 27 Netherlands 13 Belgium, Czech Republic, Greece, Hungary, 12 Portugal Austria, Sweden 10 Denmark, Ireland, Lithuania, Slovakia, Finland 7 Cyprus, Estonia, Latvia, Luxembourg, Slovenia 4 Malta 3

TOTAL 321

POLICIES AND DGS

• Agriculture & Rural Development • Competition • Economic & Financial Affairs • Education & Culture • Employment, Social Affairs and Equal Opportunities • Enterprise and Industry • Environment • Fisheries and Maritime Affairs • Health & Consumer Protection • Information Society & Media • Internal Market & Services • Joint Research Centre • Justice Freedom & Security • Regional Policy • Research • Taxation & Custom Union •Transport & Energy

• External Relations Development, Enlargement, EuroAid, External Relations Humanitarian Aid ofice, Trade • General Services European anti fraud office, Eurostat, Press & Communication, Publication Office, Secretariat General • Internal Services Budget, Bureau of European Policy Advisers, Informatics, Infrastructure & Logistics,, Internal Audit service, Interpretation, Legal service, Personnel and Administration, Translation ,

Vice President Institutional Relations and Communication Strategy Vice President Administrative Affairs, Audit and Anti-Fraud Vice President Enterprise and Industry Vice President Justice, Freedom and Security Vice President Transport Information Society and Media

President

THE PARLIAMENT

• Legislative Power co decision with the Council • Assent Procedure(int.) • Adoption of the Budget • Approval of the Commission • Participation to the European Council

THE COURT OF JUSTICE

• 13 Judges for 6 years • Request from Private, Country, Firm • Unique Legal Power

POLITICAL GROUPS IN THE E.U. PARLIAMENT DEPPE PSE

Group of the European People's Party and European Democrats Group of the Party of European Socialists

ELDR

Group of the European Liberal, Democrat and Reform Party Group of the Greens/European Free Alliance

ALE NGL UEN

Confederal Green Left Group of the European United Left/Nordic Union for Europe of the Nations Group

EDD

Group for a Europe of Democracies and Diversities

NI

Non Attached

THE EUROPEAN UNION PARLIAMENT 2005-2009

THE ECONOMIC & SOCIAL COMMITTEE

• Representative of Economic Forces • 222 Representatives • Sectorial Commissions • Social & Economic Commissions

THE COMMITTEE OF REGIONS

• Consultative Power • 222 members • Trans European Network, public, Health, Education, Economic Cohesion

Court of Justice

President (6 chambers each comprising 3 or 5 juges ) •Action for failure Treaty obligations (Commission against a Member State or Member State against another Member State) •Actions for annulment (judicial review of the legality of Community acts) •Actions for failure to act (against the Parliament, Council or Commission •Actions for damages (against Community institutions or servants) •Preliminary rulings on the interpretation or validity of Communitylaw (references from national courts) •Appeals against judgments of the Court of First Instance