COMPETITIVE ADVANTAGE IN ISRAEL

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

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

Strategy, Structure & Rivalry

• High Exposure to Competition

• Targeting Export markets

• Good Work Relations

• Planning Short Term

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


• Vertical Integration

• State Owned Enterprises

• Increasing Private Sector Participation


• 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


• Monopolization in Key Sectors

• State Owned Companies

• Gradual Privatization

• Support to Export/Investment


• 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. Some I ndicators

•Population 4.037.095

•Total labour force 53,0%

•Total unemployment rate 3,8%

•Female labour force 44,3%

•Female unemployment rate 5,3%

•GDP per head (€) 21.132

•Employees in themanufacturing industry 645,648

•Manufacturing local units 94.817

•Firms with less than 50 empl. 98%

EmiliaEmilia--Romagna: industrial districtsRomagna: industrial districts

PIACENZA

RIMINI

PARMA

REGGIO EMILIA

MODENA

FORLI ’

BOLOGNA

FERRARA

RAVENNA

Machine tools

Farm machinery

Food processing

Textile-clothing industry

Upholstered furniture

Packaging machines

Ceramic products and machines for

ceramic industry

Shoes

Biomedical products

Wood – processing machines

2

Emilia-Romagna at a glance

• Area: 22,120 km2

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

•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

ERVETERVET

The ERVET SystemThe ERVET System

I nnovation I nnovation -- Technology Transfer Technology Transfer

ASTER

ConstructionConstruction

QUASCO

CENTRO CERAMI CO

FashionFashionCITER

CERCAL

Quality Quality -- Technology Technology -- EngineeringEngineering

CERMETDEMOCENTER

CESMA

The new Players SystemThe new Players System

ERVET

TA and support to PA and Local

Authorities for Promotion and

Improvement of the regional territory

ASTER

Co-ordination, financing, managing

the Network forApplied Research and

TT

Research and TT

Laboratories

Innovation Centres

Models of Industrial Development

Community Industry Synergy

Clustering Specialization Process

Free Economic Zone

Industrial District

Porter’s Cluster

Hybrid Industrial District Cluster

Strong

Weak Strong

Hybrid FEZ-C

Hybrid ID-FEZ

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)

Demand Conditions• Mutual impact of demand sophistication (irrigation)• Economies of scale for Israeli

producers• Arab software


• Competition between

Jordan, Egypt and PA on

Israeli contracts

• Israeli new specializations,

product differentiation


• 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

Japan

China

Arab

Germany

Scandinavia

United States

High Context

Low Context

THE CULTURE ENVIRONM ENT

A rtifac tsh earm sm e ll,tas te , tou ch

V a lu esR u les

L azy

V a lu e

H u m anN atu re

R ig h ts

O b lig a tion s

R e la tion sh ip

D om in a te

S u b m iss ive

E n viron m en t

C rea te P lan

R eac t

A c tivity

O b jec tive

S oc ia l

Tru th

A ssu m p tion sR oots

E S S E N C E O FTH E C U L TU R E

IMPACTS OF CULTURE ON MANAGERIAL BEHAVIORS

Culture Context Explicit Implicit

Negotiations Planning Non Task Time

Time, Location Short Formal Long Informal

ParticipantsSame Level LargeRelevant level Small

Decision Making Position Consensus

HOFSTEDE’S CULTURAL TYPOLOGY

Power

Distance

Equal

IndividualMasculinityUncertainty

Power

Distance

Unequal

CollectivistFemininityPredictability

HOFSTEDE INDEX

Power Distance

IndividualismMasculinityUncertainty

Avoidance

Germany 35 67 66 65U.K. 35 89 66 35France 68 71 43 86Japan 54 46 95 92

USA 40 91 62 46Arab Countries

80 38 53 68

Israel 13 54 47 81

EMERGING CULTURAL PROFILES

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

HighLow

``

HighHierarchy

Uncertainty AvoidanceLow(Formalization)

HOFSTEDE’S MAPS

Uncertainty AvoidanceLow

High

Power Distance Small Large

DEN

SEW IRE GBRNZL NOR USA CAN

SIN HOK IND MAL PHI

AUT SWI FIN GER, ISR

IRA THA PAK

JAP SPA KOR

TUR FRA MEX POR

CULTURE & BUSINESS PROCESSESPolicy & Procedures:US, low u.a., high formal reportingUK, low u.a., detailed jobs descriptionGermany, high u.a., well internalized Systems & Controls:French = control(hierarchy), British=coordinate)US-UK reporting proceduresFrench: 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

PARTIAL EQUILIBRIUM ANALYSIS OF A TARIFF

S D

Pw1

Pw2

Q2 Q4 Q4 Q1

Sw1

Sw2

Price

Quantity

IMPACT OF CUSTOMS UNION AGREEMENTS

ProductLocal Country

Foreign Partner

Country

Foreign Third Country

Trade Flow

Results

A Cost

Prior CU

After CU

20

20

20

14

21

14

12

18

18

Import Source

Change

Trade Diversion

B Cost

Prior CU

After CU

17

17

17

12

18

12

14

21

21

Import

Trade Creation

IN T ER N AT IO N AL EC O N O MIC IN T EG R AT IO N

F R E E TR A D E A G R E E M E N TA b o lit ion o f Tariifs & Q u ota

M O N E TA R Y U N IO NC om m on M on etary

P o lic y

E C O N O M IC U N IO NH arm on iza tion o fE con om ic P o licy

C O M M O N M A R K E TR em ova l o f R es tric t ion son F ac to rs M ovem en ts

C U S TO M U N IO NA b o lit ion o f Tariffs & Q u otas

C om m on E xte rn a l Tariffs

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

Enterprise and Industry

Vice President

Transport

Vice President

Administrative Affairs, Audit and

Anti-Fraud

Vice President

Justice, Freedom and Security

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 Group of the European People's Party and European Democrats

PSE Group of the Party of European Socialists

ELDR Group of the European Liberal, Democrat and Reform Party

Verts / ALE

Group of the Greens/European Free Alliance

GUE NGL

Confederal Group of the European United Left/Nordic Green Left

UEN 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 JusticePresident

(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

Documents

COMPETITIVE ADVANTAGE IN ISRAEL