Global Business Management Audit

Avery Dennison Corporation

Module 1: Indentifying Global Business Opportunities Company Name: Avery Dennison Corporation (Classification: 20201060) Company Sector: Industrials Industry Group: Commercial Services & Supplies Industry: Commercial Services & Supplies Sub Industry: Office Services & Supplies Avery Dennison Corporation is a diversified company that produces pressure-sensitive adhesives and materials for industrial and consumer uses. Avery Dennison's products include pressure-sensitive labeling materials; graphics imaging media; retail apparel ticketing, branding systems; RFID inlays and tags; office products; specialty tapes; and a variety of specialized labels for automotive, industrial and durable goods applications. Since its humble beginning in 1935 from a 100-square-foot loft in Los Angeles, California the company has grown to become a global enterprise with about 31,300 employees in over 200 facilities in more than 60 countries and product sales in 89 countries worldwide. Avery operates under a global area division structure because through regional presence of its divisions the company can better respond to local variances in demand and product differentiation within each area while still taking advantages of the economies of scale that a company of the caliber of Avery Dennison has been able to create. I have identified Chile as a country in which Avery can invest its resources and secure expansion in a business environment with minimal risks and optimistic outlook. Chile is a country with strong projections for industrial growth, well-established governmental institutions and a promising destination for foreign direct investment (FDI). Chile stands as one of the most powerful economies in the region and according to a study by the World Economic Forum (WEF) Chile has the most interconnected web economy in Latin America with outstanding Macroeconomic conditions that continue to place Chile in the top-ranking nations for growth and prosperity. Avery Dennison can bring its expertise in optimizing industrial identification processes to booming industries in construction, automotive, fleet transportation, retail, education, healthcare, food processing and many other markets in Chile. The establishment of local manufacturing and converting plants may also allow Avery to export and serve markets in the neighboring countries of Ecuador, Bolivia, Peru and Argentina in which demand for specialized labeling, media and identification systems is also growing.

Module 2: Analyzing International Competitors The diversified nature of Avery Dennison business includes many competitors to each one of its three well-defined divisions in the Pressure-sensitive Materials, Retail Information Services, and Office and Consumer Products areas. I will concentrate in naming those competitors that can offer diversifies products at the same scale and specialization as Avery does:

Bemis Company, Inc. (NYSE: BMS ): Is a multinational company that manufactures

and sells flexible packaging products and pressure sensitive materials in the United States, Canada, Mexico, South America, Europe, and Asia. Bemis operates 81 facilities in 13 countries and employs about 20,400 people worldwide. Bemis posted net sales of $4.8 billion in 2009.

3M (NYSE: MMM):

A diversified technology company serving customers and

communities with innovative products and services. The following business units compete with product lines from Avery: Consumer and Office, Display and Graphics, Industrial and Transportation. 3M posted global sales of $ 23 Billion in 2009. It runs operations in 65 countries with 74,835 employees worldwide and 3M products sold in nearly 200 countries.

Pitney Bowes (NYSE:PBI): A $5.6 billion company that employs 33,000 worldwide. It

competes with Avery in the mailing and labeling system segment. It operates in over 130 countries. Among the many competitive advantages that Avery can bring to the Chilean market the manufacturer should undertake a strategic imperative focused on quality. Avery can do this by offering its Enterprise Lean Sigma (ELS) approach which empowers Averys employees to be innovative in finding new ways to solve customer problems, meet their needs and create value through their supply chain. Manufacturers around the world count on Averys solutions to streamline their identification operations in the areas of branding, logistics, packaging, anticounterfeiting, data-tags, RFID inventory control management and more. Averys promise of quality encompasses: reducing product sample response times, enhancing customer service and accelerating the rate of new product introductions. A promise focused on process excellence that has been transmitted throughout all business units and levels of the organization.
Learn more about Averys Enterprise Lean Sigma Here http://www.youtube.com/watch?v=2gyKxK2Mspc&feature=channel_page

Module 3: Assessing the Economic-Geographic environment:

Chile is located in southern South America, bordering the South Pacific Ocean, between Argentina and Peru. Chiles total land area is 743,812 sq km. The climate varies by latitude being temperate; desert in the north; Mediterranean in the central region; cool and damp in the south. The terrain of the Andean nation is comprised of low coastal mountains to the west; fertile central valley and the rugged longest continental mountain range, the Andes Mountains, to the east. Chile enjoys a strategic location relative to sea lanes between Atlantic and Pacific Oceans (Strait of Magellan, Beagle Channel, Drake Passage). Chile has a developed mining industry concentrated on copper, gold, silver, coal, iron ore, nitrates, precious metals, molybdenum; copper exports alone stand for more than one third of government income. Other major industries that contribute to the Chilean economy include: wood, processed food, seafood and wine. Volcanic and earthquake activity are natural occurrences in Chile and the incidence of such activity may cause setbacks in the economy; However, Chilean authorities are prepared to handle catastrophic situations effectively. They demonstrated so during the return to normal economic activity within a few weeks of the massive 8.8- magnitude earthquake of February 27th, 2010 After decades of State-led economic policies the Chile Central Bank became autonomous and during the last twenty years this institution has achieved the regulation and stability of the Chilean financial sector by reducing monetary subsidies, eliminating price controls, setting noninflationary economic policies, selling state-owned enterprises to the private sector and restoring confidence to attract foreign investment to this nation. The Chilean government has focused on opening up its economy to the world by reducing tariff and non-tariff barriers, facilitating new business entry and negotiating trade agreements with numerous nations and organizations around the globe. Avery should seek a location of its Chilean operations within the Central region of this nation because of the high concentration of industrial activity, major cities and universities within this area. There are well developed nautical, land and airborne transit ways that can serve as the backbone for effective supply management from suppliers and to customers within the Chilean border and also to neighboring countries.

Module 4: Assessing the Socio-Cultural environment:

The official spoken, written and business language of Chile is Spanish; although professionals and business people are expected to have basic English written and conversational skills. Chileans are very formal when conducting business, they are more punctual than other Latin America counterparts and prior appointments are necessary in order to conduct business in Chile. The template climate calls for warm attire and business people are used to wearing suits, neck tie for the men, and high-heel shows for the women. Business attire are usually sober in color and shades of blacks, grays, blues, browns are considered appropriate while wearing flashy, bright colors and fashions is not suitable. Titles are important and should be included in business cards. Greetings are affectionate and may include shaking of hands, warm hugs and kisses in the check even from men to men. The percentage of professional women in Chile is higher than in neighboring countries and today six out of every 10 graduates from Chilean universities are women. Catholicism is an influencing element of the Chilean culture and 70% of the population over 14 year of age identifies with this religion. Family and friends are very important in Chile and business conversations that include discussions orbiting around family, friends and values are generally accepted. The Geert Hofstede cultural dimensions profile for Chile includes a high value of 86 for Uncertainty Avoidance, to address this organization can work on establishing and implementing strict rules, laws, policies, and regulations to better control the business environment. The rank for individualism is low, confirming the tendency on Latin America countries to give more importance to the group, family, work teams than to the individual. In this context companies can foster an environment in which groups collaborate and work toward common goal and in the same way are collectively recognized for their achievements. When establishing business in Chile Avery Dennison must consider at all times that Chileans are very structured in their ways of conducting business. There are many norms, customs and laws that govern the privileges and duties of the workforce and in order to avoid uncertainty Avery Dennison should carefully evaluate the human resource strategy to be employed in Chile in order to foster a positive business environment for employees, customers and stakeholders who become part of this new venture. Module 5: Assessing the Political-Legal Environment

Even though Chile is considered to have one of the most stable democracies in South America; the historical road to democracy has been a struggle of ideologies and beliefs. Chile was the last of South American countries to transition to democracy after the end of the cold war, when many countries in the region had fallen to the power of authoritarian, communist dictators for decades. The democratic political framework of Chile is headed by the president, currently Mr. Miguel Piera Echenique elected March 11, 2010, who serves as the head of state and the head of government. The executive power is exercised by the government. Legislative power is vested in the government and Congress. The Judiciary is independent of the executive and the legislature. Chile scored highest of all South American countries, score of 7.1 out of 10, in the Transparency International 2010 index of corruption perceptions and ranked no. 21 out of 178 nations considered. The political institution of the country are trusted by the public and perceived to be transparent and accountable. Chiles legal system was inherited from Spain during colonization. The legal model was very inquisitive and defendants were always presumed guilty, this was true for Latin America colonies, but Chile was the most inquisitive system of all. Public law, which governs the relationships among citizens, is administered by the Ministerio Publico. It is based on the profound reforms of 1990 when the system became more open and participative reflecting the changes from a totalitarian regime to a strong democracy. Private law is governed by the Civil and Commerce Code, originally created by jurist Andres Bello these codes have been enforced for more than 150 year and have been object of several alterations to include modern additions dealing with bankruptcy and banking. Another alternative to the traditional legal system is to settle private and commercial disputes through arbitration. In Chile arbitration issues are mainly handled by the AmCham, the Chilean American Chamber of Commerce. The AmCham played a very active role in the passage of the new International Arbitration Law. The solid institutions that make up the political and legal environment in Chile give pose minimal risk for international investors. Avery Dennison should become fairly familiar with the legislative system of the nation and make sure agreements, contracts and any legal documents that impose obligations in the new operation are clearly drafted and specify the jurisdiction and system, whether code law or arbitration, in which any dispute will be settled. Module 6: Establishing a Global Company Structure

Avery Dennison is a centralized organization and global strategies for the entire organization, including all companies within its three groups of business, are developed in the corporate headquarters in Pasadena, California. The centralization decision making style employed by MNC is derived from factors such: the large size and large capital investment of the corporation in operations abroad, the high degree of technology employed by all business units in the production of homogeneous product lines, the fact that all international operations are wholly owned subsidiaries and that proprietary innovation and technologies that distinguished Avery Dennison from competitors must be protected by the organization. Once global strategies are set the global area division structure helps Avery Dennison carry out the corporate governance and message through the regional divisions in North America, Latin America, Europe, Asia and Africa. These are each divided into 3 strategic business units: pressure-sensitive materials, retail information services and office and consumer products. Each regional division is responsible for running market development, product sales and local operations in the most efficient manner for each one of the strategic business units and even though regional operations have the freedom to respond to local demands and situations of the host countries they must operate within the context set by the corporate guidelines and regulations of the global headquarters. In the new business venture in Chile Avery can assimilate the corporate philosophy and put in place the six core values that serve as the guiding principles for conducting business in all Avery units: integrity, service, teamwork, innovation, excellence and community. Each of these elements adds value to the organization and creates a motivating and innovative working environment that fosters pride and ownership for employees at all levels. Testimony of the unified global structure at work for Avery Dennison is on the career section of their webpage; Norbert, a receptionist in Europe says The Company cares for its customers, employees, the environment and the communities in which we live and work. The desire to continuously improve will bring Avery Dennison lasting success and Paul, a cost analyst in the U.S.A confirms Avery Dennison nurtures innovation and encourages a commitment to excellence, especially through continuous improvement initiatives such as Enterprise Lean Sigma. The Company also invests in employee development because it recognizes that its future relies on the talent of its employees Module 7: Financing Sources for Global Business Operations Current economic conditions for American companies to enter the Chilean market are very

favorable because Chile and the United States have a signed free trade agreement that since its implementation in 2004 caused the trade figures between the two nations to double to more than US$ 15,000 million annually. The exchange rate is a determinant factor for calculating startup cost of operations in the international arena and today the exchange rate favors American investment in Chile because the exchange rate is 483.215 Chilean Pesos per US dollar. The economic outlook for Chile is optimistic, the purchasing power of Chilean is in the rise and yet the cost of living is significantly lower in the Andean nation compared to other Latin American counter parts and that of European nations and the United States. The pro-market macroeconomic policies implemented by the central bank in Chile have kept inflation low at estimated 1.5 % in 2009 and 8% during the global crisis downturn in 2008. INE National institute of Statistics in ChileAccording to the Unemployment has been declining during 2010

and it is now about 8%, one of the lowest jobless numbers in the region, it indicates the Chilean economy is recovering and preparing to hit the growth projections and expectations to become an industrialized nation by 2020. Avery Dennison can count in its global leverage to secure financing of its investment in Chile through the growing number of global financial institutions that are looking to do business in Chile and ride the momentum wave of inward direct foreign investments in the Andean nation. Chiles treatment of foreign and local investors equally, the offering of free access to nearly all economic sectors, and minimum government intervention in investment activity is an example of leadership and forward-thinking on behalf of Chilean financial institutions and it has resulted in steady growth of incoming FDI to Chile. Registration to do business in Chile is simple and transparent, and foreign investors are guaranteed access to the official foreign exchange market to repatriate their profits and capital with little or no limitation at all. The tax rate for corporate income tax is about 18% over profits which low compared with industrialized countries. Value added tax is also levied at a rate of 19% and must be considered as part of the cost of doing business in this nation. The revenues authority, Chile's Tax Service (SII), is a modern organization that provides information online and printed on the tax cycle for foreign investors from the moment they initiate business in Chile until the business ends. Tax obligations can also be settled electronically though the SII tax portal for foreign investors: http://www.sii.cl/portales/inversionistas Module 8: Creating a Global Management Information System The dynamics that are shaping the business environment for global firms are pushing MNCs to

become extremely competitive, efficient and resourceful. Taking advantage of the economies of scale created by integrating and sharing information across multiple geographies, business units and product divisions is vital to driving cost down. Undertaking a worldwide approach similar to the Kaizen Japanese philosophy on continuous quality improvement can allow Avery Dennison to move ahead of the competitors in all regions. A globally designed enterprise resource planning system - ERP, although a pricey investment for global corporation, can be the ideal tool help companies like Avery Dennison need to capitalize on existing relationships with global customers and suppliers. It is recommended that top executives develop a robust, scalable data sharing architecture that encompasses all process of the company in a single database and platform. Allowing managers to access global data sources lets them compare their units performance with companywide statistics, implement initiatives that are being undertaken by other company divisions to improve quality, negotiate contracts with suppliers that can provide materials across geographies and business segments, strengthen relationships with global customers and capitalize on these relationships by cross-promoting business solutions to customer of all strategic business units. According to TopBits, an online community with information on how technology can make the world a better place, an ERP would be consider ideal if it chains all the below organizational processes together: Manufacturing: engineering, capacity planning, material planning, quality control, etc. Financials: Billing, payable/receivables, fixed assets, general ledger, cash management. Human Resource: Recruitment, benefits, compensations, training, payroll, time and attendance. Supply Chain Management: Inventory management, supplier scheduling, claim processing, transportation and distribution. Projects: Costing, billing, activity management, time and expense CRM: Sales and marketing, service, commissions, customer contact and after sales support Data Warehouse: Generally, this is an information storehouse that can be accessed by organizations, customers, suppliers and employees for their learning and orientation A global IT system may be an expensive and time-consuming project to undertake, but it can also create unbeatable competitive advantages for the global organization. Module 9: Identifying Human Resources for Global Business Activities In the Avery Dennison website the importance the company bestows upon their human resource

may be sensed in many of their statements and they proudly transmit this message in the following affirmation on their careers page people are one of our most important sustainable competitive advantages. That's why we recruit only highly motivated and focused individuals who want to take their careers to new heights Integrating this corporate philosophy of high esteem for team members at all level may be a challenging task for operations abroad, given the different approaches to leadership and labor legislatures in other countries around the world Labor legislation in Chile specifically allows the formation of workers unions without prior government authorization and most of these groups have a right to engage in collective bargaining. Employees in the private sector have the right to strike with authorization and regulation from the government. The Ministry of Labor enforces the minimum wage law, sets the legal workweek at six days or 45 hours, and establishes the regular workday to be 8 hours and the maximum workday length in 10 hours (including two hours of overtime pay). The government enforces these standards adequately and fines employers who do not comply with these and other labor laws. The Ministries of Health and Labor monitor the minimum standards of safe working conditions are met. It also protects the employment of workers who remove themselves from dangerous working conditions. Insurance mutual funds provide workers' compensation and occupational safety training. Another challenging aspect human resource management in this new business venture in Chile is the distinct approach to leadership Latin American countries; where superiors are distant from subordinates in the workplace and usually do not welcome input from people who work below them because it might be a sign of incompetence and weakness. In order to address these differences the company could appoint a corporate transitional leader who is capable of transferring the corporate philosophy effectively as well as the advantages of assimilating corporate values to improve their workplace. This leader must also tactically hit a balance of respect and acceptance in regards to local customs and norms and be in the lookout for improved methodologies of doing business that could be transferred from this host country to the home office or other locations. Module 10: Managing International Finance and Business Risks Managing risk in operations abroad is a complex mission that depends in multiple variances and

changes in the business environment. Variations can be of political origin such ideology shifting or attitude alteration in regards to FDI on behalf of the government in the host nation. It might be from lack of performance and adaptation to corporate governance by the human resource, including actions by employees that can affect the profitability of the operation such labor strikes. Losses can also be attributed to natural disasters; in Chile earthquakes and volcanic activity have historically caused many damages and setbacks in economic activity. Economic risk is also an element that can deeply affect the profitability of the operation abroad, a devaluation of the currency in Chile and detrimental macroeconomic conditions can have a negative effect on the return on investment of the operations in Chile. Avery Dennison strategy for entry and establishing operations abroad is based on the development of wholly owned subsidiaries; a strategy for which the Chilean government presents minimal limitation today. The decision to run a wholly-owned subsidiary is based on the need to have maximum control of the operations efficiency processes, quality control, and also to protect the know-how, specialization and proprietary technological innovations that the company has developed through the years. The company uses Value-at-Risk (VaR) analysis, which assesses the percentage of assets in the case of worse possible scenario losses. Another way of dealing with risk management is implementing the ISO standards - International Organization for Standardization- for risk management which establishes the following steps for effectively managing risks:

1) Identification: of risks/problems in a selected domain 2) Planning: the remainder of the process 3) Mapping out: social scope, objectives and evaluation

4) Defining: a framework for the activity and an agenda 5) Developing: an analysis of risks in the process 6) Mitigation or solution: Using available resources

Module 11: Product and Target Market Planning

The opportunities that make Chile an ideal market for establishing operations of Avery Dennison include the nature of the Chilean economy; an economy based in exports of commodities and also in the production of processed food including wine, cheeses and seafood. The sustained economic growth Chile has been experiencing in the last has caused the retail, utility, transportation and public sectors to expand as well. Avery Dennison industrial solutions include applications that can streamline operations in all of these sectors and since Chile is an importer of technology products and intelligence there is a strong opportunity for Avery Dennison to succeed in this market. Some of the products that Avery Dennison can promote in Chile include specialty pressure labels used for consumer product packaging and that can be applied in wine bottles, drinks, cleaning products and seafood items. Avery labeling systems can effectively be used for managing inventory levels, expiration dates and safety recalls. In the mining industry Avery RFID and metal tags can be applied for machinery positioning and identification purposes. Avery specialty reflective graphics offer a wide variety of media and branding solutions used for road signals, work zone, safety apparel and fleet vehicle applications. And in the retail sector printing solutions for inventory control, distribution, logistics, ticketing, pricing, branding, promotional coupons, security, woven, heat transfer, fastening tags and labels help retailers streamline their operations, cut cost and become more competitive in their market place. Avery Dennison products are highly customizable and the company can work with their customers to allow them to strengthen their visual appeal and support their branding strategies through the labeling solutions offered; however, there is no need for adaptation of their converting and production techniques and this can be beneficial on controlling R&D, set-up and maintenance cost for Averys labeling converting and graphics printing plants in Chile.

Module 12: Designing a Global Distribution Strategy

The most used from of transportation in Chile is by roads. The country has a infrastructure that adds to more than 40,000 miles of paved highways, including the Pan-American highway that runs from Argentina, passing trough Chile, Peru, Ecuador, Colombia and North to Panama, Mexico and The United States. Even though the route system is well planned and efficient in Chile the Southern part of the country is no accessible by road, alternative means of transportation like maritime and by air are employed to service these remote and less populated areas of the country. There are a total of 62 airports in Chile, 8 of them strategically scattered thru the Chilean territory and servicing international flights. Chiles territory is a long and narrow strip on land, as matter of fact it is considered the longest country in the world, and its coastal lines stretch 4,000 miles along the Pacific Ocean and its privileged strategic location relative to sea lanes between Atlantic and Pacific Oceans (Strait of Magellan, Beagle Channel, Drake Passage) allowed Chile to develop a strong infrastructure for logistics that connect to international shipping lanes. The U.S. and Chile agreed in 2004 to eliminate tariffs on U.S. and Chilean goods over a ten-year period for industrial goods and a twelve-year period for agricultural products and over 85 percent of imports and exports became duty-free immediately upon implementation of the FTA of 2004. Products that fall in taxable categories pay a flat duty of 6% and by 2016 all trading good between Chile and the USA will be duty-free. Chile has also negotiated free trade agreements with Australia, Canada, China, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, (Chile-Central America), EFTA European Free Trade Association, Japan, MERCOSUR, Mexico, Panama, Peru and the Republic of Korea. In establishing operations in Chile Avery Dennison can take advantage of the free trade agreements this nation has negotiated with other countries which allow Avery to import capital and resources needed for their plants free of tariffs from the United States, China and other origins. It is recommended that Avery Dennison employs a short distribution channel for the distribution of the goods manufactured at its new facility since business strategy of customized industrial and business products in Chile is the focus for growth in this new market there is no need for intermediaries. Relationships with transportation carriers and providers must be established to allow efficiency and economies in the logistics of getting the products from the Avery production plant to the business locations and plants of its customers. Module 13: Planning a Global Promotion Strategy

Freedom of expression of observed in Chile for the most part. There are a number of channels that can be used to implement the promotional strategy crafted to the new operation in Chile among them newspapers, trade publications, professional journals, billboards, electronic advertisement in industrial/trade portals, etc. In a video introduction to its company president and CEO of Avery Dennison, Mr. Dean Scarborough, argues that the products and material the company produces are encountered by consumers hundreds of times a day, but that most people are unaware of the powerhouse this Global company has created through its innovative industrial solutions. For example Avery products are found in multiple packages of shampoos, beer and soft drink bottles, the exit signs in the highways, the woven tags in clothing, and the price labels in retail environments. It is not difficult to understand that the strength of the company lies in the solutions offered by the pressure sensitive materials unit which accounts for 56% of companywide sales. For this reason the promotional strategy which is developed by the corporate headquarters is focused on presetting the industrial solutions message to professionals who make decisions about improving operation in their own manufacturing plants. The new international operation can translate advertisement messages and adapt them to show how Avery can create competitive advantages in their customers plants in Chile through the unique technological solutions. My promotional management recommendations for Avery Dennison in Chile are: Dedicate promotional dollars to reaching key industry engineers, business owner, executives, and high level professional in the targeted industries where Avery wants to push their business solutions. Run print advertisement campaigns in business journal, trade publication and chamber of commerce periodicals. Elaborate white papers and case studies sharing statistical data about efficiencies created for other customers. Buy billboard space around industrial complexes in proximity to manufacturing, commerce, warehousing and distribution centers. Participate in industrial trade shows like Vinitech (wine industry trade show) and Exponor (mining industry) and also in events organized by the distinct chamber of commerce in Chile. Given the reliability of the post service in Chile, Avery Dennison could also employ direct marketing campaigns aimed at transmitting a more personalized and convincing message to identified top-executives in the targeted industries.

Module 14: Selecting an International Pricing Strategy: In 2010 Avery Dennison celebrated their 75 year anniversary and they are proud to say the company is leading the way in innovation and business solution technologies around the globe. Emerging markets in Asia, Latin America and Eastern Europe represent 1/3 of sales for the corporation today and as these markets continue to grow, so does the commitment and investment of Avery abroad. According the investors annual report the leading position of many of their business groups allows Avery to set their pricing at premium levels. A premium pricing strategy or prestige pricing allows companies to price their products and services near the high end of the possible price range to help attract status-conscious clients and to enhance and reinforce the product's quality and unique image. The industry leadership status Avery Dennison has developed during its 75 years of operations let the company capitalize on charging premium price for its products and services. Avery printing materials and intelligence services require faultless performance because their customers rely on Avery Dennisons expertise to create attractive and distinctive brands, to control their supply chain and inventory levels, and to meet the needs of their end-customers. The high level of specialization, its commitment to excellence and being a premium provider of intelligence business solutions give Avery Dennison the leverage needed to charge top dollars for its products and services and still experience and project growth in the bottom lines. Avery Dennison can continue to capitalize in their established reputation and still charge premium pricing for the products and serviced commercialized Chile. Even though, smaller and local competitors present in the labeling solution segment of the market may pose negligible threats to Averys new proposed business the company can still offer many unique services of industrial intelligence that incorporate bar-coding, reflective and RFID technologies and give Avery Dennison a competitive edge. Avery can also negotiate global contract with multinational customer with presence in the Chile market and develop loyalty programs and alliances that secure financial earnings from business that have already been earned in other geographies. Charging premium price can also offset some of the diminishing returns Avery Dennison may incur when importing resources needed for production or when repatriating earnings derived from their investment in Chile in the case the Chilean currency devaluates.

Module 15: Determining Organizational Financial Results

In analyzing the financial results for Avery in 2009 we can see how the decline in consumer products and diminishing aggregate demand for their industrial products negatively impacted their financial statements. The company was forced to take cost reduction measures necessary to deal with the recessionary environment including the reduction of their global workforce by 10%, paying debt and reduce dividends. We see that the losses in the US region continue to increase from -4% in 2007 to -9% in 2009 and although other regions also experienced losses the percentage was lower, specifically only 2% in Latin America. Although the company is experiencing the negative effect of a challenging business environment it is taking discipline measure to emerge strong from the crisis. The company has completed the acquisition of Paxar industries to complement its business intelligence portfolio and is strongly investing in emerging markets, which today represent one third of total company sales. Some of the Green Initiatives and Research and Development goals Avery Dennison has set to

ensure sustainability for the year to come include: Developing and offering eco-friendly products to help customers reduce their impact on the environment. Piloting emission control technology that converts solvent manufacturing waste into an energy source in North American plants. In Europe and North America Avery is partnering with waste recycling experts to collect and recycle liner waste from our roll materials customers and, as a result, reduce landfill waste. Since 2005, Avery has retrofitted lighting projects in North America resulting in an annual carbon dioxide emission decrease of more than 22.6 million pounds and an energy savings in excess of $1.2 million annually for 15 locations. Another 14 sites are in progress. Averys retail information services operations are using water and soy-oil based printing inks for customer materials to reduce the need for hazardous solvents during disposal processes. Avery is investigating in ways to use solar power in factories that have the technology and appropriate climate around the world.

Module 16: Measuring Internationsl Business Success:

The weak economy and slow recovery in the United States continues to be a challenge for Avery Dennison North America and this is reflected in the 2009 income statement, the decrease of value of the stock and dividend. Expanding the companys frontiers and being able to capitalize on the new business they have earned by servicing location abroad for global customers like Wal-Mart, Ford Motors, P&G, and BMW can represent an optimistic outlook to secure shareowners gains translated in more dividends, a rebound in the value per share and additional gains to offset the increasing losses in the domestic market. Avery Dennison operation in Chile will benefit the host country in numerous ways: Creation of jobs in the region. For every dollar invested in the Chilean economy the multiplier effect can raise economic activity in the Andean nation.

Rise in the overall income level of the Chilean employees. Benefits of labor training, accumulation of new skills and transfer of knowledge from highly specialized and efficient operations in the home country.

Transfer of technologies from the highly industrialized home country to the fast-developing host nation and increased industrial output for streamlined operations of Averys customers in Chile.

Chile can also benefit from the green initiatives and cleaner technologies Avery employs n its plants.

Although the benefits of FDI in the host country are evident there are also concerns of the threats that MNCs present to small and medium local producers. Although data confirming the disappearing of local producers is scarce it is believed many smaller national enterprises disappear from the market upon entrance of MNCs into the host country due to unfair competition and inability to operate in the new business environment.

Resources

Module 1: http://www.averydennison.com http://finance.yahoo.com/q/pr?s=AVY+Profile http://www.thisischile.cl/Articles.aspx?id=3092&sec=189&eje=negocios&itz=&t=chile-hasthe-most-interconnected-economy-in-latin-america&idioma=2 Module 2: http://www.bemis.com/ http://solutions.3m.com/wps/portal/3M/en_US/About/3M/ http://www.pb.com/ http://www.averydennison.com/avy/en_us/About-Us/Enterprise-Lean-Sigma Modules 3: https://www.cia.gov/library/publications/the-world-factbook/geos/ci.html http://pdf.usaid.gov/pdf_docs/PNADL012.pdf Module 4: http://www.cyborlink.com/besite/chile.htm http://www.geert-hofstede.com/hofstede_chile.shtml Module 5: http://en.wikipedia.org/wiki/Law_of_Chile#Public_law http://www.transparency.org/policy_research/surveys_indices/cpi/2010 Module 6: http://www.averydennison.com/ Luthans, Fred, and Jonathan P. Doh. International Management. McGraw Hill. Print.

Module 7: http://www.fdi.net/country/sub_index.cfm?countrynum=45 http://www.minhda.cl/english/informacion_inversionista/incentives_for_foreign_investment .php http://www.sii.cl/portales/inversionistas Module 8: http://www.tech-faq.com/erp.html Luthans, Fred, and Jonathan P. Doh. International Management. McGraw Hill. Print. Module 9: Luthans, Fred, and Jonathan P. Doh. International Management. McGraw Hill. Print. http://www.averydennison.com/ Module 10: http://www.finpipe.com/mrisk.htm http://en.wikipedia.org/wiki/ISO_31000 http://www.averydennison.com/avy/static/ar_2009/assets/AD_09AR_full_report.pdf Luthans, Fred, and Jonathan P. Doh. International Management. McGraw Hill. Print. Module 11: http://www.averydennison.com/ Module 12: http://www.export.gov/FTA/chile/eg_main_017577.asp Module 14:

http://www.averydennison.com/avy/static/ar_2009/avy_annual_report_2009.html#/weIdent ifyYourWorld/opportunity/frame1 Module 15: http://www.averydennison.com/avy/static/ar_2009/avy_annual_report_2009.html#/weIdent ifyYourWorld/distinction/frame1 Module 16: http://www.averydennison.com/avy/static/ar_2009/avy_annual_report_2009.html#/weIdent ifyYourWorld/distinction/frame1 http://finance.yahoo.com/q?s=avy&ql=1