What Is The Association Of Southeast Asian Nations? The Association of Southeast Asian Nations (ASEAN, 1967) currently includes Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Myanmar, Laos, and Cambodia wants to foster freer trade between member countries and to achieve some cooperation in their industrial policies An ASEAN Free Trade Area (AFTA) between the six original members of ASEAN came into effect in 2003 ASEAN and AFTA are moving towards establishing a free trade zone What Is The Association Of Southeast Asian Nations? ASEAN Countries 96
What Is The Asia-Pacific Economic Cooperation? The Asia-Pacific Economic Cooperation (APEC) has 21 members including the United States, Japan, and China wants to increase multilateral cooperation member states account for 55% of world’s GNP, and 49% of world trade What Is The Asia-Pacific Economic Cooperation? APEC Members 97
What Is The Status Of Economic Integration In Africa? Many countries are members of more than one of the nine blocs in the region but, since many countries support the use of trade barriers to protect their economies from foreign competition, meaningful progress is slow The East African Community (EAC) was re-launched in 2001, however so far, the effort appears futile What Does Economic Integration Mean For Managers? Regional economic integration opens new markets allows firms to realize cost economies by centralizing production in those locations where the mix of factor costs and skills is optimal But within each grouping, the business environment becomes competitive there is a risk of being shut out of the single market by the creation of a “trade fortress” 98
Cultural Dynamics Disparity between a firm’s home and host country • Social norms and morals, beliefs, and values Made up of: • Power distance • Individualism • Masculinity–femininity • Uncertainty avoidance • Long-term orientation • Indulgence III. GLOBAL MARKET ENTRY REQUIREMENTS 99
What Is Strategy? A firm’s strategy refers to the actions that managers take to attain the goals of the firm Firms need to pursue strategies that increase profitability and profit growth Profitability is the rate of return the firm makes on its invested capital Profit growth is the percentage increase in net profits over time What Is Strategy? To increase profitability and profit growth, firms can : add value lower costs sell more in existing markets expand internationally 100
What Is Strategy? Determinants of Enterprise Value Which Strategy 101 Should a Firm Choose? There are four basic strategies to compete in international markets the appropriateness of each strategy depends on the pressures for cost reduction and local responsiveness in the industry
Which Strategy Should a Firm Choose? Four Basic Strategies Which Strategy Should a Firm Choose? 1. Global standardization - increase profitability and 102 profit growth by reaping the cost reductions from economies of scale, learning effects, and location economies goal is to pursue a low-cost strategy on a global scale This strategy makes sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal
Which Strategy Should a Firm Choose? 2. Localization - increase profitability by customizing goods or services so that they match tastes and preferences in different national markets This strategy makes sense when there are substantial differences across nations with regard to consumer tastes and preferences and cost pressures are not too intense Which Strategy 103 Should a Firm Choose? 3. Transnational - tries to simultaneously achieve low costs through location economies, economies of scale, and learning effects firms differentiate their product across geographic markets to account for local differences and foster a multidirectional flow of skills between different subsidiaries in the firm’s global network of operations This strategy makes sense when both cost pressures and pressures for local responsiveness are intense
Which Strategy Should a Firm Choose? 4. International – take products first produced for the domestic market and sell them internationally with only minimal local customization This strategy makes sense when there are low cost pressures and low pressures for local responsiveness How Does Strategy Evolve? 104 An international strategy may not be viable in the long term to survive, firms may need to shift to a global standardization strategy or a transnational strategy in advance of competitors Localization may give a firm a competitive edge, but if the firm is simultaneously facing aggressive competitors, the company will also have to reduce its cost structures would require a shift toward a transnational strategy
How Does Strategy Evolve? Changes in Strategy over Time What Are the Basic Decisions 105 Firms Make When Expanding Globally? Firms expanding internationally must decide 1. Which markets to enter 2. When to enter them and on what scale 3. Which entry mode to use exporting licensing or franchising to a company in the host nation establishing a joint venture with a local company establishing a new wholly owned subsidiary acquiring an established enterprise
What Influences the Choice of Entry Mode? Several factors affect the choice of entry mode including transport costs trade barriers political risks economic risks costs firm strategy The optimal mode varies by situation – what makes sense for one company might not make sense for another Which Foreign Markets Should Firms Enter? The choice of foreign markets will depend on their long-run profit potential Favorable markets are politically stable have free market systems have relatively low inflation rates have low private sector debt 106
Which Foreign Markets Should Firms Enter? Less desirable markets are politically unstable have mixed or command economies have excessive levels of borrowing Markets are also more attractive when the product in question is not widely available and satisfies an unmet need When Should a Firm Enter a Foreign Market? Once attractive markets are identified, the firm must consider the timing of entry 1. Entry is early when the firm enters a foreign market before other foreign firms 2. Entry is late when the firm enters the market after firms have already established themselves in the market 107
Why Enter a Foreign Market Early? First-mover advantages include the ability to preempt rivals by establishing a strong brand name the ability to build up sales volume and ride down the experience curve ahead of rivals and gain a cost advantage over later entrants the ability to create switching costs that tie customers into products or services making it difficult for later entrants to win business Why Enter a Foreign Market Late? First-mover disadvantages include pioneering costs - arise when the foreign business system is so different from that in the home market that the firm must devote considerable time, effort and expense to learning the rules of the game the costs of business failure if the firm, due to its ignorance of the foreign environment, makes some major mistakes the costs of promoting and establishing a product offering, including the cost of educating customers 108
On What Scale Should a Firm Enter Foreign Markets? After choosing which market to enter and the timing of entry, firms need to decide on the scale of market entry firms that enter a market on a significant scale make a strategic commitment to the market the decision has a long term impact and is difficult to reverse small-scale entry has the advantage of allowing a firm to learn about a foreign market while simultaneously limiting the firm’s exposure to that market IV. GLOBAL MARKET PENETRATION AND EXPANSION 109
Is There a “Right” Way to Enter Foreign Markets? No, there are no “right” decisions when deciding which markets to enter, and the timing and scale of entry - just decisions that are associated with different levels of risk and reward How Can Firms Enter Foreign Markets? These are six different ways to enter a foreign market 1. Exporting – a common first step for many manufacturing firms later, firms may switch to another mode 2. Turnkey projects - the contractor handles every detail of the project for a foreign client, including the training of operating personnel at completion of the contract, the foreign client is handed the \"key\" to a plant that is ready for full operation 110
How Can Firms Enter Foreign Markets? How Can Firms Enter Foreign Markets? 5. Joint ventures with a host country firm - a firm that is jointly owned by two or more otherwise independent firms most joint ventures are 50–50 partnerships 6. Wholly owned subsidiary - the firm owns 100 percent of the stock set up a new operation 111 acquire an established firm
Why Choose Exporting? Exporting is attractive because it avoids the costs of establishing local manufacturing operations it helps the firm achieve experience curve and location economies Exporting is unattractive because there may be lower-cost manufacturing locations high transport costs and tariffs can make it uneconomical agents in a foreign country may not act in exporter’s best interest Why Choose a Turnkey Arrangement? Turnkey projects are attractive because they are a way of earning economic returns from the know-how required to assemble and run a technologically complex process they can be less risky than conventional FDI Turnkey projects are unattractive because the firm has no long-term interest in the foreign country the firm may create a competitor if the firm's process technology is a source of competitive advantage, then selling this technology through a turnkey project is also selling competitive advantage to potential and/or actual competitors 112
Why Choose Licensing? Licensing is attractive because the firm avoids development costs and risks associated with opening a foreign market the firm avoids barriers to investment the firm can capitalize on market opportunities without developing those applications itself Licensing is unattractive because the firm doesn’t have the tight control required for realizing experience curve and location economies the firm’s ability to coordinate strategic moves across countries is limited proprietary (or intangible) assets could be lost to reduce this risk, use cross-licensing agreements Why Choose Franchising? Franchising is attractive because 113 it avoids the costs and risks of opening up a foreign market firms can quickly build a global presence Franchising is unattractive because it inhibits the firm's ability to take profits out of one country to support competitive attacks in another the geographic distance of the firm from its franchisees can make it difficult to detect poor quality
Why Choose Joint Ventures? Joint ventures are attractive because firms benefit from a local partner's knowledge of the local market, culture, language, political systems, and business systems the costs and risks of opening a foreign market are shared they satisfy political considerations for market entry Why Choose Joint Ventures? Joint ventures are unattractive because the firm risks giving control of its technology to its partner the firm may not have the tight control to realize experience curve or location economies shared ownership can lead to conflicts and battles for control if goals and objectives differ or change over time 114
Why Choose a Wholly Owned Subsidiary? Wholly owned subsidiaries are attractive because they reduce the risk of losing control over core competencies they give a firm the tight control in different countries necessary for global strategic coordination they may be required in order to realize location and experience curve economies Wholly owned subsidiaries are unattractive because the firm bears the full cost and risk of setting up overseas operations Which Entry Mode Is Best? Advantages and Disadvantages of Entry Modes 115
How Do Core Competencies Influence Entry Mode? The optimal entry mode depends on the nature of a firm’s core competencies When competitive advantage is based on proprietary technological know-how avoid licensing and joint ventures unless the technological advantage is only transitory, or can be established as the dominant design When competitive advantage is based on management know- how the risk of losing control over the management skills is not high, and the benefits from getting greater use of brand names is significant How Do Pressures for Cost 116 Reductions Influence Entry Mode? When pressure for cost reductions is high, firms are more likely to pursue some combination of exporting and wholly owned subsidiaries allows the firm to achieve location and scale economies and retain some control over product manufacturing and distribution firms pursuing global standardization or transnational strategies prefer wholly owned subsidiaries
Which Is Better – Greenfield or Acquisition? The choice depends on the situation confronting the firm 1. A greenfield strategy - build a subsidiary from the ground up a greenfield venture may be better when the firm needs to transfer organizationally embedded competencies, skills, routines, and culture Which Is Better – Greenfield or Acquisition? 2. An acquisition strategy – acquire an existing company acquisition may be better when there are well-established competitors or global competitors interested in expanding The volume of cross-border acquisitions has been rising for the last two decades 117
Why Choose Acquisition? Acquisitions are attractive because they are quick to execute they enable firms to preempt their competitors they may be less risky than greenfield ventures Acquisitions can fail when the acquiring firm overpays for the acquired firm the cultures of the acquiring and acquired firm clash anticipated synergies are slow and difficult to achieve there is inadequate pre-acquisition screening To avoid these problems, firms should carefully screen the firm to be acquired move rapidly to implement an integration plan Why Choose Greenfield? The main advantage of a greenfield venture is that it gives the firm a greater ability to build the kind of subsidiary company that it wants But, greenfield ventures are slower to establish Greenfield ventures are also risky 118
What Are Strategic Alliances? Strategic alliances refer to cooperative agreements between potential or actual competitors range from formal joint ventures to short-term contractual agreements the number of strategic alliances has exploded in recent decades Why Choose 119 Strategic Alliances? Strategic alliances are attractive because they facilitate entry into a foreign market allow firms to share the fixed costs and risks of developing new products or processes bring together complementary skills and assets that neither partner could easily develop on its own help a firm establish technological standards for the industry that will benefit the firm But, the firm needs to be careful not to give away more than it receives
What Makes Strategic Alliances Successful? The success of an alliance is a function of 1. Partner selection A good partner helps the firm achieve its strategic goals and has the capabilities the firm lacks and that it values shares the firm’s vision for the purpose of the alliance will not exploit the alliance for its own ends What Makes 120 Strategic Alliances Successful? 2. Alliance structure The alliance should make it difficult to transfer technology not meant to be transferred have contractual safeguards to guard against the risk of opportunism by a partner allow for skills and technology swaps with equitable gains minimize the risk of opportunism by an alliance partner
What Makes Strategic Alliances Successful? V. HIDDEN CHAMPION & DISRUPTION 121
What is a Hidden Champion? 1. Top 3 in the world or no. 1 on its continent 2. Revenue below €3 billion 3. Not well known in general public Hidden Champions 1. Delo: 80% of all smart cards in the world and more than 50% of all mobile phones including the iPhone are held together by adhesives made by Delo. 2. Baader: This American company has a share of 90% of the world market for fish-processing machinery. 3. Hauni: This German-based company is the world market leader for high- performance cigarette machines and is the world's only supplier of complete systems for tobacco processing. It maintains a global market share close to 90%. 4. Salad Cosmo: offers the highest quality product using the latest available technology. It is a trusted producer of Variety Bean Sprouts. 5. Belfor: An industrial service company, is a world leader in the removal of water, fire and storm damages. It is the only company that provides these services around the world. 122
What can we learn from them? (1/2) 1. Extremely ambitious goals: Market Leadership and Growth 2. Focus on narrow markets and Deep rather than broad: Do things themselves and refrain from outsourcing core competencies. 3. Globalization: Combine specialization in product and know-how with global selling and marketing. They heavily invest into the markets of the future. 4. Innovation: Effectiveness of their R&D-activities beats that of large companies by a factor of 5. Their innovations are both market- and technology-driven. What can we learn from them? (2/2) 5. Customers and Competition: Closeness to customer is the greatest strength of the hidden champions – even ahead of technology. They hold strong competitive positions. 6. Ownership and Financing: The ownership is long-term oriented and capital markets do not play a big role. Rather, they rely on self-financing. They are conservative in financial matter. 7. Employees and Leaders: They have “more work than heads” and high performance cultures. Employee qualification is top. Turnover and sickness rates are extremely low. Total identification and continuity of the leaders are the foundations for long-term success. 123
Global3 Circles of the Hidden ChampionsCompetitive orientatio advantages Focus n Leader- ship with ambitious goals High performan ce employee s Closeness to customer Simon - Kucher & Partners • Worldwide Strategy & Marketing Consultants • Focus: Revenue-driven Profit Growth • Core Competency: Pricing 124
Disruptive Innovation (1/2) 1. The leading companies were destroyed because innovative disruptor brought to market a product that was: Good Enough Simpler More Affordable 2. These innovations inevitably improve, march up-market and \"disrupt\" incumbents by gradually pushing them out of ever more complex and margin-rich product segments Disruptive Innovation (2/2) The term “Disruptive Innovation” is broadly misunderstood Many people think it’s just new and different, or radical improvements Instead, disruptive innovation changes industries because: 1. It makes complicated and expensive processes simple and 2. Opens them up to a wider audience 125
Performance Disruptive Innovation Curve Sustaining Innovations Brings increasingly better products into an established market Technological Improvements can progress faster than customer demand Time Smart Phone Disruption? One of the most popular smartphone manufacturers in the world is Xiaomi A Chinese company whose devices draw frequent comparisons to the iPhone Models include: • Redmi 2 • Mi 3 and • Mi 4i • The most expensive model (Mi 4i) costs $219 off-contract Its current focus is on developing countries, regions of the world that haven’t already pledged allegiance to the iPhone or mass- market Android 126
Some Examples of Disruptive Innovations… Minicomputers in the 1980s… Digital Equipment Corporation (DEC) was once the leading minicomputer manufacturer (second- largest computer company after IBM) OItBheMr manufacturers wWearneg: Laboratories Data General Honeywell Prime Computervision Some Facts on Minicomputers… Minicomputers were sold directly to the customers Price Range $50,000 - $500,000 High cost of Training, Support and Service Gross Profit Margin of about 45% for a $250,000 sale Gross Profit Margin of about 60% for a $500,000 sale 127
Microcomputers – The Disruptive Competition… Sold through distribution networks Price Range $2,000 Low cost of Training, Support and Service Gross Profit Margin of about 20% Why Bother Worrying, Right? !! 1. None of the existing Minicomputer customers could even use these microcomputers to take care of their needs! 2. Why give up 45 – 60% gross margins for smaller sales and 20% margins? What Disruptive Happened? Innovation Almost all of the Minicomputer manufacturing companies collapsed in unison Digital Equipment Corporation was sold to Compaq in 1998 128
Other Examples of Disruptive Innovations Netflix vs. Blockbuster Netflix drove Blockbuster into bankruptcy What was the business model that allowed Netflix to compete? • The US Postal Service – delivering to your door • And then – streaming video over the internet Good Enough? Simpler? More Affordable? Another Disrupted Businesses 259 Borders Superstores 114 Borders Express and Waldenbooks 26 Borders Airport Stores CEO Mike Edwards bids farewell to the book retailer’s fans and customers as the company announced it was going out of business after 40 years July 2011 129
Who Drove Borders Out of Business? Amazon.com They drove a 40 year old company out of business What was the business model that first allowed Netflix to compete? • Internet sales • Delivered to your door Good Enough Simpler More Affordable Kodak and the Digital Camera Steven Sasson invented and built the first digital camera using a charge- coupled device image sensor in 1975 Who did he work for? Eastman Kodak Company Why didn’t Kodak pursue the digital camera? • They did not recognize its mass-market potential • Focused instead on high-end cameras for niche markets • Executives also feared cannibalizing their core film sales 130
Biggest Disruptors of the Decade By - Transforming what exists or By - Creating what doesn’t through simplicity convenience affordability accessibility Apple Amazon Google Facebook Wal-Mart Verizon Cisco Systems Uber Netflix Pandora Skype Tato Nano ($1,580 car) Airbnb Alibaba Snapchat Cloud Storage Mobile Internet Oil & Gas Recovery Advanced Robotics Internet of Things Near-Autonomous 3-D Printing Advanced Materials Vehicles Renewable Electricity CASE STUDY: HAIER – TAKING A CHINESE COMPANY GLOBAL 131
Questions 1. Apakah keputusan Haier untuk memasuki pasar negara berkembang pada awalnya adalah strategi yang baik? 2. Dapatkan Haier mengandalkan kesuksesan pada produk “niche” untuk menjadi pemain dominan dunia dalam produk elektronik high-end? 3. Apakah strategi “three thirds” Haier merupakan strategi yang baik/bijaksana? 132
Training Leadership Development Program Pupuk Indonesia Holding Company (PIHC) PROBLEM SOLVING and DECISION MAKING Rizqiah Insanita Lembaga Management FEBUI 2019 Problem Solving & Decision Making Rizqiah Insanita Lembaga Management, Faculty of Economic and Business University of Indonesia Consultant : 1999 – present Trainer : 2001 – present Functional Assesor : 2008 – present Department of Management, Faculty of Economics and Business, University of Indonesia Lecturer: 2000 – present Competencies: Operations/ Production Management Problem Solving & Decision Making email: [email protected] Problem Solving & Decision Making 133
Materi Waktu Sesi Topik 08.00 – 10.00 Problem Solving & 1. Problem & Solution Decision Making 2. Business vs Problem 10.15 – 12.00 3. Problem Classification 13.00 – 15.15 Situation & Problem 1. The Issue Diagram 1535 – 16.35 Mapping Analysis 2. Data/ Key Questions 16.35– 17.00 Decision Tools & 1. Decision Tools Analysis 2. Define Alternative 3. Select Priority 4. Develop Action Plan Case Workshop & Presentation Review & Closing Problem Solving & Decision Making 1. Problem Solving & Decision Making Problem Solving & Decision Making 134
Problem Solving & Decision Making ?? Problem Solving & Decision Making Leader vs Alternative vs Decision Problem Solving & Decision Making 135
Repetitive Problem? No Solution? Problem Solving & Decision Making ????? Problem Solving & Decision Making 136
????? Problem Solving & Decision Making Leader vs Groupthink- syndrome of bad decision-making Sumber: https://psychologenie.com 137 Problem Solving & Decision Making
Contoh Kompetensi Problem Solving & Decision Making Level Indikator 1 2 Mengatasi permasalahan sederhana yang sering terjadi di lingkup 3 kerjanya berdasarkan pengalaman 4 Mengidentifikasi dan menganalisa permasalahan di bidangnya secara mendalam, serta dapat menyusun solusi secara mandiri 5 Menganalisa penyebab dan implikasi dari suatu permasalahan yang cukup kompleks, serta menyusun dan mempertimbangkan beberapa alternatif solusi secara rinci Menganalisa dan mengeksplorasi permasalahan yang berdampak strategis bagi organisasi, serta mengenali aspek utama yang perlu dipertimbangkan Memberikan rekomendasi untuk penyusunan keputusan yang berdampak strategis jangka panjang Problem Solving & Decision Making Problem Classification • Simple vs Complex • Well Defined Vs. ill-Defined Problem Solving & Decision Making 138
Management Level & Type of Problem TOP LEVEL COMPLEX PROBLEM unstructured problem MIDDLE LEVEL semistructured problem LOW LEVEL structured problem Problem Solving & Decision Making Operational – Managerial - Strategic 14 Masalah Operasional Masalah Perbaikan, Masalah Strategic, dan Pengendalian Pengembangan Inovasi dan Perencanaan 9 Pehatian pada apa 9Perhatian pada 9Pehatian pada masa yang telah terjadi perbaikan depan 9 Orientasi pada 9Orientasi pada 9Orientasi pada visi pendeteksian sebab penetapan target dan misi baru 9 Biasanya dikenali 9Dikenali sebagai sebagai gap antara 9Dikenali sebagai kebutuhan akan aktual vs standar/ kebutuhan akan restrukturisasi bisnis target perbaikan, misal: dalam jangka penurunan biaya, menengah dan 9 Tindakan yang perbaikan layanan, panjang diambil trouble perbaikan efektivitas shooting manajemen Problem Solving & Decision Making 139
Analytical vs Creative Thinking OPERATIONAL MANAGERIAL STRATEGIC Controlling Improvement Innovation Development 9Closed ended 9 Open ended problem problem 9Technical solutions 9 Non technical 9Procedural solutions 9Dominated by 9 Non procedural analytical thinking 9 Dominated by creative Thinking Problem Solving & Decision Making 2. Problem Mapping & Analysis ▪ Dalam permasalahan kompleks, penting untuk mengidentifikasi/ memetakan permasalahan (problem mapping) secara komprehensif. ▪ Solusi yang dihasilkan tergantung dalam kapabilitas decision maker melakukan pemetaan masalah Æ EXPERT ▪ Kesalahan dalam mengidentifikasi masalah akan berdampak pada kurang tepatnya solusi yang diambil Problem Solving & Decision Making 140
Pentingnya Problem Mapping Æ menghindari kesalahan solusi The solutions to the problem depend upon how you define the problem. Problem Solving & Decision Making Example Anda seorang Pimpinan Penjualan di sebuah perusahaan. Pada akhir tahun tercatat bahwa unit kerja Anda tidak mampu mencapai target penjualan yang diberikan perusahaan. Hal pertama yang Anda lakukan adalah mencoba mendefinisikan masalah yang diduga menjadi penyebab terjadinya hal tersebut. Problem Definition: Tenaga penjualan kurang Problem Solution: Menambah jumlah tenaga penjualan Problem Solving & Decision Making 141
Problem Definition: Harga produk terlalu tinggi Problem Solution: ????? Problem Definition: Produk kurang sesuai dengan kebutuhan pasar Problem Solution: ????? Problem Solving & Decision Making Problem Solving & Decision Making 20 Symptoms Solution Hypothesis/ Issue Analysis Facts Problem Solving & Decision Making 142
The Issue Diagram (Dissagregation) ▪ Menyusun pemetaan masalah (problem mapping) ▪ Menyusun framework berpikir secara komprehensif ▪ Memecah symptoms menjadi issues, formulasi hypothesis dan key questions ▪ Key questions Æ Mengidentifikasi data, menghasilkan informasi yang dibutuhkan untuk analisis Problem Solving & Decision Making Analysis Using The Issue Diagram Issue 1 Hypothesis 1.1 Hypothesis 1.2 Symptom Issue 2 Hypothesis 2.1 Key Questions 2.2 A Issue 3 Hypothesis 2.2 Key Questions 2.2 B Key Questions 2.2 C Hypothesis 3.1 Hypothesis 3.2 Problem Solving & Decision Making 143
3. Decision Tools a. 5 W + 1 H b. 5 Why c. Pareto Diagram d. Fishbone Diagram e. Flow Diagram f. Histogram g. Grid Diagram Problem Solving & Decision Making a. Who, What, Where, When, Why + How Who What Where Who is causing the What will happen if this Where does this problem problem? problem is not solved? occur? Who says this is a What are the symptoms? Where does this problem have problem? What are the impacts? an impact? Etc. Who are impacted by this Etc. problem? Why How Etc. When When does this problem Why is this problem occurring? How should the process or occur? Why? system work? Why? When did this problem first Etc. How are people currently start occurring? handling the problem? Etc. Etc. Problem Solving & Decision Making 144
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