Business Policy Ch. 11 Flashcards
parent company
a firm investing in international operations
a host country
is the country where that business is conducted
International firms or multinational corporations face many complex variables:
Social Cultural Demographic Environmental Political Governmental Legal Technological Competitive opportunities and threats
The main advantage of international operations is
that firms can gain new customers for their products. Other advantages include:
Absorb excess capacity, reduce unit costs, and spread economic risks
Allow firms to establish low-cost production facilities
Competition may be less intense
Potential Disadvantages of International Operations
Foreign operations could be seized
Different and often little-understood social, cultural, demographic, environmental, political, governmental, legal, technological, economic, and competitive forces
Weakness of competitors overestimated
Different language, culture, and value systems
Understanding of regional organizations needed
Dealing with two or more money systems
Globalization
The process of doing business worldwide
Recession
Two consecutive quarters of a decline in real gross domestic product
European Business Culture
Participatory management Most workers are unionized More frequent vacations and holidays Guaranteed permanent employment common Workers often resent pay for performance, commissions, and objective measurement and reward systems
The Mexican Culture
Business associates rarely entertain each other at their homes.
Business meetings and entertaining are nearly always done at a restaurant.
Preserving one’s honor, saving face, and looking important are important.
The Russian Culture
There is substantial social pressure against becoming a successful entrepreneur.
Being a winner in Russia makes one the object of envy and resentment, a member of the elite rather than of the masses.
Personal ambition and success are often met with vindictiveness and derision.
The Japanese Culture
The Japanese place great importance upon group loyalty and consensus.
Wa requires that all members of a group agree and cooperate; this results in constant discussion and compromise.
Silence, used for pondering alternatives, can be a plus in a formal Japanese meeting.
Joint Ventures in India
Joint ventures are mandatory for foreign companies doing business in India except ‘single brand’ companies (Nike, Apple)
Foreign firms restricted to 74% ownership of India-based firms
Most joint ventures in India fail
