Managing in the Global Environment

Question 1

E.L.S

What are the 3 components of the international business environment?

Answer 1

1. The Economic Environment
2. The legal-political Environment
3. The Socio-Cultural Environment

Question 2

D.I.M.G

What are the 4 stages of globalization?

Answer 2

1. Domestic
2. International
3. Multi-National
4. Global

Question 3

Explain each stage of globalization

Answer 3

Domestic- Strictly operating in the local market

International- Operating locally but has foreign investments in the form of exports.

Multi-National- Establishment of physical infrastructure in the international market.

Global- Operating globally and at a mature phase of the cycle (eg. Coca-Cola)

Question 4

Foreign market entry strategies

Answer 4

1. Exporting- transferring products for sale to a foreign market
2. Outsourcing- work activities are done in countries with cheap labour
3. Liscensing- enabling a country to produce an market in another country (eg. franchizing)
4. Direct Investing- high level of involvement (companies manages & controls assests eg. joint venture)

Question 5

What factors should be considered when choosing a foreign market entry strategy?

Answer 5

• The demand for the product/service.
• Financial & Human Resources
• Economic Factors
• Socio-Cultural (investors etc)
• Conducting ongoing environmental factors
• Competition, Marketing strategies etc.

Question 6

Discuss the economic environment

as a component of the international environment

Answer 6

Various countries may be classified as either developed or developing and when penetrating the foreign market we must be mindful of economic differences such as their economic development, conditions as well as their resource & product market.

Question 7

Discuss the legal-political environment

as a component of the international environment

Answer 7

Managers must be concerned with the political instability of the global market such as political risks, laws, tariffs, quotas and more

Question 8

Discuss the socio-cultural environment

as a component of the international environment

Answer 8

The values and behaviours that govern a particular business won’t apply to other markets in another country. Cultural beliefs and values need to be taken into consideration when entering international markets so as to not commit any cultural blunders (eg. Macdonalds in India).

Factors such as language & religion

Question 9

Define Hofstede’s Value Dimensions

Answer 9

Hofstede’s dimensions theory is a framework used to understand cultural differences across countries.

Question 10

U.M.P.I.S

List & briefly discuss Hofstede’s 5 Value Dimensions

Answer 10

Uncertainty Avoidance- refers to how threatening change is to a culture and to avoid it strict rules & regulations are instilled.

Masculinity & Femininity- Scandinavian countries have a feminine culture so you won’t adopt an autocratic approach in these areas.

Power Distance- Strict hierarchy of the upper and working class

Individualism & Collectivism- Individualistic countries stress on a self needs achievement whereas collectivism focuses on the group well-being

Short & Long term Orientation- Extent to which kind of outlook you have. China has long term orientation however Trinidad has a short term. In china there needs to be strategic planning, long term planning & forecasting. Trinidad needs less of these tactics.

Question 11

Discuss High context vs Low context cultures

Answer 11

When interacting with partners you must adapt communication tactics accordingly. Trinidad to Japan will convert their speech to non verbal communication as it is important in high context cultures (body language etc).

Question 12

What is cultural intelligence?

Answer 12

Managers must be able to use reasoning and observation to adapt to different cultural environments and so as to not be ethnocentric.