Exam 2: Understanding the international context: Responding to conflicting environmental forces
Which global integration and coordination forces would MNEs,such as Mercedes-Benz,encounter?
B
Discuss how cultural differences can have an effect on the consumption of tea worldwide.
Take the example of tea as a beverage consumed around the globe.The British drink their tea hot and diluted with milk,whereas Americans consume it primarily as a summer drink served over ice,and Saudi Arabians drink a hot,heavily sweetened brew.To succeed in a world of such diversity,companies often must modify their quest for global efficiency through standardization and find ways to respond to the needs and opportunities created by cultural differences.So Unilever produces 20 separate brands of black tea,each blended to meet the specific tastes of local consumers around the world.It adapted its Lipton brand to offer a canned iced tea drink in the United States,and sells Lipton Cold Brew tea bags in markets around the world.Even more ambitious is the Starbucks strategy of serving green tea lattes in its Chinese outlets in a bid to eventually get that traditionally tea-drinking nation hooked on coffee.
35. Interactions between host governments and MNEs have been sometimes compared to love-hate relationships. Could you please explain both parts of this equation and how host governments and MNEs relationships have evolved in the 2010s?
The “love” of this equation was built on the benefits that each could bring to the other. To the host government, the MNE represented an important source of taxation revenue, technology, and expertise that could help further national priorities, such as regional development, employment, import substitution, and export promotion. To the MNE, the host government represented the key to local market or resource access, which provided new opportunities for profit, growth, and improvement of its competitive position.
The “hate” side of the relationship - more often emerging as frustration rather than outright antagonism - arose from the differences in the motivations and objectives of the two partners. To be effective global competitors, MNEs sought three important operating objectives: unrestricted access to resources and markets throughout the world; the freedom to integrate manufacturing and other operations across national boundaries; and the unimpeded right to coordinate and control all aspects of the company on a worldwide basis. The host government, in contrast, sought to develop an economy that could survive and prosper in a competitive international environment. At times, this objective led to the designation of another company - perhaps a “national champion”—as its standard bearer in the specific industry, bringing it into direct conflict with the MNE.
A new trend is emerging that is set to alter the MNE-government relationship during the 2010s. Cash-rich governments and their nationally owned corporations in emerging markets, particularly China, are looking to invest in foreign resources, with such investments often packaged as part of a government-to-government diplomatic relationship. Not only are the government investors looking to earn returns on investment, but perhaps more importantly, they are securing the natural resources to ensure the future economic security of their own countries. This policy-based partnership of governments and national corporations engaging in the global business arena via such mechanisms as sovereign wealth funds is significantly different from the “national champion” strategy of an earlier era, and it is certain to have important global competitive implications over the next decades.
A global industry is characterized by low national responsiveness and high global integration.
Ricardo's free trade theory of competitive advantage states: if each country specializes in areas of advantage,and trades with other countries for the products/services in which they specialize,there is an overall loss for each country.
A transnational industry is characterized by moderate national responsiveness and moderate global integration.
Briefly describe the global integration and coordination forces encountered by MNEs.
The GLOBE study demonstrates how distinct cultural differences across countries result in wide variations in social norms and individual behavior and is reflected in the effectiveness of different organizational forms and management systems.
A firm's decision with respect to whether it should adopt a global,multinational or international strategy should be made without any consideration of the industry in which the firm operates.
What are the main forces that motivate MNEs such as Dell Computers to disaggregate their operations and activities to respond to national,regional and local needs and demands?
MNEs from emerging markets seem to be more poorly equipped to compete in other emerging markets when compared to their counterparts from developed markets.
The pressures that drive book publishers such as Cambridge University Press to integrate and coordinate their activities across national boundaries are primarily _________.
In 2016,attitudes toward free trade in some countries swung in the direction of greater protectionism.
The search for global competitiveness is a major source of conflict between MNEs and host governments.
Philips,a multinational electronics corporation based in the Netherlands and diversified in the consumer electronics,domestic appliance,lighting,medical systems and medical technology industries would encounter the following forces of local responsiveness:
Apple is a U.S.MNE.Briefly describe three conflicting sets of external demands that its international operations might face.
Free Trade agreements have become a topic of discussion recently.How would you approach a discussion with your next door neighbor who thinks that Free Trade agreements are the reason for job losses?
In the emerging international environment,most industries can be categorized as multinational,global or international.
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