International Business Ch

Gustavo Garcia
October 15, 2014
International Business
Chapter 1

1. What are the differences among multidomestic, global, and international companies?
A multidomestic company (MDC) is an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences. Multidomestic companies, in contrast, have been defined as a kind of holding company with a number of overseas operations, each of which is left to adapt its products and marketing strategy to what local managers perceive to be unique aspects of their individual markets. In addition, multidomestic companies focus on the differences, not similarities, among markets. A global company (GC) is an organization that attempts to standardize and integrate operations worldwide in most or all functional areas. In addition, global companies have global vision and they maintain a presence in key markets around the world. They also look for similarities, not difference, among markets. An international comapny (IC) is a global or multidomestic company.

2. Business is business, and every firm has to find ways to produce and market its goods. Why, then, might managers be unable to successfully apply the techniques and concepts they have learned in their own country to other areas of the world?
There are a number of reasons why a manager may not be able to successfully apply the specific techniques and concepts learned in his/her country, because the possibility of having to face competition from foreign imports or from foreign competitors that set up operations in its own market is always present. Cultural attitude is one that can’t be controlled but one can adapt to.

3. Give examples to show how an international business manager might manipulate one of the controllable forces in answer to change in the uncontrollable forces.
Uncontrollable forces(External forces) : Physical, political, Sociocultural, Competitive, Economic, Socioeconomic, Distributive, Financial, and Legal. Manager can lobby for a changing a law and promoting a new product which requires changes in a cultural attitude.

4. Although forces in the foreign environment are the same as those in the domestic environment, they operate differently. Why is this so?
Although forces in the foreign environment are the same as those in the domestic environment they operate differently. They operate differently for several reasons one is because of foreign legal and political forces to be looked at where there are about 20 countries to consider at one time for all of these forces have to be taken in to account.
Because domestic environments and foreign environments have different regulations and laws that they have to abide by. Domestic environments only have to deal with their own countries laws and guidelines; however, the government can take control of that company’s foreign currency flow. For an example, if a domestic environment is having a foreign currency shortage the government can place a restriction for incoming foreign currency; putting the domestic business in a hardship. This is a force that domestic environments have to deal with. As for foreign environments, not only do they need to adhere to their home countries laws and guidelines, they have to follow other participating countries guidelines as well. Political power plays a huge role in foreign environments, say Japan does business with America, and all of a sudden the government disagrees with us, they can stop business at any time and influence other countries that are involved to do the same. This causes a huge hardship on the American country. Also, if foreign environments need to make a particular accommodation to one country, they need to make it to the rest as well for most cases. That is a force that the foreign environments have to deal with, is adhering to all of the demands and stipulations of the other countries it does business with.
It is very important to make sure that the laws domestically and foreign are adhered to as they pertain to each country.

5. What is the difference between the foreign environment and the international environment?

6. Why, in your opinion, do the authors regard the use of the self-reference criterion as “probably the biggest cause of international business blunders?” Can you think of an example?
The authors regard the use of the self-reference criterion as "probably the biggest cause of international business blunders" because of manager' unfamiliarity with other cultures. To make matters worse, some managers will ascribe to others their own preferences and reactions. Thus a foreign production manager, facing a backlog of orders, may offer her/his workers extra pay for overtime. When they fail to show up, the manager is perplexed: " Back home they always want to earn more money." This manager has failed to understand that the workers prefer time off to more money. Successful managers are careful to examine a problem in terms of the local cultural traits as well as their own.

7. Discuss some possible conflicts between host governments and foreign-owned companies.

8. “A nation whose GNI is smaller than the sales volume of a global firm is in no position to enforce its wishes on the local subsidiary of that firm.” Is this statement true or false? Please explain your rationale.
In my opinion, this statement is true because a nation’s GNI measures the amount of income generated by companies nationwide, the level of income determines if the country is rich or poor. GNI involves the total value of all goods and services produced by companies within a country, despite where they’re produced around the world. It is essentially how economically powerful a country is. To me, this means that if the nation’s GNI is lower than a global firm’s sales volume, then that nation has no authority or power over the subsidiary firm operating within the nation.

9. Discuss the forces that are leading international firms to the globalization of their sourcing, production, and marketing.
5 major forces : Political, Technological, Market, Cost, and Competitive Followings are the five change-based drivers that are leading international firms to globalize their operations, with an example for each kind : (1)political-preferential trading agreements, (2)technological-advances in communications technology, (3)market-global firms become global customers, (4)cost-globalization of product line and production helps reduce costs by achieving economies of scale, and (5)competitive-firms are defending their home markets from competitors by entering the competitors' home markets to distract them.
10. What examples of globalization can you identify within your community? How would you classify these examples (e.g., international investment, international trade)?

11. Why is there opposition to globalization of trade and integration of the world’s economy? Please assess the major arguments for and against such globalization efforts.

12. What are the reasons that explain why international firms would enter foreign markets?

13. You have decided to take a job in your hometown after graduation. Why should you study international business?