Global companies employ only non-managerial labor force from a host country:
Is this true or false?
The approach taken by global corporations when entering a host country
Answer: Hewlett Packard. The company employs managerial labor force from host countries. HP does not have a formal selection process for overseas assignments. HP managers pick candidates to fill the positions and the general managers review their choices from the host countries. HP prefers to hire managers from host countries to work in management positions rather than send their own to another country where they may not be as successful.
There are several approaches taken when entering foreign markets. These include direct exports, licensing and foreign direct investment. Peng (2008) says that HP uses direct exports whereby the company sales its products in other countries. When domestic markets experience some downturns, sales abroad may compensate for such drops.
Social Factors in Global Business
The following are all components of culture except:
a. Shared actions, values, and beliefs
e. Geographic location
Additional Components of Culture.
Time-The concept of time and time management differ widely from culture to culture. This is because time orientations are generally partitioned as past, present and future. Cultures are either future-oriented or past oriented (Peng, 2008).
Power Equality-The degree of power and authority distribution and understanding of equality from different cultural perspectives.
Geographical Environments of Global Business
Developing countries usually improve their infrastructures (roads, bridges, ports, airports) in order to:
a. Train labor
b. Attract foreign direct investment
c. Raise taxes
d. Reduce spending
e. Improve climatic conditions
What Mexico may be able to do to improve their infrastructures?
Example: Mexico should consider a significant increase in the level of spending on infrastructure especially transport infrastructure. The country should set up a national infrastructure program which should aim to position Mexico among the top quintile of countries by 2030. This can be achieved by raising the total infrastructure investment to 18% of GDP (Loser & Fajgenbaum, 2012). The government should also open up all infrastructure sectors to the private sector. Loser & Fajgenbaum, (2012) says that infrastructure development in Mexico can be improved by good planning, preparation, legal framework and efficient procurement processes for publicly funded projects.
Global Trade and Investment
The Theory of Absolute Advantage was espoused by:
a. David Ricardo
b. Adam Smith
c. Bertil Ohlin
d. Eli Hecksher
e. Paul Samuelson
Example of Absolute Advantage.
Example: A nation that is more efficient than any other country in the production of any good or service is said to have an absolute advantage. For example United States has absolute advantage in the production of aircraft. This is because it takes 20 resources to produce an aircraft for which China needs 40 resources. This means that China can make aircrafts but inefficiently unlike United States.
Global Business Strategy
Information technology can support the globalization of an organization through:
a. Development of a global intranet
b. Selling globally through an e-commerce site
c. Sourcing global providers through specific B2B platforms
d. Coordination of supply-chain members globally
e. All of the above
f. None of the above
Examples of what information technology does to support the globalization of the company you currently work for.
Example One: Customer relations-Information technology enables the company to present one consistent face to customers and mobilize worldwide resources quickly to meet customer needs. Roche (1992) says that people are united in work groups by electronically linking them not by physically moving them. Information technology has enabled easy processing of customer orders, payments and monitoring of transactions by customers.
Example Two: Operations and logistics-Information technology lets the company source globally, flexibly allocating production activities across borders by optimizing internal production facilities and external purchasing of supplies.
Define globalization and identify two challenges associated with it.
Answer: Globalization is defined as the inexorable integration of markets, capital, nation-states, and technologies in ways that allow individuals, groups, corporations and countries to reach around the world farther, faster and cheaper (Steers, Sanchez-Runde & Nardon, 2010).
The first challenge of globalization is that globalization creates a powerful backlash from those left behind by the new economic and political system as a result of the paradigm shift in international politics, economics and businesses (Steers, Sanchez-Runde & Nardon, 2010). The second challenge of globalization is increased customer demands and access to competing products and services for less money (Steers, Sanchez-Runde & Nardon, 2010). This means that customers are putting increased pressure on both the price and quality of products and services.
Define culture and recognize social responsibilities of global organizations.
Answer: Culture is something shared by all or almost all members of a given social group. Culture consists of patterns explicit and implicit of and for behavior acquired and transmitted by symbols and consists of the distinctive achievement of human groups including their embodiment in artifacts. The cultural orientation of a society reflects the complex interaction of values, altitudes, and behaviors displayed by its members (Peng, 2008).
Social responsibilities for global organizations refers to business decision making related to ethical values, compliance with legal requirements and respect for people, communities and the environment. Idowu & Filho (2009) says that CSR is the firm’s consideration of and response to issues beyond the narrow economic, technical and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks.
Describe the impact of topography on business activities.
Answer: Topography includes features such rivers, waterfalls, mountain ranges and beaches. Mühlbacher, Leihs & Dahringer (2006) says that topography may be a major constraint on a country’s economy as well as for international marketing. It has a major impact on the cost and ease of distributing an international marketer’s products. Countries without coastline rely on the ports of neighboring countries to export goods by sea (Mühlbacher, Leihs & Dahringer, 2006).
Identify components of the global strategic planning process.
Answer: Global strategic planning process builds on five components of planning and analysis that provide a framework for deploying resources and a plan of action. The components include: recognizing antecedents, analysis, and choice of strategy, process, integration, and implementation (Idowu & Filho, 2009).
How do payment methods differ between domestic and international transactions? By what means are global payments most commonly deducted?
Answer: In a nation’s domestic transactions only the national currency is usually used while in international transactions payments are made in the currency of the exporting countries or in readily convertible international currencies (McDonald, Burton & Dowling, 2002).
Global payments are deducted through a fee charged by the sending agent who is typically paid by the sender when initiating the remittance transaction. Other means of deductions in global payments is interest expense deductions determined based on the actual books of the two parties involved (Peng, 2008). Another means is through withholding tax deductions which arise from overdue payments in a foreign country.