strategic Decision Making

Discussion Forum Week 15

Discussion Forum Week 15Go to the end of Chapter 11 and do Exercise 11A "Business Culture Variation across Countries: A Report for Coca-Cola Company" Step 1. After researching business etiquette and protocol for three countries, list these details in a one to two page paper as though you were apprising the managers at COCA-COLA the things they needed to know before setting up business in each of the three. After submitting your work in the discussion forum, type at least two peer replies (200 word minimum).

Chapter11-GlobalandInternationalIssues.pptx

Strategic Management Concepts: A Competitive Advantage Approach

Sixteenth Edition

Chapter 11

Global and International Issues

Slide in this Presentation Contain Hyperlinks. JAWS users should be able to get a list of links by using INSERT+F7

If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed:

1) MathType Plugin

2) Math Player (free versions available)

3) NVDA Reader (free versions available)

Learning Objectives (1 of 2)

11.1 Discuss the nature of doing business globally, including language and labor union issues.

11.2 Explain the advantages and disadvantages of doing business globally.

11.3 Discuss the global challenge facing firms and why this is a strategic issue.

11.4 Discuss tax rates and tax inversions as strategic issues.

After studying this chapter, you should be able to do the following:

11-1. Discuss the nature of doing business globally, including language and labor union

issues.

11-2. Explain the advantages and disadvantages of doing business globally.

11-3. Discuss the global challenge facing firms and why this is a strategic issue.

11-4. Discuss tax rates and tax inversions as strategic issues.

Learning Objectives (2 of 2)

11.5 Compare and contrast American business culture versus foreign business cultures; explain why this is a strategic issue.

11.6 Discuss the business culture found in Mexico, Japan, China, and India; explain why this is a strategic issue.

11.7 Discuss the business climate in Africa, China, Indonesia, India, Japan, Mexico, and Vietnam; explain why this is a strategic issue.

11-5. Compare and contrast American business culture versus foreign business cultures;

explain why this is a strategic issue.

11-6. Discuss the business culture found in Mexico, Japan, China, and India; explain why

this is a strategic issue.

11-7. Discuss the business climate in Africa, China, Indonesia, India, Japan, Mexico, and

Vietnam; explain why this is a strategic issue.

Figure 11.1 A Comprehensive Strategic-Management Model

Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988): 40. See also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo, and Putu Artama Wiguna, “Balance Scorecard of David’s Strategic Modeling at Industrial Business for National Construction Contractor of Indonesia,” Journal of Mathematics and Technology, no. 4 (October 2010): 20.

The strategic management model is included on this slide. This chapter informs all earlier steps in the model.

Global/International Issues

The underpinnings of strategic management hinge on managers gaining an understanding of competitors, markets, prices, suppliers, distributors, governments, creditors, shareholders, and customers worldwide.

The price and quality of a firm’s products and services must be competitive on a worldwide basis, not just on a local basis.

The boundaries of countries no longer can define the limits of our imaginations. To see and appreciate the world from the perspective of others has become a matter of survival for businesses.

The Nature of Doing Business Globally

Exports of goods and services from the United States account for only 13.5 percent of U.S. gross domestic product.

In contrast, as a percent of gross domestic product (GDP), exports comprise 45.6 percent of the German economy, 22.6 percent of the Chinese economy, and 187 percent of the Singapore economy (http://data.worldbank.org/indicator/NE.EXP.GNFS.ZS).

Globalization

process of doing business worldwide, so strategic decisions are made based on global profitability of the firm rather than just domestic considerations

Global Strategy

includes designing, producing, and marketing products with global needs in mind, instead of considering individual countries alone

A world market has emerged from what previously was a multitude of distinct national markets, and the climate for international business today is more favorable than in years past.

Multinational Firms

Multinational Corporations

Organizations that conduct business operations across national borders

The strategic-management process is conceptually the same for multinational firms as for purely domestic firms; however, the process is more complex for international firms as a result of more variables and relationships.

Advantages of Global Business (1 of 2)

Firms can gain new customers for their products.

Foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets.

Foreign operations can allow firms to establish low-cost production facilities in locations close to raw materials or cheap labor.

Competitors in foreign markets may not exist, or competition may be less intense than in domestic markets.

Firms have numerous reasons for formulating and implementing strategies that initiate, continue, or expand involvement in business operations across national borders.

Advantages of Global Business (2 of 2)

Foreign operations may result in reduced tariffs, lower taxes, and favorable political treatment.

Joint ventures can enable firms to learn the technology, culture, and business practices of other people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign countries.

Economies of scale can be achieved from operation in global rather than solely domestic markets.

A firm’s power and prestige in domestic markets may be significantly enhanced if the firm competes globally.

Disadvantages of Global Business

Foreign operations could be seized by nationalistic factions.

Firms confront different and often little-understood social, cultural, demographic, environmental, political, governmental, legal, technological, economic, and competitive forces.

Weaknesses of competitors in foreign lands are often overestimated, and strengths are often underestimated.

Language, culture, and value systems differ among countries, which can create barriers to communication.

Gaining an understanding of regional organizations is difficult.

Dealing with two or more monetary systems can complicate international business operations.

The availability, depth, and reliability of economic and marketing information in different countries vary extensively, as do industrial structures, business practices, and the number and nature of regional organizations.

The Global Challenge

America's economy is becoming much less American.

A world economy and monetary system are emerging.

Markets are shifting rapidly and in many cases converging in tastes, trends, and prices.

Few companies can afford to ignore the presence of international competition. Firms that seem insulated and comfortable today may be vulnerable tomorrow.

Table 11-2 Corporate Tax Rates Across Countries in 2015 (From High to Low) (1 of 3)

Country	Corporate Tax Rate (%)
United Arab Emirates (U A E)	55.00
Chad	40.00
USA	35.00
Brazil	34.00
France	33.33
Germany	33.00
India	30.00
Mexico	30.00
Italy	27.50
Japan	25.50
Israel	25.00
Austria	25.00
China	25.00
Portugal	25.00

Tax rates in countries are important in strategic decisions regarding where to build manufacturing facilities or retail stores or even where to acquire other firms. High corporate tax rates deter investment in new factories and also provide strong incentives for corporations to avoid and evade taxes. Corporate tax rates vary considerably across countries and companies.

Table 11-2 Corporate Tax Rates Across Countries in 2015 (From High to Low) (2 of 3)

Country	Corporate Tax Rate (%)
Finland	24.50
U.K.	23.00
Ukraine	21.00
Estonia	21.00
Russia	20.00
Greece	20.00
Croatia	20.00
Libya	20.00
Netherlands	20.00
Turkey	20.00
Poland	19.00
Czech Republic	19.00
Hungary	19.00
Singapore	17.00

Table 11-2 Corporate Tax Rates Across Countries in 2015 (From High to Low) (3 of 3)

Country	Corporate Tax Rate (%)
Canada	15.00
Hong Kong	16.50
Romania	16.00
Latvia	15.00
Lithuania	15.00
Ireland	12.50
Serbia	10.00
Bulgaria	10.00
Cyprus	10.00
Bermuda	0.00

Source: Based on information at www.worldwide-tax.com/#partthree, retrieved January 1, 2015.

American Versus Foreign Business Culture

To be successful in world markets, U.S. managers must obtain a better knowledge of historical, cultural, and religious forces that motivate and drive people in other countries.

For multinational firms, knowledge of business culture variation across countries can be essential for gaining and sustaining competitive advantage.

An excellent website to visit on this topic is www.worldbusinessculture.com, where you may select any country in the world and check out how business culture varies in that country versus other lands.

Table 11-3 Cultural Pitfalls to Avoid to be a Better Manager (1 of 2)

Waving is a serious insult in Greece and Nigeria, particularly if the hand is near someone’s face.

Making a “good-bye” wave in Europe can mean “No,” but it means “Come here” in Peru.

In China, last names are written first.

A man named Carlos Lopez-Garcia should be addressed as Mr. Lopez in Latin America but as Mr. Garcia in Brazil.

Breakfast meetings are considered uncivilized in most foreign countries.

Latin Americans are, on average, 20 minutes late to business appointments.

Direct eye contact is impolite in Japan.

Do not cross your legs in any Arab or many Asian countries-it is rude to show the sole of your shoe.

In Brazil, touching your thumb and first finger—an American “Okay” sign-is the equivalent of raising your middle finger.

Table 11-3 Cultural Pitfalls to Avoid to be a Better Manager (2 of 2)

Nodding or tossing your head back in southern Italy, Malta, Greece, and Tunisia means “No.” In India, this body motion means “Yes.”

Snapping your fingers is vulgar in France and Belgium.

Folding your arms across your chest is a sign of annoyance in Finland.

In China, leave some food on your plate to show that your host was so generous that you could not finish.

Do not eat with your left hand when dining with clients from Malaysia or India.

One form of communication works the same worldwide. It is the smile—so take that along wherever you go.

Cultural Differences between U.S. and Foreign Managers (1 of 4)

Americans place an exceptionally high priority on time, viewing time as an asset. Many foreigners place more worth on relationships.

Personal touching and distance norms differ around the world. Americans generally stand about three feet from each other when carrying on business conversations, but Arabs and Africans stand about one foot apart.

Rose Knotts summarized some important cultural differences between U.S. and foreign managers. Awareness and consideration of these differences listed on the next four slides can enable a manager to be more effective, regardless of his or her own nationality.

Cultural Differences between U.S. and Foreign Managers (2 of 4)

Family roles and relationships vary in different countries.

Business and daily life in some societies are governed by religious factors.

Time spent with the family and the quality of relationships are more important in some cultures than the personal achievement and accomplishments espoused by the traditional U.S. manager.

Cultural Differences between U.S. and Foreign Managers (3 of 4)

Many cultures around the world value modesty, team spirit, collectivity, and patience much more than competitiveness and individualism, which are so important in the United States.

Punctuality is a valued personal trait when conducting business in the United States, but it is not revered in many of the world’s societies.

Cultural Differences between U.S. and Foreign Managers (4 of 4)

Eating habits differ dramatically across cultures

Rules of etiquette vary and managers must learn the rules of others.

Americans often do business with individuals they do not know, unlike businesspersons in many other cultures.

Communication Differences Across Countries

Americans sometimes come across as intrusive, manipulative, and garrulous; this impression may reduce their effectiveness in communication.

Managers from the United States are much more action-oriented than their counterparts around the world; they rush to appointments, conferences, and meetings—and then feel the day has been productive.

U.S. managers often use blunt criticism, ask prying questions, and make quick decisions.

Communication may be the most important word in strategic management. Americans increasingly interact with managers in other countries, so it is important to understand communication differences across countries.

Mexico’s Business Culture

Employers seek workers who are agreeable, respectful, and obedient, rather than innovative, creative, and independent.

Mexican employers are paternalistic, providing workers with more than a paycheck, but in return they expect allegiance.

Mexico is an authoritarian society in terms of schools, churches, businesses, and families.

Japan’s Business Culture

The Japanese place great importance on group loyalty and consensus, a concept called Wa.

When confronted with disturbing questions or opinions, Japanese managers tend to remain silent.

Nearly all corporate activities in Japan encourage Wa among managers and employees. Wa requires that all members of a group agree and cooperate; this results in constant discussion and compromise.

China’s Business Culture

The Chinese rarely do business with companies or people they do not know.

Your position on an organizational chart is extremely important in business relationships.

Arriving late to a meeting is an insult and could negatively affect your relationship.

Meetings require patience because mobile phones ring frequently and conversations tend to be boisterous.

In China, greetings are formal and the oldest person is always greeted first. Like in the United States, handshakes are the most common form of greeting.

India’s Business Culture (1 of 2)

People in India do not like to say “no,” verbally or nonverbally.

Rather than disappoint you, they often will say something is not available, or will offer you the response that they think you want to hear, or will be vague with you.

Do not disagree publicly with anyone in India. Titles such as professor, doctor, or engineer are important in India, as is a person’s age, university degree, caste, and profession.

India’s Business Culture (2 of 2)

Indians prefer to do business with those whom they have established a relationship built upon mutual trust and respect.

Punctuality is important.

Indians generally do not trust the legal system and someone’s word is often sufficient to reach an agreement.

Use the right hand to give and receive business cards. Business cards need not be translated into Hindi but always present your business card so the recipient may read the card as it is handed to him or her. This is a nice, expected gesture in most countries around the world.

Business Climate Across Countries

Ease of doing business rankings based on how easy it is to:

start a business

deal with construction permits

get credit

protect investors

pay taxes

trade across borders

enforce contracts

resolve insolvency

get electricity

The World Bank and the International Finance Corporation annually rank 189 countries in terms of their respective ease of doing business (http://www.doingbusiness.org/rankings). The index ranks nations from 1 (best) to 189 (worst).

Africa’s Business Climate

Recently, 25 African countries held democratic elections, whereas two decades ago only 3 African countries were considered democracies.

Currencies in Africa are stabilizing and many countries are fund-raising to build modern highways, ports, and power grids.

Many African and non-African companies are launching operations in Africa due to the rapidly growing middle class and an average G D P growth of 5 percent for the continent through 2017.

The World Bank says food demand across Africa will double between 2012 and 2020.

The general stereotype of Africa is rapidly changing from subsistence farmers avoiding lions, to millions of smartphone-carrying consumers in cities purchasing products.

China’s Business Climate

The International Monetary Fund (I M F) recently reported that China, the world’s most populous country, has overtaken the United States as the world’s number-one economic powerhouse.

China’s economic output in 2014 reached $17.6 trillion, compared to the USA’s $17.4 trillion.

China now accounts for 16.5 percent of the world economy, compared to the 6.3 percent recorded by the United States.

Experts have predicted this monumental shift in economic power for years, but it has come much faster than expected.

Hundreds of companies are scurrying to set up business in China.

China’s economic growth has slowed to 6.8 percent, led especially by a domestic-property slump that has dented construction activity and demand for materials such as steel and cement. Ruling Communist Party leaders are calling the situation the “new normal” of slower growth as the government tries to reduce widespread pollution and conserve energy.

Indonesia’s Business Climate

A Pacific archipelago comprised of thousands of islands, Indonesia’s stock market was the top performer in 2014 among all Asian countries, and was also the top performer in five out of the last seven years in Asia.

Indonesia’s currency is the rupiah and its economy is one of the fastest growing in Asia, behind China and the Philippines.

Indonesia’s G D P is expected to grow 5.7 percent in 2015.

As Southeast Asia’s largest economy, Indonesia elected a new legislature and president in 2014.

Despite its large population and densely populated regions, Indonesia has the world’s second-highest level of biodiversity, with vast areas of wilderness and abundant natural resources.

India’s Business Climate

The G D P of India in 2015 is expected to reach 8.3 percent, making it the world’s fastest-growing large economy, and the first time that India’s growth rate has exceeded that of China since the 1990s.

By a landslide, India elected a new prime minister in May 2014, Narendra Modi. Modi has introduced excellent policies to jump-start India’s economy, boosting profits at companies ranging from banks to cement makers.

Japan’s Business Climate

Japan’s new Prime Minister Shinzo Abe was reelected on a mandate to revive the economy.

Hopes for Abe’s “Three Arrows” of hyper-easy monetary policy, government spending, and reforms such as deregulation were tarnished after Japan’s economy slipped into a recession in Q3 2014, following a national sales tax increase from 5 to 8 percent aimed primarily at reducing Japan’s huge public debt, the worst among advanced nations.

Abe likely will stay in power in Japan through 2018, becoming one of Japan’s rare long-term leaders. His historically pro-business Liberal Democratic Party (LBD), together with its junior coalition partner, the Komeito party, now controls more than two thirds of the lower house.

Mexico’s Business Climate

The country of Mexico is now (2015) the fourth-largest auto exporter in the world, behind Japan, Germany, and South Korea.

Mexico auto industry now employs one of every six Mexican factory workers and comprises one third of all exports from Mexico.

No country was hurt more in the last decade by the rise of China than Mexico, but Chinese policy today is to boost wages and therefore boost consumer spending.

Foreign direct investment (F D I) in Mexico has surged to exceed $30 billion annually.

Mexico is especially attractive for manufacturing products that are bulky or costly to transport, such as automobiles. However, a key variable hurting Mexico is drug-related violence. Mexico’s homicide rate exceeds 15 people per 100,000, compared with a per capita rate of about 5.0 in the United States and 1.1 in China. If Mexico can improve its security situation as it intends, then hundreds of additional firms may consider returning to Mexico from China (and India).

Vietnam’s Business Climate

Internet penetration has grown to 44 percent among Vietnam’s 90 million people, up from 12 percent a decade ago.

Unlike another communist country, North Korea, Vietnam is booming for business.

The market for e-commerce in Vietnam generates $4 billion in revenue annually.

Telecommunications companies in Vietnam, such as Viettel Mobile and Vietnam Mobile Telecom Services, provide the lowest data prices in the world at just over $3 per gigabyte.

Vietnamese are among the most prevalent watchers of videos on smart phones in the world.

Even the smallest businesses in the United States (and elsewhere) can easily reach and sell to consumers in Vietnam, who yearn for new products and services.

Discussion Forum Week 15

image1.emf

image2.jpeg

image3.jpeg

image4.png

Order a similar assignment, and have writers from our team of experts write it for you, guaranteeing you an A

Recent Posts

Recent Comments