Learning Activity 1
In the readings for this week we learned about the Demand Model that was introduced by Professor Michael Porter. According to the model, the ability of the firms in an industry whose origin is in a particular company to be successful in the international arena is shaped by four factors (1) their home country's demand conditions, (1) their home country's factor conditions, (3) related and supporting industries within their home country, and (4) strategy, structure, and rivalry among domestic competitors.
Learning Activity
Respond to the following questions:
(1) Which of the four elements of the diamond model do you believe has the strongest influence on a firm's fate when it competes in international markets?
(2) Provide an example of a company that demonstrates this ability to compete internationally and how this company demonstrates this ability.
(3) Which of the three types of International Strategies that were discussed in our readings does this company demonstrate? Provide a justification for your strategy choice.
Learning Activity 2
Multinational Organizations
1. International firms or multinational corporations are organizations that conduct business operations across national borders.
2. The strategic-management process is conceptually the same for multinational firms as for purely domestic firms, although the process is more complex for international firms due to more variables and relationships.
3. More time and effort are required to identify and evaluate external trends and events in multinational organizations than in domestic corporations.
4. Multinational corporations face unique and diverse risks, such as expropriation of assets, currency losses through exchange rate fluctuations, unfavorable foreign court interpretations of contracts and agreements, social/political disturbances, import/export restrictions, tariffs, and trade barriers.
5. Before entering international markets, firms should scan relevant journals and patent reports, seek the advice of academic and research organizations, participate in international trade fairs, form partnerships, and conduct extensive research to broaden their contacts and diminish the risk of doing business in new markets.
The Global Challenge
1. Few companies can afford to ignore the presence of international competition. Firms that seem insulated and comfortable today may be vulnerable tomorrow.
a. How to gain and maintain exports to other nations
b. How to defend domestic markets against imported goods.
2. America's economy is becoming much less American, as a world economy and monetary system are emerging. More and more countries around the world are welcoming foreign investment and capital. As a result, labor markets have steadily become more international.
3. Many countries became more protectionist during the recent global economic recession. Protectionism refers to countries imposing tariffs, taxes, and regulations on firms outside the country to favor their own companies and people.
4. A primary reason why most domestic firms are engaging in global operations is that growth in demand for goods and services outside the United States is considerably higher than inside.
5. Shareholders and investors expect sustained growth in revenues from firms, and satisfactory growth for many firms can only be achieved by capitalizing on demand outside the United States.
Learning Activity
Compare Business Cultures Across Countries. This exercise gives you experience gaining information about business culture in virtually any country.