International Business Strategy 301LON. Functional Area Excellence I M & IHRM. Unit: 5 Knowledgecast: 2. Module Learning Outcomes. Communicate an in-depth understanding of the complexity of the environment and its applications on decision-making process
The process of dividing the firm’s total customer base into homogeneous clusters that allows management to formulate unique marketing strategies for each group.
A group of customers that share common characteristics across many national markets.
Adaptation: Modifying elements of the marketing program to accommodate specific customer requirements in individual foreign markets
E.g., industries in automaking, publishing, furniture
Standardization: Efforts to make marketing program elements uniform, so as to target entire regions of countries, or even the global marketplace, with a similar product or service
Targeting the same product everywhere not usually feasible
Goal: To strike some ideal balance between adaptation and standardization
Adaptation is pursued when the market has unique characteristics based on language, culture, regulations, income level, economic conditions, infrastructure
In developing international products, managers emphasize their commonalities across countries rather than the differences between them.
A basic product incorporates only core features that are then varied at the margins for individual markets.
A global new-product planning team is a group within a firm that determines which product elements will be standardized and which will be adapted locally, and how products will be launched.
Pricing is complex in international business, due to multiple currencies, trade barriers, added costs, and typically longer distribution channels.
Nature of the market: Local purchasing power and distribution infrastructure are important factors.
Nature of the product or industry: A specialized or highly advanced product, or an industry with few competitors, may necessitate charging a higher price.
Type of distribution system: Channels are complex in some countries, which pushes prices up.
Location of the production facility: Locating manufacturing near customers or in countries with low-cost labor facilitates lower prices.
Firms conduct advertising via media, which includes direct mail, radio, television, cinema, billboards, transit, print media, and the Internet.
Advertising spending on major media amounted to $100 billion in both Western Europe and Asia.
In the United States, advertising expenditures totaled over $160 billion.
Advertising is influenced by local factors, such as availability of media, literacy, regulations, culture, and local customs, as well as the goals of the firm.
“The planning, selection, training,employmentand evaluation of employees for international operations.”
(Cavusgil et al, 2007:548)
How a firm recruits, trains, and places skilled personnel in its worldwide value chains sets it apart from its competition.
Recruiting, managing, and retaining human resources at a firm with extensive global operations is especially challenging.
For example, German firm Siemens has more than 400,000 employees in some 190 countries: 230,000 throughout Europe, 90,000 in the Americas, 70,000 in the Asia-Pacific region, and 12,000 in Africa, the Middle East, and Russia.
Volkswagen, Nestle, IBM, Unilever, Wal-mart, McDonald’s, and Matsushita each has more than 150,000 employees outside the firm’s home country.
Parent Country Nationals (PCNs)
The need for a broader
Greater involvement in employees lives
New HR Responsibilities
Greater risk exposure
New HR responsibilities, such as international taxation, international relocation and orientation, services for expatriates, host government relations, and language translation services
Need for a broader perspective, such as establishing fair, comparable compensation, when there is a mix of PCNs, HCNs, and TCNs
Greater involvement in employees’ personal lives, such as housing arrangements, health care, children’s education, safety, security, appropriate compensation, and higher living costs
Managing the mix of expatriates versus locals. Each location may be staffed with a mix of HCNs, PCNs, and TCNs, depending on firm’s international experience, cost of living abroad, local laws, and availability of qualified local staff.
Greater risk exposure, such as political risk and terrorism
6.External influences of government and culture, such as taxes, local work regulations, traditional work practices, and cultural conditions
International staffing policy: Activities directed at recruiting, selecting, and placing employees
Preparation and training of international employees
International performance appraisal: Providing feedback for employees’ professional development
Compensation of employees: Includes formulation of benefit packages that vary greatly from country to country
International labor relations: Managing relationships with unions; collective bargaining processes, known as industrial relations
Diversity in the international workforce
Review of Article
M. AyhanKose and Eswar S. Prasad (2010), Emerging Markets Come
of Age, Finance and Development Journal, 2010
Prepare to review this article in your seminar for this unit. You should
make written notes to bring to the seminar to support your
b. Are emerging economies really in control of their destiny? WHY?
c. What are the factors responsible for the relative resilience of emerging economies during the global recession?
Environmental Audit – Preparation
Assignment Preparation – Research
Assignment Preparation – Rehearsal