Professional Documents
Culture Documents
Sol. The following can be looked as the various aspects of the cultural
dichotomies.
Table 2.1: Cultural Dichotomies
In this new millennium, few executives can afford to turn a blind eye to
global business opportunities. Japanese auto-executives monitor carefully
what their European and Korean competitors are up to in getting a bigger
slice of the Chinese auto-market. Executives of Hollywood movie studios
need to weigh the appeal of an expensive movie in Europe and Asia as much
as in the US before a firm commitment. The globalizing wind has broadened
the mindsets of executives, extended the geographical reach of firms,
and nudged international business (IB) research into some new trajectories.
One such new trajectory is the concern with national culture. Whereas
traditional IB research has been concerned with
economic/ legal issues and organizational forms and structures, the
importance of national culture – roadly defined as values, beliefs, norms, and
behavioral patterns of a national group – has become increasingly important
in the last two decades, largely as a result of the classic work of Hofstede
(1980). National culture has been shown to impact on major business
activities, from capital structure (Chui et al., 2002) to group performance
(Gibson, 1999). For reviews, see’ Boyacigiller and Adler’ (1991) and ‘Earley
and Gibson’ (2002). The purpose of this Unit is to provide a state-of-the-art
review of several recent advances in culture and IB research, with an eye
toward productive avenues for future research. It is not our purpose to be
comprehensive; our goal is to spotlight a few highly promising areas for
leapfrogging the field in an increasingly boundary-less business world. We
first review the issue surrounding cultural convergence and divergence, and
the processes underlying cultural changes. We then examine novel
constructs for characterizing cultures, and how to enhance the precision of
cultural models by pinpointing when the effects of culture are important.
Finally, we examine the usefulness of experimental methods, which are
rarely employed in the field of culture and IB. A schematic summary of our
coverage is given in Table 2.1, which suggests that the topics reviewed are
loosely related, and that their juxtaposition in the present paper represents
our attempt to highlight their importance rather than their coherence as
elements of an integrative framework.
Sol. Given its provisional nature and limited field of action, the success of
GATT in promoting and securing the liberalization of much of world trade
over 47 years is incontestable. Continual reductions in tariffs alone helped
spur very high rates of world trade growth – around 8 per cent a year on
average during the 1950s and 1960s. And the momentum of trade
liberalization helped ensure that trade growth consistently out-paced
production growth throughout the GATT era. The rush of new members
during the Uruguay Round demonstrated that the multilateral trading
system, as then represented by GATT, was recognized as an anchor for
development and an instrument of economic and trade reform. The limited
achievement of the Tokyo Round, outside the tariff reduction results, was a
sign of difficult times to come. GATT’s success in reducing tariffs to such a
low level, combined with a series of economic recessions in the 1970s and
early 1980s, drove governments to devise other forms of protection for
sectors facing increased overseas competition. High rates of unemployment
and constant factory closures led governments in Europe and North America
to seek bilateral market-sharing arrangements with competitors and to
embark on a subsidies race to maintain their holds on agricultural trade.
Both these changes undermined the credibility and effectiveness of GATT.
Apart from the deterioration in the trade policy environment, it also became
apparent by the early 1980s that the General Agreement was no longer as
relevant to the realities of world trade as it had been in the 1940s. For a
start, world trade had become far more complex and important than 40
years before: the globalization of the world economy was underway,
international investment was exploding and trade in services – not covered
by the rules of GATT – was of major interest to more and more countries and,
at the same time, closely tied to further increases in world merchandise
trade. In other respects, the GATT had been found wanting: for instance, with
respect to agriculture where loopholes in the multilateral system were
heavily exploited – and efforts at liberalizing agricultural trade met with little
success and in the textiles and clothing sector where an exception to the
normal disciplines of GATT was negotiated in the form of the Multi-fibre
Arrangement. Even the institutional structure of GATT and its dispute
settlement system were giving cause for concern. Together, these and other
factors convinced GATT members that a new effort to reinforce and extend
the multilateral system should be attempted. That effort resulted in the
Uruguay Round.
Innovation in Training
Impressed by the number and quality of information technology graduates
from the region’s universities, MR recognized an untapped resource in the
well-educated, versatile graduates of other fields in Northern Ireland.
Working with the T&EA, IMR developed "IMR Academy," an intensive 20-
week training program at the Belfast Institute of Further and Higher
Education, to expand the skills of qualified applicants who are not computer
software graduates, but who are equally well-educated in other
Disciplines and who have demonstrated aptitude for learning computer
software programming. Tom Scott of the T&EA said IMR applicants are
assessed throughout the program and those who successfully complete the
course are awarded a National Computing Certificate and full-time
employment with IMR. Approximately 40 trainees have already participated
in the program. "IMR is extremely pleased with the T&EAs ability to design
and deliver a training program customized to our needs, and one that is
delivering us an impressive pool of incremental programming talent,"
McFerran said.
Competitive Advantage
Northern Ireland recently has attracted information technology – based
investments from other multinational companies such as BT, Fujitsu,
Liberty Mutual Group, Seagate Technology, STB Systems and UniComp.
These companies cite Northern Ireland’s work force and favorable cost base
in their decisions to locate in the region. "The availability of high-quality
graduates combined with the region’s competitive operating costs and
attractive incentives made Northern Ireland the best possible location for
STB," said Richard W. Cooke, STB’s director of engineering operations. With
salaries and fringe costs for well trained software engineers in Northern
Ireland approximately 50 percent lower than costs for US engineers, and low
employee turnover and favorable rates for office space, the overall annual
per capita operational costs to develop high quality software can be
significantly less compared with these same costs in the United States.
Typical starting salaries for IT graduates in Northern Ireland are $22,000 to
$25,000 annually. At less than three percent annually, Northern Ireland’s
employee turnover rate is a fraction of the rates typically experienced in
other parts of Europe and the United States. Annual costs per square foot for
office space, exclusive of property taxes and service charges, range from as
low as $5 per square foot in some development areas, to approximately $14
in Belfast. These costs can be as much as 50 percent lower than office space
costs in other European cities.
Master Of Business Administration-MBA Semester 4
MB0037 – International Business Management
Assignment Set-2
2. Obstacles to diffusion
Obstacles to the diffusion of Internet trade come both from enduring sources
and temporary roadblocks which may be overcome as consumer attitudes
change and technology is improved. Currently, Internet connections are
slower than desired so that downloading pictures and other information may
take longer than consumers are willing to wait. "Glitches" in online ordering
systems may also frustrate consumers, who are unable to place their orders
at a given time or have difficulty navigating through a malfunctioning site.
The lack of non- English language sites in some areas may also be off-putting
to consumers, and registering domain names in some countries is difficult.
Further, shipping small packages across countries may be inefficient due to
high local postage rates and inefficiencies in customs processing. Most of
these obstacles may be overcome within next few years. Other obstacles
may, however, have considerably greater staying power. First, there are
legal problems, as several different countries may seek to impose their
jurisdiction on advertising and laws of product assortment and business
practices. Further, the maintenance of databases, which are essential to
delivering on the promises of e-commerce, may conflict with the privacy
rules of some countries – this is currently a hot issue of contention between
the United States and the European Union. Finally, there are issues of
taxation and collection. While the Clinton Administration has sought to get
the WTO to go along with a three year tax "moratorium" on Internet
purchases much like the one observed in the U.S., strong opposition is
expected. A great attraction of e-commerce in Europe is that people may
order from other countries and thus evade local sales taxes, which can be
prohibitive (e.g., 25% in Denmark and 16% in Germany). Some firms will ship
to customers in neighbouring countries without collecting sales taxes or
duties, with the responsibility of paying falling on the consumer. Although
most consumers who order and do not arrange to pay for these taxes get
away with it, fines for those caught through random checks can be severe.
Warranty
Many large value agricultural products like machinery require warranties.
Unfortunately not everyone upholds them. It is common practice in Africa
that if the original equipment has not been bought through an authorized
dealer in the country, that dealer refuses to honour the warranty. This is
unfortunate, because not only may the equipment have been legitimately
bought overseas; it also actually builds up consumer resistance to the dealer.
When the consumer is eventually offered with a choice, the reticent dealer
will suffer, for example, with the new dealers coming up. Cotton
Production/Marketing Interface
Spinners
Machines are highly flexible, that is they can usually switch to a variety of
yarn requirements. The machines are geared to high production, are
automated and are of a precision for constant quality provision. There are
strict process controls and built – in quality control. Poor raw material,
especially when contaminated with metal particles, damages opening mills,
grid knives, fans and card clothing. Previous devices employed to remove
these (magnets) are becoming less effective. The consequences are damage
in the blow room and carding and danger of fire. Quality is therefore defined
as properties of the end use (clothing etc.), efficiency of weaving and knitting
and the efficient running of the spinning plant. Spinners require raw cotton
which is free of trash; dust, sugar and honey dew contamination, seed coats,
bark and foreign fibres and, will not nep the cloth. Further requirements are
a certain length (could be short, medium or long), uniformity of length,
strength, fineness, maturity and a certain elongation and colour.
Suppliers
In order to meet these high quality demands, the growers have to ensure
that the production, picking and ginning is of a very high standard.
Cotton grading
The Liverpool Cotton exchange, for one, relied on the skills of its experts to
manually classify raw fibre purchases for its clients. It still holds the
"standards" for length, colour and trash content. As well as the demands of
modem machinery, the lack of standardized measuring and cotton
classification procedures has resulted in commercial conflict and legal
disputes about the true nature of traded cotton. Now, computer based high
volume instrument listing systems of raw cotton (HVI systems) are available.
The system can handle large numbers of bales, reduce variation in
classification and the need for highly trained bate classifiers. For cotton
exporters the system offers the following advantages: · enhanced objectivity
in classification · improve communication if similar systems are used by
sellers or buyers · reduced conflict and need for arbitration · enhanced
competitiveness against synthetic fibres · improved integration with modern
spinning machines · reduced costs on training of experts and in measuring
time. The system can process 2000 bales per day and give a printout on the
seven parameters of grading. These include length and length uniformity,
strength and elongation, micronaire or fineness, leaf and colour.
Manufacturers include SPINLAR INC. of Knoxville, USA.
Service
In agricultural machinery, processing equipment and other items which are
of substantial value and technology, service is a prerequisite. In selling to
many developing countries, manufacturers have found their negotiations at
stake due to the poor back-up service. Often, this is no fault of the agent,
distributor or dealer in the foreign country, but due to exchange regulations,
which make obtaining spare parts difficult. Many organisations attempt to
get around this by insisting that a Third World buyer purchases a percentage
of parts on order with the original items. Allied to this problem is the poor
quality of service due to insufficient training. Good original equipment
manufacturers will insist on training and updating as part of the agency
agreement. In order to illustrate the above points, cotton can be used as an
example. Cotton is a major foreign exchange earner for Zimbabwe. In
1990/91, 52,000 tons were sold overseas at a value of Zim $ 238 million. As
the spinners, particularly those in the export market are in a highly
competitive industry, it is essential that the raw material is as clean as
possible. Also today’s spinning equipment is highly technical and the spinner
wishes to avoid costly breakdowns by all means.
Product strategies
There are five major product strategies in international marketing.
Product communications extension
This strategy is very low cost and merely takes the same product and
communication strategy into other markets. However it can be risky if
misjudgements are made. For example, CPC International believed the US
consumer would take to dry soups, which dominate the European market. It
did not work.
Extended product – communications adaptation
If the product basically fits the different needs or segments of a market it
may need an adjustment in marketing communications only. Again this is a
low cost strategy, but different product functions have to be identified and a
suitable communications mix developed.
Product adaptation – communications extension
The product is adapted to fit usage conditions but the communication stays
the same. The assumption is that the product will serve the same function in
foreign markets under different usage conditions.
Product adaptation – communications adaptation
Both product and communication strategies need attention to fit the peculiar
need of the market.
Product invention
This needs a totally new idea to fit the exclusive conditions of the market.
This is very much a strategy which could be ideal in a Third World situation.
The development costs may be high, but the advantages are also very high.
Table 9.2 summarizes the strategic alternatives with examples. The choice of
strategy will depend on the most appropriate product/market analysis and is
a function of the product itself defined in terms of the function or need it
serves, the market defined in terms of the conditions under which the
product is used, the preferences of the potential customers and the ability to
buy the product in question, and the costs of adaptation and manufacture
to the company considering these product –
communications approaches.