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Environmental Challenges of International Management

The Economic Environment
– economic system
– natural resources
– infrastructure
Economic System
most countries are moving towards a market economy; freedom of choice in mature market economy

– complete private ownership
– complete public ownership

Natural Resources
a very broad range of resources is averrable in different countries; depending on the amount of natural resources a country have, they import or export
Infrastructure
schools, hospitals, power plants, railroads, highways, ports, communication systems, airfields, and commercial distribution systems of a country
The Political-Legal Environment
– government stability
– incentives for international trade
– controls on international trade
– economic communities
Government Stability
– the ability of a given government to stay in power against opposing factions in the country
– the permanence of government policies toward business
– ‘nationalization’
Nationalization
in some countries, foreign businesses may be taken over by the government with little or no warning
Incentives for International Trade
attracting foreign business

ex: Alabama offering Mercedes huge tax breaks and other incentives to entice the German firm to select a location for a new factory in that state

Controls on International Trade
the extent to which there are controls on international trade; tariff, quota, export restraint agreement

ex: a government might decide that foreign competition is hurting domestic trade and may enact barriers to international trade

Tariff
a tax collected on goods shipped across national boundaries

collected by the exporting country, countries the good passes through, and the importing country

Quota
most common form of trade restriction; a limit on the number for value of goods that can be traded

ex: Honda is allowed to import 425,000 autos each year into the US; the company may produce unlimited amount within the US

Export Restraint Agreement
designed to convince other governments to voluntarily limit the volume or value of goods exported to or imported from a particular country

ex: Japanese steel produces voluntarily limit the amount of steel they send to the US each year

Economic Communities
a set of countries that agree to markedly reduce or eliminate trade barriers among member nations

ex: EU, NAFTA, Latin American Integration Association

The Cultural Environment
– values, symbols, beliefs, and language
– individual behaviors across cultures; orientations
Values, Symbols, Beliefs, and Language
cultural values and beliefs are often unspoken; difficulties arise when there is little overlap between countries

ex: England and US are relatively familiar cultures; China and US are not familiar cultures

Individual Behaviors Across Cultures
– Social Orientation
– Power Orientation
– Uncertainty Orientation
– Goal Orientation
– Time Orientation
Social Orientation
beliefs about relative importance of individual vs. groups they belong to

– Individualism
– Collectivism

Individualism
the person comes first
Collectivism
the group comes first
Power Orientation
people hold about the appropriateness of power and authority differences in hierarchies, like business organizations

– power respect
– power tolerance

Power Respect
people tend to accept the power and authority of their superiors simply on the basis of their position and respect their right to hold that power
Power Tolerance
more willing to question a decision from someone at a higher level or even refuse to accept it
Uncertainty Orientation
feelings regarding uncertain and ambiguous situations
– uncertain acceptance
– uncertain avoidance
Uncertain Acceptance
people are stimulated by change and thrive on new opportunities
Uncertain Avoidance
people dislike and will avoid ambiguity whenever possible
Goal Orientation
the manner people are motivated to work toward different kinds of goals
– aggressive goal behavior
– passive goal behavior
Aggressive Goal Behavior
place a high premium on material possession, money, and assertiveness
Passive Goal Behavior
higher value on social relationships, quality of life, and concern for others
Time Orientation
extent people adopt a long-term vs. short-term outlook on work, life, another elements

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