ITM - Tutorial Unit 4 - Global Environment - STUDENT Revised 2
ITM - Tutorial Unit 4 - Global Environment - STUDENT Revised 2
Review Questions
1. In your own words, explain the term “borderless”. If large companies are “stateless”,
what is the impetus for a company to choose becoming global?
5. Identify two Jamaican companies that are multi-national. What are their characteristics?
Would you describe them as being successful? Why do you say so?
Grace
Air jamaica
6. Explain the various market entry strategies that are available to managers wishing to do
business internationally or globally. What are their advantages and disadvantages?
Export .. disadvantages- cost may rise, loss of control, no attention paid to local customers
Licensing is where a corporation (the licensor) in one country makes certain
resources available to companies in another country ( the licensee), in order to
participate in the production and sale of its products abroad, at low cost. The
resources include technology, managerial skills, and/or patent and trademark
rights.
Disadvantages-loss of control (partially or fully) over your invention.
relying on the licensee's ability to effectively commercialise your patent.
poor quality management damaging your brand or product reputation.
7. Identify two Jamaican companies that are doing business overseas. How long have they
been overseas? Why do you think they chose to do business in those specific countries?
What market entry strategy did they use? Why do you think they chose that particular
strategy?
Grace – export -1995
8. What are the three key dimensions in the international environment that international
firms face? Identify the factors within each. Explain each in relation to the Jamaican
environment.
A. Economic environment – exchange rate
B. Sociocultural environment- cultural
C. Political environment- political risk (bad policies)
True or False
1. _____F The reality of today's borderless companies also means that consumers can easily
identify from which country they are buying.
2. _____F ABC Manufacturing is in the domestic stage. It has its market potential open to
the countries that border its home country.
4. _____T The belief in the right to vote, the right of choice and equal rights is part of the
beliefs, values and ways of thinking that defines a society's culture.
6. _____F Multinational corporations typically receive more than 55 percent of its total sales
revenues from operations outside the parent’s home country
8. _____ F Theodore and Stefany sometimes have a tendency to regard their own Jamaican
culture as superior and to downgrade other cultures; this reflects an attitude called
geocentricism.
9. _____T An example of global sourcing is when Nordia and Sanjay from Gap, Inc use low-
cost Caribbean labor to cheaply produce their clothing, and then finish off and sell
their clothing in the United States.
10. _____F An organization developed for the purpose of eliminating tariffs in trading
between Canada and the United States is called The North American Freedom of
Tariffs Administration (NAFTA).
11. Capita per income ________________ is the criterion traditionally used to classify countries
as developed or developing.
12. Outsourcing_______________ means engaging in the international division of labor so
that manufacturing can be done in countries with the cheapest sources of labor and
supplies.
13. List the three examples of direct investing mentioned in your text.
Joint Ventures
In a joint venture a company shares costs and risks with another firm, typically in the
host country, to develop new products, build a manufacturing facility, or set up a sales
and distribution network.
Direct Acquisition
Direct Acquisition (purchase) of an affiliate may provide a cost savings over exporting
by shortening distribution channels and reducing storage and transportation costs.
Local managers also have better awareness of economic, cultural and political
conditions.
Wholly-Owned Foreign Affiliate
When a foreign subsidiary over which an organization has complete control.
_______________________________________________________________________
Multiple Choice
a. Globally
b. regionally
c. nationally
d. strategically
15. The process of globalization typically passes through all of the following stages EXCEPT
a. domestic stage.
b. global stage.
c. international stage.
d. inter-domestic stage.
e. multinational stage.
16. If you built a computer company in Africa and then found that your product was having
difficulty being distributed to customers because of the road system, your problem would
be related to
17. Although the challenge in unstable countries is great, often the biggest area of
__________ is also there.
a. opportunity
b. consumer shopping
c. economic improvement
d. leadership
e. low governmental control
18. Color Copiers operates in a true global fashion, making sales and acquiring resources in
whatever country offers the best opportunities and lowest cost, what stage of international
development is it in?
a. Stateless stage
b. Multinational stage
c. International stage
d. Domestic stage
e. Multidomestic stage
DISCUSSION QUESTIONS
2. Compare the advantages associated with the foreign market entry strategies of exporting,
licensing, and wholly owned subsidiaries.
3. What steps could a company take to avoid making product design and marketing mistakes
when introducing new products into a foreign country?
5. What might managers do to avoid making mistakes concerning control and decision-making
when operating in a foreign culture?