Fluent Essays

Project 5: Creating an International Business Plan- Completes Steps 1-5. The Device selected for this project is Breast Pumps the selected country is Germany. Assess the Characteristics of MediCorps Potential Customers in the Selected CountryDevelop a Marketing StrategySubmit your six- to seven-page marketing strategy to include the components outlined in Step 1 and Step 2.Then submit Your final international business plan should include key findings from your marketing strategy (Steps 1–2) and financial projections and strategy implementation (Steps 3–4). It should also include an executive summary. mba_670_project_5_spring_2020_learning_topics.pdf mba_670_project_5_spring_2020_description.pdf project_5___final_report_template.pdf Unformatted Attachment Preview MBA 670 Capsim: Strategic Decision Making Project 5 - Creating an International Business Plan Learning Topics 1 MBA 670: Strategic Decision Making Project 5 Learning Topics 1 Assess the Characteristics of MediCorps Potential Customers in the Selected Country International Cultural Differences Communications, teamwork, organizational hierarchy, and positive attitudes toward management roles are essential in any organization. These are crucial in international business, as problems are often exacerbated by subtle cross-cultural differences. When defining roles in multinational teams whose members have diverse attitudes and expectations about organizational hierarchy, these cultural differences can present a challenge. Culture is a system of values and norms that is shared among a group of people. The ways people interact socially, their mutual expectations, and the values they share all have consequences for doing business and managing across cross-cultural boundaries. How a countrys cultural differences relate to international business can be seen in the following examples: • In Japan, social hierarchy and respect for seniority are highly valued and are reflected at the workplace. Those in senior management positions command respect and expect a formality and deference from junior team members. • In Scandinavian countries, societal equality is emphasized. Workplaces therefore tend to have a comparatively flat organizational hierarchy. In turn, this organization can result in relatively informal communication and an emphasis on cooperation across the organization. • The way to address colleagues and business partners varies in different countries. While Americans and Canadians tend to use first names, in Asian countries such as South Korea, China, and Singapore, colleagues tend to use the formal address, Mr. or Ms. So do Germans and many Europeans. • The concept of punctuality also differs between cultures. Where an American may arrive at a meeting a few minutes early, an Indian or Mexican colleague may arrive well after the scheduled start time and still be considered on time. • Attitudes to work also differ. While some may consider working long hours a sign of commitment, others may view it as an encroachment on their personal time and a sacrifice of essential family time. • Greeting customs are highly culture- and situation-specific. In the United States and Canada, a simple handshake while looking a person in the eye is the norm. In Japan, bowing is the traditional greeting—the deeper the bow, the greater the respect shown. In India, you put hands together as in prayer and say namaste. In Arab countries, men might hug and kiss each other (but not a woman) on the cheek. • In Latin America and the Middle East, the acceptable physical distance needed to respect someones personal space is much shorter than what most Europeans and Americans feel comfortable with. • Different cultures have different meaning for identical words. The Swedish vacuum cleaner manufacturer Electrolux introduced a print advertisement with the tagline Nothing sucks like an Electrolux. While the ad was successful in Britain, it was a disaster in the US market. 2 Several scholar-practitioners have studied cultural differences and their influence on international business. At the end of the 1970s, the Dutch social psychologist Dr. Geert Hofstede published an internationally recognized standard for understanding cultural differences. Hofstede studied IBM employees in more than 50 countries. Initially, he identified four dimensions that could distinguish one culture from another. Later, he added fifth and sixth dimensions, in cooperation with Dr. Michael H. Bond and Dr. Michael Minkov. 1. The six dimensions of national culture are as follows: 2. power distance index (high vs. low) 3. individualism vs. collectivism 4. masculinity vs. femininity 5. uncertainty avoidance index (high vs. low) 6. long- vs. short-term orientation (also known as pragmatic vs. normative) 7. indulgence vs. restraint Hofstede demonstrated that there are national and regional cultural groups that influence the behavior of societies and organizations. The table below describes these dimensions of country cultures and their implications for international business. Dimensions of National Culture and Implications on International Business Country cultural dimension Characteristics Implications Power distance index—High Degree of inequality Centralized organizations between people with More complex hierarchies and without power Large gaps in compensation, authority, and respect Power distance index—Low Power is shared and Decentralized authority widely dispersed in Fewer layers of management organizations Supervisors and employees are considered almost as equals Individualism vs. collectivism—High Preference for a High value on peoples time, need for privacy and loosely knit social freedom framework in which Expectation of individual rewards for hard work individuals are expected to take care of only themselves and their immediate family Individualism vs. collectivism—Low Loyalty to the group Work for intrinsic rewards to which they belong Maintaining harmony among group members People take overrides other moral issues responsibility for one Saying no can cause loss of face, unless its anothers well-being intended to be polite Masculinity vs. femininity—High Preference for achievement, heroism, assertiveness, and material rewards for success. Organizations are more competitive and hierarchical Strong egos— feelings of pride and importance are attributed to status 3 Dimensions of National Culture and Implications on International Business Country cultural dimension Masculinity vs. femininity—Low Characteristics Implications Preference for Organizations are more consensus-oriented cooperation, Workplace flexibility and work-life balance important modesty, caring for the weak, and quality of life Uncertainty Rigid codes of belief Many societal conventions avoidance index— and behavior, Allowed to show anger or emotions High intolerant of unorthodox behavior High-energy society and ideas People feel that they are in control of their lives Attempt to make life as predictable and controllable as possible Uncertainty Relaxed attitude in Less sense of urgency avoidance index— which practice counts Titles are less important Low more than principles Respect those who can cope under all More open or circumstances inclusive Long- vs. short-term Value persistence, orientation—High perseverance, and being able to adapt. More thrifty Thrift and education seen as positive values Long- vs. short-term Value tradition, orientation—Low current social hierarchy, and fulfilling social obligations Strong convictions More willing to compromise Virtues and obligations are emphasized Values and rights are emphasized Less willing to compromise, as this would be viewed as weakness Care more about immediate gratification than long-term fulfillment Indulgence vs. restraint—High Encourage relatively Optimistic free gratification of Importance of freedom of speech peoples own drives Debate and dialogue in meetings or decision making and emotions Emphasize flexible working and work-life balance Indulgence vs. restraint—Low More emphasis on suppressing gratification and more regulation of peoples conduct and behavior Pessimistic Controlled and rigid behavior Express negativity about the world only during informal meetings Stricter social norms Clearly, every country culture distinguishes itself by the way it conducts its interpersonal relationships and its attitudes toward time and environment. Hofstedes framework, outlined above, is widely used. However, there are others. Parson (1951) views five orientations covering the ways human beings deal with each other: • universalism vs. particularism 4 • individualism vs. communitarianism • neutral vs.emotional • specific vs. diffuse • achievement vs. ascription Gannon (2004) describes country cultures through the use of a cultural metaphor. A cultural metaphor is any major phenomenon, activity, or institution with which its members closely identify cognitively and/or emotionally. This framework uses a four-stage model of cross-cultural understanding using process and goal orientation and degree of emotional expressiveness. The cultural metaphors from 30 countries studied by Gannon include the following: • American football • German symphony • French wine • the Brazilian samba • the Japanese garden • the Indian Dance of Shiva • the Mexican fiesta • Russian ballet The differences in country cultures imply that for managers in international business there is a need to develop cross-cultural literacy and an understanding that there is a connection between culture and national competitive advantage. There is also a connection between culture and ethics in decision making. An awareness of the cultural background of your customers and business partners in a new country is an important aspect of international business, as it will help you clearly convey your message and adapt to new business settings. References Gannon, M. J. (2004). Understanding global cultures: Metaphorical journeys through 28 nations, cluster of nations and continents. Thousand Oaks, CA: Sage Publications. Hofstede, G., Hofstede, G.J., & Minkov, M. (2010). Cultures and organizations: Software of the mind. New York, NY: McGraw Hill. Parsons. T. (1951). The Social System. New York, NY: Free Press. 2 Develop a Marketing Strategy Modes of Entry What is the best way to enter a new market? Should a company first establish an export base or license its products to gain experience in a newly targeted country or region? Or does the potential associated with first-mover status justify a bolder move, such as entering an alliance, making an acquisition, or even starting a new subsidiary? Many companies move from exporting to licensing to a higher investment strategy, in effect treating these choices as a learning curve. Each has distinct advantages and disadvantages. 5 Exporting is the marketing and direct sale of domestically produced goods in another country. Exporting is a traditional and well-established method of reaching foreign markets. Since it does not require that the goods be produced in the target country, no investment in foreign production facilities is required. Most of the costs associated with exporting take the form of marketing expenses. While relatively low risk, exporting entails substantial costs and limited control. Exporters typically have little control over the marketing and distribution of their products, face high transportation charges and possible tariffs, and must pay distributors for a variety of services. Further, exporting does not give a company firsthand experience in staking out a competitive position abroad, and it makes it difficult to customize products and services to local tastes and preferences. Licensing essentially permits a company in the target country to use the property of the licensor. Such property, such as trademarks, patents, and production techniques, is usually intangible. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance. Because little investment on the part of the licensor is required, licensing can provide a very large return on investment. However, because the licensee produces and markets the product, potential returns from manufacturing and marketing activities may be lost. Thus, licensing reduces cost and involves limited risk. However, it does not mitigate the substantial disadvantages associated with operating from a distance. As a rule, licensing strategies inhibit control and produce only moderate returns. Strategic alliances and joint ventures have become increasingly popular in recent years. They allow companies to share the risks and resources required to enter international markets. And although returns also may have to be shared, these arrangements give companies a degree of flexibility not afforded by going it alone through direct investment. There are several motivations for companies to consider a partnership as they expand globally, including facilitating market entry, risk and reward sharing, technology sharing, joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships. Such alliances often are favorable when (1) the partners strategic goals converge while their competitive goals diverge; (2) the partners size, market power, and resources are small compared to the industry leaders; and (3) partners are able to learn from one another while limiting access to their own proprietary skills. The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions. Potential problems include (1) conflict over asymmetric new investments, (2) mistrust over proprietary knowledge, (3) performance ambiguity, that is, how to split the pie, (4) lack of parent firm support, (5) cultural clashes, and (6) if, how, and when to terminate the relationship. Ultimately, most companies will aim at building their own presence through company-owned facilities in important international markets. Acquisitions and greenfield start-ups represent this ultimate commitment. Acquisition is faster, but starting a new, wholly owned subsidiary might be the preferred option if no suitable acquisition candidates can be found. Also known as foreign direct investment (FDI), acquisitions and greenfield start-ups involve the direct ownership of facilities in the target country and, therefore, the transfer of resources including capital, technology, and personnel. Direct ownership provides a high degree of control in the operations and the ability to better know the consumers and competitive environment. However, it requires a high level of resources and a high degree of commitment. Coca-Cola and Illycaffé In March 2008, the Coca-Cola company and Illycaffé Spa finalized a joint venture and launched a premium ready-to-drink espresso-based coffee beverage. The joint venture, Ilko Coffee International, was created to bring three ready-to-drink coffee products—caffè, an Italian chilled espresso-based coffee; cappuccino, an intense espresso, blended with milk and dark cacao; and latte macchiato, a smooth espresso, swirled with milk—to consumers in 10 European countries. The products will be available in stylish, premium cans (150 milliliters for caffè and 200 milliliters for the milk variants). All three offerings will be available in 10 European Coca-Cola Hellenic markets, including Austria, Croatia, Greece, and Ukraine. Additional countries in Europe, Asia, North America, Eurasia, and the Pacific were slated for expansion at a later date. 6 The Coca-Cola Company is the worlds largest beverage company. Along with Coca-Cola, recognized as the worlds most valuable brand, the company markets four of the worlds top five nonalcoholic sparkling brands, including Diet Coke, Fanta, Sprite, and a wide range of other beverages, including diet and light beverages, waters, juices and juice drinks, teas, coffees, and energy and sports drinks. Through the worlds largest beverage distribution system, consumers in more than 200 countries enjoy the companys beverages at a rate of 1.5 billion servings each day. Based in Trieste, Italy, Illycaffé produces and markets a unique blend of espresso coffee under a single brand leader in quality. Over 6 million cups of Illy espresso coffee are enjoyed every day. Illy is sold in over 140 countries around the world and is available in more than 50,000 of the best restaurants and coffee bars. Illy buys green coffee directly from the growers of the highest quality Arabica through partnerships based on the mutual creation of value. The Trieste-based company fosters long-term collaborations with the worlds best coffee growers—in Brazil, Central America, India, and Africa— providing know-how and technology and offering above-market prices. Entry Strategies: Timing In addition to selecting the right mode of entry, the timing of entry is critical. Just as many companies have overestimated market potential abroad and underestimated the time and effort needed to create a real market presence, so have they justified their overseas expansion on the grounds of an urgent need to participate in the market early. Arguing that there existed a limited window of opportunity in which to act, which would reward only those players bold enough to move early, many companies made sizable commitments to foreign markets even though their own financial projections showed they would not be profitable for years to come. This dogmatic belief in the concept of a first-mover advantage (sometimes referred to as pioneer advantage) became one of the most widely established theories of business. It holds that the first entrant in a new market enjoys a unique advantage that later competitors cannot overcome (i.e., that the competitive advantage so obtained is structural and therefore sustainable). Some companies have exemplified this concept. Procter & Gamble (P&G), for example, has always trailed rivals such as Unilever in certain large markets, including India and some Latin American countries, and the most obvious explanation is that its European rivals were participating in these countries long before P&G entered. Given that history, it is understandable that P&G erred on the side of urgency in reacting to the opening of large markets such as Russia and China. For many other companies, however, the concept of pioneer advantage was little more than an article of faith and was applied indiscriminately and with disastrous results to country-market entry, to product-market entry, and, in particular, to the new economy opportunities created by the Internet. The get-in-early philosophy of pioneer advantage remains popular. And while there are clear examples of its successful application—the advantages gained by European companies from being early in colonial markets provide some evidence of pioneer advantage—first-mover advantage is overrated as a strategic principle. In fact, in many instances, there are disadvantages to being first. First, if there is no real firstmover advantage, being first often results in poor business performance, as the large number of companies that rushed into Russia and China can attest to. Second, pioneers may not always be able to recoup their investment in marketing required to kick-start the new market. When that happens, a fast follower can benefit from the market development funded by the pioneer and leapfrog into earlier profitability. For a more detailed discussion, see Tellis & Golder (2002). This ability of later entrants to free-ride on the pioneers market development investment is the most common source of first-mover disadvantage and suggests two critical conditions necessary for real firstmover advantage to exist. First, there must be a scarce resource in the market that the first entrant can acquire. Second, the first mover must be able to lock up that scarce resource in such a way that it creates a barrier to entry for potential competitors. A good example is provided by markets in which it is necessary for foreign firms to obtain a government permit or license to sell their products. In such cases, the license, and perhaps government approval, more generally, may be a scarce resource that will not be granted to all comers. The second condition is also necessary for first-mover advantage to develop. Many companies believed that brand preference created by being f ... Purchase answer to see full attachment