[Solution] Competition in the Global Economy
Created at:
Author: Sarah Bennett
International Management and Competition
Given the trend toward globalization, many organizations, even small ones, can find opportunities by expanding their international activities. At the same time, managers need to learn a great deal in order to help their organizations compete successfully.
International Activity by Size of Organization
How active an organization is in international markets depends in part on its size.
- Small organizations can increase their profits by selling to larger companies that operate abroad; although the transaction is domestic, this business activity is impacted by the international environment. When small firms participate directly in international business, they usually do so by importing or exporting goods. Small companies may also encounter competition at home from foreign companies.
- Medium-sized organizations pursue the same opportunities and face the same competition as small ones. In addition, they may have more options to enter selected international markets, such as by purchasing or building facilities in those markets (direct investment). These companies often lack expertise in international business and so may rely on specialists to manage their foreign operations.
- Multinational corporations (MNCs) take a global perspective; scan the international environment constantly for opportunities; and readily transfer capital, technology, human resources, inventory, and information from one market to another. These organizations have senior managers who are comfortable setting international business strategy and working across cultures.
International Managers and the Four Management Functions
Management functions become more complex in an international context, requiring different approaches to planning, organizing, leading, and controlling.
Select the best answer to the following question.
How do small companies usually participate in the international business environment?
- They routinely transfer resources between markets in different countries, and at least some of their managers are comfortable working in different cultures.
- They pursue various options to enter foreign markets, including direct investment, and they may use specialists to manage international activities.
- They usually import or export goods, and they may compete against foreign companies in their home country market.
View Explanation
Small organizations are often limited in their international activities. Nonetheless, they may compete against foreign businesses in their domestic market. If they enter international markets, they usually do so by importing materials or exporting products for direct sale.
Select the term that best completes the sentence.
To be effective at , managers decide which decisions will be made in the corporate headquarters and which by managers in different countries.
View Explanation
Managers design organizations to be more or less centralized. This organizing function takes on added complexity when weighing the pros and cons of allowing managers based in different countries of operation to make key decisions.
