[Solution] Part 2: 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 take on new dimensions in an international context:
- Planning must account for a broader range of factors and contingencies across different markets
- Organizing involves decisions about centralization versus local autonomy in different countries
- Leading becomes more complex due to cultural differences and communication challenges
- Controlling requires systems that work across different regulatory environments and reporting standards
Select the best answer to the following question.
How do midsized companies usually participate in the international business environment?
- 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.
- They routinely transfer resources between markets in different countries, and at least some of their managers are comfortable working in different cultures.
View Explanation
Medium-sized organizations have a range of options for entering markets in other countries. They may choose to purchase or build a facility in another country (direct investment). Since they often don't have managers with much international business expertise, they may hire specialists to help them manage their international activities.
Select the term that best completes the sentence.
In the international business environment, the managerial function of becomes more complex because of the opportunity to work with people of different cultures.
View Explanation
Leading international business activities means working with people who hold different values and beliefs and who use symbols and language differently. Cultural nuances can take a great deal of experience to master.
