[Solution] Part 3: 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, time zones, and cultural contexts
Select the best answer to the following question.
How do multinational corporations (MNCs) usually participate in the international business environment?
- They usually import or export goods, and they may compete against foreign companies in their home country market.
- They pursue various options to enter foreign markets, including direct investment, and they may use specialists to manage international activities.
- They routinely transfer resources between markets in different countries, and at least some of their managers are comfortable working in different cultures.
View Explanation
MNCs scan the international environment constantly and exploit opportunities by moving money, people, inventory, and other resources from one market to another. At least some managers at these firms are skilled at setting international business strategy and are comfortable working interculturally.
Select the term that best completes the sentence.
Ensuring that the organization is operating efficiently when people are in different locations and come from different cultures is challenging, so managers may need to make an extra effort to fulfill the function of their jobs.
View Explanation
Controlling means establishing formal and informal measures to reduce various risks to the organization. Factors such as time zone differences and differing cultural attitudes toward authority mean international managers may need to adjust how they perform the controlling function.
