Exam Notes MGMT3304 PDF

**Notes on Globalisation and International Business Strategy** **Overview of the Unit** - The unit focuses on both knowledge acquisition and application, with lectures covering basic international business (IB) strategy elements and their application. Major assignments will be supervised...

**Notes on Globalisation and International Business Strategy** **Overview of the Unit** - The unit focuses on both knowledge acquisition and application, with lectures covering basic international business (IB) strategy elements and their application. Major assignments will be supervised in tutorials**1**. **Session Objectives** - By the end of the session, participants should be able to discuss issues related to globalisation and explain the importance of global strategy in business**3**. **Drivers of Globalisation** - Two main macro factors driving globalisation: 1. **Declining Trade and Investment Barriers**: There has been a significant reduction in barriers to the free flow of goods, services, and capital. 2. **Technological Change**: Advances in communication, information processing, and transportation technologies have facilitated globalisation**6**. **Globalisation of Services** - Services are often consumed simultaneously with their production, but technology allows for overcoming geographic constraints. Examples include: - Call centers in India and the Philippines (Business Process Outsourcing). - Data and text exchanges via email or intranet. - Virtual design facilities**8**. **Globalisation of Production** - Production activities are increasingly dispersed globally to locations that are: - Low-cost. - High-quality producers of specific goods. - Co-located with essential process inputs. - Offshoring is a common form of outsourcing in this context**9**. **Current State of Globalisation** - Questions arise about the sustainability of globalisation, particularly regarding: - The viability of low labor cost production locations. - Political events like Brexit and their implications on sovereignty and immigration. - The changing attitudes of the USA towards trade agreements and European countries towards asylum seekers and security issues**7**. **International Business Activity** - International business encompasses all transactions that cross borders, including suppliers, distributors, and customers. It is influenced by various national and global regulations. Key statistics include: - \$19 trillion in goods and \$4.6 trillion in services traded annually. - \$5.3 trillion in foreign exchange transactions daily**11**. **Regional Trade Agreements** - **North America**: The USMCA has created a single market of nearly 500 million consumers**10**. - **European Union (EU)**: The largest and most integrated common market, consisting of 27 countries with 447 million consumers. Many member states have adopted a common currency, but national identities remain strong, as seen in the context of Brexit**12**. - **Indo-Pacific**: The Regional Comprehensive Economic Partnership (RCEP) is the world\'s largest free trade agreement by GDP, involving multiple countries in the region**14**. **Understanding Strategy** - Strategy has evolved from its origins in military terminology to its application in business. Key perspectives include: - **Strategy as Plan**: A formal, explicit planning process. - **Strategy as Action**: A flexible, goal-oriented approach. - **Strategy as Theory**: Principles guiding competitive success. **Overview of International Strategy** International strategy refers to the actions that managers take to achieve company goals in a global context. This often involves managing \'value creation\' by aligning various operational activities that contribute to a firm\'s value chain, including both primary and support activities, organizational structure, control metrics, and human resource strategies**9**. **Pressures to Globalize vs. Localize** **Pressures to Globalize** Companies face several pressures to globalize, which include: - **High production costs** that necessitate global efficiencies. - **Declining tariffs**, which facilitate cross-border trade and open new markets. - **Increasing competitive pressure** from regional trading blocs. - The **ICT explosion**, which simplifies the coordination of remote operations and aligns consumer tastes globally**2**. **Pressures to Localize** Conversely, companies also encounter pressures to localize their offerings, driven by: - **Unique consumer preferences** shaped by cultural or national differences. - The need for **localized business development** to counter local competition. - **Government regulations** that vary by region, affecting pricing, advertising, and human resource management practices**3**. **Strategic Approaches** **Globalization vs. Localization** - **Globalization** involves establishing worldwide operations and developing standardized products and marketing strategies. - **Localization** connects local markets within a region, allowing for greater responsiveness and specialization**6**. **Factors Favoring Global vs. Multidomestic Approaches** **Factors Favoring a Global Approach** **Factors Favoring a Multidomestic Approach** ------------------------------------------ ---------------------------------------------------- Converging incomes across nations Diverse industry standards and regulations Similar consumer lifestyles globally Demand for tailored local products Advances in technology and communication Competitive advantage of being a \"local\" company Increased worldwide trade Challenges in managing global organizations Reduced trade barriers Globalization may undermine local competencies Emergence of low-cost labor nations Formation of regional trading blocs **Porter's five generic strategies** **Competitive Strategies** **Cost Leadership Strategy** This strategy focuses on producing goods or services at the lowest cost relative to competitors, offering features acceptable to a broad customer base with relatively standardized products**.** **Differentiation Strategy** In contrast, a differentiation strategy aims to produce goods or services perceived as unique by customers, allowing firms to charge premium prices. This requires continuous enhancement of differentiated features**.** **Focus Strategy** A focus strategy involves targeting a specific competitive segment or niche, allowing firms to serve particular market segments more effectively than broader competitors. This can be achieved through focused cost leadership or focused differentiation**.** **Integrated cost leadership/ differentiation strategy**\ -- An appropriate choice for firms possessing the core\ competencies to produce somewhat differentiated products at\ relatively low prices\ -- A firm that successfully uses the integrated cost\ leadership/differentiation strategy must be able to:\ -- readily adapt to external environmental changes\ -- concentrate simultaneously on two sources of competitive\ advantage: cost and differentiation\ -- Build competence and flexibility in several value chain activities **Conclusion** Understanding the dynamics of international strategy is crucial for firms operating in a global marketplace. Balancing the pressures to globalize with the need for local responsiveness, while effectively implementing competitive strategies, can significantly impact a firm\'s success in achieving its goals. **Overview** The document focuses on international business strategies, particularly emphasizing organizational structures and market entry strategies. It is part of the MGMT3304 Applied International Business Strategy course at the University of Western Australia. **Organizational Structures** - **Integrated Global Structures**: - **Global Geographic (Area) Structure**: This structure organizes operations based on geographical areas, facilitating localized management and decision-making. - **Matrix Structure**: Combines functional and product-based divisions, allowing for flexibility and responsiveness in international markets**2**. **Network Organization Structures** - These structures are emergent and involve external entities such as strategic partners, outsourced functions, and contractors. They are designed to attract interest and experimentation in international business contexts**9**. **Market Entry Strategies** **Factors Influencing Market Entry Method Selection** 1. **Firm\'s Objectives**: Goals for foreign market engagement. 2. **Business Environment**: Conditions in the target country. 3. **Firm\'s Capabilities**: Technical, managerial, and financial resources. 4. **Competitive Context**: Understanding the competition in the target market. 5. **Product Attributes**: Characteristics of products or services for the market. 6. **Risk-Reward Equation**: Balancing potential risks against expected rewards**8**. **Entry Strategies and Their Characteristics** 1. **Exporting**: - **Advantages**: Low risk, no long-term asset commitment, easy market access. - **Critical Success Factors**: Choice of distributor, transportation costs, tariffs, and quotas**12**. 2. **Licensing**: - **Advantages**: Fast market access, no asset ownership risk, avoids tariffs. - **Critical Success Factors**: Quality of the licensee, transferability of intellectual property, host-country royalty limits**12**. 3. **Franchising**: - **Advantages**: Minimal investment, rapid market entry, small business expansion. - **Critical Success Factors**: Quality control of franchisee operations**12**. 4. **Joint Ventures**: - **Advantages**: Shared costs and risks, insider access to markets, leveraging partner skills. - **Critical Success Factors**: Strategic fit, ability to protect technology, cultural adaptability**13**. 5. **Wholly Owned Subsidiaries**: - **Advantages**: Full revenue realization, control over operations, protection of technology. - **Critical Success Factors**: Managing economic and political risks, local acceptance, repatriation of profits**13**. 6. **Contract Manufacturing**: - **Advantages**: Limited cost and risk, short-term commitment. - **Critical Success Factors**: Reliability and quality of local contractors**6**. 7. **Turnkey Operations**: - **Advantages**: Revenue from skills and technology where foreign direct investment (FDI) is restricted. - **Critical Success Factors**: Reliable infrastructure and sufficient local supplies**6**. 8. **Management Contracts**: - **Advantages**: Low-risk access to further strategies. - **Critical Success Factors**: Opportunity for long-term positioning**6**. **Sensitivity Factors in International Markets** 1. **Cultural Sensitivity**: Important for products with high linguistic content or those tied to national identity, such as food and cars**5**. 2. **Administrative Sensitivity**: Government involvement is significant in industries producing staple goods or those vital to national security**5**. 3. **Geographic Sensitivity**: Geography is crucial for products with low value-to-weight ratios or those that are fragile**4**. 4. **Economic Sensitivity**: Economic differences impact demand based on income levels and the need for responsiveness**3**. **CAGE Framework** The CAGE framework is recommended for assessing international markets. It helps in making differences visible, understanding the liability of foreignness, comparing markets, and discounting by distance**7**. These notes summarize the key points from the document regarding international business strategies, focusing on organizational structures, market entry strategies, and sensitivity factors that influence international operations. A diagram of a diagram Description automatically generated **Overview** Asian business systems are complex, adaptive systems shaped by various factors, including economic conditions, cultural influences, societal experiences, world markets, and technological changes**18**. Understanding these systems is crucial for analyzing the major economies in Asia. **Key Features of Business Systems** 1. **Definition**: Business systems refer to the frameworks and structures that govern how businesses operate within a society**4**. 2. **Elements**: - **Material Logics**: Economic realities such as factor endowments, technology, and input costs**8**. - **Ideational Logics**: External ideas, norms, values, and attitudes that influence business practices**7**. - **Coordination**: Structures and systems that manage relationships between entities**11**. - **Ownership**: Control over assets and resources**12**. - **Networks**: Relationships between different business entities**11**. - **Management**: Approaches and styles used in managing businesses**11**. - **Capital**: Financial, human, and social resources available for business operations**12**. **Regional Features** Asian business systems exhibit significant diversity, influenced by historical migration patterns, dominant internal influences (like Confucianism in China), and external factors such as colonialism and globalization**14**. **Country-Specific Insights** - **Japan**: - **Meaning**: Firms prioritize employee retention and loyalty, creating a \"tribal\" sense of belonging**10**. - **Order**: The banking system is designed to provide capital to support employment**10**. - **Coordination**: Characterized by large business groups known as keiretsu and a culture of permanent employment**13**. - **China**: - **Meaning**: Business practices are heavily influenced by Confucian relationships, emphasizing trust and social harmony**17**. - **Order**: Transitioned from a command economy to a more market-oriented approach since 1978, with increasing private enterprise**17**. - **Coordination**: The state still plays a significant role, but there is growing autonomy for private enterprises**17**. - **South Korea**: - **Meaning**: A strong work ethic prevails, with a significant portion of the workforce employed in small to medium enterprises**15**. - **Order**: Business groups known as Chaebols dominate the export industries, while government control has decreased since the 1980s**15**. - **Coordination**: Trust in interpersonal relationships is low, leading to a reliance on formal structures**15**. **Cultural Thinking Patterns** Cultural differences significantly impact business perspectives: - **Western Cultures**: Tend to focus on analysis, facts, categorization, and individual motives**3**. - **Asian Cultures**: Often emphasize synthesis and the relationships between entities and their environments**3**. **Conclusion** Understanding the main features and elements of Asian business systems is essential for navigating the complexities of doing business in these diverse economies. Each country has its unique characteristics shaped by cultural, historical, and economic factors, which influence how businesses operate and interact within their respective environments. **Overview of Environmental Scanning** Environmental scanning is the process of gathering information and forecasting relevant trends, competitive actions, and other factors that will affect operations in geographic areas and business sectors of potential interest. It includes both external and internal information about the society in which a business operates, competitors, consumer trends, and internal resources and capabilities **8**. **Importance of Environmental Scanning** 1. **Adaptation to Change**: The external environment of a business is constantly changing due to regulatory, competitive, social, and economic factors. Businesses must adapt to or influence these changes to avoid potential failure **10**. 2. **Opportunity Identification**: Scanning allows organizations to identify opportunities and gain a first-mover advantage in the market **10**. 3. **Threat Mitigation**: It helps organizations identify impending threats and develop strategies to mitigate them **10**. **Common Mistakes in Environmental Scanning** A frequent error is collecting a large amount of potentially useful information without analyzing its relevance or implications for the business. This often leads to ignoring the data when making plans **1**. **Evaluating Issues** When evaluating issues, it is essential to assess various criteria such as: - **Stable Government**: Importance rating of 8, with a score of 48. - **Quality Infrastructure**: Importance rating of 10, with a score of 80. - **Large Middle Class with High Disposable Income**: Importance rating of 9, with a score of 63. - **Reliable Legal System**: Importance rating of 7, with a score of 49 **2**. **Risk Assessment** Risk assessment involves evaluating the likelihood and impact of various risk factors. For example, risks can be categorized as high (3), moderate (2), or low (1) **2**. **Drivers and Trends** Key drivers influencing trends include: - Rapid developments in ICT and artificial intelligence. - Environmental degradation. - Demographic changes. - Conflicts and deteriorating geopolitical situations. Trends that arise from these drivers can present both threats and opportunities, such as increased security legislation, sustainability initiatives, and changes in consumer preferences **6**. **Frameworks for Scanning** Several frameworks can be used for environmental scanning: - **PESTEL Analysis**: Examines Political, Economic, Social, Technological, Environmental, and Legal factors. - **Porter\'s Five Forces**: Analyzes competition, supplier power, buyer power, threat of new entrants, and threat of substitutes **6**. **Decision-Making in New Markets** When considering entry into a new market, assessing how different it is from familiar markets can help gauge risk. Generally, the greater the differences, the higher the risk, but also the potential for higher returns **4**. **Conclusion** Environmental scanning is a critical process for organizations to remain competitive and responsive to changes in their external environment. By effectively gathering and analyzing relevant information, businesses can make informed decisions that enhance their strategic positioning. **1. Factor Conditions** - **Categories of Factors**: - **Basic Factors**: Include natural resources and labor. - **Advanced Factors**: Comprise digital communication systems and highly educated workforces. - **Generalized Factors**: Required by all organizations, such as roads, highways, and access to capital. - **Specialized Factors**: Most valuable in specific uses, e.g., skilled port workers for handling bulk chemicals. - Nations that possess both advanced and specialized factors are more likely to develop new firms that can compete globally. Interestingly, many nations cultivate these advanced and specialized factors due to a lack of critical resources, as seen in South Korea and Japan**1**. **2. Demand Conditions** - The nature and size of buyers\' needs in the home market significantly influence the demand for an industry\'s products and services. A larger segment can justify the construction of scale-efficient facilities**4**. **3. Rivalry Among Competitors** - Key elements affecting rivalry include: - Number of competitors (concentration) - Relative size of competitors (balance) - Industry growth rate - Fixed vs. variable costs - Product differentiation - Buyers\' switching costs - Diversity of competitors - Exit barriers**5**. **4. Five Forces Framework** - The framework helps strategists assess the opportunities and threats within an industry, estimating its profit potential. The challenge lies in establishing a strong and defensible position relative to the five forces**2**. - The industry-based view provides a systematic foundation for industry and competitor analysis, answering fundamental strategic questions and emphasizing the importance of industry-specific conditions in determining firm performance**3**. **5. Determinants of Buyer Power** - Buyer power is influenced by: - The number of buyers relative to sellers - Product differentiation - Switching costs - Buyers\' profit margins - Use of multiple sources - Threat of backward integration by buyers - Seller\'s threat of forward integration - Importance of the product to the buyer - Buyer\'s volume**7**. **6. Threat of Substitutes** - The threat posed by substitutes can be assessed through: - The existence of complete or partial substitutes - Relative price and quality of substitutes - Switching costs for buyers**10**. **7. Intensity of Rivalry** - Intense rivalry is characterized by actions such as price wars, the proliferation of new products, and high-cost competitive actions**11**. **8. Integration Strategies** - Firms can reduce competitive threats through integration: - **Horizontal Integration**: Acquiring similar businesses. - **Vertical Integration**: Acquiring firms involved in different steps of the value chain, which can be forward (later steps) or backward (earlier steps)**12**. **9. Government Policy** - Government policies can influence demand by enforcing product standards, regulating rivalry through antitrust laws, and impacting the availability of skilled workers and infrastructure. Porter\'s four attributes, along with government policy and chance, create conditions conducive to competitive advantage**13**. **10. Defining Industry Competition** - An industry is defined as a group of firms producing similar products or services. Theories of industry competition include perfect competition, innovation and imitation equilibrium, and the industrial organization (IO) economics model. The industry environment shapes its structure, which in turn influences strategy and firm performance, known as the structure-conduct-performance (SCP) model **Porter\'s Five Forces** Porter\'s Five Forces is a framework used to analyze the competitive environment of an industry. It helps businesses understand the dynamics that influence their market position and profitability. The five forces identified by Michael E. Porter are: 1. **Threat of New Entrants**: This force examines how easy or difficult it is for new competitors to enter the market. Factors influencing this threat include barriers to entry, economies of scale, brand loyalty, and access to distribution channels. High barriers to entry typically reduce the threat of new entrants, while low barriers increase it. 2. **Bargaining Power of Suppliers**: This force assesses the power suppliers have over the price of goods and services. If there are few suppliers or if they offer unique products, they can exert significant influence over prices. Conversely, if there are many suppliers, their bargaining power diminishes, allowing businesses to negotiate better terms. 3. **Bargaining Power of Buyers**: This force looks at the power customers have to affect pricing and quality. When buyers have many options or when they purchase in large volumes, they can demand lower prices or higher quality. Conversely, if there are few buyers or if the product is unique, the bargaining power of buyers is reduced. 4. **Threat of Substitute Products or Services**: This force evaluates the likelihood of customers finding a different way of doing what you do. If there are many alternatives available, the threat of substitutes is high, which can limit the potential for profitability. Businesses must be aware of substitutes that can fulfill the same need as their products or services. 5. **Rivalry Among Existing Competitors**: This force examines the intensity of competition within the industry. High levels of rivalry can lead to price wars, increased marketing costs, and reduced profitability. Factors influencing rivalry include the number of competitors, industry growth, and product differentiation.  **Overview** The resource-based model focuses on the internal resources and capabilities of a firm as the primary drivers of competitive advantage and performance. It emphasizes the importance of leveraging unique resources to create value and sustain a competitive edge in the market. **Key Concepts** **Resources and Capabilities** - **Resources** are defined as the assets of a firm, which can be tangible or intangible. - **Capabilities** refer to the activities that a firm can undertake, which are often developed through the integration of resources. - **Core Competencies** are capabilities that a firm can perform better than its competitors, characterized by being valuable, rare, not easily imitable, and effectively exploited by the organization**11**. **Types of Resources** 1. **Tangible Resources**: These include physical assets such as machinery, buildings, and financial resources. For example, financial resources are measured through liquidity ratios, gearing ratios, and profitability ratios**.** 2. **Intangible Resources**: These encompass non-physical assets such as human capital (expertise and engagement of employees), relationships (brand recognition and stakeholder standing), and innovation capabilities**.** **Capabilities** Capabilities are categorized into various functional areas, including: - **Corporate**: Involves planning, organizing, leading, and controlling, with measures focusing on the analysis of planned outcomes versus actual outcomes**3**. - **Research & Development**: The ability to generate new products and services, measured by the percentage of new ideas selected for funding and revenue generated from new ideas**3**. - **Marketing and Sales**: The capacity to bring new products to market and the logistics of distribution, measured through sales trends and customer service effectiveness**4**. **Value Chain** The value chain concept illustrates how different resources are required at various stages of production and distribution. It consists of: - **Primary Activities**: Directly related to the creation and delivery of products and services. - **Support Activities**: Assist in the execution of primary activities, enhancing overall efficiency and effectiveness**13**. **VRIO Framework** The VRIO framework is a tool used to evaluate resources and capabilities based on four criteria: - **Value**: Do the resources and capabilities add value? This is essential for achieving a competitive advantage. - **Rarity**: How rare are these resources? Common resources do not provide an advantage. - **Imitability**: Are the resources costly to imitate? If they are easily replicated, they may not sustain a competitive edge. - **Organization**: Is the firm organized to exploit these resources effectively? **Competitive Implications** The outcomes of the VRIO analysis can lead to different competitive implications: - **Competitive Disadvantage**: Resources that do not add value. - **Competitive Parity**: Valuable but common resources. - **Temporary Competitive Advantage**: Valuable and rare resources. - **Sustained Competitive Advantage**: Valuable, rare, costly to imitate, and well-organized resources **1. Cultural Context** - **High-Context vs. Low-Context Cultures**: - High-context cultures place significant weight on background information, where feelings and thoughts are not explicitly expressed, requiring the listener to interpret meaning. In contrast, low-context cultures express feelings and thoughts directly in words, making information readily available**4**. **1.1 Examples of Cultural Context** **Culture Example** **Context** --------------------- -------------------------------------------------------------------------------- Chinese HIGH Korean What is unsaid but understood carries more weight than written/verbal comments Japanese Relies on trust for agreement French Personal relations add to business American Focus on specifics of what was said or written Scandinavian Handshake is insufficient German Trust secured with legal agreement; personal relations detract from business Spanish LOW **2. Communication Features** - **Low Context**: - Direct and explicit communication. - High dependence on words and attention to details. - View of silence is negative, indicating poor communication. - **High Context**: - Indirect and complex communication. - Low dependence on words and less attention to details. - Silence is viewed positively, indicating good communication**2**. **3. Institutional Framework** - **Formal Institutions**: Include laws, regulations, and rules, supported by the regulatory pillar (coercive power of governments). - **Informal Institutions**: Comprise norms, cultures, and ethics, supported by the normative and cognitive pillars **4. Strategic Role of Ethics** - Ethics is governed by norms, principles, and standards of conduct that influence individual and firm behavior. It is crucial for maintaining a firm\'s reputation, especially during crises**9**. **5. Emergence of Global Institutions** - **Examples**: - **World Trade Organization (WTO)**: Polices the world trading system and ensures adherence to established rules. - **International Monetary Fund (IMF)**: Maintains order in the international monetary system. - **United Nations (UN)**: Promotes international peace, security, and cooperation among nations**711**. **6. Ethical Theories** - **Teleology**: Focuses on the consequences of actions. - **Deontology**: Emphasizes moral duties and principles. - **Ethical Relativism**: Suggests that ethical standards vary by culture (\"when in Rome, do as the Romans do\"). - **Ethical Imperialism**: Holds that there is a single set of ethics that should be universally applied**13**. **7. Justice and Individualism Approaches** - **Justice Approach**: Decisions should be based on equity, fairness, and impartiality, including distributive, procedural, and compensatory justice**14**. - **Individualism Approach**: Actions are moral when they promote individual long-term interests, which ultimately benefits society**15**. **8. Cultural Dimensions (Hofstede)** - **Individualism vs. Collectivism**: The value placed on individual goals versus group goals. - **Power Distance**: Acceptance of unequal power distribution. - **Uncertainty Avoidance**: Tolerance for ambiguity. - **Masculinity vs. Femininity**: Focus on achievement versus nurturing. - **Long-term vs. Short-term Orientation**: Planning and thrift versus immediate results. - **Indulgence vs. Restraint**: Degree to which desires are restrained by social norms A person\'s face on a white background Description automatically generated  A screen shot of a white board Description automatically generated **Niche Markets** - Niche markets often require additional information for effective targeting. National measures may be less relevant than specific market segment measures, highlighting the need for tailored strategies in niche marketing **1**. **Distribution Channels** - Various distribution channels include: - Specific buildings (offices, stores, showrooms) - Salesforce - Independent intermediaries (e.g., distribution agencies) - Telephone contact - Advertising media - Direct mail/messaging **2**. **Distribution Issues** - Organizations must decide on the amount of time and place utility to offer as part of their marketing mix. Key considerations include: - Direct vs. indirect marketing - Length and breadth of channel structure (number of levels between organization and customer) - Allocation of functions (who handles channel flows such as information, goods, and money) - Coordination and control of channel members **3**. **Market Positioning** - Market positioning can be categorized into three strategies: - Meeting the Competition: No real advantage. - Beating the Competition: Short-term advantage. - Countering the Competition: Long-term advantage **4**. **Competitive Advantage** - To achieve a competitive advantage, an offering must be: - Valuable to the customer - Superior to most competitors\' offerings - Difficult to replicate  **International Marketing** - Marketing is defined as the performance of business activities that direct the flow of goods and services from producers to consumers, ensuring the right products reach the right people at the right time and place **6**. **Global Market Segmentation** - Global market segmentation involves identifying specific segments (country groups or individual consumers) with homogeneous attributes likely to exhibit similar buying behavior. This is crucial because: - Different products are at various stages of the product life cycle. - The internet allows rapid dissemination of product information across countries. - Target segments should be measurable, sizable, accessible, actionable, and have growth potential  **Cultural Influences** - Cultural values significantly influence consumer needs and tastes, leading to divergence rather than convergence, even in regions with economic similarities. For example, the expectation that Europe\'s single market would homogenize food and clothing has not materialized  **Pricing Strategies** - Three main pricing strategies include: - Cost-oriented: Considering all costs and adding a markup. - Competition-oriented: Setting prices based on competitors\' rates. - Demand-oriented: Adjusting prices based on demand, allowing for premiums or discounts  **Global Marketing Strategy** - Global marketing focuses on: - Cost efficiencies from reduced duplication of efforts. - Opportunities to transfer products, brands, and ideas across subsidiaries. - The emergence of global customer segments (e.g., global teens, hipsters). - Improved links between national marketing infrastructures, facilitating a global marketing infrastructure  A close-up of a service marketing Description automatically generated  **Expatriate Challenges** 1. **Managerial Inability**: Expatriates often face difficulties in coping with additional responsibilities, adjusting to new environments, and dealing with personal or emotional problems. A lack of technical competence can further exacerbate these issues, especially if the expatriate\'s spouse cannot adjust to the new setting**1**. 2. **Repatriation Issues**: The longer an expatriate is assigned overseas, the more challenging it becomes to reintegrate into the home office. This can be attributed to the \"out of sight, out of mind\" syndrome, organizational changes during their absence, and technological advancements that may render their skills obsolete**5**. 3. **Culture Shock**: Expatriates often experience culture shock, which includes stages such as: - **Honeymoon**: Initial excitement and positive expectations. - **Irritation and Hostility**: Crisis stage due to cultural differences. - **Gradual Adjustment**: Recovery phase where individuals start to adapt. - **Positive Adjustment**: Acceptance and appreciation of local culture**1112**. **Performance Evaluation Systems** 1. **Country-Specific Practices**: Different countries have varying performance evaluation systems. For instance, the U.S. emphasizes direct criticism and performance criteria, while countries like Saudi Arabia and South Korea may focus more on seniority and connections**4**. 2. **Feedback Mechanisms**: The amount and type of feedback from superiors also differ. The U.S. provides considerable feedback, while South Korea and China may offer less direct criticism**4**. **Best Practices for International Assignments** 1. **Knowledge Creation**: Companies should focus on knowledge creation and global leadership development. Assignments should be given to individuals whose technical skills are complemented by strong cross-cultural abilities**7**. 2. **Repatriation Process**: A deliberate repatriation process is essential to ensure a smooth transition back to the home office. This includes mentorship programs and maintaining contact with expatriates during their assignment**9**. **Expatriate Compensation** 1. **Compensation Packages**: Expatriate compensation can include various components such as salary adjustments, bonuses, stock options, and hardship premiums. These packages should be tailored to the expatriate\'s home and host country standards**16**. **Staffing Policies** 1. **International Staffing Approaches**: - **Ethnocentric**: Key positions filled by parent-country nationals. - **Polycentric**: Local managers are hired for key positions in their own country. - **Geocentric**: The best managers are recruited regardless of nationality**17**. **Additional Responsibilities for IHRM Professionals** 1. **Complex Decision-Making**: IHRM professionals must consider a wider variety of external variables, manage a diverse workforce, and handle a larger portfolio of HR activities, including international relocations and work visas**19**. 2. **Risk Management**: There is a greater exposure to international risk issues, where errors in HR decisions can lead to significant liabilities