Final Ib prepare International Business

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Contents

LSIC 63……..…………………………………………………………………………………………………………………..…………..3

Question 1: (1.0) – Discuss the three environments in which an international company operates…….…..3

Question 2: (3.0) Explain the geocentric staffing policy, discuss its advantages and disadvantages,

please give an example……………….………………………………………….………………………………………………….3

Question 3: (3.0)- reading and answer the question…………………………………………….…………………………4

Caterpillar Inc. Is american firm in making construction machinery. All kind of machine need to be

standard. However, under low cost pressure, Caterpillar only make them in a few plant in the world

with a huge capicity and then assembling in other countries that required these machine…………….…….4

4.1. The major globalization drivers include all the following except………………..………………….…………6

4.2. The major forms of economic integration include……………………………………………………………………6

4.3. Aesthetics pertains to:…………………………………….…………………..…………………..…………………..………6

AEP 63……………………………………………………………………………………………….……………………………………….7

Question 1. (2 points)- Explain about international strategy and transnational strategy and reasons why

the international strategy involves to transnational strategy…………………………………………………………….7

Question 2. (2 points)- Explain about impacts of technological factors on the decision of choosing

production location? Give examples…………………………………………………………………………………………….8

3.1. First-mover disadvantages refer to…………………………………………………………………………………………8

3.2. The staffing policy is is compatible with a localization strategy………………………………………………..9

Question 5 (1.5 points)- What is the international strategy of Red Bull? Why?…………..………………..…..9

GLOBALIZATION…………………………………………………………..………………………………………………………10

1. Identify drivers for greater globalization…………………………………………………………………………….10

2. Identify globalization and two components of globalization………………………………………………….10

3. Globalization forces…………………………….……………….………………………………….……………….……..12

4. Impacts of globalization on business…………………………………………………………………………………. 12

INTERNATIONAL BUSINESS.…………………………………………………………………………………………………13

1. What is international business? Different between international business and domestic

business? 13

2. International Business Terminology:………………………………………………………………………………….14

3. Players in international business………………………………………………………………………………………..14

CULTURE……..……………….……………….………………..………………….……………….……………….………………..14

1. Terminology (Thuật ngữ): Cross-cultural literacy and Competitive advantage………………..………14

2. Component of culture: Values and Norms………………………………………………………………………….15

3. Hofstede value dimension and Staffing policy:……………………………………………………………………16

4. Ethnocentricity:……………………………………………………………………………………………………………….17

POLITICAL RISKS.…………………..………………..………………………………………………………..…………………18

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1. Identify Political risks and their main causes……………..………………………………..……………………..18

2. Types of political risks……………………………………………………………………………………………………..18

3. Consequences of political risks………….…………………………….……………………………………………….19

4. Measures against political risks……………………..……………………..………………………………………..…20

ECONOMIC……………………………………………………………………………………………………………………………..20

Important Economic Indicators………………………………………………………………………………………………….20

LEGAL………………………………………………………………………………………………..……………………………………21

Three Legal systems.…………………….…………………….……………………..……………………….…………………..21

INTERNATIONAL TRADE………………..…………………….………………………..……………………..…………….22

1. Instruments of trade policy……….………………………………………………………………………………………22

2. Political arguments for intervention:….……………………….………………………….………………………….23

FDI……………………………………………………………………………………………………………………………………….…..23

Forms of FDI – how they influence on entry modes…………………………………………………………………….23

INTERGRATION……………………………………………………………………………………………………………………..24

1. Levels of Economic Integration…………………………………………………………………………………………24

2. The case for Regional Integration………………………………………………………………………………………25

STRATEGY………………………………………………………………………………………………..…………………………….26

1. Two pressures in choosing strategy…………………………………………………………………………………… 26

WHERE TO MANUFACTURE…………………………………………………………………………………………………26

1. Country factor…………………………………..………………..………………..………………..………………….……27

2. Product factors………………….…………………………………………………………………………………………….27

3. Product factors and location strategies……………………………………………….………………………………28

STAFFING POLICY…………………………………………………………………………………………………………………28

1. Ethnocentric policy…………….………………..…………………………………..…………………..…………………28

2. Polycentric policy…………………………………..……………………..………………………………………..………29

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LSIC 63

Question 1: (1.0) – Discuss the three environments in which an international company

operates.

International companies operate within three interconnected environments: domestic, foreign,

and global. The domestic environment represents the company’s home country, where

familiarity with legal, economic, and cultural systems offers stability and an established

customer base. However, growth may be limited by market saturation and local economic

downturns. For example, a U.S.-based company like Coca-Cola benefits from strong brand

loyalty domestically but may need to expand internationally to drive further growth.

The foreign environment involves operations in other countries, offering opportunities such as

access to new markets and diversified revenue streams. Companies must adapt to local cultures,

regulations, and market demands, which can be both challenging and rewarding. For instance,

McDonald’s adjusts its menu in India to cater to cultural preferences, such as offering vegetarian

options. However, foreign operations also involve navigating language barriers, political risks,

and complex logistics.

The global environment encompasses overarching trends and dynamics that influence business

operations worldwide. This includes factors like international trade agreements, global supply

chains, technological advancements, and economic fluctuations. While globalization provides

opportunities for scalability, it also introduces risks such as economic instability, global crises

like pandemics, and heightened competition. Companies like Apple manage these complexities

by sourcing materials globally, assembling products in select locations, and selling worldwide.

To thrive, international companies must balance domestic stability, foreign market adaptability,

and global strategic foresight. This approach enables them to navigate challenges while seizing

opportunities in an interconnected world.

Question 2: (3.0) Explain the geocentric staffing policy, discuss its advantages and

disadvantages, please give an example.

The geocentric staffing policy is a strategic approach used by multinational corporations (MNCs)

to recruit and manage talent for key positions based on merit, regardless of nationality. This

policy focuses on selecting the most capable individuals globally to meet organizational

objectives and foster a unified corporate culture. Unlike ethnocentric and polycentric policies,

which prioritize the home-country or host-country workforce, geocentric staffing prioritizes

global integration and operational consistency across international subsidiaries.

First is advantages. One of the primary benefits of the geocentric staffing policy is that it allows

companies to access the best talent available worldwide. By selecting candidates based on their

skills and expertise rather than their nationality, companies can ensure that critical roles are filled

by the most competent individuals. Additionally, this approach promotes a global perspective

within the organization. Employees from diverse cultural backgrounds contribute unique

viewpoints, which fosters innovation and leads to better decision-making. Another advantage is

the cultural synergy it creates within the company. A workforce that reflects global diversity is

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better equipped to adapt to international markets, facilitating cross-cultural collaboration and

improving the company’s image as a global entity.

Despite its benefits, the geocentric staffing policy comes with significant challenges. First, it is

often costly. Recruiting globally, relocating employees, and providing competitive compensation

packages for expatriates can strain financial resources. Second, legal and administrative barriers,

such as immigration regulations and visa restrictions, can complicate the hiring process. Another

drawback is the potential for cultural adjustment issues. Employees working in foreign

environments may struggle to adapt to new cultural norms, which can affect their performance

and well-being. Lastly, managing a diverse workforce on a global scale requires advanced

coordination and robust communication systems, which can increase operational complexity.

A notable example of the geocentric staffing policy in action is IBM. Operating in over 170

countries, IBM prioritizes hiring the best talent globally, regardless of nationality, to fill key

leadership and operational roles. Its diverse workforce fosters innovation by integrating varied

perspectives, enabling the development of globally relevant products like its “Smarter Planet”

initiative. IBM also rotates leaders internationally to provide global experience and strategically

matches employees to roles in high-growth markets like India and China. Despite challenges

such as relocation costs and cultural adjustments, IBM addresses these with robust training and

mobility programs, demonstrating the effectiveness of a geocentric approach in driving global

competitiveness.

The geocentric staffing policy is a powerful strategy for multinational companies aiming to

achieve global integration and competitiveness. While it provides access to top-tier talent and

fosters cultural diversity, it also entails significant costs and logistical challenges. Companies

that adopt this policy must balance these factors carefully to reap its benefits and sustain long-

term growth in the global marketplace.

Question 3: (3.0)- reading and answer the question.

Caterpillar Inc. Is american firm in making construction machinery. All kind of machine

need to be standard. However, under low cost pressure, Caterpillar only make them in a

few plant in the world with a huge capicity and then assembling in other countries that

required these machine.

Question: Do you know the strategy name of Caterpillar? What about their orgnization

structure and staffing policy? Is it suitable strategy or not? Please show some advantages

and disadvantages of this strategy, orgnization structure and staffing policy.

Caterpillar Inc. employs a transnational strategy, combining global efficiency with local

responsiveness. It manufactures standardized machinery in a few centralized plants for cost

efficiency and assembles products locally to meet regional needs. This approach suits the

construction machinery industry, as it ensures consistent quality while addressing specific market

demands.

Key advantages include cost savings from centralized production, flexibility through local

assembly, and the ability to serve global markets effectively. However, challenges include

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