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Chapter 05 - The Global Environment
5-1
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a webs ite, in
whole or part.
Discussion Questions
Questions for Discussion
1. How does environmental analysis at the domestic level differ from global analysis?
As pointed out in the section titled “Complexity of the Global Environment,” the global
environment is more complex than the domestic environment for a variety of reasons, which
2. Which factors complicate environmental analysis at the global level? Which factors are
making such analysis easier?
As pointed out above, the multiple political, economic, legal, social, and cultural
Recently, though, because of globalization of markets, a domestic firm has access to data
markets to their clients.
3. Do you agree with the suggestion that soon all industries will need to evaluate global
environments?
It is very likely that soon all industries will need to evaluate global environments because
4. Which industries operate almost devoid of global competition? Which inherent immunities
do they enjoy?
It is possible that certain types of service industries operate almost devoid of global
5. Explain when and why it is important for a company to globalize.
Increasingly, firms across the world are becoming global competitors capable of threatening
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distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a webs ite, in
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distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a webs ite, in
whole or part.
6. Describe the four main strategic orientations of global firms.
There are four of these. Ethnocentric orientation means the firm believes that the values and
priorities of the parent organization should guide the strategic decision-making of all its
7. Explain the control problems that are faced by global firms.
The section titled “Control Problems of the Global Firm” will help in this discussion. An
inherent complicating factor for many global firms is that their financial policies typically
8. Describe the differences between multinational and global firms.
Firms can be ranked along a continuum from simply multidomestic or multinational to
completely global. The section titled “Global Strategic Planning” can help in this discussion.
9. Describe the market requirements and product characteristics in global competition.
See the section titled “Market Requirements and Product Characteristics.” Businesses have
discovered that being successful in foreign markets often demands much more than simply
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distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a webs ite, in
whole or part.
10. Evaluate the competitive strategies for firms in foreign markets:
a. Niche market exporting
b. Licensing and contract manufacturing
This answer falls in the large section in the text titled “Competitive Strategies for Firms in
Foreign Markets.”
a. The primary niche market approach for the company that wants to export is to modify
select product performance or measurement characteristics to meet special foreign
b. Establishing a contractual arrangement is the next step beyond exporting, but does not
involve establishing an equity position on foreign soil. Licensing involves the transfer of
some industrial property right from the U.S. licensor to a motivated licensee. Most tend to
distribution.
c. Franchising is a special form of licensing that allows the franchisee to sell a highly
d. Joint ventures agree with a mutually agreeable pooling of capital, production, marketing
equipment, patents, trademarks, or management expertise. They offer more permanent
cooperative relationships than export or contract manufacturing. JV’s, as they are called,
e. A foreign branch is an extension of the company in its foreign market—a separately
located strategic business unit directly responsible for fulfilling the operational duties
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distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a webs ite, in
whole or part.
f. Small and medium-sized enterprises with strong growth potential frequently have the need
for additional funds to be able to grow further before deciding to trade their stock publicly
g. Wholly owned foreign subsidiaries are considered by companies that are willing and able
to make the highest investment commitment to the foreign market. These companies insist
