International Business Field - Assignment Example

MABE: LEARNING TO BE A MULTINATIONAL Name Course Instructor’s name Institution Date MABE: LEARNING TO BE A MULTINATIONAL Q.1 One driver for MABE success in line with industry-based consideration is growth and expansion, In this case, it is evident that it has invested a lot in expanding its operation and growth into multiple countries. In 1970, MABE exported its products to the U.S market, through this growth and expansion strategy into the U.S market, MABE was able to partner with global electronic manufacturing brand; General Electric. Consequently in 1987, General Electric bought 48% of MABE shares which helped it in its expansion in new markets especially in smoothening its transition in these markets (Rivas et al. 2016, p. 2). Through this partnership, MABE was able to increase its global productivity by 1.5%. Moreover, this partnership offered MABE an opportunity to benefit from technology and commercial partnership which was a significant improvement to the organization operation. Through the alliance with General Electric, MABE was able to easily access communication and information technology which fostered its success (Söllner, 2007, pp.148). The other driver of MABE success in regards to the resource based consideration was again through the company’s partnership with global manufacturing brand, General Electric. Through this partnership, MABE was able to adopt state of the art technology in manufacturing of its products that gave it a significant boost in their technological level. Thus, through the partnership, MABE benefited from the availability of resources relating to product innovation and helped in conducting further investigations on product innovation (Pehrsson, 2016, pp.291). Through this alliance MABE uses multiple technological innovations in relation to the manufacture of stoves and refrigerators. Additionally, sustainability and money helped make its partnership with General Electric a success consequently improving its operation, growth and expansion strategy. In regards to institution-based consideration, MABE enjoys an array of drivers like its multidisciplinary management team and a strong corporate social responsibility program that emanated from its entry into the Indian market. In this case, MABE is able to benefit from a pool of labor presented by the significant huge population in India as well as the low labour cost (Rivas et al. 2016, p. 2). A multidisciplinary team helps an organization like MABE overcome challenges mostly associated with foreign expansion more so culture issues. This, therefore, ensures that MABE is able to acquire the best talented and capable employees in its workforce and gain a competitive advantage in foreign markets. Moreover, through Mabe’s alliance with General Electric it is able to plan for its entry into the Indian market much better relying on approaches stipulated in the Action Learning System approach where the company first visits the area where it wants to set up shop in an effort to identify the factors needed to be considered and the potential entry strategy to help it succeed (Pehrsson, 2008, pp.137). Q.2 One of the specific attributes MABE should be on the lookout for in specific foreign markets is the measurability trait in these markets. For instance, in MABE entry into the Asia markets, it should first measure the estimated market size in order to get a glimpse of what is expected from this Company depending on the market size in its effort to venture into this market (Giarratana and Torrisi, n.d.). MABE Company should ensure that these foreign markets should be easy to monitor, observe and measure. This will also entail understanding some essential factors influencing the market like the countries social-cultural traits and variables such as the per capita income. For the other variables which are quite hard to measure such as culture and lifestyle, the Company can use qualitative surveys as a measurement tool for these variables (Demir and Su, 2015, pp. 319). Additionally, the other specific attribute that MABE should consider in its search for suitable foreign markets is the size of these markets. In this case, this market size should be worthwhile for the company to pursue. In line with this the company could also look at the influential variables fostering the market size. This will entail looking into the population in this market and the density level in these markets (Giarratana and Torrisi, n.d.). Accessibility of the foreign market is another specific attribute that MABE should be on the lookout for in these foreign markets. MABE in its efforts to venture into the Venezuela market it should first review on how accessible it is. Accessibility in this is dependent on a couple of issues ranging from; media coverage, technological level to product or service delivery means (Demir and Su, 2015, pp.303). Thus, MABE should ensure that there is an accessible media coverage which will be instrumental in its advertisement efforts to help it increase its product and services awareness in the new market (Jain, n.d.). Accessibility in technology, in this case, ensures that the company enjoys technological flexibility where it can easily improve on the product itself or the service delivery process as well as link with the headquarters for easy management. Accessibility of the product or the service delivery means ensures that the company’s product is assured to reach the customers in time. The other attribute that the company should look into in the new foreign markets is the competitive intensity. In this case, MABE should ensure that before diving into the U.S market it should determine the competition density in this market or whether some global brands such as General Electric have preempted it (Söllner, 2007, pp.137). This will also give MABE crucial information on the chances for it succeeding and the estimated period that it will take for it to eventually succeed in such a market as well as giving it an opportunity to come up with workable expansion and competitive strategies to help it remain sustainable for instance, how it did in Brazil and India . The other attribute that MABE should consider in its effort to enter the foreign market is the actual growth potential of this market. It will look on to whether its entry in the South American market provides them with a possibility of it attaining high return on investment and whether it is attainable like in the case of India. It’s imperative to also review on whether the competition intensity and the growth potential of this foreign market are complementary (Pehrsson, 2016, pp.285-311). In this case, MABE should also consider another variable such as the local currencies of these foreign countries especially those from South America since they have posed huge problems previously due to their significantly low value and constant fluctuations. Q.3 The management structure that MABE should take up in the wake of its entry into these foreign markets is the matrix management structure which is effective in joint venture management. This approach is essential since it have the least amount of risk. Therefore, MABE should capitalize on its venture with General Electric not only to help it venture into the American market but help set up a matrix structure to help run its South and North America operations. This management structure will entail the two subsidiaries should agree on the regional manager who would be in charge of its operation in this foreign market (Demir and Su, 2015, pp.317). The Regional Manager will also be deputized by a local regional manager who will help with managing operation in this particular region. Work related issues will be handled locally whereas other functions are handled at MABE headquarters. This structure will be instrumental in enforcing local working conditions as well as the payment. In line with the management structure, the regional manager and his deputy will be above the line manager who will be mostly expatriates who are well conversant with the company’s culture, beliefs and goals (Söllner, 2007, pp.142). These line managers will therefore ensure that the employees from these region likewise adopt the organization believes, goals and culture. This will ensure that the company does not lose its identity and purposes in the wake of its entry into the foreign market. The line managers will be above the company employees in line with Mabe’s foreign management structure as a result of its entry into the foreign market. This organization structure is my preference having that it will ensure that MABE is able to incur minimal risk in its entry to the foreign market through its various partnerships more so with General Electric. My preference for this management will help it endear itself to the locals through provision of job opportunities as well as helping itself rely on the management team that made its partners successful for instance general electric employees. Similarly, the preference of this management structure choice stems from the ability of this structure to offer expatriates who will ensure that MABE can retain its company culture, goals and vision despite operating in foreign markets (Wong and Merrilees, 2009 ,p.272). Expatriates, will help instill the foreign employees with Mabe’s vision, goals and culture, therefore, ensuring that it is able to retain its identity in the wake of its entry into these foreign markets. The subordinates in this management structure will strictly be from the host countries, however; they will be recruited based on their work experience in the appliance manufacturing industry. This is prioritized since it helps in ensuring that the recruited employees can easily adapt to the working conditions at MABE as well as quickly take up the company’s culture, vision and goals with ease (Rivas et al. 2016, p. 8). Q.4 One significant ethical consideration for MABE in line with their overseas expansion is wages and working environments in overseas location. Thus, it should be cautious of the payment rates of the employees in the wake of its entry into foreign markets more the Indian one. The company should ensure that its wages and provided working conditions are not inferior or superior to the actual required standards in that particular country (Pehrsson, 2016, pp.288). MABE should ensure that the wage rate and working condition it provides to these employees in the Indian market is acceptable. Hence, it should be keen to apply the employment and working condition standards of the specific foreign market (Demir and Su, 2015, pp.302-321). MABE Company in line with these standards should ensure that the company guaranteed a reasonable wage rate and protected working conditions for workers in the overseas market and standard working period that entails a reasonable number of hours as well as adherence to the set leave rules. The other ethical issue that MABE should consider in its entry into the foreign markets is corruption. It should be aware that making of payment or seeking political help in exchange for favours or in order to secure businesses or opportunities which they would otherwise not obtain is an illegal action under the foreign corrupt practice act (Jain, n.d.). On the other hand, MABE should also be aware that any form of corruption is also illegal in line with these a particular foreign countries rules and regulations. Thus, MABE should be cautious that in some of these foreign countries a tip or a gift in show of appreciation but might be misunderstood as a bribe; therefore, it should desist from this practice in its course of entering into these foreign countries in order to avoid such cases (Söllner, 2007, pp.144). Moreover, MABE should reevaluate its decision to enter into foreign market where significantly huge amounts of bribes are required for the business to set up shop in this country. The other ethical issue that MABE Company should be cautious about in its effort to enter into these foreign markets is the human rights issue. It should ensure that it is well conversant with the human right issues in the Indian markets before setting up shop there (Giarratana and Torrisi, n.d.). MABE should evaluate whether its presence in these foreign markets serves as a catalyst for the violation of the human rights or not. In case the presence of MABE servers as an instigator for the violation of the human rights MABE should evaluate its decision to enter this market for instance some sweatshop organizations can operate effectively in some countries whereas in others they will be legally in contravention of human rights (Jain, n.d.) Environmental pollution is another ethical issue that MABE should put into consideration. This is an issue that requires MABE prior attention before venturing into a particular foreign market since there are countries which do not necessarily have environmental legislation. However, MABE, in this case, should ensure that its operation is in accordance with the U.S Environmental Pollution Act in order to show its initiative in sustainability growth this will enable it avoid scandals and inquiries like those of Volkswagen and others (Pehrsson, 2008, pp.134). Q.5 One alternative for Mabe’s organization structure in ten years’ time would entail a Chief Executive Officer who would be the highest ranking member in this organization structure. The CEO, in this case, would be in charge of all the organizations globally, regionally and all operations. The direct assistant will be Manager who would also be in charge of administrating and coordinating all regional managers in the entire organization region subsidiaries spread out globally. Next in rank will be the regional managers who would be in charge of different regional branches of these operations running the day to day operation in these regional branches. Line managers in these regional branches would answer to the regional managers. Line managers would be in charge of employee recruitment training and coordination. Consequently, Line managers would also be expatriates who would be employees within the organization who have ascended ranks in the organization and who boast of a substantial number of years of experience in the organization (Söllner, 2007, pp.135-150). The senior employees will follow in rank; they will be tasked with managing both the middle level and junior employees who respectively will follow in rank. The other alternative is for the organization structure to remain as it is currently. There will be a single CEO who will be in charge of all the organization operations. He will be followed by the regional managers who will be in charge of the regional operation of Mabe’s branches. The line manager will be in charge of recruitment, training and coordination of the regionally based workforce. Other levels will follow with their respective roles (Wong and Merrilees, 2009 ,p.250). I nominate the first option since it fosters a close relationship between the employee workforce as well as the management system. Moreover, the chain of command ideally flows, roles and duties are well assigned and allocated to individuals. This will provide long-term benefit for the organization since it will ensure continued progress to the achievement of the organization goals having that the entire organization workforce is structured towards the achievement of these goals as well as feeling part of a global team entrusted with similar roles according to ranks and pay. References Demir, F. and Su, L. (2015). Total Factor Productivity, Foreign Direct Investment, and Entry Barriers in the Chinese Automotive Industry. Emerging Markets Finance and Trade, 52(2), pp.302-321. Eriksson, K. and Chetty, S. (2013). The effect of experience and absorptive capacity on foreign market knowledge. International Business Review, 12(6), pp.673-695. Giarratana, M. and Torrisi, S. (n.d.). Entry and Survival in Foreign Markets from Emerging Countries: Technology, Brand Building and International Linkages. SSRN Electronic Journal. Jain, N. (n.d.). Financing and Mode of Entry in Foreign Markets. SSRN Electronic Journal. Jose Luis Rivas, Cristina Odalis, Ventura Gonzalez and Daniel Hernandez 2016. MABE:learning to be a multinational. Iveypublishing,ivey business school. London. Pehrsson, A. (2008). Strategy antecedents of modes of entry into foreign markets. Journal of Business Research, 61(2), pp.132-140. Pehrsson, A. (2016). Sequential expansion in a foreign market. European Business Review, 28(3), pp.285-311. Söllner, A. (2007). The Role of Relationships in Determining Foreign Entry Modes. Journal of business market management, 1(2), pp.135-150. Wong, H. and Merrilees, B. (2009). Foreign market entry mode choice of Australian firms. International Journal of Trade and Global Markets, 2(3/4), p.250. Read More