Professional Documents
Culture Documents
Assignment-1
Ravi Kanth V
2001002
PGDM-A
2. Describe the reactive and proactive reasons that prompt a firm to go global.
Reactive Reasons
Market: The corporation is reacting to demand discovered elsewhere. It might have
discovered this by chance or from a tip from a related firm.
Competitive Environment - it sees competitors going to a particular place. For
example, when Honda set up shop in Ohio, some other Japanese auto parts companies
also moved to Ohio to continue supplying Honda
Political Environment changes - Trade Barriers:
o Tariff or non-tariff obstacles: If an exporting firm discovers that the
government in the receiving country is erecting tariff or non-tariff barriers to
obstruct the export, the exporter may decide to establish a manufacturing unit
elsewhere to avoid tariffs.
o "Buy-local" rules: Exporting enterprises may discover that "buy-local"
regulations limit their exports, prompting the exporter to form a local alliance
or partnership.
Proactive Reasons
3. Examine the different forms of Strategic Alliances and conflicts that may
arise in Strategic Alliances.
Strategic Alliances
Strategic alliance refers to cooperative agreements between potential or actual
competitors. Strategic alliances run the range from formal join ventures in which two or
more forms have equity stakes, to short term contractual agreements, in which two
companies agree to cooperate on a particular task.
Types
Scale Alliances: Aims at providing efficiency through the pooling of similar
assets so that the partners can carryout business activities in which they already
have experience.
Link Alliance: Use complementary resources to expand into new business areas.
Joint ventures: A type of ownership sharing popular among international
companies is Joint venture, in which more than one organization owns the
company. The type of legal organization may be a partnership, a corporation, or
some other form permitted in the country of operation. When more than two
organizations participate, the joint venture is sometimes called as Consortium.
Equity Alliance: is a collaborative arrangement in which atleast one of the
collaborating companies takes an ownership position (almost always minority) in
the others. The purpose of the equity ownership is to solidify a collaborating
contract, such as a supplier-buyer contract, so it is more difficult to break.
Licensing Arrangements: The least sophisticated and easiest to manage type of
alliance.
Conflicts that may arise in Strategic Alliances:
Relative importance to partners.
Divergent objectives.
Control Problems
Comparative contributions and appropriations
Differences in culture.
4. Discuss the role of International Culture for a Company conducting
International Business.
Culture represents the specific learned norms of a society, based on attitudes, values and
beliefs.
Role of International Culture
Culture has a significant impact on international commerce. Entry into new markets
necessitates an awareness of the local market's values, beliefs, and habits. Ads with
unsuitable language or imagery, for example, might entirely derail efforts to reach new
markets. Even fast-food restaurants, such as McDonald's, have had to demonstrate
cultural awareness to enter a foreign market successfully.
Overcoming ethnocentricity - The inclination to see one's own race or social
group as the paradigm of human experience is known as ethnocentrism.
Ethnocentricity includes the acceptance of internal cultural disputes as the norm.
The wrong assumption can lead to serious misunderstanding in the conduct of
international business. Ethnocentricity is dangerous in the context of international
ethical behavior as it involves contempt, blind assumptions, same as self-
attributions. Overcoming ethnocentric and parochial attitudes begins with an
understanding of one’s own culture and how it is similar or different from other
cultures. The focus must be on cultural underpinnings that affect global
operations. Global firms initially focus on national cultural environments and
incorporate information on subcultures at a later stage
Communication: Communication plays an important role in international
business, and sometimes effective communication can be the difference between
succeeding or failing in a new market. Effective communication is particularly
important for international businesses as there is a risk of your messages getting
‘lost in translation’. There are several things that need to be considered when
looking at how effective your business’ communication is at an international level.
Attitude: Businesses also need to be aware that different cultures have different
attitudes towards business.
Scandinavian countries such as Sweden emphasize social equality and therefore,
they tend to have a relatively flat organizational hierarchy. This relates to their
informal approach to communication and cooperation normally at the heart of
their organizations. In Japan, their traditional values of relative status and respect
for seniority are reflected in their organizations and there is a very clear
organizational structure. This always means that senior management command
respect and expect a level of formality from junior members of their teams.
Etiquette: Workplace etiquette is something else that businesses need to be aware
of if they are working internationally. Another important factor to consider in
international company while engaging with colleagues and clients from different
cultures is the formality of address.
5. Outline the main agreements underlying TRIPs and TRIMs under the
purview of W.T.O.
The TRIPs Agreement:
The TRIPS Agreement, which came into effect on 1 January 1995, is to date the most
comprehensive multilateral agreement on intellectual property.
It protects the following areas of intellectual property: copyright and related rights (i.e., the
rights of performers, producers of sound recordings, and broadcasting organizations);
trademarks including service marks; geographical indications including appellations of
origin; industrial designs; patents including the protection of new varieties of plants;
integrated circuit layout-designs; and undisclosed information including trade secrets and test
data.
The following are the Agreement's three key features:
In addition the Agreement provides for certain basic principles, such as national and most-
favoured-nation treatment, and some general rules to ensure that procedural difficulties in
acquiring or maintaining IPRs do not nullify the substantive benefits that should flow from
the Agreement. The obligations under the Agreement will apply equally to all Member
countries, but developing countries will have a longer period to phase them in.
The term “trade-related investment measures” (“TRIMs”) is not defined in the Agreement.
However, the Agreement contains in an annex an Illustrative List of measures that are
inconsistent with GATT Article III:4 or Article XI:1 of GATT 1994.
The TRIMs Agreement and Regulation of Foreign Investment: As an agreement that is
based on existing GATT disciplines on trade in goods, the Agreement is not concerned with
the regulation of foreign investment. The disciplines of the TRIMs Agreement focus on
investment measures that infringe GATT Articles III and XI, in other words, that discriminate
between imported and exported products and/or create import or export restrictions. For
example, a local content requirement imposed in a non-discriminatory manner on domestic
and foreign enterprises is inconsistent with the TRIMs Agreement because it involves
discriminatory treatment of imported products in favour of domestic products. The fact that
there is no discrimination between domestic and foreign investors in the imposition of the
requirement is irrelevant under the TRIMs Agreement.
Basic Substantive Obligations: Article 2 and the Illustrative List: Article 2.1 of the
TRIMs Agreement requires Members not to apply any TRIM that is inconsistent with the
provisions of Article III (national treatment of imported products) or Article XI (prohibition
of quantitative restrictions on imports or exports) of GATT 1994. An Illustrative List annexed
to the TRIMs Agreement lists measures that are inconsistent with paragraph 4 of Article III
and paragraph 1 of Article XI.
Mandatory and Non-mandatory Measures: The Illustrative List covers both TRIMs which
are mandatory or enforceable under domestic law or under administrative rulings and TRIMs
compliance with which is necessary to obtain an advantage.