Course Title: International Business

Course Code: BUS 570

Submitted to Submitted by
Course Teacher Name: AM. SOLAIMAN
Name: Samina Huq ID: MBA 072 18349
Designation: Assistant Professor Program: MBA
Department Business
Administration
Stamford University Bangladesh

Date: 10th December, 2020

Q.1 What are the different strategic orientation options the multinational
companies have to run their business in international business? Discuss any one
of them with a real life example.
STRATEGIC ORIENTATIONS
MNEs have strategic predispositions toward doing things in a particular way, which help
determine the specific decisions the firm will implement. There are four such predispositions:
ethnocentric, poly- centric, regiocentric, and geocentric. Table 8.1 lists each predisposition and its
characteristics.
An MNE with an ethnocentric predisposition will rely on the values and interests of the parent
company in formulating and implementing the strategic plan. Primary emphasis will be given to
profitability and the firm will try to run operations abroad the way they are run at home. Firms
trying to sell the same product abroad that they sell at home use this predisposition most
commonly.
An MNE with a polycentric predisposition will tailor its strategic plan to meet the needs of the
local culture. If the firm is doing business in more than one culture, the overall plan will be adapted
to reflect these individual needs. The basic mission of a polycentric MNE is to be accepted by the
local culture and to blend into the country. Each subsidiary will decide which objectives to pursue,
based on local needs. Profits will be put back into the country in the form of expansion and growth.
An MNE with a regiocentric predisposition will be interested in obtaining both profit and public
acceptance (a combination of the ethnocentric and polycentric approaches) and will use a strategy
that allows it to address both local and regional needs. The company will be less focused on a
particular country than on a geographic region. For example, an MNE doing business in the EU
will be interested in all the member nations.
An MNE with a geocentric predisposition will view operations on a global basis. The largest
international corporations often use this approach. They produce global products with local
variations and staff their offices with the best people they can find, regardless of country of origin.
Multinationals, in the true meaning of the word, have a geocentric pre- disposition. However, it is
possible for an MNE to have a polycentric or regiocentric pre-disposition if the company is
moderately small or limits its operations to specific cultures or geographic regions.
Nikon and Sony have appointed Indians to lead their local operations, which were earlier managed
by the Japanese. Asian consumer electronics makers are increasingly placing their trust on Indian
executives, especially at a time when several of them are struggling in their home turf, or finding
the going tough in the largest markets, and are expecting India to play a bigger role when they are
expanding to emerging markets. The number of expats in senior roles in the Indian arms of Sony,
Panasonic, Hitachi and Daikin too have come down, while Samsung too now has Indian executives
in their global think tank. At Daikin India, Indian executives have replaced expats in seven critical
functions like deputy plant head, senior vice president (tech support) and general managers for
service, HR (factory) and R&D. In Panasonic, expats in mid-to senior roles are now 20%,
compared with 40% three years ago
Hitachi Air Conditioning India said overseas entities have begun to realize that business is best
understood by locals and have started handing over major roles to them. The overseas entities send
in their representatives from various departments to share best practices being followed by various
entities all over the globe. The process is laid down between local entity and global teams and then
those processes are monitored and administered. Empowering domestic leaders helps companies
to understand the pulse of the market, aids in faster decision making to facilitate growth, gets the
best of local knowledge to promote R&D and deliver customized products for local customers.

Q2. Describe any one of the steps involved in the process of external
environmental assessment by the multinational companies.
The External Assessment, or External Environmental Scan, is an inventory of the political,
economic, social, and technological forces that influence the mission and goals of an organization,
and how it functions. It involves analysis of the current environment and the trends that may affect
it.
The analysis of the external environment involves two activities: information gathering and
information assessment.
Information gathering
Information gathering is a critical phase of international strategic planning. Unfortunately, not all
firms recognize this early enough. In the case of Harley-Davidson, the large US- based motorcycle
manufacturer, it was not until the Japanese began dominating the motor- cycle market that Harley
realized its problem. A systematic analysis of the competition revealed that the major reason for
Japanese success in the US market was the high quality of their products, a result of extremely
efficient manufacturing techniques. Today, Harley is competitive again. It achieved renewed
success because it rethought its basic business, reformulated company strategy, vastly improved
product quality, and rededicated itself to its core business: heavyweight motorcycles. There are a
number of ways that MNEs conduct an environmental scan and forecast the future. Four of the
most common methods include:
• Asking industry experts to discuss industry trends and make projections about the future
• Using historical industry trends to forecast future developments
• Asking knowledgeable managers to write scenarios de-scribing what they foresee for the
industry over the next two to three years
• Using computers to simulate the industry environment and generate likely future
developments.
The Japanese and the South Koreans provide excellent examples. Mitsubishi has more than 700
employees in New York City, where its primary objective is to gather information on American
competitors and markets. All large Japanese corporations operating in the United States employ
similar strategies. The same is true for large South Korean trading firms, which require their branch
managers to send back information on market developments. These data are then analyzed and
used to help formulate future strategies for the firms. Such information helps MNEs to identify
competitor strengths and weaknesses and to target areas for attack. This approach is particularly
important when a company is delivering a product or service for many market niches around the
world that are too small to be individually profitable. In such situations the MNE has to identify a
series of different niches and attempt to market successfully in each of these geographic areas. The
information is also critical to those firms that will be coming under attack.