MGT1FOM - 1-Why do you think international businesses...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1-Why do you think international businesses traditionally prefer to operate in industrialized countries? Discuss. Notes___________________________________________________________________ __ _______________________________________________________________________ ___ _______________________________________________________________________ ___ B. Infrastructure Infrastructure refers to a country s physical facilities support economic activities such as transportation, energy producing facilities, and communications. Companies operating in LDCs must contend with lower levels of technology and perplexing logistical, distribution, and communication problems. For example, cell phone companies have found opportunities in LDCs, where land lines are limited; in Latin America, cell phones will reach 170 million by 2008. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. CHAPTER 4 Managing in a Global Environment 85 UNLOCKING CREATIVE SOLUTIONS THROUGH TECHNOLOGY Virtual Reality: Negotiating the Cross- Cultural Web Technological and cultural issues are so tightly interwoven that there are a multitude of new ways to offend or alienate customers. For example, purple is a sign of royalty in some parts of the world, but in others it is associated with death. Credit cards are the backbone of e-commerce in the United States, but they are still a rarity in many countries. Managers should also consider that many online shoppers want to buy from sites that cater to their native languages. The virtual reality for managers is that they have to shape their Web sites if they want to reach this growing international market. C. Resource and Product Markets When operating in another country, company managers must evaluate the market demand for their products. If market demand is high in a country, a firm may choose to export products to that country. To develop manufacturing plants, resource markets for providing needed raw materials and labor must be available. For example, at McDonalds in Crakow, the burgers come from Poland, the buns from Moscow, the potatoes from Germany, and the onions from California. . D. Exchange Rates Exchange rates are the rate at which one country s currency is exchanged for another country s currency. Volatility in exchange rates has become a major concern for companies doing business internationally. Changes in the exchange rate can have major implications for the profitability of international operations. Assume the U.S. dollar is exchanged for 0.8 euros; if the dollar increases to 0.9 euros, U.S. goods will be more expensive in France where it will take more euros to buy a dollar s worth of U.S. goods. It will be more difficult to export U.S. goods to France, and profits will be slim; if the dollar drops to 0.7 euros, U.S. goods will be cheaper and can be exported at a profit.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 18

MGT1FOM - 1-Why do you think international businesses...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online