1-Why do you think international businesses traditionally
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