International Business Environment
This is an individual assignment. It will constitute 100% of your overall mark for the module. Please choose ONE question from the following six.
You are asked to write an essay-style answer of about 3000 words on your chosen question. All questions are equally weighted. You are expected to develop your own arguments based on your own interpretation and reflection of the reading; as well as relevant discussions on the related themes covered in the seminar workshops. This is not a closed-book assessment. You are free to use research-based academic work, such as journal articles, books, and other sources. [Please also refer to your module guide; lecture outlines and notes taken in workshops and the Web Sunspace based material. Remember to provide full references, using Harvard referencing, at the end of the answer for source material that you refer to.
The assessment covers all learning outcomes for the module.
For the question chosen, the competent answer will be concise, accurate and clearly written in your own words. It will put forward your individual interpretation of relevant analysis to the issues raised, rather than be just a descriptive account. It will be logically organised and contain a conclusion. Where you draw on the views, words and research of others, these will be acknowledged as references, and cited clearly in your answer.
The University’s Policy on Cheating, Collusion, and Plagiarism will apply.
1.Various governments around the world have responded to the 2008 global financial crisis by engaging in fiscal stimulus packages and spending money on ‘bailing out’ some of their commercial banks. Discuss the case for and against reducing the size of the resulting national budget deficit as quickly as possible as a means of demonstrating good macroeconomic management.
2.Assess which issues in your view are causing friction among members of the World Trade Organisation, and evaluate how they are likely to be resolved.
3.Compare and contrast the means by which a company can internationalise its operations. For a company of your choice, chart the recent progress it has taken in achieving internationalisation outlining why it adopted its chosen method.
4.Imagine there is a proposed merger between a Chinese company and an African company. You are appointed to lead a team consisting of managers from both countries to examine any cultural problems linked to the proposed merger. Applying the work of Hofstede and Trompenaars, how close would the cultural fit be; and how might you seek to improve cultural understanding between the two groups of managers?
5.International businesses seek to locate foreign operations in countries which are stable. What particular aspects of a country’s political structure and processes should a company take into account when assessing political risk?
6.Give recommendations to national policymakers in a country of your choice on ways to raise levels of R & D (Research and Development) activity in the country’s businesses.
International Business Environment –
Module Assessment Criteria:
The Relevance of the work examined to its selected question.
The work should have a substantial knowledge of relevant
material, showing a clear grasp of themes, questions and issues
The analysis should be comprehensive, clear and orderly.
4.Argument & Structure
The argument should be well supported, focussed and is clear and
The work should contain distinctive or evaluation independent
thinking; and formulate an independent position in relation to
theory and/or practice.
Max. 20 %
The work is well written, with standard spelling & grammar, in a
readable style with acceptable format.
7.Reference to Critical appraisal of up-to-date and/or appropriate literature. Recognition of different perspectives. Very good use of
a wide range of sophisticated source material.
Internationalization process: a case review of Haier Group
The term ‘globalization’ is hardly to identify because it refers to many aspects such as trade, capital and people around the whole world (Held & McGrew, 2003). Generally, globalization refers to the increasing linkages across the globe, including the development of human life based on a global scale development and the rise of global consciousness. Different countries tend to across the difference of language, time zone, regulations, cultural and trade barriers, to achieve a whole economical development and prosperity under globalization. High technologies are transferred from different countries with a large scale and high speed in globalization. Before globalization, the most advanced technology was first used in some local area; then sold in developed countries, and lastly used developing countries. Usually it took a relatively long time in this process. The technology used in developing countries may be relatively advanced in its local area, but still behind from those developed countries. Time lag in the technology transfer has been shortened rapidly after globalization.
The term ‘internationalization’ has been used to refer to the importance of the growing links of international trade between or among nations, rather than ‘globalization’ which mainly means free trade (Daly, 1999; Held & McGrew, 2003). In a short word, the nation plays more important role in ‘internationalization’ than in ‘globalization’. i.e. ‘globalization’ is deeper than ‘internationalization’ at a worldwide economical level. The globalization becomes feasible and desirable due to the increasing free-market ideology, technological benefits, shifting the economic center from the developed to the developing countries and the opening of borders to trade (Govindarajan & Gupta, 2000).
Economical globalization leads to the rapid development for multinational companies which play a pivotal part in world economy. Multinational companies attract a wide range of customers and acquire huge profits by their high qualities, excellent services, good brand reputation, outstanding management and distinctive culture. Products and technologies trade as well as international investment undertaken by Multinational companies promote the development of global economy. In addition, small and medium-sized enterprise (SME) also plays an important in its activity, employment and innovation by high degree of globalization and internationalization, particularly in such an E- business period (Bell et al., 2004; Peter et al., 1998; Wagner et al., 2003). Problems also have been brought for large and small enterprises. When they have opportunities to increase their income and expand their markets, they also would meet various challenges and risks. For example, managers should decide whether to choose exports based on the domestic production, or to build factories in target countries with foreign direct investment (FDI), or produced in third low-cost countries. Different choices would all face different language, culture and regulations problems. Therefore, how to fit the international roles, participate an international operation and promote their own competitiveness, are big issues for both small and large companies. What type of strategy they choose would play a vital role in their business way.
In 1978, the Chinese government made the decision of the reform and opening-up policy in the Third Plenary Session of the 11th Central Committee. China’s outward FDI, which began in the 1980s and as the major recipient in middle 1990s, played an increasing role in international trade (Taylor, 2002). During the past 30 years, China ranks one of the top international trading countries with the average growth rate nearly 10%. Thus rapid economic development, however, limits its international competitiveness (Liu & Li, 2002). How to break those limitations and become internationalize in global economy has been a problem faced by many Chinese companies. This essay introduces one of the most successful China’s multination companies, Haier, to provide an overview of progresses it achieving internationalization and how other Chinese companies can learn from Haier.
2. Internationalization – a case review of Haier Group
2.1 A brief introduction to the Haier Group
Haier Group was founded in 1984, Qingdao, China. On January 1, 1984, the ‘Qingdao household electrical appliances’ was renamed as ‘Qingdao Refrigerator Factory’, again renamed as ‘Haier Group’ in 1992. With the development of more than 25 years, Haier has received a high reputation at home an abroad as a large international enterprise group, form a small and local company. Its products have developed from a single refrigerator — the BCD-212, to a variety series of home appliances, more than 15,100 products with 96 product lines today (Duysters et al., 2009), including air conditioners, range hoods, sterilizers, washing machines, dishwashers, televisions, water heaters, gas stoves, rice cookers, microwave ovens, computers, mobile phones, etc. Many of them have been awarded as Chinese Famous Brand products, and enjoyed by consumers.
Up to the end of 2009, Haier has established 29 worldwide manufacturing base, 19 oversea trading companies, and 8 comprehensive research and development (R&D) centers; in 2009, Haier global turnover exceeded 18.2 billion U.S. dollars. Haier has its brand value of about 11.9 billion U.S. dollars, and it consecutively ranked the top of China’s most valuable brand for 8 years since 2002. Financial Times selected Haier as one of the “China’s Top 10 Global Brands” in 2008; at the same year, Haier ranked 13th in ‘Global 200 list’ by Forbes’ Reputation Institute, and the top among Chinese companies (http://www.haier.com); in the 2010 Bloomberg BusinessWeek (2010) ‘The world’s 50 most innovative companies’, Haier ranked the 27th. In addition, Haier made the Chinese famous children’s scientific carton series ‘Haier Brothers’ and have contributed lots of charity work. Over two decades development, Haier formed the key culture – innovation, and builds up as its own culture system. Haier had applied for 9738 patents with 2799 invention patents by the end of 2009, leading its top among Chinese companies. (http://www.haier.com).
2.2 Three stages of Haier’s internationalization
The successful internationalization of mainly include 3 stages: the early stage – from 1984 to 1991, the national expansion stage – form the end of 1991 (or early 1992) to the end of 1997, and the transnational operation stage – from 1998 till now (figure 1).
Figure 1. The main steps of Haier Group to realize its internationalization
2.2.1 Early stage
In 1985, Qingdao Refrigerator Factory introduced the advanced technology and equipments form the Germany company Liebherr which was considered as the world’s leading refrigerator manufacture, produced the first Asian ‘four star’ refrigerators named ‘Qingdao-Liebherr’. The cartoon ‘Haier brother’ also represents these two companies: the black hair Chinese boy Qingdao, and the blond hair German Haier. Due to the cooperation with Liebherr, Qingdao Refrigerator Factory, as the only modern refrigerator manufacturer in China, produced high quality refrigerators. Zhang Ruimin, the leader of Qingdao Refrigerator Factory (now as the CEO of Haier Group), decided to put ‘Qingdao-Liebherr’ as the leading brand products, to lead the whole industry market.
The most important features in Haier’s early stage are ‘pay high attention to quality’. Zhang Ruimin destroyed 76 refrigerators because of some quality problem in their appearance, which caused great influence to the whole society in China. Qingdao-Liebherr gave consumer a deep impression by its high quality level. Haier set the quality standards higher than Japanese Industrial Standards (JIS) — the quality standards applied in Japanese household appliances was considered as the highest quality products in the world (Duysters et al., 2009). In early 1990s, Haier passed the ISO9001 certification, German DVE, GS and TUV certification; American UL certification, and Canadian CSA and EEV certification. During 1984 – 1991, Qingdao Refrigerator Factory built up a market-oriented business concept with the core aim to improve its quality, and constructed the ‘Overall Everyday Clean (OEC)’ management strategy. In the Chinese national refrigerator competitions, December 1988, Haier owned its first gold medal, established its leading position in Chinese refrigerator industry.