International Business Essay
Q.2 a) Evaluate the different ways in which Bata has interacted with foreign political systems in its investments and operations abroad. ANS – Multinational enterprises (MNEs) like Bata must operate in countries with different political and legal conditions, so the political impact on the foreign investments is very important. This paper explains this issue based on the Bata case in three parts. The first part evaluates the different ways in which Bata has interacted with foreign political systems in its investments and operations aboard. In the second part, the advantages and disadvantages, which MNEs bring to their company and the host-country when doing foreign direct investment, are analyzed relating to the Bata case. And the last part gives a detailed analysis of the complex political impact on international business with reference to the political environment in general; also supply the way of formulating effective political strategy.
* Bata’s effective organizational structure and managing style With activities in 60 countries, Canada-based Bata Shoe Organization has much operational experience both in developed countries and developing countries and can deal with different political systems. It has an effective organization structure, which consists of · Bata Limited located in Toronto, Canada, acts as headquarters of the operating companies. Regional offices exist in Toronto, Mexico City, Singapore, Paris, Calcutta and Harare. · The International structure: a decentralized organization, where operating companies are independent businesses, supported by a global management team. · Private Ownership: Bata shoe organization companies have also entered into a number of joint ventures, retail franchising and brand licensing agreements . By and large Bata’s operations are independent units established in each country where the firm does business. As such, Bata is able to decentralize control of its political strategy–giving subsidiaries significant autonomy in managing relations with their respective government. b) Should Pizza Hut put more of its efforts in expanding in Brazil or somewhere in South East Asia? Why? ANS –
Pizza Hut, one of the most popular food chains, opened their 10000Th shops in the Brazilian market in 1994. Pizza Hut’s parent company is PepsiCo. PepsiCo was trying to penetrate in Brazilian market in various ways. However, the path was not as easy as assumed. Pizza Hut faced decline in the Brazilian market. Experts said that there were two probable reasons for this. One is Pizza Hut’s less successful introduction of new products and the second is the low price strategy of the competitors.
However, Pizza Hut had a high hope to make Brazils their second or third major market because Brazil had many location specific advantages like urbanization, size, population, Gross National Product etc. Brazil endured erratic political situations since 1964. After a long military dictatorship, a stable political reformation was done by the year 1997.Economically; Brazil has a mixed history as well. It has a very good economic potential. It has access to several natural resources and well knit infrastructures. However, inflation affected the economy very badly. Pizza Hut entered in Brazil in 1988, during the period of high inflation.
It followed the practice of corporate franchise. Later, Pizza Hut bought some of the franchises. But still different problems arose like- difference in cultures, cost of maintaining large pool of employees and of course inflation. Gradually, the inflation rate of Brazil normalized. People made more informed decisions and Pizza Hut began to flourish. However, in 1995, sales of Pizza Hut dropped. As a mean of counterattack, Pizza Hut took two different strategies. One was to cut the price by 25% and another was to announce various sales related decisions by mingling with local cultures like Samba dance. But both of the plans failed miserably. In these ways, Pizza Hut struggled to succeed in the Brazilian market.
Q.3 a) what factors threaten India’s future competitive positions in cashew nut productions? ANS – Since the opening of China’s doors to world trade in the late 90’s, it has become an emerging super power. Hence, China may be a threat to India’s current competitive position in the cashew nut production because it is also capable to support cashew processing with its abundance of human resources, low-wage rates, and possible training in the manual dexterity required in the premium cashew nut production. China is currently engaging in new markets and providing cheap manual labor to other manufacturing.
With this, China can see that the increasing profitable cashew nut industry and decide to enter it because it has the capability to do so. Moreover, the current formulation of the European Union (EU) provides that its members eliminate trade barriers for imports and exports between each other may be a possible threat to India’s United Kingdom market. Since the UK can virtually import anything from its neighboring countries without any cost, it might affect the demand of cashew nuts –the Europeans may divert their attention from cashew nuts to other products popular in its neighboring countries. India’s competitiveness could also be threatened by the increased Research and Development improvement that countries worldwide are engaging in nowadays. Brazilians (India’s most prominent competitor in the cashew nut industry) may possibly find machinery that can be substituted for the needed hand dexterity for the flavor that India’s cashew nut has.
b) Should the United States seek to tighten the economic grip on cube? If so, how should it be done? ANS – U.S. should not seek to tighten economic grip on Cuba as it is already a weak economy as compared to U.S. due to the political environment of the country for the past few decades. For U.S. industries and companies Cuba is a very potential market. Also the workforce is efficient, so there is a possibility of efficient labor at lower cost for U.S. industries. Also, other countries of the world started favoring Cuba and also doubted the rationale of U.S. on imposing the embargo.
1. Attitude: An attitude may be defined as a learned disposition to behave in a consistently favourable or unfavourable way with respect to a given object (Schiffman and Kanuk, 2000). Stated differently, it positions people into a frame of mind of liking or disliking things, of moving toward or away from them‘ (Kolter and Armstrong, 2008: p144). It is acknowledged that people have attitudes toward almost everything – religion, politics, clothes, music, food (Kotler, 2003).
For instance The demand for life insurance in a country may be affected by the unique culture of the country to the extent that it affects the population‘s risk aversion (Douglas and Wildavski, 1982). Henderson and Milhouse (1987) argue that an individual‘s religion can provide an insight into the individual‘s behaviour; and understanding religion is an important component of understanding a nation‘s unique culture. Also, Zelizer (1979) notes that religion historically has provided a strong source of cultural opposition to life insurance as many religious people believe that a reliance on life insurance results from a distrust of God‘s protecting care. But historically, some form of social insurance existed in Nigerian and Africa society long before the introduction of the modern insurance in Nigeria (Osoka, 1992).
These social schemes evolved through the existence of extended family system and social associations such as age grades, and other unions. The simplest form of the ‗social insurance‘ was practiced by means of providing cash donations, materials or sometimes organized collective labour to assist members of extended family and members of social or communal associations who suffer a mishap.
2. Lack of Knowledge of Insurance Culture: In a recent study of quality of life in developing countries with reference to South Africa (Moller, 2004), income and social security (own wages, ability to provide for family, insurance against illness/death and income in old age) have been treated as one of the major indicators of quality of life. This standpoint stresses the significance of insurance to human life. Ironically, insurance services seem not to have been so accepted enthusiastically in developing countries. The abysmal level of insurance culture in developing economies has attracted relative interests among researchers and practitioners alike. Risk has been identified as a central fact of life in the rural areas of less-developed countries (Udry, 1994). Some of the problems associated with this have been marketing. For example, Omar (2005) assesses consumers‘attitudes towards life insurance patronage in Nigeria and found out that there is lack of trust and confidence in the insurance companies. Other major reason for this attitude is lack of knowledge about life insurance product.
3. Low Level of Education: Educational status of Nigerians has significant influence on their attitude towards insurance. Educated people have more positive attitude to insurance than less educated ones. In a recent insurance conducted in Lagos, Nigeria. The choice of Lagos is due to its nature as a metropolitan city where most Nigerian ethnic groups are largely represented. Fact shows that respondents with higher education outperformed others even though no statistical significant difference was observed with vocational education.
4. Unemployment Issue: Employees working status has a significance effect on Nigerians attitude towards insurance. Retired and Employed Nigerians with means attitude scores of 28.50 and 28.14 respectively outperformed their competitors. No significant difference was observed between retired, employed and Self-employed respondents. On the other hand, self-employed people have significantly higher attitude towards insurance than unemployed, student and part time workers. This result is quite similar to findings in most developed world.
In Conclusion, The findings of this study suggest some major implications for marketing of insurances services in Nigerian businesses environment which is a big market. Given that attitude is strongly linked to behaviour, marketers of insurance services targeting Nigerians are confronted with the challenge of encouraging people to embrace insurance institution and its associated benefits. Based on the findings, this article confirms negative attitudes of Nigerians to insurance services further.
But apart from this broad finding in respect of the negative attitudes to this line of business, this study suggests some specific findings based on different demographical factors of the respondents. The findings serve as inputs to marketers of insurance services on how they formulate and implement relevant marketing strategies towards addressing the nonchalant attitude of Nigerians to insurance. For instance, specific marketing strategies are required to encourage the young generation below 46 years of age, the divorced/separated, and the less-educated to embrace and appreciate the role of insurance. Since, the basic issue associated with this lack of interest rests mainly in their lack of appreciation of the roles of benefits of insurance services; it is recommended that significant marketing communication activities with instant compensation to both marketers be targeted more at this set of people highlighted. This will help to kindle their interest in the business and brings the insurance institution to the highly exalted position it belongs in their perception.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 26 September 2016
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