21591 Transnational Management

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21591 Transnational Management
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National culture plays a significant role in international business. Based on Hofstede’s dimension scores below, explain what the culture score differences mean for a New Zealand manager managing employees in a newly established subsidiary in Thailand.

Country

Power distance

Individualism

Masculinity

Uncertainty avoidance

Long-term orientation

Indulgence

New Zealand

22

79

58

49

33

75

Thailand

64

20

34

64

32

45

 

In the past 15 years, global clothing production has doubled to meet demand. Fast fashion, the term used to describe clothing designs that move quickly from the catwalk to stores to meet new trends, has been a particularly hot segment and a source of enviable growth for some clothing companies. Multinational companies such as Zara, Forever 21, and Topshop belong to the fast fashion industry. However, the fast fashion industry requires using a lot of water and chemicals and emitting a significant amount of greenhouse gases. Is the fast fashion business ethical? How can fast fashion companies become sustainable in the long term? Please justify your answer using any two of the theories discussed in class (Kantian, Aristotelian, Utilitarianism, or Eastern philosophy). You need to use at least one example discussed during this semester to support your answer.

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Case Study

Based in China, Star (a hypothetical company name), is one of the major home electronic appliance makers in the world. With its ten manufacturing plants, five global research and development alliances, fifteen foreign subsidiaries across the world, and more than 15,000 global employees, Star’s products are available in more than 25 countries. Star makes more than 1,500 varieties of home appliances in almost 20 product lines, including refrigerators, freezers, air-conditioners, washing machines, microwave ovens, TV sets, mobile phones, computers, and vacuums. Star is known for its affordable prices and high-quality products.

In 1995, Star began its foray into the international market by exporting refrigerators to the United States, Germany, Japan, and other developed countries. With the rapid increase in exports, Star decided on foreign direct investment to expand overseas markets, access advanced technology, and build up an international brand name. The key milestones of its global expansion include its first joint venture in Nigeria in 1996; acquiring an Italian refrigerator factory in 2000; forming a joint venture with a Japanese company in 2005; and purchasing a local refrigerator factory in Thailand in 2010. Star’s international operations are characterized by its responsiveness to the needs of national markets. Star’s efforts to adapt to different countries and different cultures have boosted its global image, reputation, and sales. However, such success is also accompanied by many transnational challenges.

For example, in the joint venture operation in Nigeria, Star has 60 per cent ownership of the joint venture, and the remaining is held by the local partner. Recently, Star’s top management has raised concerns about the following issues in Nigeria:

Frequent changes of political leadership in Nigeria, which bring frequent changes in local government policies and high uncertainties in doing business

Constant conflicts between Star’s headquarters and the local partner in Nigeria because top managers from the headquarters want the local partner to follow their home-based strategies rather than using its local strategies

In addition to the existing operations abroad, Star has identified Norway as a high-potential market to sell its products. However, they have not decided which entry mode should be used. The following factors may influence the managers’ decision:

Star has not established networks with local suppliers and distributors in Norway.

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Based on Hofstede’s culture dimension rubric, Norway’s culture score is 31 in Power Distance,

69 in Individualism, 8 in Masculinity, 50 in Uncertainty Avoidance, 35 in Long-Term Orientation, and 55 in Indulgence. The score for China is 80 in Power Distance, 20 in Individualism, 66 in Masculinity, 30 in Uncertainty Avoidance, 87 in Long-Term Orientation, and 24 in Indulgence.

There are two senior managers in the Star head office who have worked in Sweden and Denmark for two years.

Star wants to take advantage of local technology and talents to support the design of products in the head office. 

Based on the above case study, answer the following three questions:

If you are a manager at Star, what strategies would you suggest to the head office to effectively manage the issues in the Nigerian joint venture?
Managers at headquarters are planning to assign a group of four team members to work on a project designing a washing machine for the German market. Based on the following team member profiles, will the company benefit from such team diversity?

Name

Gender

Age

Nationality

Education

Major

Marco

Male

40

Italian

Master’s degree

International Business

Amy

Female

30

American

Ph.D. degree

Mechanical Engineering

Nan He

Female

35

Chinese

Ph.D. degree

Marketing

Max

Male

45

German

Ph.D. degree

Software Engineering

What entry mode should Star use when entering Norway? Explain your choice of the entry mode, and also identify the possible challenges of your choice.

Teaching materials and exam resources provided to you at UTS are protected by copyright. Students are reminded that copying or sharing of these materials can constitute misconduct.

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