Question 1: What is the North American Free Trade Agreement? Has this trade agreement impacted (positively or negatively) the United States and more specifically the state of Georgia? Provide specific examples and a rationale for your response.
The North American Free Trade Agreement (NAFTA) was a document used to create a trilateral trade bloc. Canada, Mexico, and the U.S. joined together, effective January 1, 1994, to for a free trade area that unified North America (Alexander, 1993). The NAFTA agreement was designed to create a “comprehensive structure” for trade and for investment among the three principle North American powers, and so controls, or directs, the economic activity between the three nations. It eliminated tariffs, and other non-tax related barriers to trade, and established continental rights designed to protect intellectual property, as well as creating an international framework for the resolution of trade related disputes (Floudas & Rojas, 2000).
As the NAFTA agreement reaches its twentieth year, there is a large enough body of evidence to say with some certainty how it has impacted the United States economy, especially as it relates to specific states. NAFTA , no doubt, boosted the American agricultural sector, but has also been held responsible for the loss of a large number jobs (Lanthemann, 2014). This has created a mixture of impacts on individual states and their economies, depending on what types of goods they are exporting, and depending on the way in which the community has responded to the basic impacts that NAFTA had on their economies.
For example, Georgia has been impacted by NAFTA, both by encouraging an increase in the overall exportation of agricultural products, and by diminishing the job opportunities there. It is a commonly held belief that NAFTA damaged exportation, but in reality, for the state of Georgia and multiple other states, trade with NAFATA countries increased by more than 100% and represented the largest export markets following the enforcement of NAFTA (Department of Commerce, 2015). Additionally, however, a minimum of five Georgia counties have been actively negatively impacted by NAFTA. More specifically, a total of 22,918 jobs lost between 1993 and 2000 as a direct result of NAFTA related activity (Halaby, 2015).
References:
Alexander, D.C. (1993). The North American Free Trade Agreement: An Overview. International Tax and Business Law 48(11): 48-57.
Floudas, D.A. & Rojas, L.F. (2000). Some thoughts on NAFTA and trade integration in the American continent. International Problems 52(4): 371-389.
Halaby, D. (2015). rural entrepreneurship. Economic Development Journal, 14(4), 41-48.
Lanthemann, M. (2014, January 7). NAFTA And The Future Of Canada, Mexico And The United States. Forbes. Retrieved June 01, 2016, from http://www.forbes.com/sites/stratfor/2014/01/07/nafta-and-the-future-of-canada-mexico-and-the-united-states/
Question 2: What is state capitalism and guarded globalization? Why do Multinational firms (MNCs) have to be mindful of this phenomenon? Provide specific examples and a rationale for your response.
Multinational firms need to be mindful of this phenomenon, in that if they do not approach their multinational spread in a strategic way, they can stifle or limit their own growth, as countries move to block their entry (Bremmer, 2014). This can, however, be avoided through the cultivation of intentional, strategic relationships, or alliances, between the multinational brand and the nation they wish to enter (Narula & Hagedoorn, 1998). Cooperative agreements ensure that the nation that could guard against new entry is actively involved in, and guaranteed to profit from, the alliances that are formed.
Guarded globalization can thus be managed through specific strategies that focus on avoiding areas of political sensitivity within the emergent market, capitalize on government to government relationships, and increase productivity and diversity. For example, a chemical company can enter a new market more successfully as a perfume company, than in their own typical market.
References:
Bremmer, I. (2014). The New Rules of Globalization. Harvard Business Review Retrieved from https://hbr.org/2014/01/the-new-rules-of-globalization
Narula, R. & Hagedoorn, J. (2000). Innovating through strategic alliances: moving towards international partnerships and contractual agreements. Retrieved from https://www.researchgate.net/profile/Rajneesh_Narula2/publication/222494358_Innovating_through_strategic_alliances_moving_towards_international_partnerships_and_contractual_agreements/links/0fcfd50d0a3a361960000000.pdf
Question 3: Should MCNs adopt the regulations of the country of origin or yield to those in the country of operation? Please provide specific examples and rationale for your response.
There is a strong body of evidence that demonstrates that MCNs do not need to adopt the standards and regulations of the nations in which they operate. Most MCNs seem to use a kind of standardized, or generic basic standards in all countries in which they operate (Lindholm 2000). These are typically, to some degree, related to the nation that they originated in, but actively becomes ambivalent as they find a middle ground. They ultimately represent nether the “local” nor the “origin” as they globalize, or build a set of standards that can be consistent despite their multinational status (Tregaskis, 1998; Ngo et al., 1998). This occurs as the result of globalization related pressures (Prakash & Griffin, 2012). For example, a brand that originates in the united states, but then opens a branch in Hong King as a result of their growing interest at establishing itself as MNC is likely to used the same, or very similar policies and strategies within the new Hong Kong office, because they are not strictly American in nature, but rather designed to create a common ground between the Multinational facets of the company (Prakash & Griffin, 2012). This method of operation is important because it allows the MNC to be flexible enough to accommodate the competitive pricing strategies, and accommodation of local customs, while still creating a unifying strategy across the brand as a whole (Prakash & Griffin, 2012). This strategy gives the brand greater strength, and prepares it for more consistent global growth and performance than strategies that adhere too tightly to the statutes of the nation of origin, or which tries to diversify and adopt a strict version of the regulations that are found in every nation that they enter.
References:
Lindholm, N. (2000). National culture and performance management in MNC subsidiaries, International Studies of Management & Organization: 45-66.
Ngo, H.-Y. et al., (1998). Human resource practices and firm performance of multinational corporations: Influences of country origin, The International Journal of Human Resource Management, 9: 632-652.
Prakash, A., & Griffin, J. J. (2012). Corporate responsibility, multinational corporations, and nation states: An introduction. Business and Politics, 14(3), 1-10. doi:10.1515/bap-2012-0014
Tregaskis, O. (1995). HRD in foreign MNEs. International Studies of Management and Organization, 28 (1): 136-163.
Question 4: What are the major dimensions of culture studied by Geert Hofstede? Identify and describe each. What is the cultural profile of the United States and Mexico? What conclusions can you draw regarding cultural challenges facing managers from Mexico when they interact with employees from the USA and vice versa?
Hofstede created a multi-art theory of cultural dimensions, which in essence stated that a society’s culture impacts its values, and that the values determined behavior and structure of interactions. He specifically identified six dimensions of interest with regard to national cultures: power distance index, the individualism vs. collectivism, uncertainty avoidance index, masculinity vs femininity, long-term vs short-term orientation and indulgence vs. restraint. The power distance index (PDI) is the extent to which member of a unit expect power to be unequally distributed. Individuality vs collectivism (IDV) determines to what extent a culture is segregated into societal groups. The uncertainty avoidance index (UAI) us related to societies tolerance for the unexpected. Masculinity vs femininity is the comparison of, or preference for, one over the other. Long- vs short term orientation is related to the concern for impact of actions, and finally, indulgence vs restraint is related to the societies desire for gratification to be rapid (Hostede, 2011).
Mexico has a PDI score of 81, and IDV of 30, a masculinity preference of 69, UAI of 82, long-term orientation of 24, and indulgence of 97 (Hofstede,2015). In contrast the USA has a PDI score of 40 , and IDV of 91, a masculinity preference of 62, UAI of 46, long-term orientation of 26, and indulgence of 68. The USA’s high tolerance for individualism is inherently tied to the consept that every one has equal right to power, as is demonstrated in the scores, however it is interesting that the United States is nearly as tied to masculine power as Mexico, which has a much higher power distance index than the USA does. As such, leaders in mexico must adjust their expectations when working with Mexican leaders or to establish branding there, because their social expectations for women, for individualism, and for uncertainty are in direct opposition to the American position.
References:
Hofstede, G. (2011). Dimensionalizing Cultures: The Hofstede Model in Context. Online Readings in Psychology and Culture, 2(1). doi:10.9707/2307-0919.1014
Hofstede, G. (2016).Mexico. Retrieved from https://geert-hofstede.com/mexico.html
Hofstede, G. (2016).United States. Retrieved from https://geert-hofstede.com/united-states.html
