Business
Section A
Question 1
The term business culture to a great extend refers to the behaviors of individuals in an organization with regard to the meanings that people attach to their actions in the firm. It includes the organizations values, visions, norms, belief systems and habits etc. It also incorporates collective behaviors on the part of individuals working in the organization. More often than not business culture is passed down from the existing members of the organization onto the incoming or new members. Hence, organizational culture is concerned with perceptions, ways of thinking and feeling which influences business interactions with clients, employees and the government. Principally organizational culture or business culture is a set of policy guidelines written or unwritten that comprise of shared mental assumptions guiding interpretation and action with respect to appropriate and acceptable form of behavior at the work place.
The business culture in Saudi Arabia is generally founded on religious principles of Islam. Business people involve Allah in all that they do. To be a successful businessman in Saudi Arabia you must confess the Islamic faith and include prayers during business meetings and interactions. In Saudi Arabia there is no distinction between religion and all other aspects of life essentially in business. All religious protocols and rituals are observed regardless of whether you are in the middle of a meeting or business negotiations. To Saudis Allah is supreme above any human undertaking hence it is essential that his will fall through, in situations where business negotiations turn sour the Saudis believe that it is the will of Allah similar to when businesses experience success.
The implication of this culture to an organization that intends to run a joint venture business in with the Saudis is that they must be ready to profess the Islamic faith and serve Allah the Almighty to ensure success of their business venture. Moreover, a firm with intention to invest its entire (100%) foreign investments in Saudi Arabia should be ready to accept the Islamic religion as this is crucial in determining the success of the business in aiming for profitable returns on investments made.
Saudis as well require that women who work in the country carry permits that are approved by their husbands and the state. Women’s dressing is also very particular and strict. The implication for any business with intention to set up in Saudi Arabia is that foreign women must adhere to these regulations by ensuring that they have a working visa with the approval of the government and their spouses to work. Furthermore, they must strictly adhere to the dressing requirements as prescribed. The implication for a foreign business intending to set up in Saudi is that these stipulations must be observed to the letter or else risk the success of their business in the country.
Another central aspect of Saudi culture is the acceptance of nepotism in business; Saudis believe that trust is strengthened by family ties. Hence, awarding family members positions of in your company is not taken as a form of corruption but rather a means to ensure that the company in trusted hands. For this reason foreign business with intention to form partnerships with Saudi business men or invest in the country must be cognizant of this fact. Majorly, misinterpretation of the nepotism as corruption may result into sour business interactions. Foreigners must thus see it as a way of doing business in Saudi Arabia and accept it for what it is.
Question 2
A firm intending to set up as transnational firm from initially an international firm must first recognize the implication of this new strategy framework. This consideration should be founded on the differences that separate international firms from transnational ones. Whereas a transnational firm is one that has investments in foreign operations other than its home country business operations, international firms only have investments in their home country that are generally focused on the management of imports and exports. What is more is that transnational companies have a central cooperate facility coordinating efforts of delegated instructions in each individual foreign market. Essentially, the delegation entails; decision making, product research, product development and marketing functions of the company’s products and services.
The challenge to grapple with for transnational organizations is concerned with logistical implications in the management of the subsidiary units of the organization which are distributed in different continents and countries around the world. Foremost, the hierarchy of transnational organizations is organized such that sub units of the firm are autonomous in the management of regional functions but are at the same time answerable to the central bureaucracy of the entire conglomerate. Secondly, that each individual sub unit is responsible for the research and development of company products and services to suit the needs of the region in which they operate. Hence, the sub units of the company in the countries where they are set up are challenged in gathering intelligence, investing money, transmitting messages and promoting sales in the countries where they are established. Lastly, companies subordinate to the organization must deal with regulations and policy implications of operations in boundaries that they operate. The subsidiary firm must do this while at the same time make strategic effort toward ensuring that it is answerable to the central management of the entire larger company.
Section B
Question 3: Factors Limiting and Liberating Globalization
Protagonists of globalization popularly argue that it has generally resulted into integration of the world where cultures are exchanged and understood through the sharing of meanings from one part of the world to another. Therefore, the main driving factor behind globalization in the 21st century is the benefit that it has been associated with particularly to the development of developing and third world countries. Through globalization poor nations of the world have been able to access facilities, goods and services from multinational corporations mainly based in developed countries. In essence this drives economic growth and development in the world’s poorest of countries. Hence, the development of third world countries through the provision of goods and services from the developed world is the main contributor to the developments in globalization.
On the other hand, antagonists argue that globalization’s role in developing poor countries in the world is an actual mirage. Despite the fact that it improves growth rates, productivity, enhance technological capabilities etcetera; it does not function to redistribute wealth from developed nations to poor nations. This is because the profits realized from the sales of the goods and services provided by MNCs are repatriated into the economies of the developed nations where they are based leaving the 3rd world poorer despite the advancements in economical, technological and production aspects. Hence, this unequal redistribution of wealth serves as the main detriment to the growth of globalization in the 21st century.
Question 4: Burger King beefs up Global Operations
Burger King is a fast food company majorly focused in the production of hamburgers with its base in Miami. Its major market share is in the United States and Canada although it has established presence in other parts of the world such as South America and Europe. Canada and the US accounts for 60% of its business while the remaining 40% stake is distributed throughout the other regions of the world. Burger Kings research and extension reveals that its clientele is basically comprised of the youth and teenagers who purchase burgers from shopping complexes. For this reasons Burger King has made strategic investments to put up shop in shopping malls and similar establishments where it can maximize its sales. The initial strategy employed by Burger king for global presence was to improve on its popularity around the world through word of mouth that is driven by the tourist traffic visiting Miami each year. The strategy worked quite well as the brand established itself quite successfully in regions where visitors to Miami had interacted with the bran during their tour of Miami. The success of Burger King in global expansion generally depends on the growth of the middle class and a wholesome growing population, its strategy is to expand into regions that favor these conditions such as South Africa, Nigeria, India and Russia among other regions of the world. However, the entry of the company in these markets is met by unique challenges that are specific to the economic, social, political and demographic conditions that are present in each of these locations.
- The potential for the operation of Burger King in France, India, Nigeria, Pakistan and South Africa presents several inferences that can be used to compare the successful establishment of the franchise in either state. Furthermore, the establishment of Burger King in the countries is dependent on the economic situations of each country. First, the case of France is quite promising given that France is a major world economy since France is among the G-20 countries of the world. Similarly, its economic performance is considerably as good as the performance of the US economy and that of the UK where Burger King has enjoyed considerable success in the past .
India on the other hand is a third world emerging economy and as such may not serve to be quite prospective for Burger King given the form of establishment that it is. This is majorly due to the fact that in most countries where Burger King has established the pricing of its products is to a great extent regarded to be premium. Worse still the burger business in India is likely to suffer based on the religion in India that prohibits the consumption of beef products since cows are considered holy in India. However, comparing the performance of Burger King in Nigeria, Pakistan, and South Africa it is found that the company has similar prospects in each of these countries. The overriding similarity in these states is that each comprises of a growing middleclass which is the main customer base of the Burger King Company. Further, these countries comprise of emerging world economies that promise considerably sustainable incomes for the middle class. Thus the establishment of burger king in either state stands to be a successful venture.
- An international company that sets its eyes on establishing its presence in a new foreign country stands to face challenge from competition paused by similar locally established companies. In this regard; a company such as Burger king would not be exempt from such competition. However, Burger King has several advantages that place it in a competitive position compared to local firms. Particularly, Burger King has had experience entering new markets in the global scene. In effect the company has developed a structured approach in entering new markets. The company has as well gathered resources from the areas that it has set up to help in the development and expansion of the firm into other foreign markets. The disadvantage that Burger King stands to face in such a situation is competition that is presented by the provision of local cuisine that substitutes its products. In addition, the provision of these alternatives at lower prices than those offered by Burger King would also cripple business for the firm.
- Whereas there is potential for growth of the Burger King business in the USA and in Canada, management at Burger King recognizes that the expansion of the company worldwide promises far better returns that would ultimately result in faster growth of the firm. Following in the footsteps of its arch rival McDonalds which has grown immensely attributably to its global expansion. Burger king like McDonalds should take advantage of the growth of the middle class in other regions in the world to drive the growth of their firm. Hence, it is essential that Burger King continuously initiates and develops strategy aimed at targeting expansion in regions around the world that present potential for the growth of the firm.
- Effective investments in research and development of the products offered by Burger King that is majorly hamburgers in the United States market and other major world markets reveal that the youth for a substantial customer base for the firm. What is more the research provides information as to the closed environment such as a shopping center as a major selling point for fast foods. Therefore it is intuitively an advantage for Burger King to target the youth in shopping malls as its main customer base that drive sales of its products. Nonetheless, more research needs to be done affirmatively establish these assumptions for a comprehensive interpretation.
- The location of Burger King’s headquarters in Miami was quite influential in developing brand image given the traffic that visits Miami on tourism each year. As a result, Burger King has been able to build its popularity across the world based on the familiarity that people around the world share once they have visited Miami and interacted with the brand. This has had the effect of strengthening its global presence making it an international brand particularly popular in Latin America and in the Caribbean Islands where most Miami visitors come from. On the other hand it is a limiting strategy for global penetration on the premise that the populations in these regions where Miami visitors are based do not have populations that would sustain a growing business. For this reason Burger king should focus more on other regional markets with population potential for the company’s growth.
- Given the expansive nature of the Russian market a similarity that is drawn with Burger Kings experience in Brazil is the similar expansive nature of the market in Russia. Hence, similar to the establishment of offices in Rio Burger King should as well begin by establishing offices in Moscow to handle the supplies in the country. Subsequently, it should follow through with all the steps it took in establishing itself in the Brazilian market by replicating these in the Russian market.
Question 5
- The first factor that has been influential in the growth of the growth of the cruise-line industry is the advent of the transoceanic airline services which posed competition for the shipping industry. Cruisers had to respond to this competitive threat by developing a strategy that was focused on targeting the middle class traveler who could afford cruise ships travel. They also include perks that are in terms of onboard and offshore offerings to tourists who chose to tour the world by sea.
- Developments in the global market have in turn made Carnival restructure its security frameworks in light of the terrorist attacks that have been on the rise in the 21st century. Similarly, global dynamics especially in light of the global financial crisis that rocked world financial markets in 2007 made Carnival offer affordable cruises that comprise of short distances at sea. The strategy if the company is to offer longer voyages in times of plenty finances when resources become available. Further, to deal with the challenge of staffing Carnival employs staff from different locations in the world where it operates.
- The international mature of the cruising industry is such that it is affected by all manner of differences that arise from the demarcation of national boundaries. Hence, political, social, economic and cultural differences among others influence the operations of cruise ship businesses across the world. Consequently, liners are faced by a constant challenge to design voyages and ships that accommodate economic realities of the market while at the same time cognizant of the sociopolitical and cultural expectations and preferences of their customers.
- The management of Carnival has to grapple with the threat of capacity building such that docking in most ports is hindered due to the growing size of cruise ships. Worse still, a greater challenge may be in the environmental pollution that larger cruise ships cause at sea which may cause friction between the business and environmentalists.
- The ethicality of tax avoidance by cursing companies is a question whose answer is neither here nor there. This is because on the one hand antagonists argue that exempting taxes on the basis that a ship flies a certain nation’s flag present intolerable issues of convenience with respect to staffing, safety and operating requirements. On the other hand protagonists argue that the exempt taxes are usually offset by the spending of crew members, passengers spending and from the port fees charged in destinations where the ship docks. Further, the protagonists observe that the revenues earned through docking tax serve to contribute to the development of the countries where the ships stop especially in the case of developing countries. In general, the morality of whether tax avoidance by shipping companies is ethical or not purely depends on interpretations of various parties to the debate.
Works Cited
Bigman, D. (2002). The Pros and Cons of Globalization for Developing Countries. In D. Bigman, Globalization and the Developing Countries: Emerging Strategies for Rural Development and Poverty Alleviation (pp. 27 - 80). CABI Publisher. Retrieved 3 21, 2014, from ftp://ftp.cgiar.org/isnar/Publicat/globalization/Glob_06%20ch01.pdf
Daniels , J. D., Radebaugh, L. H., & Sullivan , D. P. (2013). International Business Environments and Operations. New York: Pearson.
Garcia , J., & Troisonne, M. (2014). Saudi Arabia: Benefits and Business. Retrieved 3 20, 2014, from Inter Nations Connecting Global Minds: http://www.internations.org/saudi-arabia-expats/guide/working-in-saudi-arabia-15374/saudi-arabia-benefits-and-business-culture-2
Huntington, S. P. (1973). Transnational Organizations in World Politics. Workd Politics, 25(3), 334 - 368. doi:http://dx.doi.org/10.2307/2010115
Iwan, L. (2007, 06 18). Difference between a global, transnational, international and multinational company. Retrieved 03 20, 2014, from Lee Iwan Accumulated Experience: http://leeiwan.wordpress.com/2007/06/18/difference-between-a-global-transnational-international-and-multinational-company/
Ordóñez, P. d. (2006). Transnational Corporations and strategic challenges: An analysis of knowledge flows and competitive advantage. Learning Organization, 13(6), 544 - 559. doi:10.1108/09696470610705433
Ravasi, D., & Schultz, M. (2006). Responding to organizational identity threats; explotring the role of organisational culture. Academy of Management Journal, 49(3), 433 - 458.
