Types of International Strategies

Learning Objectives

1. Understand what a multidomestic strategy involves and be able to offer an example.

2. Understand what a global strategy involves and be able to offer an example.
3. Understand what a transnational strategy involves and be able to offer an example.

A firm that has operations in more than one country is known as a multinational corporation
(MNC).The largest MNCs are major players within the international arena. Walmart’s annual
worldwide sales, for example, are larger than the dollar value of the entire economies of Austria,
Norway, and Saudi Arabia. Although Walmart tends to be viewed as an American retailer, the
firm earns more than one-quarter of its revenues outside the United States. Walmart owns
significant numbers of stores, as of mid-2014, in Mexico (2,207),  Brazil (556), Japan (437), the
United Kingdom (577), Canada (390), Chile (386), Argentina (105), and China (400). Walmart
also participates in joint ventures in China (328 stores) and India (5). Even more modestly sized
MNCs are still very powerful. If Kia were a country, its current sales level of approximately $42
billion (in 2012) would place it in the top 75 among the more than 180 nations in the world
(Wal-Mart Stores Inc., 2014).

Multinationals such as Kia and Walmart have chosen an international strategy to guide their
efforts across various countries. There are three main international strategies available: (1)
multidomestic, (2) global, and (3) transnational (Figure 7.23 “International Strategy”). Each
strategy involves a different approach to trying to build efficiency across nations while
remaining responsive to variations in customer preferences and market conditions.

Multidomestic Strategy

A firm using a multidomestic strategy sacrifices efficiency in favor of emphasizing

responsiveness to local requirements within each of its markets. Rather than trying to force all of
its American-made shows on viewers around the globe, MTV customizes the programming that
is shown on its channels within dozens of countries, including New Zealand, Portugal, Pakistan,
and India.
 Figure 7.23: International
Strategy [Image description]

Similarly, food company H. J. Heinz adapts its products to match local preferences. Because
some Indians will not eat garlic and onion, for example, Heinz offers them a version of its
signature ketchup that does not include these two ingredients.
 Figure 7.24: Baked beans
flavored with curry? This H. J. Heinz product is very popular in the United Kingdom.

Global Strategy

A firm using a global strategy sacrifices responsiveness to local requirements within each of its
markets in favor of emphasizing efficiency. This strategy is the complete opposite of a
multidomestic strategy. Some minor modifications to products and services may be made in
various markets, but a global strategy stresses the need to gain economies of scale by offering
essentially the same products or services in each market.

Microsoft, for example, offers the same software programs around the world but adjusts the
programs to match local languages. Similarly, consumer goods maker Procter & Gamble
attempts to gain efficiency by creating global brands whenever possible. Global strategies also
can be very effective for firms whose product or service is largely hidden from the customer’s
view, such as silicon chip maker Intel. For such firms, variance in local preferences is not very
important.

Transnational Strategy

A firm using a transnational strategy seeks a middle ground between a multidomestic strategy

and a global strategy. Such a firm tries to balance the desire for efficiency with the need to adjust
to local preferences within various countries. For example, large fast-food chains such as
McDonald’s and KFC rely on the same brand names and the same core menu items around the
world. These firms make some concessions to local tastes too. In France, for example, wine can
be purchased at McDonald’s. This approach makes sense for McDonald’s because wine is a
central element of French diets.
Key Takeaways
 Multinational corporations choose from among three basic international strategies: (1)
multidomestic, (2) global, and (3) transnational. These strategies vary in their emphasis on achieving
efficiency around the world and responding to local needs.

Exercises

1. Which of the three international strategies is Kia using? Is this the best strategy for Kia to be
using?
2. Identify examples of companies using each of the three international strategies other than those
described above. Which company do you think is best positioned to compete in international markets?

Global Competitive Advantage

Today, we live in a globalized economy. Businesses shouldn't just strive to
have the most market share locally or even nationally, but should instead
consider their position on a global scale.

There are more opportunities than ever before for businesses to

internationalize and increase their market share on a global scale.
Geographical barriers to international trade have been weakened thanks to
the development of new technologies that have improved our ability to
communicate, share information, and transport goods faster and more
efficiently.

All of these factors have provided the opportunity for some companies to gain
competitive advantage against their competition worldwide. How did they
accomplish this? Discover three primary strategies that businesses use to
successfully gain global competitive advantage.

Understanding International Markets

It is important to identify which markets would be best suited for marketing,
selling, distributing, and manufacturing your product or service. Businesses
can accomplish this by talking to their customers about what international
competitors they utilize, asking partners about their experiences, and
researching what international markets of interests have to offer. Measure
your opportunity cost to effectively identify foreign market opportunities.
Cultivating International Networks
If you want to begin offering your products or services on an international
scale, you will not be able to do it alone. It is crucial to find a team that can
support your efforts to gain global competitive advantage. Often this will
include partners in international markets of interest, including distributors,
manufacturers, lawyers, government agencies, and more. One of the best
ways to build cultivate your international network is to work with your current
partners. Many of them already have international partners or clients working
internationally that they can recommend.

Creating a Culture of Innovation

Creating a culture of innovation is important for gaining any kind of
competitive advantage, particularly when utilizing a differentiation strategy.
However, building an inventive culture within your business is even more
essential when trying to gain global competitive advantage. More businesses
than ever before are expanding into international markets, making competition
more intensive. Distinguishing and communicating the value of your
company's offerings against ever-riding international competitors is essential
for gaining global competitive advantage and increased market share.

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ead the highlights

A strategy statement communicates your company’s strategy to everyone

within your startup. The statement consists of three components: objective,
scope and competitive advantage. All three components must be expressed
as clearly as possible.
A well-written strategy statement will help employees and the organization to
understand their roles when executing the company’s strategy. Without this
understanding, your startup may be pulled in different directions and lose its
focus. The purpose of the strategy statement is to ensure
that employees have a clear understanding of the company’s strategy.

Hierarchy of company statements

The strategy statement is the fourth level in the hierarchy of company
statements. It is more concrete, practical, and unique than the mission
statement.
Elements of a strategy statement
There are three basic elements of a strategy statement: the objective, the
scope and the competitive advantage.
Defining the objective, scope and competitive advantage requires trade-offs,
which are fundamental to strategy. For example, if a company decides to
pursue growth, it must accept that profitability will not be a priority. If it decides
to serve institutional clients, it may ignore retail customers.

Defining the strategic objective

The strategic objective is the single, specific objective that will drive the
business over the next few years. It is based on the maxim, “If you don’t know
where you are going, any road will get you there.” It is not to be confused with
the company’s mission, vision or values, which are not useful as strategic
goals. The objective must be specific, measurable and time bound. It must
also be a single goal (that is, growth or profitability), although subordinate
goals may follow from the strategic objective.

Maximizing shareholder value is one strategic objective. However, many

strategies are designed to achieve this goal. When creating a strategy
statement, you must answer the question: Which objective is most likely to
maximize shareholder value over the next few years?
For early-stage startups, the objectives relating to your market strategy
depend on the type of market you plan to enter.

Entering an existing market

If you enter an existing market, your aim for the first year will be to maximize
the market share that you capture from the competition. To measure that
objective, you need to:

 Determine the revenue associated with your desired market share

 Break it down by number of orders
 Then reverse engineer the rest of your sales funnel to calculate how
many leads, prospects and proposals would be associated with your
revenue target
Entering a new market
If you enter a new market, your first-year objectives will differ. They will not be
revenue-oriented. Instead your objectives will focus on:

 Educating potential customers about your vision (by demonstrating

thought leadership about their having a business problem and your
solution to fix it)
 Turning these early adopters (“visionaries”) into reference customers
At the end of the year, ideally you will see evidence of traction around your
vision:

 Invitations to speak at conferences

 Mentions by one or two key opinion leaders
 Increased website traffic
 Increased inquiries from potential customers.
The details will depend on the nature of your business, but in general, these
types of measures will indicate whether a market exists for you.

Defining the scope

The company’s scope encompasses three dimensions—the target
customer or offering, geographic location, and vertical integration (that
is, whole product). Each dimension may vary in relevance (for example, the
customer may be more important than geographic location). Clearly defining
the boundaries in each area should make it obvious which activities to
concentrate on (and which ones to avoid).

The company’s scope does not determine exactly what should be done within
those boundaries, as there is room for experimentation and initiative.
However, it should specify where the company or business will not go. This
will prevent employees from wasting resources on projects that do not fit the
corporate strategy.

Defining the competitive advantage

The competitive advantage is the most important part of the strategy
statement. It describes the logic of why you will succeed, how you differ, or
what you are doing better than the competition. To define the competitive
advantage:

 State the customer value proposition. Explain why customers should

buy your product or service. Map your value proposition against those of
your competitors to identify what makes yours distinctive.
 Outline the unique activities, or complex combination of activities, that
allow your company to deliver your customer value proposition. In their
book The Discipline of Market Leaders (1995), Michael Treacy and Fred
Wiersma describe three generic value disciplines: operational
excellence, customer intimacy and product leadership, with each
value discipline reflecting the unique activities that provide a competitive
edge. For more information, see the article Competitive strategies:
Value disciplines.
 Create a business model canvas which connects the activities that
deliver your company’s competitive advantage to your customer value
proposition.

Developing a strategy statement

First, create a great product strategy based on careful evaluation of the
industry landscape. Then, develop a strategy statement that captures the
strategy’s essence in a way that makes sense to everyone at the company.
The process should involve employees in all parts of the company and at all
levels. Work through the wording of the strategy statement in as much detail
as possible.

The end result is a brief statement that reflects the three elements of an
effective strategy and makes sense to everyone in the company. It may
include explanatory notes to clarify issues and implications.

Summary: A strategy statement communicates three key aspects of your

business (objective, scope and competitive advantage) to your employees to

help them best execute their roles; without such clarity, your startup may lose

its focus.

Read next: A strategy canvas: A tool for developing a

differentiation strategy for technology products

References
Financial integration
From Wikipedia, the free encyclopedia
Jump to navigationJump to search
Financial integration is a phenomenon in which financial markets in neighboring, regional
and/or global economies are closely linked together. Various forms of actual financial integration
include: Information sharing among financial institutions; sharing of best practices among financial
institutions; sha of cutting edge technologies (through licensing) among financial
institutions; firms borrow and raise funds directly in the international capital
markets; investors directly invest in the international capital markets; newly engineered financial
products are domestically innovated and originated then sold and bought in the international capital
markets; rapid adaption/copycat of newly engineered financial products among financial
institutions in different economies; cross-border capital flows; and foreign participation in the
domestic financial markets.
Because of financial market imperfections, financial integration in neighboring, regional and/or global
economies is therefore imperfect. For example, the imperfect financial integration can stem from the
inequality of the marginal rate of substitutions of different agents. In addition to financial market
imperfections, legal restrictions can also hinder financial integration. Therefore, financial integration
can also be achieved from the elimination of restrictions pertaining to cross-border financial
operations to allow (a) financial institutions to operate freely, (b) permit businesses to directly raise
funds or borrow and (c) equity and bond investors to invest across the state line with fewer [or
without imposing any] restrictions.[1] However, it is important to note that many of the legal
restrictions exist because of the market imperfections that hinder financial integration. Legal
restrictions are sometimes second-best devices for dealing with the market imperfections that limit
financial integration. Consequently, removing the legal restrictions can make the world
economy become worse off. In addition, financial integration of neighboring, regional and/or global
economies can take place through a formal international treaty which the governing bodies of these
economies agree to cooperate to address regional and/or global financial disturbances through
regulatory and policy responses.[1] The extent to which financial integration is measured includes
gross capital flows, stocks of foreign assets and liabilities, degree of co-movement of stock returns,
degree of dispersion of worldwide real interest rates, and financial openness. [1][2][3] Also there are
views that not gross capital flows (capital inflow plus capital outflow), but bilateral capital flows
determine financial integration of a country, which disregards capital surplus and capital deficit
amounts. For instance, a county with only capital inflow and no capital outflow will be considered not
financially integrated.[4]
Mergers vs. Acquisitions: An Overview
Mergers and acquisitions are two of the most misunderstood words in the
business world. Both terms often refer to the joining of two companies, but there
are key differences involved in when to use them.

A merger occurs when two separate entities combine forces to create a new,

joint organization. Meanwhile, an acquisition refers to the takeover of one entity
by another. Mergers and acquisitions may be completed to expand a company’s
reach or gain market share in an attempt to create shareholder value.

KEY TAKEAWAYS

 A merger occurs when two separate entities combine forces to create a

new, joint organization.
 An acquisition refers to the takeover of one entity by another.
 The two terms have become increasingly blended and used in conjunction
with one another.
Mergers
Legally speaking, a merger requires two companies to consolidate into a new
entity with a new ownership and management structure (ostensibly with
members of each firm). The more common distinction to differentiating a deal is
whether the purchase is friendly (merger) or hostile (acquisition). Mergers require
no cash to complete but dilute each company's individual power.
In practice, friendly mergers of equals do not take place very frequently. It's
uncommon that two companies would benefit from combining forces with two
different CEOs agreeing to give up some authority to realize those benefits.
When this does happen, the stocks of both companies are surrendered, and new
stocks are issued under the name of the new business identity.

Typically, mergers are done to reduce operational costs, expand into new
markets, boost revenue and profits. Mergers are usually voluntary and involve
companies that are roughly the same size and scope.

Due to the negative connotation, many acquiring companies refer to an

acquisition as a merger even when it is clearly not.
Acquisitions
In an acquisition, a new company does not emerge. Instead, the smaller
company is often consumed and ceases to exist with its assets becoming part of
the larger company. Acquisitions, sometimes called takeovers, generally carry a
more negative connotation than mergers. As a result, acquiring companies may
refer to an acquisition as a merger even though it's clearly a takeover. An
acquisition takes place when one company takes over all of the operational
management decisions of another company. Acquisitions require large amounts
of cash, but the buyer's power is absolute.

Companies may acquire another company to purchase their supplier and

improve economies of scale–which lowers the costs per unit as production
increases. Companies might look to improve their market share, reduce costs,
and expand into new product lines. Companies engage in acquisitions to obtain
the technologies of the target company, which can help save years of capital
investment costs and research and development.

Since mergers are so uncommon and takeovers are viewed in a negative light,
the two terms have become increasingly blended and used in conjunction with
one another. Contemporary corporate restructurings are usually referred to as
merger and acquisition (M&A) transactions rather than simply a merger or
acquisition. The practical differences between the two terms are slowly being
eroded by the new definition of M&A deals.

Real World Examples of Mergers and Acquisitions

Although there have been numerous mergers and acquisitions, below are two of
the most notable ones over the years.
Merger: Exxon and Mobil 
Exxon Corp. and Mobil Corp. completed their $81 billion merger in November
1999 following approval from the Federal Trade Commission (FTC). Exxon and
Mobil were the top two oil producers, respectively in the industry prior to the
merger. The merger resulted in a major restructuring of the combined entity,
which included selling more than 2,400 gas stations across the United States.
The joint entity continues to trade under the name Exxon Mobil Corp. (XOM) on
the New York Stock Exchange (NYSE).

Acquisition: AT&T Buys Time Warner

On June 15, 2018, AT&T Inc. (T) completed its acquisition of Time Warner Inc.,
according to AT&T's website. However, due to intervention by the U.S.
government to block the deal, the acquisition went to the courts, but in February
2019, as reported by the Associated Press, the "federal appeals court cleared
AT&T’s takeover of Time Warner."

The $81 billion acquisition will realize cost savings for the combined entity of $1.5
billion and revenue synergies of $1 billion, which are expected to be realized
within three years of the close of the acquisition.

Managing diversity within and

across Cultures
 THESTREAK25 FEB 2019 2 COMMENTS

From our increasingly diverse domestic workforce to the globalization of business, cultural
competence is arguably the most important skill for effective work performance in the 21st
century.

Cultural competence, in brief, is the ability to interact effectively with people from different
cultures. This ability depends on awareness of one’s own cultural worldview, knowledge of other
cultural practices and worldviews, tolerant attitudes towards cultural differences, and cross-
cultural skills.

The more different cultures work together, the more cultural competency training is essential to
avoid problems.  Cultural problems can range from miscommunication to actual conflict, all
endangering effective worker productivity and performance.
 Managing Cultural Diversity in the Workplace

Developing cultural competence results in an ability to understand, communicate with, and

effectively interact with people across cultures, and work with varying cultural beliefs and
schedules. While there are myriad cultural variations, here are some essential to the workplace:

1. Communication: Providing information accurately and promptly is critical to effective work and

team performance. This is particularly important when a project is troubled and needs immediate
corrective actions. However, people from different cultures vary in how, for example, they relate to bad
news. People from some Asian cultures are reluctant to give supervisors bad news – while those from
other cultures may exaggerate it.
2. Team-Building: Some cultures – like the United States – are individualistic, and people want to
go it alone. Other cultures value cooperation within or among other teams. Team-building issues can
become more problematic as teams are comprised of people from a mix of these cultural types.
Effective cross-cultural team-building is essential to benefiting from the potential advantages of cultural
diversity in the workplace
3. Time: Cultures differ in how they view time. For example, they differ in the balance between
work and family life, and the workplace mix between work and social behavior. Other differences
include the perception of overtime, or even the exact meaning of a deadline. Different perceptions of
time can cause a great misunderstanding and mishap in the workplace, especially with scheduling and
deadlines. Perceptions of time underscore the importance of cultural diversity in the workplace, and
how it can impact everyday work.
4. Schedules: Work can be impact by cultural and religious events affecting the workplace. The
business world generally runs on the western secular year, beginning with January 1 and ending with
December 31. But some cultures use wildly different calendars to determine New Years or specific holy
days. For example, Eastern Orthodox Christians celebrate Christmas on a different day from western
Christians. For Muslims, Friday is a day for prayer. Jews observe holidays ranging from Rosh Hashanah to
Yom Kippur. These variations affect the workplace as people require time off to observe their holidays.

To develop cultural competence, training should focus on the following areas:

1. Awareness. Cultural Awareness is the skill to understand one’s reactions to people who are
different, and how our behavior might interfere with effective working relationships. We need to learn
to overcome stereotypes? We need to see people as individuals and focus on actual behavior, rather
than our preconceived and often biased notions.
2. Attitude. This is the companion skill to awareness. Attitude enables people to examine their
values and beliefs about cultural differences, and understand their origins. It is important that to focus
on facts, rather than judgment. Also, note that suggesting that some people are more biased and
prejudiced than others can quickly sabotage cultural training.  The goal is managing cultural diversity in
the workplace, and creating effective working relationships – not to make converts.
3. Knowledge Social science research indicates that our values and beliefs about equality may be
inconsistent with behavior. Ironically, we are often unaware of this. Knowledge about our own behavior
– and how it relates to fairness and workforce effectiveness – is an essential skill.  It’s also essential to be
knowledgeable about other cultures, from communication styles to holidays and religious events.  The
minimum objective is tolerance, which is essential for effective teamwork. Differences are what make
tolerance necessary , and tolerance is what makes differences possible.
4. Skills The goal of training – in awareness, attitude, and knowledge – should be skills that allow
organizational leaders and employees to make cultural competence a seamless part of the workplace.
The new work environment is defined by understanding, communicating, cooperating, and providing
leadership across cultures.  Managing cultural diversity in the workplace is also the challenge for
organizations that want to profit from a competitive advantage in the 21st century economy.

for an organization to actually profit from the “diversity of thought” of its diverse workforce the
following factors have to come together:

 Commitment to the diversity development process by top management and all employees
 Diversity promoting and supporting companywide structures and processes
 Development and training of the workforce’s cross-cultural (leadership) competencies and
conflict management skills

Without the necessary organizational framework, intercultural training, and support, diverse
teams will have difficulties becoming cohesive, innovative, and productive units. Let’s take a
detailed look at the steps needed achieve this goal.

1. Select a cross-culturally competent team leader Leading a multicultural team successfully

requires competencies that go well beyond the technical knowledge and the leadership qualities usually
required. To be effective, leaders of multicultural teams need:

 A high level of cultural flexibility

 Robust ambiguity tolerance
 Low levels of ethnocentrism

These intercultural competencies are best learned through cross-cultural training combined with
personal work experience (e.g., being a member of a diverse team, working in an unfamiliar
environment, having a mentor with a different cultural background).
2. Select the team members Next, a team leader who already has the necessary cross-cultural
proficiency selects the members based on specific criteria related to the team’s/project’s target
population (adapted from Jent, N., “Diversity: Zauberwort zur Leistungssteigerung des HR-Bereichs,”
2005). These selection criteria need to be clearly defined and transparently communicated to all team
members.
Reminder: The organizational framework, the hierarchy within the broader organization, and the actual

physical/virtual space have to be already defined.

3. Make the kick-off phase personal Start any project or team kick-off phase with a team event
that gives members an opportunity to get to know each other personally, such as a shared meal. And if
 for some reason the team can’t meet in person, at the very least a friendly videoconference allowing for
small talk is recommended.
4. Take the time to build relationships and trust Personal relationships and trust are a central
element of doing business in many cultures around the globe. Other cultures (e.g., the Germans) prefer
to approach negotiations and projects head-on without much time given to relationship building.
However, unless you are German and manage a team of Germans (especially men), investing time to
build trusting relationships is never wrong. By the way, even German men like to socialize and build
relationships after work.
5. Learn about differences While team members might have similar educations, professional
experience, and work in the same industry, there are still considerable differences to be found between
team members. It is those differences (e.g., career path, education, culture, hobbies, social background)
that will lead to creative and innovative ideas, and eventually will influence the quality of team
performance.
For example, a large American telecom company increased sales and retention of customers calling to
Brazil by listening to its South American team member. She explained that Brazilians like to take their
time talking to friends and family back home. As a result, the company lowered the call rate, but still
increased its profit because of the longer call times.
6. Clarify expectations:
Leaders:The process of discussing and clarifying expectations is a necessary step for any team, but is
particularly crucial for multicultural teams. Diverse employees will have different expectations about
leadership due to factors such as age and professional or cultural background. Consider the varying
patterns of expectations and common processes that need to be negotiated. Who expects what, and
why? How will decisions be reached? Who decides ultimately? Who can voice criticism?
Team members:The members need to be able to voice and discuss their expectations before some kind
of common ground can be negotiated. Clarify potential conflicts and explore possible remedies. How
different are the issues raised, and the troubleshooting plans imagined by the various team members? If
team goals cannot be met in a timely manner, can a plan B be envisioned and implemented?
7. Communicate, communicate, communicate Choosing adequate communication channels and
cooperating consistently are essential for local and virtual teams. Which tools fit the team’s framework
and work methods? As we all know, communicating clearly and without conflict is challenging even in
our mother tongue. The difficulties multiply exponentially when different vocabularies are at play such
as in the case of interdisciplinary and/or international teams. Therefore, it becomes even more
important to apply the golden rules of communication:

 Communicate with a positive attitude

 Be clear about who you are addressing
 Be descriptive
 Avoid making value judgments
 Rephrase what you heard
 Give examples
 Speak only for yourself
 Suggest changes that can be linked to behaviors

By working hard to create a team culture, communication and collaboration just might become a
pleasure and an inspiration instead of hard work.
8. Set and respect deadlines It is a well-known fact that time does not mean the same to
everybody; after all, who does not get annoyed by chronic latecomers? Time can be a sensitive issue
personally and culturally. To get everybody on the same page, communicate the rules about time
keeping and deadlines clearly. This is especially important if some of the team members are not working
in the same time zone and the common work hours are limited. In this scenario, team members have to
be even more flexible, as returning a phone call might have to wait for the next day. What time frames
are acceptable, and when is a call-back considered late? What are the consequences if deadlines are not
respected?
9. Be alert to signs of trouble Inconsistencies and delays might signal issues with team
collaboration. Don’t procrastinate when you become aware of deadlines not being met or people
avoiding direct contact. Helpful interventions to prevent trouble may include personal talks, social
gatherings, reminders of milestones achieved, or teambuilding events. When considering any
intervention, cultural intelligence and sensitivity are of utmost importance to achieve the goal of better
collaboration.
10. Assess the team’s work Of course, feedback about the team’s progress needs to be given. But a
majority of cultures consider public critique offensive and improper, and only allow for indirect or
private face-to-face critique. To work together successfully, it, thus, is necessary to tailor any critique to
the member’s cultural background. While it might be acceptable to give critique directly and rather
bluntly when working with a Dutch team member, for example, this will not be acceptable to individuals
from other cultures such as China or India. It might be helpful to call upon a (cultural)
facilitator/mediator if the issue involves more than one team member, as that is usually a signal of a
bigger issue. Again, don’t procrastinate.

Reap the Benefits

A multicultural team, like any other team, needs room and time to get to know each other,
experiment, and build trust. To create room for the diversity of thoughts, multicultural teams
need to find the balance between time-tested (cultural) practices and the development of novel
ideas. Team members need to commit fully to the process, and be willing to go beyond their
comfort zone. If they do, the diverse team offers each member a chance to bring his or her
personal and professional expertise to the table, and to be recognized and valued for it.

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What is Country Risk?

Country risk is the risk that a foreign government will default on
its bonds or other financial commitments. Country risk also refers to
the broader notion of the degree to which political and economic
unrest affect the securities of issuers doing business in a particular
country.
How Does Country Risk Work?
Let's assume that you are considering purchasing either
a bond issued by the government of Canada or a bond issued by the
government of Nigeria. Both governments intend to use
the funds for similar projects. Which bond is more likely to default?
That depends in part on your assessment of country risk .

Political and economic instability are two of the biggest reasons

countries default on their bonds, so the question of determining
country risk is at least partially a matter of comparing
these factors for Canada and Nigeria. Analysts scrutinize tax
systems, the influence of certain political parties, evidence of
corruption, inflation rates, education systems, demographics, and a
wide variety of other factors to determine and predict sources of
instability.

Why Does Country Risk Matter?

Country risk is a concern because political and economic unrest
create volatility. In turn, investors demand higher returns as
compensation for this added risk. As you can imagine, Canada
would have much less country risk than Nigeria, but in exchange for
this peace of mind, Canadian bonds will yield less than the Nigerian
bonds. As a result, the presence and degree of country risk makes it
more expensive for many emerging economies or struggling
countries to borrow money.

What is Macro Risk?

Macro risk is a type of political risk that can impact all businesses operating
within a nation. Macro risk can be political in nature or it can be caused
by macroeconomic factors or events outside of the country's ruling government's
control. Common examples of macro risk include changes in monetary policy,
shifts in the regulatory or tax regime, and political or civil unrest.

Understanding Macro Risk

Macro risk affect all asset classes that are exposed to a particular country or
region. For example, imagine a country that has elected a government with a
platform that is against foreign influence and interference. Any company
that engages in foreign direct investment or has operations within the country
would be facing tremendous macro risk because the government has the
potential to expropriate any and all foreign operations, regardless of
industry. There are many organizations that provide reports and information on
the degree of macro risk that a country may possess. Furthermore, companies
have the opportunity to purchase political risk insurance from a variety of
organizations to mitigate potential losses.

Macro Risk and the Impact on the Market

Macro risk is both a short- and long-term concern for financial planners,
securities traders and investors. Some of the macroeconomic factors that can
influence macro risk include unemployment rates, interest rates, exchange
rates and even commodity prices. Some macro risks will have more of an impact
on a particular sector than it has on others. Changes in environmental
regulations, for example, tend to impact the mining and energy industries more
than other industries, but pain in these industries can then ripple through an
economy if mining and energy are significant sources of investment and jobs.

Macro risk is an important factor for stock traders and institutions to consider in

their financial and risk models. Most macro risks are addressed in valuation
models like the arbitrage pricing theory and the modern portfolio theory families
of models. Valuation models and closely related fundamental analysis models
also consider macro risk as a factor. Understanding how macro risk influences
the intrinsic value of a particular investment is important because when the
factors change values, errors can be introduced in the corresponding intrinsic
value forecasts.

Macro Risk and International Investment Flows

Investors also look at macro risk to gauge the political stability and the general
growth opportunities in other countries. There are several types of annual
international rankings of countries that provide insight into their relative political
and social stability and how that correlates with potential economic growth.
Investors can take action either by investing directly into a country or by investing
into regionally oriented funds. With some emerging markets, the growth story can
be compelling even if the macro risks are significant. If an investor is diversified
over enough markets, the macro risks of any particular one becomes more
manageable from a portfolio perspective.

What is corporate governance?

The purpose of corporate governance is to facilitate effective, entrepreneurial and
prudent management that can deliver the long-term success of the company.

Corporate governance is the system by which companies are directed and controlled.
Boards of directors are responsible for the governance of their companies. The
shareholders’ role in governance is to appoint the directors and the auditors and to
satisfy themselves that an appropriate governance structure is in place.

The responsibilities of the board include setting the company’s strategic aims, providing
the leadership to put them into effect, supervising the management of the business and
reporting to shareholders on their stewardship.

Corporate governance is therefore about what the board of a company does and how it
sets the values of the company, and it is to be distinguished from the day to day
operational management of the company by full-time executives.

In the UK for listed companies corporate governance it is part of the legal system as the
UK Corporate Governance Code applies to accounting periods beginning on or after 29
June 2010 and, as a result of the new Listing Regime introduced in April 2010, applies
to all companies with a Premium Listing of equity shares regardless of whether they are
incorporated in the UK or elsewhere.

But good governance can have wider impacts to the non listed sector because it is
fundamentally about improving transparency and accountability within existing systems.
One of the interesting developments in the last few years has been the way in which the
‘corporate’ governance label has been used to describe governance and accountability
issues beyond the corporate sector. This can be confusing and misleading as UK
Corporate Governance has been built and developed to deal with the governance of
listed company entities and not designed to cover all organisational types that may have
different accountability structures.

Many academic studies conclude that well governed companies perform better in
commercial terms.

Understanding Social Responsibility

Social responsibility means that individuals and companies have a duty to act in
the best interests of their environment and society as a whole. Social
 responsibility, as it applies to business, is known as corporate social
responsibility (CSR).

The crux of this theory is to enact policies that promote an ethical balance
between the dual mandates of striving for profitability and benefiting society as a
whole. These policies can be either ones of commission (philanthropy -
donations of money, time, or resources) or omission (e.g., "go green" initiatives
like reducing greenhouse gases or abiding by EPA regulations to limit pollution).
Many companies, such as those with "green" policies, have made social
responsibility an integral part of their business models, and they have done so
without compromising profitability. In 2018, Forbes named the top socially
responsible companies in the world. Topping the list is technology giant Google,
followed closely by The Walt Disney Company and Lego, who announced in
March 2018 that it would begin manufacturing its pieces from plant-based
sources.

Additionally, more and more investors and consumers are factoring in a

company's commitment to socially responsible practices before making an
investment or purchase. As such, embracing social responsibility can benefit the
prime directive - maximization of shareholder value. There is a moral imperative,
as well. Actions, or lack thereof, will affect future generations. Put simply, being
socially responsible is just good business practice, and a failure to do so can
have a deleterious effect on the balance sheet.

In general, social responsibility is more effective when a company takes it on

voluntarily, as opposed to being required by the government to do so through
regulation. Social responsibility can boost company morale, and this is especially
true when a company can engage employees with its social causes.

KEY TAKEAWAYS

Corporate Social Responsibility: Tracking the

Top Trends
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By INVESTOPEDIA
 Updated Jan 30, 2020
As pressure is added by consumers seeking to make more responsible choices
and by the constraints of ever-dwindling natural resources, more companies are
incorporating sustainable strategies and adopting more socially responsible
practices. Corporate social responsibility, or CSR, is the business practice of
pursuing social and environmental gains, alongside financial gains. As the push
for companies that do good increases, corporations of all sizes are looking for
ways to incorporate sustainable business practices into their everyday.

Some of the most popular CSR trends in the area of corporate social
responsibility include increased transparency, investment in green technologies,
local community and employee engagement, and diversity and inclusion
initiatives.

CSR Trend: Increased Transparency

Demands for disclosure for companies to reveal what's under the hood of their
businesses have become commonplace among consumers. This CSR trend is
partly in response to heightened regulatory oversight such as the European
Union's noteworthy General Data Protection Regulation (GDPR). It is also partly
a result of ever-increasing availability of almost instantaneous information, and
consumer and shareholder demands of once behind-the-scenes information. As
part of a business model that embraces corporate social responsibility,
companies are sharing more environmental, social and governance disclosures.

Consumers are no longer satisfied with shady business dealings and hidden
agendas but are demanding to know more about previously internal matters. For
example, even workers at places like Google have openly protested the
company's bid on a cloud computing contract with US Customs and Border
Protection. Just as nonprofits are subject to rigorous impact reporting, financial
transparency, and accountability, increased transparency is a CSR trend that will
only grow in coming years.

CSR Trend: Green Technology

Gone are the days of rampant resource usage without any accountability or
thought toward replenishment. Climate change continues to drive many
conversations in the corporate world, and multiple trends in CSR intersect at this
topic. As available natural resources are rapidly depleted and our world reaches
a tipping point of a two-degree rise in average temperature, socially responsible
companies are investing in green technologies, reducing their reliance on non-
renewable resources, and looking to more sustainable inputs to do business.

Whether it's fashion companies looking into alternative fabrics such as

eucalyptus or recycled water bottles, producing clean emissions through more
rigorous machinery emissions tests, or simply getting certifications like LEED for
their buildings, green technology will certainly be a growing trend for businesses
looking to enhance their corporate social responsibility.

CSR Trend: Global Companies Acting Locally

Localization is in. Even companies that operate on a global level are recognizing
the value of local markets and supply chains. This is not only to reduce carbon
emissions that might be associated with transportation or supply chain costs (as
creating "greener" businesses is also a rising CSR trend mentioned above), but
to tap into local talent and solutions. Many companies that also have charitable
arms are also prioritizing nonprofit partners that work with local leaders and local
talent, rather than "shipping in" cookie-cutter solutions.

Also, corporate social responsibility initiatives actively attempt to engage in

activities that benefit their local communities as well as produce profits for the
corporation. Not only are there publicity benefits to be gleaned from getting
involved in local communities, it can also boost employee satisfaction.
Increasingly, corporations interested in CSR are donating to local nonprofits,
funding the construction of things like schools in lower-income neighborhoods,
and becoming engaged with civic issues that affect where they do business.
Corporate-sanctioned volunteer events, especially during the holidays, is also an
emerging CSR trend that allows employees to volunteer their efforts and make
positive contributions with minimal time commitments.

CSR Trend: Diversity and Inclusion

As the issue of economic inequality rises to the forefront of many political
debates, so does the issue increasingly press upon corporations. Recognition of
inequalities in pay and economic burdens of employees is an emerging trend in
corporate social responsibility. Pay equity between males and females,
measuring the difference in income between the highest-paid and the lowest-paid
worker at a company, and making sure that there is a diverse staff base have
become key priorities of the best companies in the world.

Corporate social responsibility initiatives such as intentionally recruiting

candidates from difficult economic or educational backgrounds ultimately
empowers local talent, brings diverse voices to the table, and is a trend that's
here to stay.

Global Human Resource Management

- Meaning and Objectives
With the advent of globalization, organizations - big or small have ceased to be local, they have become
global! This has increased the workforce diversity and cultural sensitivities have emerged like never
before. All this led to the development of Global Human Resource Management.

Even those organizations who consider themselves immune to transactions across geographical
boundaries are connected to the wider network globally. They are in one way or the other dependent
upon organizations that may even not have heard about. There is interdependence between
organizations in various areas and functions.

The preliminary function of global Human Resource Management is that the organization carries a
local appeal in the host country despite maintaining an international feel. To exemplify, any
multinational / international company would not like to be called as local, however the same wants a
domestic touch in the host country and there lies the challenge.

We may therefore, enumerate the objectives of global HRM as follows:

1. Create a local appeal without compromising upon the global identity.

2. Generating awareness of cross cultural sensitivities among managers globally and hiring of staff
across geographic boundaries.
3. Training upon cultures and sensitivities of the host country.

The strategic role of Human resources Management in such a scenario is to ensure that HRM policies
are in tandem with and in support of the firm’s strategy, structure and controls. Specifically, when we talk
of structures and controls the following become worth mentioning in the context of Global HRM.

 Decision Making: There is a certain degree of centralization of operating decision making.

Compare this to the International strategy, the core competencies are centralized and the rest are
decentralized.
 Co-ordination: A high degree of coordination is required in wake of the cross cultural
sensitivities. There is in addition also a high need for cultural control.
 Integrating Mechanisms: Many integrating mechanisms operate simultaneously.

Global HRM and the Staffing Policy

Here also the role is no different i.e. hiring individuals with requisite skills to do a particular job. The
challenge here is developing tools to promote a corporate culture that is almost the same everywhere
except that the local sensitivities are taken care of.

Also, the deciding upon the top management or key positions gets very tricky. Whether to choose a local
from the host country for a key position or deploy one from the headquarters assumes importance; and
finally whether or not to have a uniform hiring policy globally remains a big challenge.

Nevertheless an organization can choose to hire according to any of the staffing policies mentioned
below:

 Ethnocentric: Here the Key management positions are filled by the parent country individuals.
 Polycentric: In polycentric staffing policy the host country nationals manage subsidiaries
whereas the headquarter positions are held by the parent company nationals.
 Geocentric: In this staffing policy the best and the most competent individuals hold key positions
irrespective of the nationalities.

Geocentric staffing policy it seems is the best when it comes to Global HRM. The human
resources are deployed productively and it also helps build a strong cultural and informal
 management network. The flip side is that human resources become a bit expensive when hired
on a geocentric basis. Besides the national immigration policies may limit implementation.

Global HRM therefore is a very challenging front in HRM. If one is able to strike the right chord in
designing structures and controls, the job is half done. Subsidiaries are held together by global HRM,
different subsidiaries can function operate coherently only when it is enabled by efficient structures and
controls.

What is Employee motivation?

Definition: Employee motivation is defined as the enthusiasm, energy level,
commitment and the amount of creativity that an employee brings to the
organization on a daily basis.

Motivation is derived from the Latin word, “movere” which literally means
movement. All the definitions that you would read in books or in dictionary
relate to the fact that motivation is behavior and one needs to channelize this
behavior in order to achieve desired goals and results.

Employee motivation is all about how engaged an employee feels in tandem

to the organization’s goals and how empowered he/she feels. Motivation is of
two types:

 Intrinsic motivation
 Extrinsic motivation
Motivated employees are an asset to an organization, they are directly
proportional to an organization’s success. Motivation is intangible, difficult to
measure and extremely difficult to control, but very easy to facilitate if done
right. It’s all about intention, intensity, and perseverance.

Types of employee motivation

There are two types of motivation, intrinsic and extrinsic. An organization
needs to understand for a fact that not employees are clones, they are
individuals with different traits. Thus effectively, motivating your employees
will need to acquire a deeper understanding of the different types and ways of
motivation.

With this understanding, you will be able to categorize your employees better
and apply the right type of motivation to increase the level of employee
engagement and employee satisfaction. Some employees respond better to
intrinsic motivation while others may respond better to extrinsic motivation.
Intrinsic motivation
Intrinsic motivation means that an individual is motivated from within. He/she
has the desire to perform well at the workplace because the results are in
accordance with his/her belief system.

An individual’s deep-rooted beliefs are usually the strongest motivational

factors. Such individuals show common qualities like acceptance, curiosity,
honor, desire to achieve success.

Research has shown that praise increases intrinsic motivation, so does

positive employee feedback. But it should all be done in moderation. If you
overdo any of these, there are high chances that the individual loses
motivation.

It is well observed in children and I am using this as an example here if

children are overpraised for the little things they are expected to do on a daily
basis, their motivation level decreases. Now if you are reading this blog, there
are good chances you are not a child, although we encourage children to read
good content, the purpose of writing this blog is to still focus on adults.

So if you are a manager, supervisor or in a leadership role, please be

intentional with your feedback or praise. Make sure it is empowering and your
employees understand your expectations.

Extrinsic motivation
Extrinsic motivation means an individual’s motivation is stimulated by external
factors- rewards and recognition. Some people may never be motivated
internally and only external motivation would work with them to get the tasks
done.

Research says extrinsic rewards can sometimes promote the willingness in a

person to learn a new skillset. Rewards like bonuses, perks, awards, etc. can
motivate people or provide tangible feedback.

But you need to be careful with extrinsic rewards too! Too much of anything
can be harmful and as a manager or a supervisor, you need to be clear to
what extent are you going to motivate your employees to accomplish
organizational goals.
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Top 10 ways to motivate employees

If you are looking for ways to motivate your employees at work, here are the 5
simple ways of making it work:

1. Employee motivation surveys: Use an online survey software or

platform to conduct employee motivation surveys. Let them give candid and
genuine feedback about their experience, ideas, and suggestions. This will
help you identify areas that need your attention.
2. Employee satisfaction surveys: Employee satisfaction depends on a
ton of factors such as work environment, infrastructure, roles and
responsibilities, etc. Conducting employee satisfaction surveys will help
Managers understand dissatisfaction factors and act on them. Frequent
surveys will help addressing dissatisfaction issues faster.
3. Job well done- recognize it! Recognition plays a huge role in
increasing the motivation levels of the employees. It helps create a healthy
bond between the employer and employees. It not only fulfills our basic
need of esteem but also facilitates belonging.
4. Focus on intrinsic rewards: It is true some people need rewards to
get tasks done, but extrinsic rewards fade very quickly. Focus on motivating
your employees from within. Some may even say, “yeah this is all good but
we gotta eat and pay rent”… well, that’s true, for that you compensate your
employees well, but make sure you create values for your organization that
are long-lasting.
5. Autonomy not bureaucracy: Micromanagement is the worst thing you
can do as a manager. It is not only time consuming, but also really
unwanted. If you have hired people with certain skillset let them do their job,
be a facilitator, not a dictator. Human beings value autonomy, give them the
freedom to get things done in ways acceptable and see the changes.
6. Create an amazing work environment: No, it’s not Fussball, or free
snacks or a coffee machine. According to a study conducted by Ohio State
University, your work environment seriously impacts your mood. So it does
make sense to invest in the work environment where people actually spend
60 hours a week. Creating a good atmosphere will motivate your staff. Just
go ahead and do it.
7. Be a visionary: Lead with vision. Employees need to know their efforts
are driving something important. They need to know their destination and
more importantly the path that will take them there. If as a leader you lack
 the vision for your own organization, how do you expect them to own up to
your vision? Make a visual reminder of your organization’s road map,
encourage your employees to add to that. You will be surprised how
innovative they can get.
8. Solicit ideas and suggestions, act on them: Now that you have
conducted surveys, you have received feedback from your employees.
Ensure that the ideas, suggestions, grievances that they have put forth will
looked into and addressed in a timely fashion.
9. Career-pathing: Having a career growth plan with clearly mentioned
roles and responsibilities is crucial to employees. It helps them focus, and
direct their efforts to an achievable goal. Make sure that you sit down with
every employee and come up with a career plan that is transparent and
communicated clearly.
10. Provide flexibility: Not all employees are alike. Some prefer 9-5,
others not much; some like coming to work daily, others not much. For
some, commuting to work might be long and challenging. Allow some
flexibility within reason and your employees will be happy and motivated
Importance and function of Cross-cultural management in international business
The need for multi-cultural management has been brought about by a number of factors
(Greblikaite and Daugeliene 2010). First, there is increased globalization that has led to
the desire for business enterprises to compete and remain relevant in the contemporary
business environment.

In addition, the rate of migration from one country to another has been growing steadily
over the years. The outcome of these activities has been the creation of work
environments made up of employees from different cultures.

By and large, cross-cultural management looks at how different people around the world
respond to situations. It goes ahead to provide strategies to ensure that people from
varied cultures across the globe can successfully work together (Kawar 2012, p. 107).

The number of businesses venturing into multinational operations across the world has
been on rise driven by the ever increasing trend of globalization. As business
enterprises continue to expand operations beyond their domestic market, the need for
managers who can effectively perform in a cross-cultural environment can not be
overemphasized.
Unlike in the past, corporate bodies are today compelled to create strategic alliances
and establish joint ventures in foreign markets (Okoro 2013, p. 2). Besides having
managers who are capable, it is also important for multinational businesses to ensure
that employees are properly equipped with vital skills necessary for surviving in a multi-
cultural setup.

For this reason, corporate bodies make every effort to provide an opportunity for
managers and employees at different levels to visit other countries and learn how to
cope with different cultures (Piekkari, Welch and Welch 2014). Arguably, this makes it
possible for managers to have fruitful engagements with people from other cultures and
to take advantage of business opportunities that may be found in other countries.

Generally, scholars are in agreement that cross cultural management is very critical for
success to be realized in an international business environment due to increased
globalization (Primecz, Romani and Sackmann 2011). Considering that many business
enterprises, big and small are now taking advantage of the growing global market, it is
necessary to come up with strategies for managing and negotiating across different
cultures in order to succeed.