The International Business Environment

International management is defined  as the management of business operations con- ducted in more than one country.  The fundamental  tasks of business management,  includ- ing financing, production, and distribution of products  and services, do not change in any substantive way when a firm is transacting business across international borders. The basic management functions  of planning,  organizing, leading, and controlling are the same whether a company operates domestically or internationally. But managers will experience more difficulty and risks when performing  these management functions on an interna- tional  scale. Consider the following blunders:

  • When U.S. chicken entrepreneur  Frank  Purdue translated  a successful advertising  slo- gan into Spanish, “It takes a tough man to make a tender chicken”  came out as “It takes a virile man to make a chicken affectionate.”20
  • It took McDonald’s more than a year to figure out that Hindus in India do not eat beef. The company’s sales took  off only after McDonald’s  started using lamb to make burgers that were sold in India.21
  • In Africa, the labels on bottles show pictures of what is inside so illiterate  shoppers can know what they’re buying. When  a baby-food  company showed a picture of an infant on its label, the product didn’t sell very well.22
  • United Airlines  discovered that even colors can doom a product.  The airline handed out white carnations when it started flying from Hong Kong, only to discover that to many Asians, these flowers represent death and bad luck.23

Some of these examples seem humorous,  but there’s nothing funny about them to man- agers trying to operate in a highly competitive  global environment.  What should managers of emerging global companies look for to avoid obvious international mistakes? When  they are comparing one country with another, the economic, legal-political,  and sociocultural sectors present the greatest difficulties.  Key factors to understand in the international envi- ronment are summarized in Exhibit 3.3.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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