Describe the pressures for local responsiveness that international companies face.
Chapter 12 Strategies
for International Business
#Daniels #15edition #StrategiesforInternationalBusiness #Chapter12International Business: Environments and Operations, 15e, Global Edition (Daniels et al.)
Daniels, 15edition, Strategies for International Business, Chapter 12
Answer:
ReplyDeleteThe two main pressures for local responsiveness that international companies face are consumer divergence and host-government policies.
a. Consumer divergence: Some maintain that fundamental divergences in consumer tastes and preferences across countries have and will continue to exert strong pressure for local responsiveness. Many think that differences in consumer tastes and preferences across countries emerge and endure due to several factors, including cultural predisposition, historical legacy, emergent nationalism (i.e., "buy local" campaigns), and economic prosperity. No matter the cause, proponents of customer divergence say the outcome is the same: consumers prefer goods that are sensitive to their way of life.
b. Host-government policies: Host-country governments mandate policies that differ widely from each other, causing variability in political, legal, and economic situations around the world. The movement toward privatization, economic freedom, and deregulation has reduced the variability among countries, but differences among countries remain. In light of the recent economic crisis, these differences are again growing as countries take more steps to intervene in an unstable marketplace. These differences push firms to determine how to best configure and coordinate their value chain so that they provide the necessary degree of local responsiveness without jeopardizing their capability to create value. Host governments also have a range of aggressive tools to ensure that an MNE is locally responsive. These tools can be broad policy directives, explicit threats or acts of trade protectionism, local content rules, or simply national product standards that can be met only by local operations. Each policy boosts the pressure on companies to make sure that part or all of its value chain can respond to the local pressures.