Page 111 - Introduction to Business

CHAPTER 2 The Environment of Business 85

Parle’s in India, it instantly had access to Parle’s huge national bottling and distri-
bution network. All that Coca-Cola had to do was to upgrade existing production
facilities and manufacture Coca-Cola products, which were then ready to be sold
through Parle’s distribution network. It is important for MNEs to make sure that the
company being acquired is well established and has a good reputation in the local
market. As compared with other types of foreign market entry discussed so far,
acquisitions are relatively risky because a significant amount of capital may be
needed to acquire and upgrade facilities. Also, cultural differences may inhibit the
integration of the two organizations of different nationality, customs, and values. If
for some unfortunate reason (e.g., labor problems) the new firm performs poorly
and the MNE wants to dispose of its assets, serious thought must be given to its exit
strategy—how to get out of the country and at the same time sell the company at a
reasonable price without incurring significant loss.

Establishment of New Subsidiaries. As an alternative to acquisitions, MNEs
frequently decide to build and operate their own new facilities (also called “green field”
plants) overseas. These subsidiaries of MNEs require a large capital investment. Yet, subsidiaries New facilities built and
the new subsidiaries will most likely be modern, efficient, environmentally sound, operated overseas by MNEs that
require large investment of capital given
and designed to contemporary international standards, which will enable them to
the fact that these new establishments
handle the latest in supply chain management. For these reasons subsidiaries are are tailored to the exact needs of the
sometimes preferred to acquisitions because they can be tailored to meet the MNEs
MNE’s needs. However, subsidiaries will require major marketing efforts to pene-
trate the international market because of cultural differences and the fact that the
entrant is relatively unknown. A new customer base needs to be established
through a well-orchestrated marketing campaign.
reality Name a U.S. multinational enterprise that you are familiar with and
CH ECK identify the main strategic reason for its going abroad.

Careers in International Business

International business careers cover a broad spectrum of opportunities and can be
challenging, fascinating, and rewarding. While most careers in international busi-
ness require a certain amount of international travel, advances in information tech-
nology and the Internet have reduced that need somewhat. Furthermore, there are
quite a few international business jobs that are home based. Rapid developments
in communications and IT have made ours a “small world after all.” A professional
career in international business will invariably require the following three major
traits, in descending order of importance: First is a functional area (accounting,
finance, information systems, management, or marketing) of expertise coupled
with a strong international business knowledge that could be obtained through an
undergraduate business degree. Second is a passion for and ability to work in
diverse cultural environments. Finally is knowledge of (or the willingness to learn)
a foreign language. With the rapid globalization of business, the outlook for gradu-
ates with an international perspective is very bright. Employment opportunities for
students interested in international business can be found in three major sectors of
the economy: the private business sector, government agencies, and international
organizations.
Within the private sector, international careers can be developed by working
with small- or medium-sized companies, large multinational enterprises and

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