Managing in a Global Environment Section 4 Case study - Holden Outerwear, Suggested Answers

1. Which stage of globalization characterizes Holden Outerwears international involvement? The four stages of globalization include: the domestic stage; the international stage; the multinational stage and the global (stateless) stage. Answers may vary, but Oregon-based Holden lies mostly within the international stage of corporate international development. Factors that mark the company as presently in the international stage of development include the firms outsourced China manufacturing and significant international sales to Japan, Germany, Norway, and Canada. Holden is a small company, and it does not own factories or fabric mills. To qualify as a multinational business, Holden needs more than onethird of sales to take place outside of the U.S., and its marketing and advertising strategies must be standardized and uniform across all regions. Holden cannot be characterized as a domestic company or a global (stateless) company. The domestic stage is characteristic of companies that make and sell goods solely within their home countries; the global (stateless) stage is characteristic of firms that have ownership, management, and manufacturing dispersed among many nationalities. 2. Identify Holdens primary approach to entering the international market. What are the benefits of this entry strategy? For small businesses that want to go global, exporting, global outsourcing, and licensing represent low-cost ways of conducting business internationally. To reach global consumers and keep manufacturing costs low, Holden uses an outsourcing strategy. The manufacture of Holden apparel takes place in factories in China. Owner Mikey LeBlanc states that this strategy slashes the cost of his products in half. Outsourcing also provides a steady source of skilled labor and textile materials. Large well-established firms tend to use more costly market entry strategies, such as acquisitions and greenfield ventures. Although high cost market entry strategies involve significant risk and resources, they offer maximum control over business processes and profits. 3. What are the challenges of international management for leaders at Holden? While the four management functions of planning, organizing, leading, and controlling are the same whether a company operates domestically or internationally, managers experience greater challenges and risks when performing functions in an international setting. In the video, Mikey LeBlanc explains that to obtain the benefits of Chinas low cost manufacturing, managers had to carefully oversee 12 different shipping companies. The situation required extensive paperwork and resources. In addition, garments with multiple components often failed to deliver together at the same time, creating long delays. Though not discussed specifically in the video, Holdens managers face additional challenges in the economic, legal-political, and sociocultural environment of business. Difficulties include political unrest, government takeovers, tariffs, language and cultural barriers, poor infrastructure, and even globalization protests. To help manage people, global managers should understand cultural differences, including Hofstedes value dimensions: power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity, and long-term/short-term orientation.