Doing business in the global environment requires an in-depth understanding of the foundations of global strategies; such as the dynamics of global strategies, managing in a global and competitive environment, understanding the impact and influence of global institutions on MNCs, and cultural intelligence (Torres, 2010).

Doing business in the global environment requires an in-depth understanding of the foundations of global strategies; such as the dynamics of global strategies, managing in a global and competitive environment, understanding the impact and influence of global institutions on MNCs, and cultural intelligence (Torres, 2010). Further, in reality, multinational enterprises (MNEs), defined as firms that engage in foreign direct investment (FDI) by directly controlling and managing value-adding activities in other countries, too often have to adapt their strategies, products, and services for local markets. For example, in the publishing industry, one size does not fit all. In the automobile industry, there is no “world car.” Cars popular in one region are often rejected by customers somewhere else. The Volkswagen Golf and the Ford Mondeo (marketed as the Contour in the United States), which have dominated Europe, have little visibility in the streets of Asia and North America. The so-called “world drink,” Coke Classic, actually tastes different around the world (with varying sugar content (Peng, 2014).

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Moreover, too often, the quest for worldwide cost reduction, consolidation, and restructuring in the name of “global strategy” has sacrificed local responsiveness and global learning. And almost by definition, the narrow notion of “global strategy” focuses on how to compete internationally, especially on how global rivals, such as Coca-Cola and Pepsi, Toyota and Honda, and Boeing and Airbus, meet each other in one country after another (Peng, 2014). The current brand of “global strategy” seems relevant only for MNEs from developed economies, primarily North America, Europe, and Japan—commonly referred to as the Triad—to compete in other developed economies, where income levels and consumer preferences may be similar. Emerging economies (or emerging markets), a term that has gradually replaced the term developing economies since the 1990s, now command half of the worldwide FDI inflow and nearly half of the global gross domestic product (GDP) measured at purchasing power parity. Brazil, Russia, India, and China—now known as BRIC in the new jargon—command more attention. BRICS (that is: BRIC + South Africa) has become a newer buzzword. Many local firms rise to the challenge, not only effectively competing at home but also launching offensives abroad.6 Overall, more than a quarter of the worldwide FDI outflows are now generated by these emerging multinationals from emerging economies  (Peng, 2014).

To this end, this section includes readings and an in-depth review of global institutions, applications of culture in global business, and ethics in the global business environment.

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Required Reading:
Please refer to each Activity for required readings within Activity Resources.

Assignment 1   Global Institutions

Douglass North, (as cited in Peng, 2014), a Nobel laureate in economics, more formally defines institutions as “the humanly devised constraints that structure human interaction”. (p. 2).  An institutional framework is made up of formal and informal institutions governing individual and firm behavior. These institutions are supported by three “pillars” identified by Richard Scott, a leading sociologist. They are: (1) regulatory, (2) normative, and (3) cognitive pillars (Peng, 2014).  Further, formal institutions include laws, regulations, and rules. Their primary supportive pillar, the regulatory pillar, is the coercive power of governments. For example, while many individuals and companies may pay taxes out of their patriotic duty, a larger number of them pay taxes in fear of the coercive power of the government if they are caught not paying taxes. In contrast, informal institutionsinclude norms, cultures, and ethics (Peng, 2014). The two main supportive pillars are normative and cognitive. The normative pillar refers to how the values, beliefs, and actions of other relevant players—collectively known as norms—influence the behavior of focal individuals and firms. The recent norms centered on rushing to invest in China and India have prompted many Western firms to imitate each other without a clear understanding of how to make such moves work. Cautious managers resisting such “herding” are often confronted by board members and investors:  “Why are we not in China and India?” In other words, “Why don’t you follow the norm?” Also supporting informal institutions, the cognitive pillar refers to the internalized, taken-for-granted values and beliefs that guide individual and firm behavior (Peng, 2014).

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Activity Resources:

Spotlight on Skills: APA Form and Style

Throughout this course, and other courses here at this University, you are required to follow APA form and style when preparing assignments. If you are unfamiliar with APA form and style, take this tutorial: . Are you already familiar with APA form and style? Keep up with the 2010 changes by taking this tutorial:. Check out this blog for deeper discussions and examples: APA Style Blog at You can visit:

Main Task: Analyze and evaluate the role, responsibilities and impact that global institutions have on Multinational Enterprises (MNE)

Based on your research and the section readings noted  above, develop a scholarly paper to critically address the following:

·  Discuss what global institutions actually do. What is their role in global business? Provide real world examples of global institutions in your discussion.

·  Analyze and evaluate how global institutions reduce uncertainty in global business. What is “informal, relationship-based, personalized exchange”?  And what is “formal, rule-based impersonal exchange”?

·  Compare and contrast the relationship between “an institution-based perspective of business strategy” and Michael Porter’s “Diamond Model.”

Support your paper with five (5) scholarly sources.  In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included.

Length:  5-7pages not including title and reference pages

Your paper should demonstrate thoughtful consideration of the ideas and concepts that are presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards. Be sure to adhere to Northcentral University’s Academic Integrity Policy.

Learning Outcomes: 4, 7

 

Assignment Outcomes

Assess the impact and influences of global institutions in international strategic management.

Examine global strategizing, structures, and learning in international strategic management.

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