Meeting and negotiate a contract with a businessperson from France

 You have to negotiate a contract with a businessperson from France. How will you approach them? 

Meetings are more important than ever in business today. Just like any other international business behavior, respect for the national business culture will improve my chances of achieving my objectives in France. In addition, when deciding on the contents of the meeting and the appropriate negotiation strategies should be based on the cultural habits and customs of France. 

i. Starts with the way I conduct my business meetings should be arranged at least two weeks in advance and prepare an advisable agenda in advance to ensure each one in my team is ready. The facilities for this negotiation require a sense of art and a dual language (English and France) business card is a great opportunity for me to show my attention to detail.

ii. Presentations should be well-prepared, comprehensive, clear, well-written, informative, presented professionally, and appealing to the intellect of the French.

iii. State my business intentions directly and clearly with a detailed agenda. The French counterparts need time to build trust in my company. So, I don't want to make them confused. I know that they do have a habit of direct and probing questions, so I am not going to offend them. Also, I should offer my plans for a carefully considered proposal.

iv. The French like a full understanding of the logic behind your proposal since they prefer to focus on the long-term goals. Therefore, I must have considered long-term goals in my proposal. The French may judge me on my ability to demonstrate my intellectual faculties and this would usually mean discussing polar views. So, I have to reason and make myself clear to earn their respect. As long as I can justify my views this will help the France to see that I am well prepared as well as serious about my intentions. 

v. Even though the French are happy to be convinced of my new ideas after the debate, they are not likely to accept anything that deviates from their cultural norms. Therefore, I have to learn some basic French phrases and use them properly in the negotiation. I think that my French language efforts will be much appreciated and remembered.

vi. It is entitled by law that many French employees take several weeks off in the summer. Some companies even close operations for the entire month of August. Therefore, I need to take this into account when planning my business trips to France. In France, meetings are held to discuss issues, not to make decisions, and normally do not hold meetings in bars or cafes. So, I have to decide whether where should I hold this negotiation. In the negotiations, I must focus on the subject matter of the deal I am discussing and get prepared to answer direct and detailed questions. 

vii. When conducting business negotiations with my French counterparts, I am very likely to come across centralized decision-making, and obviously, it takes some time.

viii. Let them know I have identified and managed all the risks. The main way to persuade them to change the possible different viewpoint is through the use of logical reasoning. So, my logical reasoning must be strong enough.

ix. In France, even if I have signed a contract, there is a chance that they will come back to re-negotiate it as a result of internal negotiations. So, I should always try and seek out the top decision-maker to reduce discussions with intermediaries. However, I think treating those intermediaries with respect, can still help me to reach a positive outcome.

In summary, I think the approaches I mentioned above is following Cialdini’s six principles of persuasion which are reciprocity, scarcity, authority, consistency, liking, and consensus. Understand these six principles can be an advantage when trying to persuade others to take a specific action or buy a specific product. For instance, the facilities for this negotiation require a sense of art, and a dual language (English and France) business card is trying to do the principle of liking. If they liked me, my chance to reach a positive outcome is greater. Presentations should be well-prepared, comprehensive, clear, well-written, informative, presented professionally, and appealing to the intellect of the French, is trying to do the authority and consistency. 

How does the French communication pattern and listening habit differ from my own culture?

Overall, presentations all should be well-prepared, comprehensive, clear, well-written, informative, and presented professionally. However, employees in Taiwan do not take several weeks off in the summer, not to mention close operations for the entire month of August. Although centralized decision-making happens regularly in Taiwan, it is not as common as in France.

Reference

Cialdini's 6 Principles of Persuasion: A Simple Summary. The World of Work Project. (2021, April 15). https://worldofwork.io/2019/07/cialdinis-6-principles-of-persuasion/. 

Meeting etiquette. Business Culture. (2013, October 22). https://businessculture.org/western-europe/business-culture-in-france/meeting-etiquette-in-france/. 

Holding a business meeting with people from different cultures

 Introduction

Assume you are holding a business meeting with five people, each from a different continent (North America, South America, Europe, Africa, and Asia). Which steps should you take to ensure that everyone is comfortable and that communication is good between everyone?

When you’re holding a meeting with people from different cultures, you need to consider their different needs and approaches. But saying is much easier than doing. To increase the efficiency of this multicultural meeting, the key is how do you brainstorm ideas, make the right decisions, and address possible conflicts that are comfortable for everyone. Even though the people in the room have the same opinion, they may express it in a completely opposite way. For instance, communication styles vary from culture to culture such as the notions of authority and hierarchy. 

To handle them, an open mind is a great approach to start with.

i. Being Aware of The Variations

Variations always exist among cultures. Therefore, the first thing to consider is how those differences play out. For instance, where people are supposed to sit in this meeting or how to make sure they’re willing to provide feedback or argue. 

ii. Be A Pro, Not A King

Learn these countries' customs and professional practices and become an expert observer of others. It’s a team effort and that's why you are in this meeting. So, provide the reading material on cultural differences.

iii. Build Up Relationships

People who come from a hierarchical culture are loath to provide feedback to the seniors. Therefore, build up great relationships can help the efficiency of communication. We must know the personalities on the team as much as possible since it’s especially important when your team comprises people from different countries. In addition, spend some time building emotional bonds so that people have opportunities to get to know each other by sharing ideas or even talking over drinks. Then, a lot of the cultural differences won’t matter as much.

iv. Debate and Disagreement

In Asian countries such as China, saying I disagree can be seen as very aggressive and destroying the relationship. In Southern Europe, however, it is a good opportunity to build a relationship. Therefore, softening the language to make the conversation more comfortable. In short, in the meeting, people should agree or disagree with an idea, not any particular person. 

Reference

Meyer, E. (2017, September 27). How to Run a Meeting of People from Different Cultures. Harvard Business Review. https://hbr.org/2015/12/how-to-run-a-meeting-of-people-from-different-cultures. 

The cultural intelligence assessment, CQ

 Take the cultural intelligence assessment

What does that tell you about yourself?

I must say that I run into some confusing situations while answering some of these questions. That makes me think more than 5 seconds to answer those questions which incompatible with the rule of the assessment that is "Do Not think too long about any question." So, honestly, some of these questions are answered by rethinks or even imaginations about what should I do in that situation. Therefore, I don't know whether my answers are influenced by my rethinks or imaginations.

However, after I sum up my CQ scores and got my overall cultural intelligence, I found that I am not surprised with the result. I got 51 in CST which is an excellent score that reflects my cultural strategic thinking. When I went back to review those CST questions, I found they are about how smooth you can adapt to changing cultures. I think the reason why I can such a high score is that I respect different cultures and always trying plan ahead.

I got 27 scores in cultural motivation, which indicated a red alert(below 37). That means although I can respect different cultures and plan ahead, I still need to be more active instead of passive. I think it is true since I am not really active in learning about new cultures.

I got 33 scores in cultural behavior which means I am excellent in cultural behavior. I think it is also connected to my habits of respect and plan ahead since it reflects the ability to learn and prepare for any possible cultural diversity.

What does that tell you about the differences between your culture and others?

I think it also makes cultural diversity to become much easier to compare. For instance, I get 51 in CST which is an excellent score that reflects my cultural strategic thinking. But people from different cultures may get pretty low scores in this section which means they think pretty differently compare to my opinion or my feelings. Therefore, I should mind the differences and trying to get both sides as winners. I must adjust my thinking to satisfy each different needs if I want to sell the same product to different countries or fill the needs of different cultures. 

Country's profile on Geert Hofstede, Cultural Dimensions, Taiwan

Country's profile on Geert Hofstede - Cultural Dimensions

According to the Geert Hofstede - Cultural Dimensions an overview of Taiwanese culture relative to other world cultures is like this:

i. The Power Distance

This dimension deals with the fact that all individuals in societies are not equal, it expresses the attitude of the culture towards these inequalities. 

Taiwan has a relatively high score of 58 on this dimension which indicates that it is a hierarchical society. This means that people accept a hierarchical order in which everybody has a place and which needs no further justification. 

ii. Individualism

It is the degree of interdependence a society maintains among its members. In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies, people belong to ‘in groups’ that take care of them in exchange for loyalty.

Taiwan, with a score of 17 is a collectivistic society. Loyalty in a collectivist culture is paramount and overrides most other societal rules and regulations. A society fosters strong relationships, where everyone takes responsibility for fellow members of their group. In collectivistic societies, offense leads to shame and loss of face. Employer/employee relationships are perceived in moral terms, hiring and promotion take account of the employee’s in-group.

iii. Masculinity

A high score on the masculine indicates that the society will be driven by competition, achievement, and success, with success being defined by the winner/best in the field. A low score on the dimension means that the dominant values in society are caring for others and quality of life. The fundamental issue here is what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine).

Taiwan scores 45 on this dimension, a lower intermediate, and is thus considered a slightly Feminine society. In Feminine countries the focus is on “working in order to live”, managers strive for consensus, people value equality, solidarity, and quality in their working lives.

iv. Uncertainty Avoidance 

Should we try to control the future or just let it happen? The extent to which Taiwanese feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these situations.

Taiwan scores 69 on this dimension and thus has a high preference for avoiding uncertainty. In these cultures, there is an emotional need. Innovations may be resisted, security is an important element in individual motivation.

v. Long Term Orientation

Normative societies. which score low on this dimension prefer to maintain time-honored traditions. A culture that scores high takes a more pragmatic approach and encourages thrift and efforts in modern education as a way to prepare for the future.

Taiwan scores 93, making it a pragmatic, long-term orientation culture. Societies with this orientation show an ability to adapt traditions to a modern context, a strong propensity to save and invest, thriftiness, and perseverance in achieving results.

vi. Indulgence

This dimension is defined as the extent to which people try to control their desires and impulses, based on the way they were raised. Relatively weak control is the Indulgence and Restraint means strong control.

Taiwan has a very intermediate score of 49 which does not indicate the dominant preference on this dimension.

To summarize, honestly, I don't know how they got these results. But, I think these experts have their own algorithms and norms. The theory of Hofstede’s cultural dimensions constitutes a framework revolving around cross-cultural communication. It also describes the relationship between values and behaviors based on factor analysis. In short, this theory studies significant aspects of culture, and most importantly, it provides enterprises a comparison scale while trying to do businesses in different countries and can help managers in sailing successfully across the international business market.

However, I think the theory is trying to simplify a complex question. Basically, it is also a psychological product which means it does not precisely sweep the board. I think flexibility can be the seventh dimension to a better format of the cultural dimensions since cultures are always changing and even faster in recent years. The flexibility can be scored by the changes in each of the six dimensions. A higher score in flexibility means the culture is more likely to change. Therefore, multinational companies should reassess their strategies. In addition, Environmental Sensitivity can also be a crucial dimension of the cultural dimensions that constitutes a framework. It reflects how we react to our environmental changes.

What do you think of the mere concept of culture as a group of individuals having the same traits?

Although the theory of Hofstede’s cultural dimensions constitutes a framework revolving around cross-cultural communication, I’m not going to tar all the people in the same group with the same brush. I think "most" of the British people are very polite and gentle. However, I don't think "every" British person is polite and gentle. 

Reference

Taiwan. (n.d.). Retrieved April 17, 2021, from https://www.hofstede-insights.com/country/taiwan/

Understanding cultures & people With HOFSTEDE DIMENSIONS. (2019, September 20). Retrieved April 18, 2021, from https://www.cleverism.com/understanding-cultures-people-hofstede-dimensions/

Multinational Management in a Changing World, 2021, The Growing Opportunities and Multinational Options

Multinational management is the formulation of strategies and the design of management systems that successfully take advantage of international opportunities and respond to international threats. Successful multinational managers are executives with the ability and motivation to meet and beat the challenges of multinational management. 

Growing Opportunities 

The growing middle class in countries such as China, India, Russia, and Brazil will largely exceed the combined population of the United States, Western Europe, and Japan, and they aspires to live a more comfortable life by owning U.S. and Western branded products. This suggests tremendous opportunities for multinationals. 

The Multinational Options

The multinational company is broadly defined as any company that engages in business functions beyond its domestic borders. What kinds of business activities might make a company multinational? The most apparent activity is international sales. When a company produces in its own country and sells in another country, it engages in the simplest level of multinational activity. However, crossing national borders opens up more multinational options than simply selling internationally. Suppose a domestic-only company, it can buy the dye, make the fabric, design, produce its products, and sell the shirt, all in the United States. However, the U.S. market may be stagnant, with competitive pricing and lower profit margins. The competitors might find higher-quality fabric or dye from overseas suppliers, or lower production costs in low-wage countries, allowing them to offer lower prices.  

The Worldwide Trend

Globalization is the worldwide trend of the economies of the world becoming borderless and interlinked. Companies are no longer limited by their domestic boundaries and more likely to compete anywhere, source their raw material, and produce their products anywhere. Some of the most important trends are falling borders, growing cross-border trade and investment, the rise of global products and global customers, the growing use of the Internet and sophisticated information technology, privatizations of companies formerly owned by governments, the emergence of new competitors in the world market, and the rise of global standards of quality and production. 

Not All Economies of The World Are Benefiting Equally

Terrorism, wars, and a worldwide economic stagnation have limited some the aspects of globalization and even producing some worrisome effects such as scarcity of natural resources, environmental pollution, negative social impacts, increased interdependence of the world’s economies, and widening the gap between rich and poor countries. 

Beneficial to The World’s Economies

Globalization is resulting in lower prices in many countries as multinationals are becoming more efficient. Many emerging markets such as India and China to enjoy greater availability of jobs and better access to technology. 

The Classifications

The classifications roughly indicate a country’s gross domestic product (GDP) and the growth in GDP, but they are not exact, they just simplify discussions.

Less developed countries are the poorest nations and often plagued with unstable political regimes, high unemployment, and unskilled workers. But, they are experiencing significant growth in their share of world trade with sharp increases in the past 

The World Trade Organization and Free Trade Areas 

In 1947, several nations began negotiating to limit worldwide tariffs and encourage free trade. At that time, worldwide tariffs averaged 45%. These negotiations were known as GATT, the General Agreement on Tariffs and Trade. In addition, the WTO provides a formal structure for continued negotiations and for settling trade disputes among nations. 

Is free trade working? The data seems to support its conclusion

Since the early GATT agreements, world trade has grown at more than four times the output of the world’s gross domestic product. However, some argue that the WTO favors the developed nations because it is more difficult for poorer nations to compete in a non-regulated world and they also move environmentally damaging production to poorer and often environmentally sensitive countries. 

Regional trade agreements or free trade areas are also agreements among groups of nations to reduce tariffs and develop similar technical and economic standards such as the EU, NAFTA, and APEC. 

The NAFTA

The North American Free Trade Agreement (NAFTA) links the United States, Canada, and Mexico in an economic bloc that allows freer exchange of goods and services. After the agreement went into effect in the early 1990s, all three countries saw immediate increases in trade. 

The Global Networks

Multinational companies not only trade across borders with exports and imports but also build global networks that link supply, production, and sales units across the globe. The cross-border ownership, called foreign direct investment, is on the rise. 

The Internet and Information Technology Are Making It All Easier 

The explosive growth in the Internet as well as in the capabilities of information technology increases the multinational company’s ability to deal with a global economy. The Internet makes it easy for companies to go global since any web site can be accessed by anyone in the world. Electronic communication such as e-mail and the World Wide Web allows multinational companies to communicate with company locations throughout the world. 

The Privatizations

The developing nations use privatizations to jump-start their economies or to speed the transition from a communist system to a capitalist system. Multinational firms often acquire the best companies in the developing world. 

New Competitors Are Emerging 

The free-market reforms in emerging countries are creating a potential group of new competitors in the world market. In many cases, these new competitors had to survive brutal competition in their domestic markets to become successful. 

New Opportunities

When the large multinationals use developing countries as low-wage platforms for high-tech assembly, they facilitate the transfer of technology. Workers and companies in developing countries often learn new skills. In countries where the workers are well educated and motivated, the former assemblers often become the creators rather than the builders of advanced technologies. 

The Rise of Global Standards 

Especially in technical industries, global product standards are common such as the AA batteries anywhere in the world, and it will fit in your flashlight. Many electronic devices are now smart enough to overcome these differences. Power sources for computers often can adjust automatically for differences in voltage.

The International Organization for Standardization (ISO) in Geneva, Switzerland has developed a set of technical standards known originally as ISO 9000, now called the ISO 9001:2000 series. There also are environmental protection standards known as ISO 14000. Many large European multinationals such as Germany’s Siemens now require suppliers to be ISO-certified. 

The next generation of successful multinational managers must have the following characteristics:

i. A global mindset, it requires managers to think globally, but act locally.

ii. The ability to work with people from diverse backgrounds.

iii. Emotionally intelligent.

iv. A long-range perspective

v. The ability to manage change and transition

vi. The ability to create systems for learning and changing organizations

vii. The talent to motivate all employees to achieve excellence and Accomplished negotiating skills

The Strategic Approach 

Strategy is defined here as the activities that managers use to sustain and increase organizational performance. Strategy formulation is the process of choosing or crafting a strategy. Strategy implementation includes all the activities that managers and an organization must perform to achieve strategic objectives. 

 

 

How Exposed Is Taiwan to Globalization?

 How Exposed Is My Country, Taiwan, to Globalization?

To answer this question and also to succeed in business, it is critical to understand what is globalization first. It is not as simple as open your browsers and link to a foreign website. It is an external environment to operate. And like any other things, views of globalization are not always positive or negative. There are some benefits and there also some unavoidable harms. 

So, what is globalization? Purchasing something from another country means globalization? Why does the Fed decide to increase reserve and interest can influence the world's economy? Globalization cannot be described by only one dimension or aspect, it has many dimensions such as economic, cultures, technologies, businesses, environment, and geography. From a business and economic point of view, globalization can mean the increase of economic activities in the world. Simply to say, trades of goods and services, and financial flow internationally, are increasing around the world. Not only financial flows and trade but also information and people are moving more and more frequently around the globe.

Now, Taiwan is the crucial semiconductor manufacturing country, providing more than 50% of IC(Integrated Circuit) worldwide. So, from the economic point of view, Taiwan engaged in many trade and exchanges internationally. According to the sales data of vehicles in 2020, the market share of domestic-made is around 52%, the other 48% is foreign-made cars. However, these are not enough to tell that how exposed is Taiwan to globalization. Based on the five elements of economic globalization which are international trade, foreign direct investment, capital market flows, migration, and diffusion of technology, and each one represents 1 mark, then we can measure how exposed is Taiwan to globalization.

i. International Trade

As I mentioned above, the market share of domestic-made is around 52%, the other 48% is foreign-made cars. These cars are international trade. Foreign brands such as BMW, Volvo, KIA, Lamborghini, and Porsche, sign agreements with local retail companies and trade their cars with these companies. (+1 point)

ii. Foreign Direct Investment

Instead of just import their cars, some automobile companies such as Toyota, Nissan, and Mitsubishi Motors choose to invest money in production facilities in Taiwan so they can produce and sell their cars in Taiwan. It is an example of foreign direct investment. (+1 point)

iii. Capital Market Flows

Taiwan Stock Exchange provides services for individual and institutional investors such as ETF, domestic and foreign stocks, bonds, and Futures. In Taiwan, investors can buy and sell shares of Taiwanese companies and some shares of foreign companies. However, its value is just about 1.27% of the total value in the world. (+0.127 points)

iv. Migration

In Taiwan, some jobs like fishermen or caregivers in nursing homes are the most common jobs that hire foreign workers. Most of them are from Myanmar, the Philippines, Indonesia, and Vietnam. These four countries divided by 233 countries worldwide is around 0.017. (+0.017)

v. Diffusion of Technology

Now, Taiwan is the crucial semiconductor manufacturing country, providing more than 50% of IC(Integrated Circuit) worldwide. Therefore, I think the diffusion of technology is not too hard to get. However, Taiwan is still a developing country, so a full mark is not the case. According to the Human Development Index in 2020, Taiwan is graded at 0.91. So, I will use that data as the point of Diffusion of Technology in Taiwan. (+0.91)

To summarize, Taiwan gets 3.054 points on the five elements of globalization. Although it does not precisely describe the whole map of how exposed is Taiwan to globalization, it provides me a direction to evaluate it. If we do the math, 3.054 divided by 5, the result is approximately 61%. I know it is not totally correct, but I think my ability to evaluate economic globalization will be improved after learning this course.

The Political, Economic, Technological, Social, Environmental, or Other Impacts of The Globalization Trend on Taiwan? 

Obviously, the most popular trends recently are electric vehicles, AI, self-driving vehicles. Politically, the government of Taiwan has announced the "Electric Motor Vehicle Industry Development Promotion Plan" in August 2009 and the "Smart Electric Vehicle Development Strategy and Action Plan" in April 2010. In order to encourage and support the development of domestic electric vehicle-related industries, the "License License Tax Law Amendment" Extends the exemption period of electric vehicle license plate tax. The "Air Pollution Prevention and Control Action Plan" was launched at the end of 2017. One of its key tasks is the "ban on the sale of fuel oil vehicles." To electrification, In 2030, urban buses will be fully electric and Taiwan will enter the age of fully electric vehicles in 2040. 

Economically, brands of other countries and products from foreign producers will become more and more common in Taiwan since the government keeps trying to sign FTA(Free Trade Agreement) with multiple countries. In addition, foreign direct investment such as Amazon, Facebook, and data centers, Intel developing centers, even Tesla Giga Factory in the possible future, is changing Taiwan dramatically.

Environmentally, since the 311 event in 2011 known as The 2011 earthquake off the Pacific coast of Tōhoku on 11 March. The earthquake triggered powerful tsunami waves that may have reached heights of up to 133 ft in Miyako and traveled at 700 km/h inland. Residents of Sendai had only about 10 minutes to evacuate. The tsunami hit Japan hardly and the Japanese National Police Agency report confirms 15,899 deaths. The tsunami also caused nuclear accidents, the Fukushima Daiichi Nuclear Power Plant was damaged by the tsunami. After the news, the president of Taiwan Tsai Ing-Wen declared that we are leaving nuclear plants. Now, Offshore wind power and other green power plants are the future plans of Taiwanese electric trends. Disasters bring death but also bring rebirth. 

Socially, step by step, Taiwan keeps trying to join as many international organizations as possible to gain its positions. Also, more and more Taiwanese people choose to study university abroad. Due to the lower cost of international travel and the use of Facebook, Instagram, and other social media, Taiwanese are making friends or even getting married to people from any other countries.

Technologically, as mentioned above, automobile companies such as Toyota, Nissan, and Mitsubishi Motors choose to invest money in production facilities in Taiwan, so the local automobile companies and their workers can learn from them. In the future, the local companies can learn more knowledge and technologies from direct investment.

The Negative and Positive Impacts

Positive Impacts

i. Although, In Taiwan, some jobs are replaced by AI, robots, and foreign laborers. But more jobs and opportunities are created by foreign direct investment. Self-driving buses need more related engineers to maintain and monitor them. 

ii. Since The 2011 earthquake off the Pacific coast of Tōhoku on 11 March, Taiwan speeds up its investment in green energy plans. 

iii. Many traditional cultures in Taiwan such as sexual inequality has ameliorated and changing due to more and more international information exchange and education.

iv. More international companies operate in Taiwan means they have to pay the government taxes and hire laborers in Taiwan.

v. Many companies such as Taiwan Semiconductor Manufacturing Corporation and Foxconn Technology Group now gain their profits through operating internationally. The local financial institutions also take advantage of globalization to expand their businesses.

Negative Impacts

i. Many jobs like bus drivers may disappear in the future. For instance, self-driving buses are now operating in a few areas have replaced more and more drivers. 

ii. Some protectionist policies such as tariffs, may cause inequality in trading goods and services. 

iii. International big brands such as Starbucks, McDonald's, and KFC, compete with small local companies, make them harder to operate. Moreover, if those companies purchase raw materials and real estate, the prices will go up.

Reference

Malamud, V., & Rotenberg, Y. (2010). Globalization: Opportunities and threats to developing country business. Retrieved from https://my.uopeople.edu/pluginfile.php/1183211/mod_book/chapter/272333/BU1307_Unit_1_/UNIT_1_-_Globalization-_opportunities_and_threats_to_developing_country_business_-_CNX.pdf

A Case Review, Nike's Globalization

Introduction

Globalization is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and culture exchange. It has been taking place hundreds of years and has speeded up enormously over the recent half-century. Globalization has resulted in increased international trade, more companies are now operating in more than one country, greater dependence on the global economy, freer movement of capital goods and services, and greater recognization of international brands. Improved international transport, containerization, and improved information technology all contributed to the speed of globalization.

A Case Review, Nike's Globalization

Nike was founded in 1964. Now, it has become a sportswear multinational corporation worth over $100 billion. So, how that magic happens? The story started from just a small distribution that imports Japanese shoes to the US. After operating a store and kept trying to improve the products, Nike could not keep up with the increasing demand. Every new shipment received sold out quickly. Nike's founder has to deal with the issue if he wants to expand his business. So, Nike started to make their own products and branding. Instead of locking itself into an exclusive distributor, Nike can now control all the production and grows its revenues rapidly. 

An Incorrect Expansion Strategy

However, Nike's growth wasn't always smooth. In the 1990s Nike came under scrutiny for various unethical practices. Its expansion strategy was facing a lot of challenges. As Nike gains more and more eyes on its success, unethical news was follow up. The most famous one was the incredibly low wages for their workers in developing countries such as Vietnam, Thailand, Indonesia, Malaysia, China, and South Africa, although it looks like Nike has paid enough living wages. Obviously, Nike took the advantages of globalization to lower its cost of production by outsourcing those jobs to low-wage countries and keeping the high prices of its products to gain tremendous profits. 

How Does It Happen?

So, how does Nike came to that situation through its expansion strategy? Society always wants companies to create high-paying jobs and protect the environment. But on the other hand, these companies want to reduce costs incurred to comply with environmental regulations in the production and improve labor productivity. Lower cost and higher prices of their products are all companies trying to do. But, modern information technologies and changing culture hit the old school concept seriously with negative brand images. What do think if a liar tries to sell you a product compare with a friendly honest person? At some point, trade is built on trust. But information asymmetry makes us hard to trust sellers we unfamiliar with. So, we consider the brands we trust. However, it may not a part of Nike's expansion strategy. During that period, Nike was focusing on its cost of production rather than the possible damage to its reputation.

Positive and Negative Impacts

However, it was not always bad and evil. There are still positive and negative impacts with its strategy. Although Nike's reputation was damaged by those negative news, some positive effects are indubitable. Creating more jobs is one of them. Due to the direct investment to the production infrastructures, these governments also benefit from taxing those workers and Nike. The skills of these countries are also been improved. Furthermore, other companies are also learned from the event, start to rethink their strategies, and improving sustainable development. Negative impacts such as child labor, cutting jobs when the wages are no longer cheap, and environmental pollution while producing are also serious issues that Nike has to put its effort into.

Nike's Response

How did Nike respond to these situations? In order to keep its successful business, Nike learned from its past. Some actions must be taken when the dilemmas occur since this dilemma has direct impacts on not only the quality of products but also the reputation of Nike. To handle these issues, Nike adjusted its strategies for the internal and external environment. For issues like working conditions, Nike established a code of conduct to force its contracting factory to follow and requires its suppliers to pay workers at least the local minimum wage, to make sure the workers get their benefits and improves working conditions. With these approaches, Nike successfully improves the image of the company. When the working condition was improved, workers became to think the company positively. Nike now has abundant resources in persuading the media to get rid of negative thoughts about it. Nike also has a grading system for all its suppliers to reflect the actual situation of working conditions and to prevent unethical issues.

Share of Opinion

In my opinion, Nike's responses are an excellent way to reverse its negative reputation in the past. However, I think some other alternative responses are also great for the same purpose. For instance, Nike can establish a subsidiary in its suppliers' located countries to manage all the supply of its products under its control and also offer some cheaper products to these countries. Or, as a sportswear company, Nike can also promote the atmosphere of physical activity to those countries. It is a win-win strategy since Nike improves the health of the people in suppliers' countries. Moreover, as the income increased and the atmosphere is created, these countries are also contributing to Nike's sales.

What Are The Consequences?

What would the consequences have been then? Another Nike’s reaction was to announce a video of its contracted supplier in Vietnam and Indonesia, Thailand, and China to convey the message, “Nike is a responsible company with a safe working environment, happy and satisfied workers.” However, trust is hard to build but easy to lose. Consumers need more time to reaccept it.

Reference

Nike solution for the ethical dilemmas marketing essay. (n.d.). Retrieved April 13, 2021, from https://www.ukessays.com/essays/marketing/nike-solution-for-the-ethical-dilemmas-marketing-essay.php