International Business Management Report

Document Type:Thesis

Subject Area:Management

Document 1

The results on the world trends are based on PESTEL analysis of USA and Mexico political, economic and technological factors. The report gives further insight on how the 3 of the world trends impact Fisher & Paykel Appliances Holdings Limited decisions and operations Differences in cultures across different economies affect the management of various employees. The report gives a comparison of different cultural components between employees of the organization from Mexico, USA, and New Zealand. The Hofstede’s model has been used to highlight the cultural differences between the three countries. Finally, the report touches on the resource-based strategic theory and environment led method of strategic management. Further elaboration of the implications of the two approaches to the organization finalizes the report on the international business management of Fisher & Paykel Appliances Holdings Limited. INTERNATIONAL BUSINESS MANAGEMENT Fisher & Paykel Appliances Holdings Limited Background and Assumptions Fisher & Paykel Appliances Holdings Limited is a New Zealand based firm that specializes in drying, cooling, cooking, and washing. The holding firm manufactures, designs and markets a variety of household appliances like dishwashers, laundry machines, refrigerators through the subsidiary Fisher &Paykel Appliances Limited. Persistent production of a wide range of products has earned the company a high market share in different parts of the world which has led the company to establish its presence in different regions in the world. The firm is also forming partnerships and acquiring other appliance and cookware manufacturing companies as it expands its facilities of production and pushes to earn synergy benefits. The company has been in operation since 1934 and has been operating in 50 countries with manufacturing firms in Italy, China, Thailand and Mexico (Fisher & Paykel Ltd, 2018)The Company’s Mexico and the USA firms are of significant interest for this report.

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The Fisher &Paykel Appliances Mexico, S. de. RL. De C. V. undertakes to manufacture of household appliances and refrigerators. The company which is based in Reynosa. Mexico is a subsidiary of the Fisher & Paykel Appliances Holding. The Fisher & Paykel Appliances USA Holdings, Inc conducts business as the holding company. According to an article published in Reuters by O’Boyle and Graham (2017), the Banco de Mexico raised the interest rates by 7% in a bid to reduce the inflation rates. However, this action is a negative impact on the company’s business as it indicates that majority of people in Mexico will have disposable income as the high-interest rates reduce the supply of money in the economy. Increase in interest rates reduces the purchasing power of the Fisher & Paykel Appliances Holdings Mexican customers as the buyers have little to spend.

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Fisher & Paykel Appliances Holdings is likely to suffer the reduction in sales revenue in Mexico due to the increased interest rates. Another economic issue that might affect business operations of Fisher & Paykel Appliances Holdings in Mexico is the rising rate of inflation. The price of unemployment in the United States has hit a fall of 4. percent, which indicates that the labor market in the region is tightening (Mutikani, 2017). Increased labor leads to higher standards of living which mean that currently, the majority of the customers in the United States can buy the company’s products. The USA interest rates have been increasing within 2017. According to an article published in the BBC NEWS (2017) by the end of 2017, the Federal Reserve raised the interest Rates by0. The political climate in the USA is good for the business as the business can access permits with less bureaucracy as well as existence of laws that protect multinational firms operating in the region Mexico is just about to election in July 2018.

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The political situation in Mexico has been characterized by riots and demonstrations which has brought unrest in the nation. According to research posted in BMI Research (2018), a presidential win by Andres Manuel Lopez Obrador (AMLO) will result to lead the country to a shift to more business-friendly policies as the candidate has been leaning towards developing business-friendly policies for companies operating in the region. A win for the candidate will bring positive effects to the company as the stringent policies of the nation affect how multinational firms in the area conduct their business. The current systems and administration have been associated with a bureaucracy with corruption, the rise of drug-related violence and other political factors affecting the Mexican market. According to the Boston Consulting Group (BCG), the Mexican manufacturing industry is expected to rely on robots for around 30% of the tasks by 2025 (Guthrie, 2017).

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With the development of firms like Genesis-ICESA which specializes in assembling and designing workstations for automating specific manufacturing tasks, the Mexican manufacturing sector is likely to experience effective and efficient manufacturing sector which reduces the cost of production. Reduced cost of production increases the profitability of Fisher & Paykel Appliances Holdings as the company conducts a majority of its manufacturing activities in Mexico. Impact of Economic, Political and Technological Trends to the Firm The technological, economic and political factors in the USA and Mexico have both adverse and positive effects on the operations and direction of the organization. The USA economy has been experiencing gradual growth over the recent years. Majority of the US customers are using the internet to order and pay for products. This phenomenon has led the company to invest in the online platform to create an online store and focus its marketing strategies to reach customers who prefer to use the online platform.

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Culture Awareness and Sensitivity Culture involves the customs, ideas and social behavior of a given society or group of people. People across different regions have diverse culture due to their social background. The process of efficiently managing employees within different countries calls for knowledge of the culture of the employees. following according to a survey conducted by Pew Research Center (2018). In Mexico, religion is a substantial issue with the majority of people in the country being Catholics. Majority of people in Mexico recognize religion or Catholicism as a historical and personal identity. One significant similarity in all the three countries is the social structure. Social structure touches on how the society is structured concerning the social classes between the members of the community. Application of Hofstede's Model of Culture to Inform and Customize Management Style The Hofstede’s six dimensions of culture are one of the most used standards for understanding cultural differences amongst different people within the group.

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The work of Hofstede gives various aspects which as a manager I can use to differentiate one culture from another. Though initially, they were four, the Hofstede model today entails five dimensions which include individualism, masculinity versus femininity, power distance index and uncertainty avoidance among other aspects. The Hofstede’s model provides a better way of comparing the cultures in New Zealand, Mexico, and the USA. Retrieved from:https://www. The dimension individualism entails to the degree of interdependence that society maintains among its members. Mexico score of 30 indicates that it is a collectivistic society. This score interprets that the society advocates for healthy relationship and loyalty towards one’s family, team, organization or any other group. Everything is perceived in group or family form with everyone being responsible to the other member.

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New Zealand which scores 79 signifies that it is an individualist culture. Managers are expected to be assertive and decisive with emphasis on competition and equity (Hofstede Insights, 2018). The other dimension is uncertainty avoidance. The aspect pertains the degree in which the members of the particular culture feel threatened by unknown or ambiguous situations and end up developing institutions and beliefs to deal with the issue. Mexico scores 82 on this dimension indicating that the society’s top priority is avoiding uncertainty. In this kind of community, people have an urge of being busy; time is considered a critical factor, with a call to set rules. According to the theory, an organization can translate these “strategic resources” into a strategic advantage if the resources are valuable, inimitable, and rare and the business is organized to exploit these resources (Raduan, 2009).

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The environment based theory of strategic management argues that the organization needs to continuously adapt to the competitive environment which it operates to survive. Hebert Spencer developed the method and demonstrated that businesses who endure the most adverse situation are the fittest businesses in the economy and are prospered mainly because of successfully adapting to the environment. Implications of the resource-based theory and environment based approach to the firm. Both the resource-based and environment theories have a significant impact on Fisher & Paykel Appliances Holdings. bbc. com/news/business-42344170 [Accessed 26 February 2018]. BMI Research, 2018. Political Risk Analysis - Crib Sheet: AMLO Early Favourite As Field Takes Shape - MAR 2018. Online] Available at: http://www. Economy Grew at 2. Rate in Fourth Quarter. Online] Available at: https://www. nytimes. com/2018/01/26/business/economy/gdp-economy. Online] Available at: https://www.

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focus-economics. com/countries/mexico [Accessed 26 February 2018]. Graham, M. O. Hofstede Insights, 2018. COUNTRY COMPARISON. Online] Available at: https://www. hofstede-insights. com/country-comparison/mexico,new-zealand,the-usa/ [Accessed 26 February 2018]. Management, Strategic Management Theories and the. European Journal of Social Sciences, 26 February.

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