Module 3


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Module 3

  1. 1. IBS 118 MODULE 3Provide and discuss examples of five multinational companies that effectively handle the issue ofcultural challenges in global advertising.!. Nokia,Nokia Corporation is a Finnish multinational communications corporation that is headquartered inKeilaniemi, Espoo. Nokia is involved in the manufacturing of mobile devices and in convergingInternet and communications industries. It is the worlds largest manufacturer of mobile phones with itsglobal device market share was 23% in the second quarter 2011. Nokia produces mobile devices forevery major market segment and protocol and also Internet services such as applications, games,music, maps, media and messaging through its Ovi platform. The Nokia brand, valued at $25 billion, islisted as the 14th most valuable global brand in the Interbrand Best Global Brands list of 2011. In theglobal smartphone rivalry, Nokia held the 3rd place in 2Q2011, behind Samsung and Apple.Nokia’s mission is simple, “Connecting People”. In its website, Nokia states its vision is to build greatmobile products, and to enable millions of people everywhere to get more of life’s opportunitiesthrough mobiles. Nokia’s management apparently failed for too long to understand these game-changesgoing on within the mobile industry and failed to install a sense of urgency for change throughout theorganisation. The management stuck for too long within its ‘comfort zone’ of design and superiormobile cameras. And it seems that Nokia forfeited a connection with mobile software developers andthereby missed out on the opportunities of getting new applications from global co-creation amongentrepreneurs and innovation eco-systems. Incidentally, the most successful app for i-Phone is thegame ‘Angry Birds’ developed by a Finnish company.Nokia’s agreement with Microsoft essentiallyallows Nokia to have a very important strategic competitive advantage against their competition. It willallow them to have mobile phone experiences no one else would have in the market if you were Nokiaand wanted to survive what would you do?One way is creating your own ecosystem and this is where Nokia needs Microsoft’s help. This soundsrather crazy, but not so when you consider this; companies, the size of Nokia, don’t play to get by, theyplay to win. If they can’t win or come in a credible second they are good as dead anyway. Theiroverheads will just flatten them. At the other end of the alliance, Microsoft also suffers from similarissues. As mobility is seen as the future of computing, Microsoft has faced much criticism for not beingable to create a credible mobile OS platform, hardware included. Microsoft can now focus on theirsoftware platform. As it is, they are already having so much trouble keeping up with the competition.I’m sure Microsoft is probably not perfect for Nokia, but under the circumstances, they are the bestoption.
  2. 2. 2.Nike3.Once a company, like Nike, decides to become a global entity, it will often experience an increase inprofitability. Unfortunately, companies like Nike must overcome some difficult obstacles beforeestablishing a successful business in a foreign country. Some of the issues of concern are child laborlaws, wages, and outsourcing’s effect on sales. Because of this, most widely known companies havepresented various cases to defend their positions on conducting business in the foreign country. Onesuch example is a Nike sweatshop labor case that stirred up a large amount of controversy over ethicalbusiness practices. Even though Nike has attempted to recover from the bad press it received about thesweatshops, it still struggles to defeat the negative feelings from people across the United States. Thus,a summary of the case, the legal, cultural and ethical challenges, an understanding of the roles the hostgovernments play, and the strategic and operational challenges faced are important to gain a thoroughunderstanding of the issues and case. Most people could easily define Nike and are familiar with theproducts offered, like the customized options available in the Nike store online, Nike Sportswear, NikeWomen, Nike Basketball, and Nike Football. These products, among others, have led Nike to a profitof $15 billion in 2006 and a catchy “Just Do It!” slogan (Hill, 2009). The company outsourced itsmanufacturing plants to several countries in order to lessen costs and become more efficient inproductivity. The outrage and protests that followed were far from what Nike expected; the companywas labeled as forcing “children to slave away in hazardous conditions for below-subsistence wages” .As a result, protestors of globalization and human rights activists criticized Nike for taking advantageof the workers overseas and placing them in a destructive working environment. Moreover, the factthat Nike was making billions of dollars and still failed to provide a safe working environment onlymade matters worse. After Nike realized it was the target of several protests and complaints againstglobalization, it recognized the need for safer work environments and an adherence to certain standardsfor each of the overseas factories. The factory workers were forced to work exceptionally long hours tofulfill quotas and had to follow strict rules during work for below minimal pay despite having “77percent of the employees in Vietnam suffer from respiratory problems” . Therefore, the legal, ethical,and cultural challenges began to add up for Nike and it was time for the company to confront them.The majority of challenges Nike had to overcome involved ethical issues and debates. Even thoughNike was providing jobs to those who may not otherwise have one, it was paying “a mere $1.60 a dayto Vietnam factory workers when the living wage is at least $3 a day” (Hill, 2009). Nike could haveavoided this challenge by paying each employee worker the living wage of the country he or she livesin to purchase necessary items. Moreover, the living wage is a cultural expectation which Nike failedto meet that led to protests. Another ethical issue involved “a report that found workers with skin orbreathing problems had not been transferred to departments free of chemicals and that more than halfthe workers who dealt with dangerous chemicals did not wear protective masks or gloves” (Hill, 2009).The debate was over the unsafe conditions Nike was providing its factory workers while it experienced
  3. 3. The company attempted to redeem itself by stating “it had formulated an action plan to deal with theproblems cited in the report, and had slashed overtime, improved safety and ventilation, and reducedthe use of toxic chemicals” Even though Nike took steps to improve the accusations in the report, itshould have been corrected once it was aware of the conditions and provided each worker with a fairand safe work environment. “Nike joined a task force called Fair Labor Association to assess whethercompanies are abiding by the code and banish sweatshops in the shoe and clothing industries” (Hill,2009). The debate over independent auditors performing audits of overseas factories came from the“United Students Against Sweatshops to ensure a truly independent audit” (Hill, 2009). Nike is awidely recognized brand, which is the reason several other host governments became involved in thesweatshop case. The strategic and operational challenges Nike faces are vast and will require a largeamount of time and effort. This is especially true because the operational practices and strategies Nikepreviously adhered to was no longer effective; rather, those practices began to hinder its success. Oneoperational challenge Nike faces is the development of a strict monitoring system in its factoriesoverseas. On the other hand, hiring a firm to ensure accurate accounting reports are produced is astrategic challenge. Moreover, determining a country to set up another factory in is both a strategic andoperational challenge. Nike faces several challenges; however, it can achieve continual success throughan effective operational and strategic plan. Therefore, the factories and sweatshops establishedoverseas by Nike launched a debate regarding whether Nike was in compliance or violation of ethicalguidelines and regulations. Despite several attempts, Nike is still the focus of protests regardingviolation of child labor laws and unsafe working environments. Moreover, numerous governmentalorganizations have worked with Nike to ensure safe and ethical business practices and to monitor thesweatshops Nike established overseas. Consequently, Nike was forced to change its operational andstrategic plans drastically in order to remain successful and appease labor and civil rights unions. Thecase of the Nike sweatshops demonstrated how difficult it can be for a business to become globalbecause of the different rules and regulations established by that country.4.5.6.Citigroup/7.Along with organic growth, Citi has completed a number of targeted acquisitions in emergingmarkets to reach new customers. While its US consumer unit is slowly building itself back up, Citi’sreal bread and butter is coming from its efforts overseas. Strategic acquisitions in key markets(including China, Turkey, India, UK, Japan and Central America) have left Citi well positioned tocapitalize on future growth. “In 2006, we opened just under 1200 Citibank and CitiFinancial branchesglobally – more than three a day on average – with some 70 percent outside the US,” Prince says. “Inaddition, our markets and banking business and wealth management business have continued to growaround the world.”Since the second quarter of 2006, Citi has completed more than a dozen transactions, most of which
  4. 4. fall outside the US. With its eye on greater international revenue, Citi has its sights set on rebalancingciscoits earnings to eventually take in 60 percent international and 40 percent US – a sharp jump fromthis year’s second quarter earnings mix that was closer to 50/50.Citi is already well on its way to reaching that target with a veritable shopping list of key transactionscompleted in fertile markets. In Central America, Citi acquired Grupo Uno, a prominent credit cardcompany, and Grupo Cuscatlan, a regional bank, and also entered into a key partnership with theholding company controlling Banco de Chile. In the UK, it acquired the world’s largest online bankwith its purchase of Egg, and acquired Quilter to leverage its wealth management capabilities. Thecompany also scored in China by becoming Taiwan’s largest international bank, after acquiring Bankof Overseas Chinese, and securing greater ownership in another major bank, Guangdong DevelopmentBank.The list goes on, with even more ownership stakes secured in Turkey, Japan and India – throughAkbank, one of Turkey’s leading banks, Japan’s Nikko Cordial, a long-time joint venture partner, andIndia’s second largest mortgage lender, HDFC Ltd. Citi plans to continue stamping Citi across theglobe. “All of these transactions position us to increase our ownership stakes in the future, while alsoproviding valuable product and distribution arrangements now. We will continue to pursue a strategy ofdiversifying our investments and deploying capital towards the faster growing regions of the world.”While the red arc will be used consistently across the business in all its advertising and marketingcommunications, red’s not the only color that will be associated with Citi. Part of its image overhaulhas involved a new focus on environmental responsibility and a commitment to ‘going green’. LeadingWall Street with a whopping $50 billion commitment to climate control over a 10-year period, Citi willbe capitalizing on the ‘green is good for business’ mantra that other big corporations – such as GE andIBM – are currently spouting.“Citi recognize that there clients want to do business with a company that is serious about dealing withclimate change and other environmental issues,” n addition, there is huge growth in those companiesfocused on being more environmentally focused and in the alternative energy arena; citi working withmany of these companies now, and expect to do even more in the future to drive innovation andchange.Citi is no stranger to environmentally friendly moves. The company was one of the institutionsresponsible for developing the Equator Principles, a doctrine of best practices for assessing andmitigating social and environmental risks in finance, and the firm’s ongoing commitment is evidence
  5. 5. of today’s growing corporate trend of incorporating ‘green’ as a critical and necessary part of businessdecisions.2.Cisco3.A key element of Ciscos sales philosophy is to focus on architecture and end-to-end solutions, whenappropriate, not on individual products. Raising the overall knowledge of architecture among relevantgroups throughout the company will enable Cisco to engage customers and partners at a more strategiclevel with greater added value. To accomplish this, Cisco must create a bridge between siloedarchitecture experts and customer-facing staff in diverse groups across Cisco.Selling end-to-end architecture solutions is not simple, and the required knowledge and expertise ismostly held by a relatively small group of individuals scattered across multiple organizations andgeographies. In addition, the word "architecture" itself was not uniformly understood within Cisco.Cisco needed to spread the knowledge throughout the workforce, providing sales engineers, accountrepresentatives, and other customer-facing groups with the information they need to position Ciscosolutions and services effectively from an architecture perspective.To execute its architecture strategysuccessfully, Cisco had to overcome several technology, process, and cultural challenges. Thesechallenges include:Architecture content is typically spread across various repositories (e.g., document control systems, wikis).Architecture experts are not readily identifiable. Many do not have "architect" in their title.Architecture content is not always up to date.Content and expertise tend to remain among architects within their own teams and locations. Adding value and sharing expertise is limited.Underlying these challenges are several root causes:The tendency for architects to work in functional or regional silos.Multiple content repositories and systems that do not easily enable exchange of information or efficient content updates. Even within a single group, collaboration and document tools might not interoperate.Information overload, making it difficult to know what information is important or relevant.Over-exposure, exacerbating time constraints. Being identified as an expert and contacted frequentlymakes it difficult for the best architects to get their work done efficiently.5. Fedex