Instructions for Report The CEO has asked the task force to write a report with its findings and recommendations for how NBD should handle this situation. Specifically, the report needs to answer the following questions: •Was the Chinese supplier ethical in shipping more than 300,000 cases made of real leather instead of the requested faux leather material, even though the supplier was not charging NBD anything extra for the higher cost of real leather? Explain why or why not using ethical theory and principles. •When the manufacturing VP contacted the Chinese supplier to complain, the supplier could not understand why NBD was not pleased about receiving a real leather case, given that NBD was still paying for the less expensive faux leather one. Is there a cultural difference between customer expectations and business transactions in the West and in Asia? Explain. •As an organization, what strategic errors did the task force observe in the decision making by various individuals in this situation? By the design VP? By the manufacturing VP? By the marketing VP? •What is the appropriate strategy going forward? Conduct a SWOT analysis and PESTEL analysis to decipher what NBD should do in light of these strategic errors. Using your outline and research notes write a report for the CEO. Be sure to meet the following requirements: •Include APA-formatted in-text citations and an APA-formatted reference list (do not format the body of the report using APA style, just the reference list). See references and citations for details. •Include a specific recommendation on what action, if any, the CEO should take based on your analysis and conclusions. •Support your conclusion with references to cultural norms, strategy, and the principles of SWOT and PESTEL. •The report should be no more than five pages (double spaced, 12-point font; the reference list does not count towards page limit). Case Colossal Corporation maintains a subsidiary in Serafini, a small country in Eastern Europe. This subsidiary is incorporated in the state of Delaware as New Brand Design, Inc. (NBD), a company that designs, brands, and manufactures innovative electronic products and markets and distributes them for resale across the globe. NBD has been admitted to conduct business in Serafini. NBD’s executive board is composed of ten members from three different countries, including a vice president of design, a vice president of marketing, and a vice president of manufacturing. Due to recent conflicts among the board members, communication among them has been less than efficient, and they are regularly blaming each other for mistakes made by NBD. The design vice president's staff originally proposed two alternative materials for laptop cases that are packaged and sold with certain high-end laptops manufactured by NBD, such as its best-selling product, the Dualplex 360: real leather (pig skin) and faux leather made from a synthetic material (polyurethane). Both laptop cases ...

1. Instructions for Report
The CEO has asked the task force to write a report with its
findings and recommendations for how NBD should handle this
situation. Specifically, the report needs to answer the following
questions:
•Was the Chinese supplier ethical in shipping more than
300,000 cases made of real leather instead of the requested faux
leather material, even though the supplier was not charging
NBD anything extra for the higher cost of real leather? Explain
why or why not using ethical theory and principles.
•When the manufacturing VP contacted the Chinese supplier to
complain, the supplier could not understand why NBD was not
pleased about receiving a real leather case, given that NBD was
still paying for the less expensive faux leather one. Is there a
cultural difference between customer expectations and business
transactions in the West and in Asia? Explain.
•As an organization, what strategic errors did the task force
observe in the decision making by various individuals in this
situation? By the design VP? By the manufacturing VP? By the
marketing VP?
•What is the appropriate strategy going forward? Conduct a
SWOT analysis and PESTEL analysis to decipher what NBD
should do in light of these strategic errors.
Using your outline and research notes write a report for the
CEO. Be sure to meet the following requirements:
•Include APA-formatted in-text citations and an APA-formatted
reference list (do not format the body of the report using APA
style, just the reference list). See references and citations for

2. details.
•Include a specific recommendation on what action, if any, the
CEO should take based on your analysis and conclusions.
•Support your conclusion with references to cultural norms,
strategy, and the principles of SWOT and PESTEL.
•The report should be no more than five pages (double spaced,
12-point font; the reference list does not count towards page
limit).
Case
Colossal Corporation maintains a subsidiary in Serafini, a small
country in Eastern Europe. This subsidiary is incorporated in
the state of Delaware as New Brand Design, Inc. (NBD), a
company that designs, brands, and manufactures innovative
electronic products and markets and distributes them for resale
across the globe. NBD has been admitted to conduct business in
Serafini.
NBD’s executive board is composed of ten members from three
different countries, including a vice president of design, a vice
president of marketing, and a vice president of manufacturing.
Due to recent conflicts among the board members,
communication among them has been less than efficient, and
they are regularly blaming each other for mistakes made by
NBD.
The design vice president's staff originally proposed two
alternative materials for laptop cases that are packaged and sold
with certain high-end laptops manufactured by NBD, such as its
best-selling product, the Dualplex 360: real leather (pig skin)
and faux leather made from a synthetic material (polyurethane).
Both laptop cases were very similar in appearance, although the
real leather case was a little heavier than the faux leather case.
Both cases could be sourced from an established supplier in

3. China, with whom the design VP had a long-term relationship.
The marketing VP evaluated the cost of the two cases from this
Chinese supplier and decided that he would go with the faux
leather case because it was available at a 20 percent lower cost
in comparison to the real leather case.
An initial order of 500,000 faux leather cases was placed with
the Chinese supplier, and within about a month, the shipment of
cases arrived at NBD's South African facility, where the laptops
were assembled and packaged for sale all over the world. When
the newly delivered cases were inspected by NBD's product
team in South Africa, they discovered that more than two-thirds
of the cases were actually made of real leather. After NBD's VP
of manufacturing contacted the Chinese supplier to complain
about the cases being "out of spec," he was told that it was not
an error—the supplier was aware of the fact that over 300,000
cases in the shipment were made out of real leather. After some
persistent questioning, the supplier revealed that as a result of
an order cancellation from another customer, they had suddenly
found themselves overstocked with an inventory of pig leather.
Rather than let this extra inventory go to waste, the Chinese
supplier decided to use up that inventory toward fulfilling a
major part of NBD's order!
The Chinese supplier was not willing to apologize for their
decision to ship over 300,000 real leather cases to NBD without
first obtaining approval for the switch. In fact, the supplier did
not feel that NBD had any grounds to complain because the
supplier was willing to accept the lower payment as per NBD's
original order of faux leather cases. Instead of insisting that the
supplier take back the 300,000 or so cases that were out of spec,
the manufacturing VP accepted the entire shipment and then
conveyed this news to the marketing VP in an internal company
memo.
Upon receiving the memo, the marketing VP realized it was too
late for the real leather cases to be returned to the supplier in
China, and he would have to make the best of out of an
undesirable situation. He made a decision that the faux leather

4. cases would be packaged for laptops shipped to Europe and
North America, given that they were lighter in weight. The real
leather cases would be used for laptops packaged and sold in
Africa and Asia. Previous marketing surveys conducted by NBD
had revealed that consumers in the West preferred lighter laptop
cases, while consumers in Africa and Asia equated heavier cases
with better quality and longer life. Of course, the marketing VP
forgot that the advertising materials and product inserts for the
laptop had already been printed in multiple languages and all of
this product literature stated that the laptop case was made of
synthetic material.
The laptop cases were shipped to retail outlets, and within a
couple of weeks, the marketing VP had a potential crisis on his
hands. Tech writers and product reviewers from two well-known
South African and Kenyan newspapers had called and emailed
to inquire about what they rightly suspected was a pig leather
case and not the synthetic material that was specified in NBD's
product literature. They informed the marketing VP that if they
revealed the truth about the origins of the case material in their
reviews, it would have a tremendously negative impact on
NBD's sales in Africa and Asia, where a significant number of
consumers opposed the use of pigskin in products on religious
grounds. They wanted to know how the company was going to
resolve this issue before they went to press.
The marketing VP contacted the manufacturing and design VPs
to find out what they should do to get the company out of this
potential crisis. After a lot of finger-pointing and talking past
each other, the three individuals arranged a conference call with
Colossal’s CEO and brought the CEO up to date. The CEO
promised the three VPs that her international task force would
research and address the issue. End of Case
Managing in a Global Environment

5. Managing in a global environment presents particularly difficult
challenges as well as the potential for significant rewards. A
manager must be acutely aware of all possible cultural,
linguistic, legal, and ethical issues when managing a diversified
workforce. There are many tools available to the international
manager for engaging stakeholders, strategizing, and learning
about how different cultures do business.
International Expansion and Global Market Opportunity
Assessment
Choosing to expand internationally is rarely black and white. A
wide variety of internationalization moves are available after
choosing to expand. Moreover, some flatteners make global
moves easier, while some make them more difficult. Indeed,
even importing and outsourcing can be considered stealth, or at
least early, steps in internationalization, because they involve
doing business across borders. The first section of this resource
discusses the rationale for international expansion and the
planning and due diligence it requires.
In the second section of this resource, you will learn about
PESTEL, the framework for analyzing the political, economic,
sociocultural, technological, environmental, and legal aspects of
different international markets.
Global Strategic Choices
The Why, Where, and How of International Expansion
The allure of global markets can be mesmerizing. Companies
that operate in highly competitive or nearly saturated markets at
home, for instance, are drawn to look overseas for expansion.
But overseas expansion is not a decision to be made lightly, and
managers must ask themselves whether the expansion will

6. create real value for shareholders. Companies can easily
underestimate the costs of entering new markets if they are not
familiar with the new regions and the business practices
common within the new regions. For some companies, a misstep
in a foreign market can put their entire operations in jeopardy,
this section explores the rationale for international expansion as
well as how to analyze and evaluate markets for international
expansion.
Flow chart with four boxes. The top box asks, Why? Positive
economic logic? Supported by our differentiators? Strengthens
our differentiators? If no, stop. If yes, proceed to the next box,
Where? What new countries fit our differentiators? Which ones
chan strengthen our differentiators? Where is the best business
fit? This box proceeds to a box labeled How? Do it on our own?
Do we need a local partner? How big and how fast? The bottom
box, showing hard criteria, soft criteria, and fit proceeds to the
Where box. Hard criteria include market size, future growth,
parking levels, and competitive environment. Soft criteria
include economic and political stability, restrictions on foreign
ownership and freedom of capital flows. Fit includes human
resources, geographic proximity, and cultural differences.
Analysis and Evaluation of Markets for International Expansion
Rationale for International Expansion
Companies embark on an expansion strategy for one or more of
the following reasons:
•improve the cost-effectiveness of their operations
•expand into new markets for new customers
•follow global customers
For example, the US chemical firm DuPont, Brazilian aerospace
conglomerate Embraer, and Finnish mobile phone maker Nokia
are all investing in China to gain new customers. Schneider

7. Logistics, in contrast, initially entered a new market, Germany,
not to get new customers but to retain existing customers who
needed a third-party logistics firm in Germany. Thus, Schneider
followed its customers to Germany. Other companies, like the
microprocessor maker Intel, are building manufacturing
facilities in China to take advantage of the less costly and
increasingly sophisticated production capabilities. For example,
Intel built a semiconductor manufacturing plant in Dalian,
China, for $2.5 billion, whereas a similar state-of-the-art
microprocessor plant in the United States can cost $5 billion
(“2011 Global R&D Funding Forecast, 2010). Intel has also
built plants in Chengdu and Shanghai, China, and in other Asian
countries (Vietnam and Malaysia) to take advantage of lower
costs.
Planning for International Expansion
As companies look for growth in new areas of the world, they
typically prioritize which countries to enter. Because many
markets look appealing due to their market size or low-cost
production, it is important for firms to prioritize which
countries to enter first and to evaluate each country’s relative
merits. For example, some markets may be smaller in size, but
their strategic complexity is lower, which may make them easier
to enter and easier from an operations point of view. Sometimes
there are even substantial regional differences within a given
country, so careful investigation, research, and planning are
important to do before entry.
International Market Due Diligence
International market due diligence involves analyzing foreign
markets for their potential size, accessibility, cost of operations,
and buyer needs and practices to aid the company in deciding
whether to invest in entering that market. Market due diligence
relies on using not just published research on the markets but

8. also interviews with potential customers and industry experts. A
systematic analysis needs to be done, using tools like PESTEL.
Evaluating whether to enter a new market is like peeling an
onion—there are many layers. For example, when evaluating
whether to enter China, the advantage most people see
immediately is its large market size. Further analysis shows that
the majority of people in that market can’t afford US products,
however. But even deeper analysis shows that while many
Chinese are poor, the number of people who can afford
consumer products is increasing (Kleiner, 2010).
Regional Differences
The next part of due diligence is to understand the regional
differences within the country and to not view the country as a
monolith. For example, although companies are dazzled by
China’s large market size, deeper analysis shows that 70 percent
of the population lives in rural areas. This presents distribution
challenges given China’s vast distances. In addition, consumers
in different regions speak different dialects and have different
tastes in food. Finally, the purchasing power of consumers
varies in the different cities. City dwellers in Shanghai and
Tianjin can afford higher prices than villagers in a western
province.
Let’s look at a specific example. To achieve the dual goals of
reducing operations costs and being closer to a new market of
customers, for instance, numerous high-tech companies identify
Malaysia as an attractive country to enter. Malaysia is a
relatively inexpensive country, and the population’s English
skills are good, which makes it attractive both for finding local
labor and for selling products. But even in a small country like

9. Malaysia, there are regional differences. Companies may be
tempted to set up operations in the capital city, Kuala Lumpur,
but thorough due diligence reveals that the costs in Kuala
Lumpur are rising rapidly. If current trends continue, Kuala
Lumpur will be as expensive as London in five years. Therefore,
firms seeking primarily a lower-cost advantage would do better
to locate to another city in Malaysia, such as Penang, which has
many of the same advantages as Kuala Lumpur but does not
have its rising costs (Chamania, Mehta, & Sehgal, 2001).
Understanding Local Consumers
Entering a market means understanding the local consumers and
what they look for when making a purchase decision. In some
markets, price is an important issue. In other markets, such as
Japan, consumers pay more attention to details—such as the
quality of products and the design and presentation of the
product or retail surroundings—than they do to price. The
Japanese demand for perfect products means that firms entering
Japan might have to spend a lot on quality management.
Moreover, real-estate costs are high in Japan, as are freight
costs such as fuel and highway charges. In addition, space is
limited at retail stores and stockyards, which means that stores
can’t hold much inventory, making replenishment of products a
challenge. Therefore, when entering a new market, it’s vital for
firms to perform full, detailed market research in order to
understand the market conditions and take measures to account
for them.
How to Learn the Needs of a New Foreign Market
The best way for a company to learn the needs of a new foreign
market is to deploy people to immerse themselves in that
market. Larger companies, like Intel, employ ethnographers and
sociologists to spend months in emerging markets, living in
local communities and seeking to understand the latent,

10. unarticulated needs of local consumers. For example, Dr.
Genevieve Bell, one of Intel’s anthropologists, traveled
extensively across China, observing people in their homes to
find out how they use technology and what they want from it.
Intel then used her insights to shape its pricing strategies and its
partnership plans for the Chinese consumer market (Radjou,
2009).
Differentiation and Capability
When entering a new market, companies also need to think
critically about how their products and services will be different
from what competitors are already offering in the market so that
the new offering provides customers value. Companies trying to
penetrate a new market must be sure to have some proof that
they can deliver to the new market; this proof could be evidence
that they have spoken with potential customers and are
connected to the market (“How We Do It,” 2011).
Related to firm capability, another factor for firms to consider
when evaluating which country to enter is corporate fit, the
degree to which the company’s existing practices, resources and
capabilities fit the new market. For example, a company
accustomed to operating within a detailed, unbiased legal
environment would not find a good corporate fit in China
because of the current vagaries of Chinese contract law
(Wingard, 2002). While a low corporate fit doesn’t preclude
expanding into that country, it does signal that additional
resources or caution may be necessary. Two typical dimensions
of corporate fit are human resources practices and the firm’s
risk tolerance.
Industry Dynamics

11. In some cases, the decision to enter a new market will depend
on the specific circumstances of the industry in which the
company operates. For example, companies that help build
infrastructure need to enter countries where the government or
large companies have a lot of capital, because infrastructure
projects are so expensive. The president of the Spanish
infrastructure company Fomento de Construcciones y Contratas
said, “We focus on those countries where there is more money
and there is a gap in the infrastructure,” such as China,
Singapore, the United States, and Algeria (“Practical Advice,”
2011).
Political stability, legal security, and the “rule of law”—the
presence of and adherence to laws related to business contracts,
for example—are important considerations prior to market entry
regardless of which industry a company is in. Fomento de
Construcciones y Contratas learned this the hard way and ended
up leaving some countries it had entered. The company’s
president, Baldomero Falcones, explained, “When you decide
whether or not to invest, one factor to take into account is the
rule of law. Our ethical code was considered hard to understand
in some countries, so we decided to leave during the early
stages of the investment” (“Practical Advice,” 2011).
Ethics in Action
Companies based in China are entering Australia and Africa,
primarily to gain access to raw materials. Trade between China
and Africa grew an average of 30 percent in the decade up to
2010, reaching $115 billion that year (Redfern, 2011). Chinese
companies operate in Zambia (mining coal), the Democratic
Republic of the Congo (mining cobalt), and Angola (drilling for
oil). To get countries to agree to the deals, China had to agree
to build new infrastructure, such as roads, railways, hospitals,
and schools. Some economists, such as Dambisa Moyo, who
wrote Dead Aid: Why Aid Is Not Working and How There Is a

12. Better Way for Africa, believe that the way to help developing
countries like those in Africa is not through aid but through
trade. Moyo argues that long-term charity is degrading. She
advocates business investments and setting up enterprises that
employ local workers. Ecobank CEO Arnold Ekpe (whose bank
employs 11,000 people in twenty-six African states) says the
Chinese look at Africa differently than the West does: “[The
Chinese] are not setting out to do good,” he says. “They are
setting out to do business. It’s actually much less demeaning”
(Perry, 2009). Deborah Brautigam, associate professor at the
American University’s International Development Program,
agrees. In her book, The Dragon’s Gift: The Real Story of China
in Africa, she says, “The Chinese understand something very
fundamental about state building: new states need to build
buildings and dignity, not simply strive to end poverty”
(Bloomfield, 2010).
Steps and Missteps in International Expansion
Let’s look at an example of the steps—as well as the missteps—
in international expansion. American retailers entered the
Chilean market in the mid- to late 1990s. They chose Chile
because of the country’s strong economy, the advanced level of
the Chilean retail sector, and the free trade agreements signed
by Chile. From that standpoint, their due diligence was
accurate, but it didn’t go far enough, as we’ll see.
Retailer J. C. Penney entered Chile in 1995, opening two stores.
The French retailer Carrefour also entered Chile, in 1998.
Neither company entered through an alliance with a local
retailer, and both companies were forced to close their Chilean
operations due to the losses they were incurring. Analysis by
the Aldolfo Ibáñez University in Chile explained the reasons
behind the failures: the managers of these companies were not
able to connect with the local market, nor did they understand
the variables that affected their businesses in Chile (“The

13. Globalization of Chilean Retailing,” 2007). Specifically, the
Chilean retailing market was advanced, but it was also very
competitive. The new entrants (J. C. Penney and Carrefour)
didn’t realize that the existing major local retailers had their
own banks and offered banking services at their retail stores,
which was a major reason for their profitability. The outsiders
assumed that profitability in this sector was based solely on
retail sales. They missed the importance of the bank ties.
Another typical mistake that companies make is to assume that a
new market has no competition just because the company’s
traditional competitors aren’t in that market.
The Chilean retailers were successful in their own markets but
wanted to expand beyond their borders in order to get new
customers in new markets. The Chilean retailers chose to enter
Peru, which had the same language.
The Peruvian retailing market was not advanced, and it did not
offer credit to customers. The Chileans entered the market
through a partnership with local Peruvian firms and introduced
the concept of credit cards, which was an innovation in the
poorly developed Peruvian market. Entering through a domestic
partner helped the Chileans because it eliminated hostility and
made the investment process easier. Offering the innovation of
credit cards made the Chilean retailers distinctive and offered
an advantage over the local offerings (“The Globalization of
Chilean Retailing,” 2007).
PESTEL, Globalization, and Importing
Know the Components of PESTEL Analysis
PESTEL analysis is an important and widely used tool that
helps show the big picture of a firm’s external environment,
particularly as related to foreign markets. PESTEL is an
acronym for the political, economic, sociocultural,

14. technological, environmental, and legal contexts in which a firm
operates. A PESTEL analysis helps managers gain a better
understanding of the opportunities and threats they face;
consequently, the analysis aids in building a better vision of the
future business landscape and how the firm might compete
profitably. This useful tool analyzes for market growth or
decline and, therefore, the position, potential, and direction for
a business. When a firm is considering entry into new markets,
these factors are of considerable importance. Moreover,
PESTEL analysis provides insight into the status of key market
flatteners, both in terms of their present state and future trends.
Firms need to understand the macro environment to ensure that
their strategy is aligned with the powerful forces of change
affecting their business landscape. When firms exploit a change
in the environment—rather than simply survive or oppose the
change—they are more likely to be successful. A solid
understanding of PESTEL also helps managers avoid strategies
that may be doomed to fail given the circumstances of the
environment. J. C. Penney’s failed entry into Chile is a case in
point.
Finally, understanding PESTEL is critical prior to entry into a
new country or region. The fact that a strategy is congruent with
PESTEL in the home environment gives no assurance that it will
also align in other countries. For example, when Lands’ End,
the online clothier, sought to expand its operations into
Germany, it ran into local laws prohibiting it from offering
unconditional guarantees on its products. In the United States,
Lands’ End had built a reputation for quality on its no-
questions-asked money-back guarantee. However, this was
considered illegal under Germany’s regulations governing
incentive offers and price discounts. The political skirmish
between Lands’ End and the German government finally ended
when the regulations banning unconditional guarantees were
abolished. While the restrictive regulations didn’t put Lands’

15. End out of business in Germany, they did inhibit its growth
there until the laws were abolished.
There are three steps in the PESTEL analysis.
1.Consider the relevance of each of the PESTEL factors to your
context.
2.Identify and categorize the information that applies to these
factors.
3.Analyze the data and draw conclusions.
Common mistakes in this analysis include stopping at the
second step or assuming that the initial analysis and conclusions
are correct without testing the assumptions and investigating
alternative scenarios.
The framework for PESTEL analysis is presented below. It’s
composed of six sections—one for each of the PESTEL
headings (Carpenter, 2009). The framework includes sample
questions or prompts, the answers to which can help determine
the nature of opportunities and threats in the macroenvironment.
These questions are examples of the types of issues that can
arise in a PESTEL analysis.
Political Factors
The political environment can have a significant influence on
businesses. In addition, political factors affect consumer
confidence and consumer and business spending. For instance,
how stable is the political environment? This is particularly
important for companies entering new markets. Government
policies on regulation and taxation can vary from state to state
and across national boundaries. Political considerations also
encompass trade treaties, such as NAFTA, ASEAN, and EU.
Such treaties tend to favor trade among the member countries
but impose penalties or less favorable trade terms on

16. nonmembers.
Economic Factors
Managers also need to consider macroeconomic factors that will
have near-term and long-term effects on the success of their
strategy. Inflation rates, interest rates, tariffs, the growth of the
local and foreign national economies, and exchange rates are
critical. Unemployment, availability of critical labor, and the
local cost of labor also have a strong bearing on strategy,
particularly as related to the location of disparate business
functions and facilities.
Sociocultural Factors
The social and cultural influences on business vary from
country to country. Depending on the type of business, factors
such as the local languages, the dominant religions, the cultural
views toward leisure time, and the age and lifespan
demographics may be critical. Local sociocultural
characteristics also include attitudes toward consumerism,
environmentalism, and the roles of men and women in society.
Making assumptions about local norms derived from
experiences in your home market is a common cause for early
failure when entering new markets. However, even home market
norms can change over time, often caused by shifting
demographics due to immigration or aging populations.
Technological Factors
Technological factors have a major bearing on the threats and
opportunities firms encounter. For example, new technology
may make it possible for products and services to be made more
cheaply and to a better standard of quality. New technology may
also provide the opportunity for more innovative products and

17. services, such as online stock trading and remote working. Such
changes have the potential to change the face of the business
landscape.
Environmental Factors
The environment has long been a factor in firm strategy,
primarily from the standpoint of access to raw materials.
Increasingly, this factor is best viewed as both a direct and
indirect cost for the firm.
Environmental factors are also evaluated on the footprint left by
a firm on its respective surroundings. For consumer product
companies like PepsiCo, for instance, this can encompass the
waste management and organic farming practices used in the
countries where raw materials are obtained. Similarly, in
consumer markets, it may refer to the degree to which
packaging is biodegradable or recyclable.
Legal Factors
Finally, legal factors reflect the laws and regulations relevant to
the region and the organization. Legal factors can include
whether the rule of law is well established, how easily or
quickly laws and regulations may change, and what the costs of
regulatory compliance are. For example, Coca-Cola’s market
share in Europe is greater than 50 percent; as a result,
regulators have asked that the company give shelf space in its
coolers to competitive products in order to provide greater
consumer choice (“EU Curbs Coca-Cola,” 2005).

18. Many of the PESTEL factors are interrelated. For instance, the
legal environment is often related to the political environment,
where laws and regulations can only change when they’re
consistent with the political will.
PESTEL and Globalization
Over the past decade, new markets have been opened to foreign
competitors, whole industries have been deregulated, and state-
run enterprises have been privatized. So, globalization has
become a fact of life in almost every industry (Yip, 1989). This
entails much more than companies simply exporting products to
another country. Some industries that aren’t normally
considered global do, in fact, have strictly domestic players.
But these companies often compete alongside firms with
operations in multiple countries; in many cases, both sets of
firms are doing equally well. In contrast, in a truly global
industry, the core product is standardized, the marketing
approach is relatively uniform, and competitive strategies are
integrated in different international markets (Porter, 1986; Yip,
1989). In these industries, competitive advantage clearly
belongs to the firms that can compete globally.
A number of factors reveal whether an industry has globalized
or is in the process of globalizing. The box below groups
globalization factors into four categories: markets, costs,
governments, and competition. These dimensions correspond
well to Thomas Friedman’s (2005) “flatteners” (as described in
his book The World Is Flat), though they are not exhaustive.
Markets
The more similar markets in different regions are, the greater
the pressure for an industry to globalize. Coca-Cola and

19. PepsiCo, for example, are fairly uniform around the world
because the demand for soft drinks is largely the same in every
country. The airframe manufacturing industry, dominated by
Boeing and Airbus, also has a highly uniform market for its
products; airlines all over the world have the same needs when
it comes to large commercial jets.
Costs
In both of these industries, costs favor globalization. Coca-Cola
and PepsiCo realize economies of scope and scale because they
make such huge investments in marketing and promotion. Since
they’re promoting coherent images and brands, they can
leverage their marketing dollars around the world. Similarly,
Boeing and Airbus can invest millions in new-product R&D
only because the global market for their products is so large.
Governments and Competition
Obviously, favorable trade policies encourage the globalization
of markets and industries. Governments, however, can also play
a critical role in globalization by determining and regulating
technological standards. Railroad gauge—the distance between
the two steel tracks—would seem to favor a simple
technological standard. In Spain, however, the gauge is wider
than in France. Why? Because back in the 1850s, when Spain
and neighboring France were hostile to one another, the Spanish
government decided that making Spanish railways incompatible
with French railways would hinder any French invasion.
These are a few key drivers of industry change. However, there
are particular implications of technological and business-model
breakthroughs for both the pace and extent of industry change.
The rate of change may vary significantly from one industry to
the next; for instance, the computing industry changes much
faster than the steel industry. Nevertheless, change in both

20. fields has prompted complete reconfigurations of industry
structure and the competitive positions of various players. The
idea that all industries change over time and that business
environments are in a constant state of flux is relatively
intuitive. As a strategic decision maker, you need to ask
yourself this question: how accurately does current industry
structure (which is relatively easy to identify) predict future
industry conditions?
SWOT Analysis
A situation analysis is often referred to by the acronym SWOT,
which stands for strengths, weaknesses, opportunities, and
threats.
Graphic showing opportunities and threats grouped as external
factors that encompass technology, competition, and economic,
political, legal, and social trends. Strengths and Weaknesses are
grouped as internal factors and encompass financial, technical,
competition position, human resources, and product line.
SWOT Analysis
Essentially, a SWOT analysis is an examination of the internal
and external factors that impact the organization and its
strategies. The internal factors are strengths and weaknesses;
the external factors are opportunities and threats. A SWOT
analysis gives an organization a clear picture of the business
situation in which it operates and helps it identify which
strategies to pursue.
Internal Factors
Strengths and weaknesses include the resources and capabilities

21. within the organization now. Since the company has the most
control over internal factors, it can craft strategies and
objectives to exploit strengths and address weaknesses.
Examples of internal factors include the following:
•financial resources
•technical resources and capabilities
•human resources
•product lines
All of these are controlled by the organization. Competitive
positioning can also be a strength or a weakness. While
competitors’ strategies and tactics are external to the company,
the company’s position relative to the competitors is something
that it can control.
External Factors
External factors include opportunities and threats that are
outside of the organization. These are factors that the company
may be able influence—or at least anticipate—but not fully
control. Examples of external factors include the following:
•technology innovations and changes
•competition
•economic trends
•government policies and legislation
•legal judgments
•social trends

22. While a company can control how it positions itself relative to
the competition, it can’t control competitors’ actions or
strategies.
Benefits of a SWOT Analysis
Encourages Realistic Planning
Imagine a growing company that is able to attract new
customers more easily than the competition because it has a
strong reputation and visible leader. These strengths should be
considered and exploited in the strategy. Now imagine that the
company also has a poor history of delivering on customer
commitments. If this weakness is not addressed, it will not only
make it difficult to retain customers but also likely damage the
reputation of the company and its leader—which would
eliminate key strengths. By conducting a situation analysis, the
company is more likely to consider both of these factors in its
planning.
Improves Ability to Forecast Future Events
What’s the worst thing that could happen to your business?
Most organizations can answer this question because they have
assessed the environment in which they operate. For instance,
perhaps they know of pending legislation that might adversely
affect them. Or perhaps they recognize legal risks, or unique
challenges from past economic cycles. By considering threats
and worst-case scenarios during the planning process,
organizations can take steps to avoid them, or minimize the
impact if they do they occur.
SWOT Analysis Example
A situation analysis can benefit any organization. The example
below shows the SWOT analysis for a fictional college.

23. Graphic showing opportunities and threats grouped as external
factors. Opportunities include, expand online programs, create
custom programs for local employers, credit for prior learning.
Threats include, reduced state funding, economic recover, and
aggressive marketing by for-profit competitors. Strengths and
Weaknesses are grouped as internal factors. Strengths include
bright, committed faculty, strong and trusted leaders, student
completion rates, student advising initiative, and community
partners. Weaknesses include aging tech infrastructure, training
for part-time faculty, nursing program under capacity and
inefficient transfer process.
SWOT Analysis Example
Even this rudimentary analysis highlights some strategic issues,
discussed below, which the college needs to consider.
Internal
The college has a number of strengths. Committed faculty and
trusted leaders have collaborated to build academic programs
that are showing high completion rates among students. The
student advising program is also contributing to that success.
Also, the college has excellent relationships with businesses in
the community.
Among the weaknesses, the technology infrastructure is
outdated. The college also employs a large number of part-time
faculty members, but doesn’t provide them with adequate
training or support. Nursing, one of the more expensive
programs at the college, is not attracting enough students to
keep it full. Also, the college has learned from some of its
recent graduates that students are not receiving transfer credit at
the local university for all of their courses taken at the college.
The students wonder if the college faculty and advisers really
understand their academic goals or the requirements of the four-

24. year degree programs at the university.
By completing a SWOT analysis, the college can shape its
strategies and objectives to align with both the internal
resources and capabilities it has, as well as the external factors
it faces.
External
The college leadership is feeling pulled by conflicting economic
factors. The region has been through an economic downturn,
which resulted in cuts to state funding. At the same time, an
economic recovery has just begun. During the previous
economic recovery, college enrollment dropped when students
who were pursuing additional education returned to the
workforce. How might the timing of those two funding issues
work out? The college is also being affected by a local
institution that is aggressively marketing to its students—
especially students in the nursing program.
Still, there are opportunities. Students have expressed interest
in more online courses and programs. That might also slow the
local competitor, though it would also require the college to
address its aging technology infrastructure. The college has
identified a number of innovative programs that would enable
students to earn degrees more quickly and at the same time
expand its partnership and collaboration with local businesses.
SWOT Examples for Organizations and Individuals
Chess master Bruce Pandolfini has noted the similarities
between business and chess. In both arenas, you must

25. understand your own abilities as well as your flaws. You must
also know your opponents, try to anticipate their moves, and
deal with considerable uncertainty. A very popular management
tool that incorporates the idea of understanding the elements
internal and external to the firm is SWOT (strengths,
weaknesses, opportunities, and threats) analysis. Strengths and
weaknesses are assessed by examining the firm, while
opportunities and threats refer to external events and trends.
These ideas can be applied to individuals too.
Porter’s five-forces analysis examines the situation faced by the
competitors in an industry. Strategic-groups analysis narrows
the focus by centering on subsets of these competitors whose
strategies are similar. SWOT analysis takes an even narrower
focus by centering on an individual firm. Specifically, SWOT
analysis is a tool that considers a firm’s strengths and
weaknesses along with the opportunities and threats that exist in
the firm’s environment, as represented in the table below.
SWOT point
Organizational examples
Individual examples
Strengths
Having high-levels of cash flow gives firms discretion to
purchase new equipment if they wish to.
Strong technical and language skills, as well as previous work
experience, can help individuals rise above the competition.
Weaknesses

26. Dubious leadership and CEO scandals have plagued some
corporations in recent years.
Poor communication skills keep many job seekers from being
hired into sales and supervisory positions.
Opportunities
The high cost of gasoline creates opportunities for substitute
products based on alternative energy sources.
The U.S. economy is increasingly services based, suggesting
that individuals can enjoy more opportunities in service firms.
Threats
Concerns about worldwide pollution are a threat to petroleum-
based products.
A tight job market poses challenges to new graduates.
Executives using SWOT analysis compare these internal and
external factors to generate ideas about how their firm might
become more successful. In general, it is wise to focus on ideas
that allow a firm to leverage its strengths, steer clear of or
resolve its weaknesses, capitalize on opportunities, and protect
itself against threats. For example, untapped overseas markets
have presented potentially lucrative opportunities to Subway
and other restaurant chains such as McDonald’s and KFC.
Meanwhile, Subway’s strengths include a well-established
brand name and a simple business format that can easily be
adapted to other cultures. In considering the opportunities

27. offered by overseas markets and Subway’s strengths, it is not
surprising that entering and expanding in different countries has
been a key element of Subway’s strategy in recent years.
Indeed, Subway currently has operations in nearly 100 nations.
SWOT analysis is helpful to executives, and it is used within
most organizations. Important cautions need to be offered about
SWOT analysis, however. First, in laying out each of the four
elements of SWOT, internal and external factors should not be
confused with each other. It is important not to list strengths as
opportunities, for example, if executives are to succeed at
matching internal and external concerns during the idea
generation process.
Second, opportunities should not be confused with strategic
moves designed to capitalize on these opportunities. In the case
of Subway, it would be a mistake to list “entering new
countries” as an opportunity. Instead, untapped markets are the
opportunity presented to Subway, and entering those markets is
a way for Subway to exploit the opportunity. Finally, and
perhaps most important, the results of SWOT analysis should
not be overemphasized. SWOT analysis is a relatively simple
tool for understanding a firm’s situation. As a result, SWOT is
best viewed as a brainstorming technique for generating
creative ideas, not as a rigorous method for selecting strategies.
Thus the ideas produced by SWOT analysis offer a starting
point for executives’ efforts to craft strategies for their
organization, not an ending point.
In addition to organizations, individuals can benefit from
applying SWOT analysis to their personal situation. A college
student who is approaching graduation, for example, could lay
out her main strengths and weaknesses and the opportunities
and threats presented by the environment. Suppose, for instance,
that this person enjoys and is good at helping others (a strength)
but also has a rather short attention span (a weakness).

28. Meanwhile, opportunities to work at a rehabilitation center or to
pursue an advanced degree are available. Our hypothetical
student might be wise to pursue a job at the rehabilitation center
(where her strength at helping others would be a powerful asset)
rather than entering graduate school (where a lot of reading is
required and her short attention span could undermine her
studies).
Real World Use of Statistics
Option 3. Explain and analyze the effectiveness of the statistics
methods to determine the impact of these diseases. Use the link
above to review statistics videos of your choice in order to
address this inquiry (View Free Statistics Videos).
Initial responses should be no less than 450 words in length not
including your reference(s) and supported by at least two
references (aside from the textbook). Please be aware that just
“cutting and pasting” sections of articles (in lieu of writing an
original initial post) is not acceptable and will negatively
impact your grade.
Understanding Measurements in Biostatistics
You will define how measurements are used in biostatistics.
This internet exercise assignment should be at least 450 words
and no more than 1 1/2 pages. You will need to cite within the
text and have a reference section in APA format (6th edition) as
well as adhere to standard writing for graduate level.
You are encouraged to type your summary directly into the open
text field and attach a paper containing the same content to
avoid issues with submission.
Step 1: You will define measurements from your textbook
and/or various sources first. You are demonstrating that you
understood the concept .You are going to define this in 2-3
sentences by using your textbook and/or other sources.
Step 2: You are going to pick an article that utilized the concept
of measurements. You want to take a look at the following sites
to select your article:

29. Journal of Public Health: http://jpubhealth.oxfordjournals.org/
European Journal of Public Health:
http://eurpub.oxfordjournals.org/
American Journal of Epidemiology:
http://aje.oxfordjournals.org/
The Journal of Infectious Diseases:
http://jid.oxfordjournals.org/
Clinical Infectious Diseases: http://cid.oxfordjournals.org/
Health Promotion International:
http://heapro.oxfordjournals.org/
Step 3: Thoroughly READ the article and TAKE notes.
Step 4: Complete the writing of your summary with a review of
this article. In your assessment of this article, you MUST
provide how the researchers used the statistical concept in their
research by doing the following: 1) Explain the sample (i.e.,
population used), 2) Summarize the statistical analysis and what
software or analysis package was used and 3) Evaluate and
describe the results and conclusions in your own words. It is
very important that you are able to paraphrase and apply critical
thinking in each of these assignments.
Please make sure you cite within the text in APA format (6th
edition) and have a reference section!