Reading Materials
Passage Two
International Trade
国际贸易环境
International business differs from domestic business in that a firm operating across borders must deal with the forces of three kinds of environments-domestic, foreign, and international. In contrast, the company whose business activities are carried out within the borders of one country needs to be concerned essentially with only the domestic environment. Even in this case, however, no domestic firm is entirely free from the foreign or international environmental forces because the possibility of having to face foreign competition from imports or foreign competitors who set up operations in its own market is always present. Let us first examine these forces and then see how they operate in the three environments.
Forces in the Environments (环境机制)
Environment as here is the sum total of all the forces surrounding and influencing the life and development of the firm. The forces themselves can be classified as external or internal. Furthermore, inasmuch as management has no direct control over them (although it can exert an influence), the external forces are commonly called uncontrollable. They consist of the following:
Competitive 6. Physical
Distributive 7. Political
Economic 8. Sociocultural
Financial 9. Labor
5. Legal 10. Technological
The elements over which management does have some command are the internal forces such as the factors of production (capital, raw materials, and people) and the activities of the organization (personnel, finance, production, and marketing). These are the controllable forces which management must administer in order to adapt to changes in the uncontrollable variables. For instance, when the government decreed that cyclamates could no longer be employed as an artificial sweetener (uncontrollable variable), canners responded by reformulating their products to eliminate this substance (controllable variable). The process of adaptation does not imply that managers must wait passively for changes to occur to which they then react. In fact, the most successful administrators are those who so knowledgeable about the environmental forces that they are not only prepared and waiting but may even contribute to these changes as they take place.
The Domestic Environment (国内环境)
The domestic environment is composed of the controllable and uncontrollable forces which originate in the home country. Obviously, these are the one with which managers are most familiar. Being domestic forces does not preclude their affecting foreign operations, however. For example, if the home country is suffering from a shortage of foreign currency, the government may place restrictions on overseas investment to reduce its outflow. As a result, management of multinational find they can not expand overseas facilities as they would like to do. In another instance from real life, a labor union striking the home-based plants learned that management was supplying parts from its foreign subsidiaries. The strikers contacted the foreign unions which pledged not to work overtime to supply what the struck pants could not. The impact of this domestic environmental force was felt overseas as well as at home.
Foreign Environments (国外环境)
The forces in the foreign environments are the same as those in the domestic environment except they occur in a foreign nation. However, they operate differently for several reasons including the following.
• Different force values
Even though the kinds of forces in the two environments are identical, their values often differ widely and at times are completely opposed to each other. A good example of diametrically opposed political force values and the bewilderment they create for multinational managers is the case of Dresser Industries and the former Soviet pipeline. In June 1982, President Reagan extended the American embargo against shipments of equipment for the pipeline to include foreign companies manufacturing equipment under U. S. License. The Dresser home office instructed their French subsidiary to stop work on an order for compressors. However, in August, the French government ordered Dresser France to defy the embargo and begin scheduled deliveries under penalty of both civil and criminal sanctions. As the Dresser vice president for finance put it, “The order put Dresser between a rock and a hard place.”
• Changes difficult to assess
Another problem with the foreign forces is that they are frequently difficult to assess, especially the legal and political elements. A highly nationalistic law may be passed to appease a section of the population. To all outward appearances, a government may appear to be against foreign investment, yet pragmatic leaders may actually encourage it. A good example is Mexico. Legislation was enacted which severely restricts the percentage of foreign ownership, but there is a clause permitting exceptions “if the investment contributes to the welfare of the nation.” This escape clause allows a foreign firm which is highly desired by government leaders to still set up a wholly owned subsidiary.
• Decision making more complex
Decision making is more complex because of the multiplicity of the forces. Consider managers in the home office who must make decisions affecting subsidiaries in just 10 different countries (many MNCs are in 20 countries or more). They must not only take into account the domestic force but must also evaluate the influence of 10 foreign national environments. Instead of having to consider the effects of a single set of 10 forces as do their domestic counterparts, they have to contend with 10 sets, both individually and collectively, because there may be some interaction.
For example, if management agrees to labor's demands at one foreign subsidiary, chances are it will have to offer a similar settlement to another because of the tendency of unions to exchange information across borders. Furthermore, as we shall observe throughout the text, not only are there many sets of forces but there are also extreme differences among them.
Another common cause of added complexity is the managers' unfamiliarity with other cultures. Their unconscious reference to their own cultural values, called Self Reference Criterion, may keep them from recognizing the true import of changes in the foreign environments. Thus, they may either overreact or fail to take any action whatsoever.
• Forces are interrelated
In the chapters to follow, it will be evident that the forces are often interrelated. This in itself is no novelty, because the same situation confronts the domestic manager. What is often different, however, is the types and degrees of interaction that occur. For instance, the combination of high-cost capital and an abundance of unskilled labor in many lesser-developed countries may lead to the use of a lower level of technology than would be employed in the more industrialized nations. In other words, given a choice between installing costly, specialized machinery with few workers or less-expensive, general purpose machinery requiring a larger labor force, management will frequently choose the latter when faced with high interest rates and a large pool of available workers. Another example of interaction is that of the physical and sociocultural forces. Barriers to free movement of a nation's people, such as mountain ranges or deserts, help to maintain pockets of very distinct cultures within a county.
International Environment (国际环境)
The international environment is essentially the interaction between the environmental forces of the home country and those of the various foreign nations where the company does business. Personnel at the multinational enterprise headquarters work in the international environment, whereas personnel in a foreign subsidiary do not unless they too are engaged in international trade through direct exporting or management of other foreign affiliates. Also included in the international environment are the supranational organizations whose actions affect the business community. These are: (1) worldwide bodies such as the World Bank, (2) regional economic grouping of nations (European Community), and (3) organizations of nations bound by industry agreements of which the Organization of Petroleum Exporting Countries is an example.
New Words
• exert 尽力；努力
• decree 颁布；制定
• cyclamate 糖精
• preclude 避免，排除
• identical 同一的；完全相似的
• diametrically 完全，全然；恰好
• bewilderment 迷惑；昏乱
• embargo 禁运令；封港令
• defy 违抗
• assess 估计
• appease 平静；使满足；安抚
• pragmatic 实际的，实用主义
• multiplicity 多种多样的
• confront 面对；遭遇
• supranational 超（越）国家（主权、利益或疆界）
• inasmuch 由于，因此