American companies form the majority of MNCs (multi-national corporations). On the other hand, many people believe that Americans are poorly equipped to assist an organisation to enter into a non-American culture.

1. Explain the characteristics of the American culture that would prohibit understanding and empathetic behavior towards another culture. (5 Marks)

ANSWER i): ** Answer box will enlarge as you type

1. Explain the Uppsala model and how it assists organisations to expand globally. (6 Marks)

ANSWER ii):

Question 2 (7 Marks)

Though many MNCs espouse and follow rigid codes of social responsibility in their home countries they are often not as diligent with respect to ‘host’ or overseas countries. In 1984 the Bhopal disaster in Madhya Pradesh, India killed 3,787 and impacted a further 558,125 people. The corporation in question was Union Carbide, a majority USA owned company. Indian courts convicted the Chairman and other senior executives of “…causing death by negligence”.

1. Why do you believe that Union Carbide had a less stringent policy in India with respect to negligence than they did in the USA?

ANSWER i):

1. What is the way to fix this situation? Explain whether it is legislation or cultural change from MNCs that is required

ANSWER ii):

Question 3 (7 marks)

Communication has undergone a revolution in the past 20 years. Today, using various technologies, executives can speak with offshore subsidiaries in host countries on a 24/7 basis. Often these executives do not have a deep cultural or social understanding of the region or the host country.

1. What are some of the common issues which get in the way of understanding. Use the model of communication to answer this question. (2 Marks)

ANSWER i):

1. This easy communication has also allowed executives in head offices to impose their own decision making onto the managing executives in the host countries and in many situations over ruling the decisions of the host country executives. Comment whether this is positive or a negative for the MNC. (5 Marks)

ANSWER ii):

Question 4 (7 marks)

Suppose you are a strategic planning consultant and you have been called in to assist in the evaluation of a new country entry strategy for a company. What are the criteria you would investigate?

ANSWER:

Question 5 (7 Marks)

It is often a momentous decision for a successful national company to become an MNC. What are the stages that a company can pass through prior to establishing a 100% home office owned business in a host country?

ANSWER:

Question 6 (11 Marks)

In the 1970s, Nestle the Swiss based MNC manufacturer and distributor of food and beverage products, was accused of ‘hooking’ mothers of Africa onto the use of infant formula powdered milk for their babies rather than mothers’ breast milk. Given the powder had to be mixed with water and African water was impure many babies died.

The structure of the Nestle organisation in Africa contained separate product, marketing and sales functions. It was a standalone business entity. So, the sales and product executives in Switzerland were not aware that the infant powdered milk was being ‘mis-sold’ and ‘mis-represented’ leading to dead African babies. Many commentators believed that it was the structure of the African business that was to blame as it had no oversight from Switzerland.

It is fair to say that Nestle made significant and profound changes to its governance structure after this event.

1. Explain what you believe could have been lacking in the Nestle Africa business. Did they make an unsafe product to meet a need which did not really exist? (4 Marks)

ANSWER i):

1. Consider whether Nestle was responsible for setting up a standalone subsidiary in Africa with little oversight. Define what you would consider to be a more appropriate structure. Think of the need for strong product support from a well-resourced head office. (7 Marks)

ANSWER ii):