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International Entrepreneurship: Starting, Developing, And Managing A Global Venture , 2nd Edition Solution Manual

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    Hisrich, International Entrepreneurship International Entrepreneurship : Starting, Developing and Managing a Global Venture 2e Part 1 – International Entrepreneurship and Entrepreneurship Opportunities Chapter 1 – Importance of International Entrepreneurship Questions for Discussion 1. What are some differences between domestic and international entrepreneurship? International entrepreneurship requires the consideration of a multitude of factors that will impact the business decision making process. These factors include:  The Economics of the new market and how that market’s economy will be able to support the new prod uct or service being introduced.  The Stage of Economic Development that that market is in and whether it is in th e right stage for this business.  The Balance of Payments in a country and its impact on currency exchange rates,  Type of Economic System present in that country and how a foreign woul d go about entering the market.  Political - Legal Environment and how laws and regul ations are created and enforced.  Cultural Environment of the country and how that country’s cultu ral practices differ from yours.

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    Hisrich, International Entrepreneurship  Technological Environment determines if that market is in fact ready for the product and has the necessary technical infrastructure for it to be useful. 2. What are the key characteristics to understand when moving a business from one country or region to another?  Economics  State in economic development  Balance of payments – balance of trade  Type of economic system  Political - legal environment  Cultural environment  Technological environment 3. What potential problems might an entrepreneur encounter when entering a new country? Success in one country or market does not automatically me an success in other countries. An entrepreneur needs to be aware of the market conditions in that country, whether there is a need for their product or service, whether there is a distribution network that can efficiently get that good to the customer, and a sales network to deliver it. Fluctuations in currency exchange rates can have a drastic impact on businesses as sales one day could be worth much less than sales the next depending on movements in rates. This makes planning and pricing difficult. Local competition can be problematic if the entrepreneur does not know the new

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    Hisrich, International Entrepreneurship market well as a local player could be completely dominant and the local market will not shift to a foreign entrant. Communication problems and cultural differences could lead to misunderstandings or disagreements between the entrepreneur and their customers, limiting potential bus iness opportunities and growth. And legal problems could arise if there is no protection of trade rights, intellectual property, or contract enforcement. And in some instances foreign governments have been known to take over foreign businesses or push them out of the market with little notice. 4. What does an entrepreneur need to be aware of before entering a foreign market? The entrepreneur needs to be aware of several things before entering a foreign market:  the distribution system  the banking system  foreign exchange rates and policies  tariff rules and regulations  patent protection enforcement policies  any appropriation reg ulations and business practices

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    Hisrich, International Entrepreneurship International Entrepreneurship : Starting, Developing and Managing a Global Venture Part 1 – International Entrepreneurship and Entrepreneurship Opportunities Chapter 2 – Globalization and the International Environment Questions for Discussion 1. What are the most critical strategic factors to consider before entering a foreign market?  The allocation of responsibility between U.S. and foreign operations  The nature of the planning, reporting, and control systems to be used throughout the  international operations  The appropriate organizational structure for cond ucting international operations  The potential degree of standardization Each of these must be thought through and understood so that the international venture works in concert with the domestic enterprise, each supporting the other. If these factors are not

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    Hisrich, International Entrepreneurship considered than there is the potential for miscommunication, overlapping of duties, or errors in action that would prevent the international venture from succeeding. 2. How does the control of foreign operations change as the enterprise grows?  At its infancy, the foreign operation is generally run by a very centralized decision making process. The international entrepreneur relies on their limited circle of advisor and partners to aid in controlling operations at home for the international markets.  As the enterprise grows, it is able to build more of a local n etwork in the foreign country. The larger size and complexity of the business makes it more difficult for all decisions to be made back in the home office. At this point the local office becomes more independent and is free to make its own business decisions.  Once this process of decentralization has expanded to several different markets, it becomes very difficult to control and manage as one office might be acting in conflict with another, and information is slow to make it back to the home office. At this point control is brought back to the headquarters and systems and controls are implemented to improve the communication structure and process.

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    Hisrich, International Entrepreneurship International Entrepreneurship : Starting, Developing and Managing a Global Venture Part 1 – International Entrepreneurship and Entrepreneurship Opportunities Chapter 3 – Cultures and International Entrepreneurship Questions for Discussion 1. Why does an entrepreneur need to be aware of the culture of the country that they are entering into?  Differences in culture between an entrepreneur’s home and the foreign market they are entering can be large. This means that a product in one market may not be suitable in another market with differing cultural norms and behaviors. Or perhaps the packaging and the marketing will have to be altered in order for it to be accepted.  The manner in which business itself is done might be very different based on the culture of a country. Decisions might be made more collectively, potentially extending the time it takes to complete a deal. Or communication barriers may lead to confusion and frustration, in addition to added costs for translation services or multiple contracts. The manner in which people work might be different, so an entrepreneur that is expanding

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    Hisrich, International Entrepreneurship manufacturing facilities overseas might find that it takes either a longer or shorter time to complete the same amount of production that they achieve in their home market.  Some of the cultural distinctions that U.S. firms most often face include differences in business styles, attitudes toward development of business relationships, attitudes toward punctuality, negotiating styles, gift - giving customs, greetings, significance of gestures, meanings of colors and numbers, and customs regarding titles. For example, consider the following: o The head is considered sacred in Thailand so never touch the head of a Thai or pass an object over it. o The number 7 is considered bad luck in Kenya and good luck in the Czech Republic, and it has magical connotations in Benin. The number 10 is bad luck in Korea, and 4 means death in Japan. o In Bulgaria a nod means no, and shaking the head from side to side means yes. o The "okay" sign commonly used in the United States (thumb and index finger forming a circle and the other fingers raised) means zero in France, is a symbol for money in Japan, and carries a vulgar connotation in Brazil. o The use of a palm - up hand and moving index finger signals "come here" in the United States and in some other countries, but it is considered vulgar in others.  American firms must pay close attention to different styles of doing business and the degree of importance placed on developing business relationships. In some countries, businesspeople have a very direct style, while in others they are much more subtle in style and value the personal relationship more than most Americans do in business. For

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    Hisrich, International Entrepreneurship example, in the Middle East, engaging in small talk before engaging in business is standard practice.  Attitudes toward punctuality vary greatly from one culture to another and, if misunderstood, can cause confusion and misunderstanding. Romanians, Japanese, and Germans are very punctual, whereas people in many of the Latin countries have a more relaxed attitude toward time. The Japanese consider it rude to be late for a business meeting, but acceptable, even fashionable, to be late for a social occasion. In Guatemala, on the other hand, one might arrive any time from ten minutes early to 45 minutes late for a luncheon appointment.  People around the world use body movements and gestures to convey specific messages. A misunderstanding over gestures is a common occurrence in intercultural communication, and misinterpretation along these lines can lead to business complications and social embarrassment.  Proper use of names and titles is often a source of confusion in international business relations. In many countries (including the United Kingdom, France, and Denmark) it is appropriate to use titles until use of first names is suggested. First names are seldom used when doing business in Germany. Visiting business people should use the surname preceded by the title. Titles such as "Herr Direktor" are sometimes used to indicate prestige, status, and rank. Thais, on the other hand, address one other by first names and reserve last names for very formal occasions and written communications. In Belgium it is important to address French - speaking business contacts as "Monsieur" or "Madame," while Flemish - speaking contacts should be addressed as "Mr." or "Mrs." To confuse the two is a great insult.

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    Hisrich, International Entrepreneurship  It is also important to understand the customs concerning gift giving. In some cultures, gifts are expected and failure to present them is considered an insult, whereas in other countries offering a gift is considered offensive. Business executives also need to know when to present gifts - on the initial visit or afterwards; where to present gifts - in public or private; what type of gift to present; what color it should be; and how many to present.  Gift giving is an important part of doing business in Japan, where gifts are usually exchanged at the first meeting. In sharp contrast, gifts are rarely exchanged in Germany and are usually not appropriate. Gift giving is not a normal custom in Belgium or the United Kingdom either, although in both countries, flowers are a suitable gift when invited to someone's home.  Customs concerning the exchange of business cards also vary. Although this point seems of minor importance, observing a country's customs for card giving is a key part of business protocol. In Japan, for example, the Western practice of accepting a business card and pocketing it immediately is considered rude. The proper approach is to carefully look at the card after accepting it, observe the title and organization, acknowledge with a nod that the information has been digested, and perhaps make a relevant comment or ask a polite question. (www.unzco.com/basicguide/c14.html) Cultural differences can add to the complexity of expanding into foreign countries. By understanding them ahead of time the entrepreneur can prepare themselves and their organization to prevent any problems or disruptions to their business and ensure that they achieve the benefits that their expansion offers.

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    Hisrich, International Entrepreneurship 2. How should an entrepreneur act in a country with high power distance? In a high power distance culture organizations are set up very hierarchical with clear delineations of duties and process. Decision making is made at the top of the organization and filtered down to those at the bottom. All interactions between bosses and subordinates are very formal communication can be limited between layers of the organization. For an entrepreneur starting a business in such an environment , they should be aware that their employees will not openly question their decisions, that there is a sense of inequality between the different layers of the organization, and that trying to implement a flat and open organizational structure will take work and training and should not be expected right away. 3. Why do you need to be culturally aware when you give or receive gifts in different countries? Gift giving is seen as different things in different countries. Some countries will expect you to bring them a gift and will be insulted if you do not. Other countries will not accept a gift at all for fear that it might look like a bribe. Businesspeople need to be aware of the practice in the country they are entering so that they can be prepared and act accordingly.

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    Hisrich – International Entrepreneurship Instructor’s Resource International Entrepreneurship : Starting, Developing and Managing a Global Venture Part 1 – International Entrepreneurship and Entrepreneurship Opportunities Chapter 4 – Developing the Global Business Plan Questions for Discussion 1. What role does a business plan play for a global entrepreneur? A business plan is used primarily to obtain financial resources for an entrepreneurial venture from a variety of potential investors. It outlines the opportunities available in the market and how that business will take advantage of them. It also details the steps and plans that the business will undertake in order to guide entrepreneurs and managers in their business decisions. Overall it will help to show that an entrepreneur has fully thought through, researched, and examined a potential market and has then developed a strategy to make a financially viable operation succeed over a given period of time.

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    Hisrich – International Entrepreneurship Instructor’s Resource 2. What are the key sections of the plan? The main parts of the business plan are as follows:  Executive Summary which outlines the business and contains important summary information. This is often the most important section of the plan.  Introduction goes into further detail of the opportunities available in the market. It discusses the proposed market and any potential barriers to entry.  Economic, Political, and Legal Aspects provides information about these aspects in the market and how they might impact the business venture. If there are problems identified then solutions to them should be included here.  Cultural Analysis examines the customs and traditions in the market and any advantages or disadvantages that the entrepreneur’s business will face.  Organizational Plan describes the form of ownership of the venture, how will management be structured, the structure of board of directors (if needed), roles and responsibilities of management team, and salary and payment information for them.  Product or Service Description is where full detail is given for the good that will be introduced. If it is a product, full specifications and patent information should be given, for a service the unique skills and qualities of that service should be explained.  Market Entry Strategy explains how the venture will enter the market and claim a competitive position.  Operations Plan describes the flow of goods and services from production to the customer. It will detail how the customer will order and receive the good s , how it is manufactured and delivered, and how it is serviced after delivery, and the responsible parties for each of these aspects.

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    Hisrich – International Entrepreneurship Instructor’s Resource  Marketing Plan describes how the good s will be distributed, priced, and promoted. This will include any market research the entrepreneur has completed, an analysis of the potential customers, and forecasts for that good s or service s .  Financial Plan is the final section of the business plan and details the financial information needed to determine the viability of the venture. It includes up to three years of sales forecasts, along with forecast on costs of goods sold, and expenses. A projected cash flow statement should be included to show how much money will be coming in and going ou t a given time for the venture. The last part of the financials is projected balance sheets for the first three years showing the projected assets and liabilities of the venture. 3. What additional information is needed for a global plan than would be for a strictly domestic business? Analyses of the international market, including an economic, political, and legal analysis of the foreign country, are needed in global business plans. The impact of trade areas and cultural differences should also be included.

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    Hisrich – International Entrepreneurship Instructor’s Resource International Entrepreneurship: Starting, Developing and Managing a Global Venture Part 2 – Entering the Global Market Chapter 5 – Selecting International Business Opportunities Questions for Discussion 1. What types of information should entrepreneurs seek out before deciding on which foreign market to enter? Just as with entering a domestic market, they need to research the demographics of the market they are trying to enter. How many potential customers are there? What are their income levels? Is the infrastructure available to support their business? Are there existing competitors? They also need to look at the political stability of the region, the financial strength, and the legal structure of the nation. Will they be able to take their profits out of the country? 2. What are the different types and sources of information that are available? The two different types of data are primary and secondary . Primary data is original information collected for the particular requirement. This could take the form of survey s, interviews, or observations. Secondary data is pre - existing published information. This data can come from both public and private sources, government research, and industry trade groups. Often it is macro - level

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    Hisrich – International Entrepreneurship Instructor’s Resource data that the entrepreneur can use to focus their data gathering at the primary level. Once the entrepreneur has identified the SIC or NAICS code, they can find a lot of industry level data, such as market size, growth trends, and competitive position. In some instances this secondary data can be relatively easy to find and aggregate, while in others the entrepreneur will need to be creative in research depending on the given market and the availability of data. 3. What are some potential problems with data collected in another country? Depending on the level of development and transparency in a country, there are several potential problems an entrepreneur might face when collecting data:  Comparability – T he data for one country may not be the same as in another country, either in time scale, magnitude, or research factor.  Availability – S ome countries have more data available than others. For those that have less data it can be difficult to make accurate predictions of the market or to fully analyze all the necessary factors.  Accuracy – Sometimes the data collected has been done so using vigorous standards, or else its collection or representation may have been influenced by a heavy hand such as a powerful local businessman or government. This is most often the case in less developed markets.  Cost – While all government collected data is available for free in the United States, the cost of obtaining data in other countries can be quite high, either through the government or through private data collection sources.

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