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Cultural distance includes variations in languages, religion and religious practices, as well as is social traditions and mores. In terms of recommendations, it sorely behooves an enterprise to significantly study and attempt to quantify its distance from a foreign market in terms of culture before proceeding with any expansionist plans.
Political and administrative distance includes issues of legality as well as any perceived hostilities between the two countries. There are various components of political and administrative distance that are tied into economic distance, such as the hegemony of indigenous financial institutions as well as any political or monetary allies (or dearth of such allies) existent. This is because "Historical and political associations shared by countries greatly affect trade between them" (2). The vast majority of the calculations involved in determining economic distance is taken into consideration via a country portfolio analysis, and pertain to income and...
Lastly, geographic distance factors in as well in terms of accessibility and issues of transportation or forms of communication
On the whole, Ghemesh's claims appear to have a validity that is especially prudent in contemporary business practices given the surging popularity in globalization. From a pragmatic level, there surely is more at stake than dollars and cents when it comes to selling products or expanding a domestic enterprise into a foreign market. The author's many case studies within this document readily demonstrate the veracity of his point.
Endnotes
Pankaj Ghemawat, "Distance Still Matters," Harvard Business Review, (2001): 3.
Pankaj Ghemawat, "Distance Still Matters," Harvard Business Review, (2001): 4.
Bibliography
Ghemawat, Pankaj. "Distance Still Matters." Harvard Business Review, (2001): 1-12.
Bibliography
Ghemawat, Pankaj. "Distance Still Matters." Harvard Business Review, (2001): 1-12.
Ghemawat believes that this strategy is wrong. Instead of attempting to import pre-existing business models into areas where a company is expanding, Ghemawat believes that companies need to embrace what he refers to as arbitrage, the ability to exploit differences rather than similarities. Ghemawat believes that there are four dimensions of difference: cultural, administrative, economic, and geographic. Furthermore, he suggests that arbitrage, alone is not a sufficient global strategy; he
For the most part, there appears to be a good deal of truth in the author's recommendation for a balanced approach towards successfully implementing globalization. There certainly seems to be a large amount of pride involved in the traditional notion of globalization, in which countries assume that it is only due to their "superior business model" (Ghemawat, 2003, p. 78) that their product is succeeding domestically, and they merely have
Bartlett & Beamish state, "Today, every firm must meet the challenges of managing strategies, organizations, and operations that are increasingly more complex, diverse, and uncertain than during earlier times -- and do so within the confines of their administrative heritage. Discuss this statement in light of relevant ideas presented in "Distance still Matters" (in what ways do ideas in the readings complement or conflict with the claims of Bartlett &
(Ghemawat, 2001) Ghemawat states that administrative distance in relation to 'preferential trading agreements' involves gold, electricity, coffee, tea, cocoa spices, textiles fibers as well as sugar, sugar preparations and honey. Also included are gas and travel goods such as handbags as well as footwear and sanitary, plumbing, heating and lighting fixtures and furniture parts. Geographic distance factors impact products such as electricity current transfer over long distances, gas transfer, paper,
Administrative and political distance risk is most seen from the standpoint of legal and financial institutions, the monetary systems and political associations and the role of foreign governments in defining the barriers to entry for foreign businesses. Geographic distance risks have more to do with the physical distance and varying climates. The geographic distance set of risks also capture the lack of potential infrastructure due to remoteness. The economic distance risk assessments include the different information or
Globalization can be loosely defined as trade networks between disparate geographic regions, leading to the exchange of goods, people, and ideas. Improved technology and transportation tools, industrialization, and advancements in market economies have created a world in which globalization has become inevitable. As Held & McGrew (2003) point out, the evolution of physical, normative, and symbolic infrastructure has facilitated globalization since the industrial age, giving rise to banking systems, normative