Uncontrollable Environmental Variables
Meadwestvaco is a packaging country that operates on a worldwide scale. As such, this company is obliged to consider a variety of factors when expanding their operations to foreign countries. Despite the fact of the global village, it is also a fact that many differences exist among the nations of the world. These can occur on a cultural, economic, or political scale. It is important that a company be aware of these in order to optimize their success on a global scale.
An important aspect of culture is cultural symbols (p. 147). Each culture has issues and elements that is important to it. These are represented by symbols. Symbols could be historical, such as ancient buildings or works or art, religious, political, or a variety of other factors that is important in the collective consciousness of the particular culture. Meadwestvaco could make a study of these icons and integrate them in their packaging material or advertising in order to create a positive image in a specific country.
An important economic factor is infrastructure (p. 148). A company that has its roots in a developed country such as the United States or the UK might assume the presence of certain infrastructure in a foreign country. The problem is that many European and especially African countries simply do not have certain forms of infrastructure available, and this could impact significantly upon transport and communication. Telecommunication infrastructure, for example might be much slower than is the case in the home country, or it might be absent. It should be recognized that an investment might be needed to create the necessary infrastructure for profitable business in the foreign country. This is particularly important for a packaging company, as packaging implies that long-distance transport will often be necessary.
An important political factor is trade regulations (p. 150). Many countries have very strict trade regulations. When expanding to foreign countries, Meadwestvaco needs to also research these political factors, as they may impact heavily upon the types of materials as well as fees and consequent income. Some countries also have competition clauses in order to avoid that foreign companies compete too strongly with domestic companies of the same nature. Meadwestvaco need to take these factors into account in order to ensure that profitable business is possible in the specific country.
There are many benefits associated with understanding buyers and markets in the foreign market. Meadwestvaco is already familiar with this principle, as can be demonstrated by its lucrative presence in China. Understanding cultural symbols, for example, has the advantage of creating a positive image (or avoid negative connotations) in the mind of the foreign buyer. Creating positive image via the active use of cultural symbols can play a large part towards driving sales.
The advantage of understanding economic infrastructure will help Meadwestvaco to quantify its operations in the foreign country. It may be necessary to invest in telecommunications and transport setups in order to make the foreign business viable in terms of revenue.
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