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    PPQ Parts: Political and Economic Concerns for Global Expansion

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    Consider the following scenario:

    PPQ Parts has determined that for the company to expand globally over the next several years, its managers must be properly trained in multiculturalism and diversity management. PPQ Parts executives must be aware of any political and economic concerns that may arise during the expansion.

    Address the following for senior management:

    1. What are some of the issues the host foreign country could face as a result of the expansion?
    2. Explain what cultural barriers and diversity issues are commonly encountered by international/multinational (MNC) and global organizations.
    3. Why has diversity become such an important topic in the international arena?
    4. What can occur when issues related to multiculturalism and diversity are ignored in an international company?
    5. Describe at least 2 political and 2 economic issues that may arise during global expansion and proposed methods of addressing them.
    6. Explain the importance of and the implications of each of these items in PPQ Parts's expansion plans to Germany and Japan

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    Solution Preview

    1. What are some of the issues the host foreign country could face as a result of the expansion?

    a. Language Barrier: Language is the most potent tool of the international business to communicate to clients.

    PepsiCo's failure in Taiwan.
    Pepsi's advertising slogan sounds like this, "Come alive with the Pepsi's generation". But when it is being translated into Chinese, the slogan gives a different meaning of "Pepsi will bring your ancestors back from dead" to the Taiwanese. The company makes such mistake when they are too keen in branding themselves with a single identity, using the same marketing campaign and brand message for domestic and foreign market. The problem is not just about the translation, the same word will have different meaning in different language and culture. Chinese pay great respect to their ancestors and Pepsi's slogan is being viewed as an offended act. Pepsi thus lost great volume of customers.

    As a solution in this case, we can make use of the three skills, which is preparing, decentering, and recentering, in bridging for effective communicating in cross-cultural setting. Language is one of the contexts which we should do adequate research before entering a foreign market, especially when the foreign language is not our native tongue or spoken language.

    b. Underestimating Local Tastes, Preferences, and Competitors: Starbucks is forced to close down many of their outlets in Australia simply because of underestimating the competitors. When Starbucks first entered the Australia market through franchising and brought in coffee with the cafÃ?© cultural to the masses, they found out that there is already several similar cafÃ?©s operating in the local market. The company underestimated local people preferences for local coffee and the comfortable drinking environment created by the opponents. In the end, they have no choice but to move out of the Australia market.

    c. Price Standardization: KFC has done a mistake when entering the India market. The company is very insist in global standard and thus is not willing to price their goods too low compared with their outlets in other countries. Therefore, they are targeting on those high-income customers in India. Nevertheless, this target market segmentation is prove to be failed as two pieces of KFC chicken is about the same price of a full tandoori chicken offered by local Indian restaurants. Such comparison make KFC failed even focusing on those with higher purchasing power. Due to this major reason and some other minor factors, KFC's status in India is totally ruined. They are forced to move out of India for three years and reentered after that. The investors have lost their confident and trust towards KFC and hence affected the company's future ...

    Solution Summary

    This solution looks at the challenges facing a company in venturing to global markets. Factors such as cultural barriers, cultural diversity, multiculturalism, political, and economic issues encountered by a company doing business in international arena are discussed.

    A special attention is given here on the global expansion of PPQ Parts.