Explore BrainMass

Assumptions- load-bearing and vulnerability characteristics

Please answer this question on an individual basis, and post your answer
within the weekly discussion question conference. More
and more companies are placing their 'value added' activities in the hands of
the international market in hopes of improving their cost structure, expanding
their markets or meeting competition head-to-head. The success of a
Company's international ventures depend upon a receptive business and market
environment in the country [ies] they are competing in. As long as these
assumptions remain intact, international strategies will be effective. Just to
illustrate one: Successful international strategies are dependent upon the
continued economic and political stability in the particular country being
targeted. I would like you to identify two to three basic assumptions about
the business and consumer environment that must remain valid in the future in
order for international strategies to thrive. In your selection of
assumptions, use the following two criteria:

1) Choose assumptions that absolutely must remain valid. That is, if these
assumptions don't hold true, international strategy success is in immediate
danger. These kinds of assumptions are referred to as 'load-bearing'
assumptions. To use an example from another industry, the U.S. tobacco
industry continues their operations based on the assumption that commercial
sales of cigarettes will remain a legal transaction. If that assumption were
to fail, it would seriously threaten the very existence of at least the
domestic tobacco industry. So presuming that cigarette sales remain legal is
truly a 'load bearing' assumption.

2) In addition to being 'load bearing,' select the assumptions that might be
most vulnerable to environmental changes. These are assumptions that have a
reasonably high probability of not holding up [or failing]. Here's an
example of a 'vulnerable' assumption: When companies such as WalMart decide to
export their 'business model' of everyday low prices and good values to
countries all over the world, they are operating under the assumption that the
'business model' will remain intact and valid, regardless of the country market
that they enter. However, there is a reasonable chance that the image that
caught on so well in the U.S. will not succeed in countries where low prices
may be strongly associated with poor quality merchandise. If this is true,
WalMart is basing its international expansion on a 'vulnerable' assumption.

To be clear about this, I'm looking for two to three assumptions that have
both load-bearing and vulnerability characteristics. I'm not looking for two
different set of assumptions. As a final step, I would like you to identify
actions that you take to manage the risk associated with these
'load-bearing,' 'vulnerable' assumptions. Some actions may be shaping actions
to prevent the assumption from becoming a reality. Other actions may be
'hedging' actions that provide you with a contingency plan in the event that
the assumptions do become a reality.

Solution Preview

The two assumptions are as follows:

1)Laws with respect to outsourcing of jobs to countries like India and China will remain in favor of corporations: With more and more US companies setting up international operations in countries like India and China and shifting most of their jobs to these countries due to the abundant and qualified labor in these countries at extremely low costs, there has been an increasing cry in US senate over the loss of jobs of domestic population due to such shifting of jobs. Few US senators are fighting against outsourcing of jobs. Therefore, in order to justify any new investment and expansion of international operations in these countries by large US corporations, one of the major underlying assumption is that US ...

Solution Summary

Assumptions that have both load-bearing and vulnerability characteristics.