chapter 4

The formal and informal rules that govern behavior in a society

Institutions

Shared values, beliefs, and norms that influence behavior

Culture

Moral principles guiding business decisions and behavior

Ethics

The challenge of balancing global efficiency with local responsiveness

MNC Manager’s Dilemma

Pressure to reduce costs through standardization and efficiency

Integration Pressure

Pressure to adapt products to local markets and preferences

Responsiveness Pressure

A strategy focused on standardizing products across countries

Global Strategy

A strategy focused on adapting products to local markets

Localization Strategy

The balance between global efficiency and local responsiveness

Integration-Responsiveness Framework

The need to adjust products based on cultural, administrative, geographic, and economic differences

CAGE Framework

Differences in values, language, and norms across countries

Cultural Distance

Differences in laws, regulations, and institutions across countries

Administrative Distance

Differences in physical distance, climate, and infrastructure

Geographic Distance

Differences in income levels and economic conditions

Economic Distance

Products that require significant adaptation due to cultural differences

High Adaptation Products

Products that require moderate adaptation across markets

Moderate Adaptation Products

Products that require little to no adaptation globally

Low Adaptation Products

The idea that too much product variation increases complexity and costs

Over-Adaptation Problem

The idea that firms must reduce product variety to improve efficiency

Standardization Benefit

Adapting products to meet local consumer tastes and preferences

Local Responsiveness

Using one product or model globally to achieve economies of scale

Global Standardization

Competing globally by balancing multiple strategies and markets

Global Strategy Complexity

The ability to share resources and activities across countries

Global Integration

The need to modify products and strategies for local markets

Local Responsiveness Need

A strategy that combines both global efficiency and local adaptation

Transnational Strategy

A company operating in multiple countries

Multinational Enterprise (MNE) oai_citation:0‡IB+356+2026+-+9+-+Slides+Feb+19.pdf