Cultural Risks and Comparative & Competitive Advantages in Global Business Environment

This report discusses the cultural risks faced by organizations while entering into international markets, and the roles of comparative and competitive advantages in ensuring success. It also covers industrial policies, factor conditions, and related supporting industries. The report uses Ford Motor Company as an example. Subject: Business Environment, Course Code: NA, Course Name: NA, College/University: NA.

Global Business Environment

Table of Contents
Global Business Environment.........................................................................................................3
REFERENCES................................................................................................................................1

Global Business Environment
Entering into an international market leads to major cultural risks that an organization has
to face, but there are comparative and competitive advantages that helps an organization in
ensuring its success in international market. Ford Motor Company is an American multinational
automobile manufacturer, which is headquartered in Dearborn, Michigan, United States. It was
founded by Henry Ford and establish on June 16, 1903. The company deals in automobiles and
commercial vehicles. The report includes the cultural risks that are faced by an organization,
while entering into an international market. The report also includes the roles and benefits of
comparative and competitive advantages that helps in ensuring the success in international
market. The contribution of industrial policies, factor conditions and related supporting
industries is also included in the report.
Culture of a country represent their beliefs, language, values,etc. Cultural risk refers to
the problem faced by a company to understand language of the country and beliefs which may
lead to the failure of the project. Chinese culture have 56 ethnic groups amongst them the most
important or largest one is Han Chinese. There are many other groups who were combined with
Han Community while continuing their own culture and languages. Every group has its own
culture of clothes or festivals or beliefs or languages, etc. They follow joint family system as in
their culture families or their ancestors have priority. Korea's culture is shaped based on Chinese
and Japanese cultures (Mandorino, and et. al 2022). They are bifurcated in two parts i.e. North
Korea & South Korea. Where there is one lingo in North Korea and 5 Lingos in South Korea.
For Koreans also family is important part of their life where every young member should respect
their elders. Korean culture have various Code of Conduct which is compulsory to be followed
whenever they at social gathering which shows their loyalty towards their culture. Buddhism if
followed by large population as the beliefs of Buddhism religion projects a huge effect on
Korean lifestyle.
Risks:
Cultural understanding
The cultural Understanding is a very important risk as there are various difference in the
culture of USA & China and Korea. USA's language is very different from the Chinese and

Korean language which is a main barrier when doing the business. While traditions like festivals
in China and Korea are different with that of USA.
Moving too fast
In USA the entrepreneurs are inclined towards fast decision-making they are not inclined
towards making relationship with them while in Chinese and Korean Culture they want to
establish a relationship with whom they do business (Gutiérrez‐Valencia, and et. al 2022).
Chinese and Korean entrepreneur invite them for dinner so that they can establish relationship. If
Ford will try to initiate fast decision, then it may cost them their deal.
Hierarchy system
The hierarchy system is a major risk as there is wide difference in the culture. In USA, it
is normal to suggest your view point to the senior and call them by their name, while it is treated
as disrespect in Chinese and Korean culture. This method will lower the reputation of the
company.
How to deal with it
Cultural Understanding
Ford can come out of this risk by employing a person who is very well known with both
the cultures language and traditions so that they can have someone who will communicate with
both of them (Hariharan, and et. al 2022). It will also help them while forming relationship as
Ford can wish them on their Festivals.
Moving Too Fast
`Ford can overcome this risk by having patience while dealing with Chinese & Korean
entrepreneur. Here Ford should also try to establish relationship by giving some gifts to them.
While giving gifts they should know what gifts can be given in their culture, so that while trying
to form relationship they don't damage their reputation. They can also try to respect their families
by inviting them for dinners. This will impress those entrepreneurs as they are inclined towards
their families.
Hierarchy System
For overcoming this risk Ford can train their employees regarding the culture of China
and Korea. In which Ford can provide them with the information of Chinese and Korean culture
which will help them understand what should be done by them, so they can maintain their
reputation. The employees should remember that they can't interfere when their head is saying

something. In these employees can practice before time only as they can start calling their leader
with their designation name.
An organization has a comparative advantage at producing something if it can produce it at
lower cost than any another organization. Comparative advantage takes place when an
organization produces a goods and services for a lower opportunity cost than other companies.
An organization with a comparative advantage makes the trading or business worthwhile. The
comparative advantage helps Ford in ensuring the new opportunities for the business (Grujović,
and et. al ., 2022). This new opportunity will help them in their growth and expansion. The
comparative advantages are beneficial for Ford in many ways, such as providing the goods and
services in lower cost will results in high profits for the business. It gives the company the ability
to sell goods and services at prices that are lower than their competitors, it will help in gaining
stronger sales in terms of margins and greater profitability. Comparative advantage has many
benefits also, such as
Increased efficiency: The Ford has chosen to specialise their production on products and
services that they can make efficiently and then can buy what they cannot efficiently create from
other companies.
Lower the opportunity cost, higher the profit margins: Companies that have a comparative
advantage can focus their labour, capital and resources on production that requires a lower
opportunity cost, therefore they achieve higher profit margins. This factor of comparative
advantage helps Ford in making huge profits for their business (Zeng, and et. al .,., 2022).
Competitive advantage refers to the factors or attributes that allows a Ford to produce more
affordable or higher quality services or goods than its competitors in the market. It is also
referring to a strategy that uses by a business, in order to make more profits and growth of the
company. Creating a competitive advantage, provides a business a clear benefit to target the
market, that is better than what the other companies or its competitors offers in the market.
The competitive advantage is divided under four major segments or strategies (Shou, Y.,
2022). They are, cost leadership, this refers as the cheapest manufacturer or provider for a
specific product in the market completion. differentiation, under this strategy company focuses
on the uniqueness and distinction of product from the other competitors in the market. cost focus
, the cost focus is based on the price factor of the product, under this the company focuses on the

cost of the product. The differentiation focus refers to the offering of unique features that fulfils
the demands of a narrow market. These four are the major types of competitive advantage. The
differentiation strategy helps Ford in covering the most possible market because it helps in
focusing them on the uniqueness of the product. The competitive advantage benefits Ford, by
contributing in making higher profits. It also maintains the loyalty of the Ford. The competitive
advantage helps in attracting more brands alliances, talents, and potential investors from the
market. Having a competitive advantage helps in distinguishing Ford from its competitors by
offering something new and different, which has superior value to its customers. The
comparative advantage and competitive advantage are useful in expansion and growth of the
business (Miao and et. al ., 2022). It also helps Ford in making high profits, and it will increase
the productivity of the business as well. The competitive advantage is shaped by analysing the
market, this helps in targeting the market, that will surely effect the growth of the business.
Analysing the market includes:
 Customer surveys
 Collection of data about the competing company’s products and selling points.
 Taking the feedbacks on marketing and sales strategies.
 Identification of selling trends for specific products during the different seasons.
Analysing the market ensures the implementation of strategies and monitoring the performances.
The competitive advantage also includes the product differentiation factor (Keramati, and
Gillies, 2022). This is achieved by offering a valued and variation of the physical products. This
refers to the ability of differentiating a product varies greatly along the continuum depending on
a particular product. The product differentiation factor of competitive advantage helps Ford in
covering great customer market. this results in higher profits and high selling of the business.
The industrial policies are known as the strategic efforts or approaches that an industry put
on its development and enhancement. The industrial policies are used in the betterment of the
organization. The organization used their policies in order to develop new plans in order to
development of the Ford (Saunders, 2022). Industrial policies include the strategies and methods
that are effective for the development and growth of the Ford. The industrial policies are the
examples of policies that includes the high productivity and high rate of returns in terms of
revenue and sales. Industry policy includes Modernisation, area determination and proper

utilization of foreign assistance or investment. The industrial policy helps in complete
deployment of natural resources of the country. It helps in identification of collecting and using
the resources in proper manner. it also facilitates in national income of the country.
The factor conditions refer to the different types of resources that can present within a country.
Factor conditions includes the resources such as: human resources, capital resources, natural
resources knowledge resources and the infrastructure (Fischman,., Leshy, and Krakoff,, 2022).
These resources are helpful for Ford in order to expand and develop its business. The factor
conditions effect the business in positive ways, because these factor works as a positive key
points in order to expansion of the business of Ford. These factors can create the ground for
international competitiveness for Ford. The factor conditions play an important role in making
the business globalize, because the resources of factor conditions provide the international
competitiveness which impacts directly and positively towards the growth and development of
Ford.
The related and supporting industries refers to the upstream and downstream that allows the
innovation and exchange of ideas (ten Hagen, and et. al , 2022). These related and supporting
industries help in giving the knowledge and idea about the current trends in the market. This
support especially important as the industry grows more complex. The presence of capable
suppliers within a country is the key for the development and expansion of Ford that use of those
suppliers for the cost effectiveness in order to provide quality inputs. This involves the sharing of
knowledge and information within the suppliers and manufactures, that gives Ford within an
industry early allowance to deal in new products.
The exchange of information and knowledge between the suppliers and manufactures
help the company growing with all supportive aspects. The supporting industries provides a
sense of mutual growth between the industries in the market (Edneyand et. al., 2022). Companies
use it as a strategy in the growth and development of their business. Adopting this method by
Ford will results in making mutual relations with its suppliers and manufactures, which turns out
in an effective tool for their business expansion and growth. The industrial policy, factor
conditions and related supporting industries these factors helps Ford in making its business
effectively and significantly profitable with high efficiency of growth. A significant growth of
business is an indicator of providing customer satisfying goods and services, this key point help
Ford in making new customers and covering in huge market sector in terms of its customers.

This leads to rapid growth and expansion of Ford. It also helps in achieving the goals and
objectives of Ford effectively and efficiently. The internal industry rivalry refers to the
completion for the market share between the organizations in the industry. The completion could
be on the basis of prices, non-prices dimensions. This rivalry helps in price competition, price
cost and profitably in Ford. This rivalry results in new and innovative products in the market.
The industry rivalry can result in a motivating and healthy completion for the organization,
because it helps in development and improvement in the existing products of the organization.
The industry rivalry is the opportunity of facing healthy competition in the market.
From the above report it is concluded that, the cultural risks play a very important role in
order to enter into the international market. The report also summarizes the roles of comparative
and competitive advances that helps an organization to grow and expand its business. The above
report also concludes the industrial policy, factor conditions, related and supporting industries.
these factors help in contribution towards the success of the company. These factors helps in
attaining the organizational goals and objectives of an organization.

REFERENCES
Books and journals
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Gutiérrez‐Valencia, and et. al 2022. ABO blood group and risk of COVID‐19 infection and
complications: A systematic review and meta‐analysis. Transfusion. 62(2). pp.493-
505.
Hariharan, and et. al 2022. The dietary inflammatory index, obesity, type 2 diabetes, and
cardiovascular risk factors and diseases. Obesity Reviews. 23(1). p.e13349.
Grujović, and et. al ., 2022. Advantages and disadvantages of non‐starter lactic acid bacteria
from traditional fermented foods: Potential use as starters or
probiotics. Comprehensive reviews in food science and food safety.
Zeng, and et. al .,., 2022. Single-crystal high-nickel layered cathodes for lithium-ion batteries:
advantages, mechanism, challenges and approaches. Current Opinion in
Electrochemistry. 31. p.100831.
Shou, Y., 2022. Supply chain integration for sustainable advantages. Springer Nature.
Miao and et. al ., 2022. Application of intermittent aeration in nitrogen removal process:
development, advantages and mechanisms. Chemical Engineering Journal. 430.
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Keramati, M.R. and Gillies, R.M., 2022. Advantages and Challenges of Cooperative Learning in
Two Different Cultures. Education Sciences. 12(1). p.3.
Saunders, E.N., 2022. Elites in the making and breaking of foreign policy. Annual Review of
Political Science, 25.
Fischman, R.L., Leshy, J. and Krakoff, S.A., 2022. Coggins & Wilkinson's Federal Public Land
and Resources Law. Foundation Press.
Edneyand et. al., 2022. Mapping a decade of interventions to address the supportive care needs
of individuals living with or beyond cancer: a scoping review of
reviews. Supportive Care in Cancer, pp.1-12.
ten Hagen, and et. al , 2022. Can I Teach This Student?: A Multilevel Analysis of the Links
Between Teachers’ Perceived Effectiveness, Interest-Supportive Teaching, and
Student Interest in Math and Reading. Contemporary Educational Psychology.
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https://stunningtours.com/chinese-culture-html/
https://www.globalizationpartners.com/2017/10/09/south-korea-culture-and-tradition/
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