As a result of global economic integration, firms must consider overseas investment and operation, whether proactively or reluctantly, so as to sustain competitive advantages.
The forecast that this trend will intensify is strongly supported by current economic development and the life cycle theory for international trade and direct investment.
Numerous management studies and company reports have made it evident that the lack of culture sensitivity or poor intercultural communication costs business money, time and opportunities. Cross cultural training is therefore necessary in developing communication skills and enhancing management performance.
Acmite's workshops of managing across borders and cultures examine the variables and dimensions of a culture and provide an outline of this culture, the powerful effects of cultural differences on an enterprise and their implications for communication and management.
Life cycle theory for international trade and direct investment
The industry life cycle is associated with changes in the pattern of trade and direct investment that together result in international migration of purchasing, producing and marketing. The life cycle theory for trade and direct investment is based on two assumptions. First, that demand fro new products emerges first in the advanced industrialized countries of North America, Western Europe, and Japan and then diffuses internationally. Second, that in mature stage, the production requires fewer inputs of technology and sophisticated skills. The result is the following development pattern:
- New industries begin in high-income countries (traditionally the United States, but increasingly in Japan and Western Europe) because of the presence of a market and the availability of technical and scientific resources.
- As demand grows in other markets, they are serviced initially by exports
- Further growth of overseas markets and reduced need for inputs of technology and sophisticated labor skills make production attractive in newly industrialized countries. The advanced industrialized countries begin to import
With maturity, a reduced need for skilled production workers and an increased perception of the product as a commodity, the production activity shifts increasingly to developing countries in search of low cost labor. (Contemporary strategy management)