7/16/2019 Answer Cases Study HoldenOuterwear

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 Managing in a Global Environment

Section 4 – Case study - Holden Outerwear, Suggested Answers

1. Which stage of globalization characterizes Holden Outerwear’s international involvement?

The four stages of globalization include: the domestic stage; the international stage; the multinational stage and the global (stateless) stage. Answers may vary, but Oregon-based Holden lies mostly within the international stage of corporate international development.Factors that mark the company as presently in the international stage of developmentinclude the firm’s outsourced China manufacturing and significant international sales toJapan, Germany, Norway, and Canada. Holden is a small company, and it does not ownfactories or fabric mills. To qualify as a multinational business, Holden needs more than one-third of sales to take place outside of the U.S., and its marketing and advertising strategies

must be standardized and uniform across all regions. Holden cannot be characterized as adomestic company or a global (stateless) company. The domestic stage is characteristic of companies that make and sell goods solely within their home countries; the global (stateless)stage is characteristic of firms that have ownership, management, and manufacturingdispersed among many nationalities.

2. Identify Holden’s primary approach to entering the international market. What are thebenefits of this entry strategy?

For small businesses that want to “go global,” exporting, global outsourcing, and licensingrepresent low-cost ways of conducting business internationally. To reach global consumers

and keep manufacturing costs low, Holden uses an outsourcing strategy. The manufactureof Holden apparel takes place in factories in China. Owner Mikey LeBlanc states that thisstrategy slashes the cost of his products in half. Outsourcing also provides a steady sourceof skilled labor and textile materials. Large well-established firms tend to use more costlymarket entry strategies, such as acquisitions and greenfield ventures. Although high costmarket entry strategies involve significant risk and resources, they offer maximum controlover business processes and profits.

3. What are the challenges of international management for leaders at Holden?

While the four management functions of planning, organizing, leading, and controlling arethe same whether a company operates domestically or internationally, managers experience

greater challenges and risks when performing functions in an international setting. In thevideo, Mikey LeBlanc explains that to obtain the benefits of China’s low cost manufacturing,managers had to carefully oversee 12 different shipping companies. The situation requiredextensive paperwork and resources. In addition, garments with multiple components oftenfailed to deliver together at the same time, creating long delays. Though not discussedspecifically in the video, Holden’s managers face additional challenges in the economic,legal-political, and sociocultural environment of business. Difficulties include political unrest,government takeovers, tariffs, language and cultural barriers, poor infrastructure, and evenglobalization protests. To help manage people, global managers should understand culturaldifferences, including Hofstede’s value dimensions: power distance, uncertainty avoidance,individualism/collectivism, masculinity/femininity, and long-term/short-term orientation.