Describe the primary characteristics of culture
1. A. Describe the primary characteristics of culture. Give Examples. (10 marks)
In order to assess and learn the primary characteristics of culture, we must first know and understand the meaning of culture. So what is culture? Culture, according to the scholar and anthropologist of the 18th century, “culture is that complex whole that includes knowledge, belief art, law, morals, customs, and other capabilities and habits acquired by man as a member of society. “So, based on this definition, we could say that culture depends heavily on society. It is, in a way, a collection of ways and course of doing things, which is an end result of human interaction with one another. It is, as you could say, a polished product of human experience. As time moves on, culture changes and grows more complex than it was before. If we would be lucky enough to be alive when the year 2050, we would be stunned to by the definite change of culture by then. Another important aspect of culture is the use of material objects; this is more commonly referred to as material culture. Evolution of some of these objects also makes the evolution of culture much more possible. For example, the computer was unheard of in the time of Newton, but through human experience, skills and needs, it is very much a common place object today and plays a very vital part of the existence of our society and culture. Though the evolution of the material culture is relatively important, much more important aspects are the skills and knowledge we acquire through the usage and application of these objects in our daily lives. All the skills we acquire, all the knowledge we gain, and all the purposes of these thing are more commonly referred to as the non-material objects of culture.
And now that we know the essentials of culture, we can now further understand the growth and development of culture through its primary characteristics.
Culture is learned. Man is not born with culture, but with the ability to learn, acquire, and develop culture through experience. For example, a child is born not knowing what culture is or how things are done in the eyes of society. But he learns through imitating, how thing are properly done. He then develops the necessary tools to go about his daily activities. Also, through the help of language, this is the primary tool for communication; the elder generation can pass to the younger generation the knowledge and skills they had acquired through experience. Therefore, because of these things, you could say that culture is learned.
All people have varied culture. There are differently groups of people around the world, and we call these groups different societies. A society may be a group of people banding together and living in a stable union, and pooling together their efforts to attain a common objective by collective action. Knowing this, people should not judge a custom of one society using his own since they both have different societies and culture. For example, in the Americas, there are many societies in the continent of the Americas; they have developed different cultures and norms from each society. The differences between societies lie in the rapidity and complexity of changes occurring within the society. No matter how much the complexity or the advancement of the said society has gained, it still has a culture unique to itself. Therefore, no culture is far more advanced or civilized than the other.
Culture is a group product. Culture was not designed by man to become what it has become. It is simply the accumulation of certain practices acquired by man through his interaction with other people. For example, you and your group may start out on a research. You may find a good method in doing this research with the help of another group mate. Other members may find a better way of improving the method you used in doing the research. And in due time, other groups may seem interested in your way of doing your research and may try to imitate it. Just one person in the group may not be a Man just adapted whatever practice was most useful to him at the time and then went on to keep that practice as time went further on. Therefore, culture is not only learned but is also transmitted through human interaction and experience. A generation may put an imprint upon the one before it, thus, making an accumulation and selective result of group life.
Culture is transmitted from generation to generation. This may happen through oral traditions or in writing. It may be transmitted through everyday conversation, through interaction between the older and the younger, and even through reward and punishment. Culture is accumulated and whatever the past has learned, the present and future generation may build on it to produce something better which may aid them more as they go along the roads of everyday life. For example, when people in the early days wanted to preserve food to keep them from rotting, they put them in barrels filled with salt or put in seasoning or exposed them under the sun to dry. By doing that, they are still ensured of having meat which wasn’t rotten but lost the flavor of fresh meat. So, the future generation invented a better way of preserving the meat and its flavor, by freezing it, and they accomplished that with the aid of the refrigerator.
Another means of transporting knowledge from generation to generation is through books and spoken language. The accumulated knowledge and learning of the bygone scholars and great thinkers of the past are imparted to us through the books and other written materials in which they have so tediously spent their lives writing. And also, through the spoken medium; oral traditions may not have been successfully passed to the younger generations if not through the use of songs, tales, stories, and other such things. That is why communication arts is a very important part of the school curriculum.
Culture is adaptive. Culture continually renews itself. It is even said that nothing is much more predictable than death, change, and culture change. Humans have a way of inventing things when he is in very much need of it. If he finds that the method he uses is no longer obtaining his desired results, he then turns to a new strategy which may give to him the results he so desires. For example, a teacher may find her class very rowdy, noisy and out of control. So she tries to shout on the top of her voice just to get the class’s attention. But It would only cause more of the riot, so, she tries another method. She keeps quiet and waits for the class to settle down. And settle they did. You see, this discovery of hers may result in a new behavior pattern which satisfies the characteristic mentioned above.
1. B. Under what circumstances should international business people impose the values of their culture on foreigners with whom they do business? Does it make a difference if the activity is conducted in the home or host country?
Everyone has a background of a great culture and values which they are really proud of. But of course, limits must be taken when carrying the business over into another country. One must be able to know when it is right to impose certain values of their culture on the locales and when not to. International business is a way of bringing your culture to other places in the world. By doing that you are able to showcase great things about your culture, even bad ones. But still, knowing the limitations is a good practice for anyone. It’s a sign of respect for the culture and values of the people you are doing business with. We all know that we are a diverse community. We all have societies, and in the heart of these societies are values that we deeply cherish. We also know that there are people out there who do not share the same beliefs as ours. It is a universal truth. No one can alter that. All one can do is to respect the beliefs of others as you want your beliefs to be respected.
When doing business with people with different backgrounds from yours, you must at least know their customs, traditions and values in order to not offend your business partners. But that doesn’t also mean that you would entirely forget your values. When you think that this certain practice in your country can bring a positive result for you and won’t, in any way, offend your foreign partners, then don’t hesitate to impose it.
Whether you’re conducting the business in your homeland or in other parts of the world, it is of course proper that you know the limits of imposing your culture to the people you are doing business with.
For example, you take your business to another place. Let’s say you own a soft drinks company; let’s say Coca-cola. After establishing your business in the US and watching it grow and flourish before your eyes, you are then struck by a great idea. Why not take the business abroad? Why not venture into an international business? Since it was a big hit here in the US, why not try to take it outside? And so did the management of Coca-cola. They brought their famous soft drink brand to other parts of the world. It was all such a big hit. Why? Because they knew when and when not to impose their culture upon those people whom they do business with. They knew how to mix their culture with the culture of the people they do business with. Like in the Philippines. The manufactures of Coca-cola tickled the minds of the Filipino people by mixing their culture with the American culture. They incorporated the Filipino values with those of the Americans and it made such an impact on the people that coke became a very big success, and still is in the Philippines and even the other parts of the world.
One must also always remember that the people you work with have values and traditions that they also cherish. They would not want it to be trampled upon much more to be insulted.
It is only a matter of putting the right things in the right place. One mustn’t be too assertive, but mustn’t also be too timid. One must know the right time to do the right thing and must also bear in mind that he is working with people with backgrounds different from his. One must be very careful as to not offend the other party; he must take great efforts in knowing the cultures and values of the other party as to avoid unnecessary misunderstandings. And lastly, he too must try to, even in the most little way show that he is very interested, or he respects the culture and values of the other party with a great deal. He must at least incorporate an aspect of the other party’s culture in his business in order to win the trust and respect of the people he does business with.
It makes no difference whether the activity is held in the host or home country. One must respect each others cultures. One key point of international business is that one gets to share his culture with the other parts of the world. But in the sense that we value our own culture and traditions, let us also value diversity and difference. That way, we will be able to conduct peaceful and wonderful businesses with other people from other parts of the world.
Case Question 1
Go back in time to 1986. Do a SWOT analysis for Telefonica De España. Does your analysis lead to the same conclusions as Telefonica’s managers?
SWOT Analysis for Telefonica de España
-Strong Position in Spain. They knew that domestic demands for telephone services would continue in the underserved Spanish market
-Has competitive advantage vis-à-vis local entrepreneurs. They knew well that they are more advanced than local businessmen in accessing technology, capital, and managerial talent.
-Linguistic and cultural ties between Spain and South America. Against any other foreign company that may chose to invade South America, they had greater advantage, culture-wise and linguistically.
-Lacked access to the latest technology and managerial talent. They had poor or less access to the latest technology and had poor or less management skills.
-Lacked competitive advantage against foreign competitors. Their competitors had by far, the greater skill than they and that they had access to better technology than Telefonica.
-South American markets. With their almost similar ties and culture, they can be sure that the locals would prefer them over other foreign company.
-Local market. They had a strong position still in Spain.
-Entry of Foreign rivals. The entry of foreign rivals who offered cheaper prices, more advanced services and smaller profit margins posed a great threat on them.
-Abolishing of telephone monopolies on 1998. Any European firm could provide service to anywhere in Europe.
The option to invade the other European markets would have been futile since they had a much greater advancement in marketable skills than those of the Telefonica de España. If the Telefonica did push through with their plan for Europe, they would have lost the business battle. Their investments may have stagnated over the years since their competitors could offer a better service than they. It would have been an impossible feat to attain. It would have been better if they averted their eyes somewhere else. To a better location where there lay no competition for them. And there was a better location: South America.
Seeing the opportunities that lay ahead if I took the Telefonica to South America, I also would not have hesitated. Since language and cultural barriers are almost non-existent, it would be easy for me to make it into the South American markets. And plus, I also have advantage on both local and other foreign investors. I may lack the technological advantage compared to other foreign companies, but I have the upper hand in communication. The same goes for the local entrepreneurs. I have a more superior technological and managerial advancement compared to them, and linguistic and cultural barriers do not exist so I still get the upper hand. If I were put in the situation of the marketing strategists, seeing that I had everything to gain and nothing to lose, I’d wisely invest in the South American markets.
Case Question 2 (6 marks) (Approx. 500 words)
How would you characterize the corporate strategy adopted by Telefonica?
I can characterize the corporate strategy adopted by Telefonica de España as local skeptics dubbed as “conquistador capitalism”.
As Telefonica joined the European Union, they were faced with a lot of threats and competition because of other countries entering their borders carrying with them technology and promises of good service with cheaper rates. And, the European Union also announced that on 1998, state-sponsored telephone monopolies would be abolished and that any telecommunications firm would be able to provide service anywhere in the European Union. They tried to assess their choices. Should they close their barriers against other potential rivals from the European Union? Should they change their marketing strategy and their scope of operations? Or should they try to enter the European Union markets and try to compete with other European rivals whom they know had better advantage managerial and service-wise?
Seeing that they had no bout against the other big European companies such as British Telecom and Deutshe Telekom, who had better exposure and experience with managerial approaches and access to more moderns and advanced technology, they forgot about the plan of conquering the European markets and instead averted their eyes to the South American market. Seeing that they had much more of an advantage there against foreign investors and local owners, they started buying shares from soon to be privatized monopolized telephone companies. Soon they were cutting off thousands of workers to remove “unnecessary” costs but still doubling its network rates. They also bought almost all the shares in telephone companies in the south Americas, making tem the biggest private telephone company. But there were also down sides to that. Minority share holders had lots of complaints that the parent company charges exorbitant fees for its rendered services and that the parent company transfers product lines with high growth potential from its subsidiaries to itself.
I believe that the skeptic’s name for Telefonica was correct. It totally conquered almost the whole South America’s telecommunications system and has more than doubled its network lines in SA compared to the ones it has in Spain. But still, because of its aggressive approach to the South American markets, it has earned for itself a lot of criticisms and also lots of complaints from the people it renders its services to. Though it earned and even tripled everything that it had back in Spain, it was not exempt from competition. Seeing its success, Bellsouth signed up 1 million cellular phone subscribers in Sao Paolo, rendering almost half of the market there within only 10 months of operation. Bellsouth now poses a great threat to the “New Conquistador”. Whatever its approach may be, it had better think of the possible outcome, and since the world is entering the 21st century, it must be able to give a better service to its customers rather than lose them to new competition.
Before we begin to address the problems and complaints of the minority shareholders, let us first examine what their problems are.
Minority shareholders in Telefonica South America have been complaining about the exorbitant management fees the parent company is charging which is causing their interest to dwindle and also, they complain about the practice of the parent company to transfer product lines which have high growth potential from the subsidiaries to the parent.
It is only normal for the minority shareholder to feel unhappy with the way Telefonica South America runs the South American telecommunications market. It was pointed out that due to their charging of excessive management fees, the subsidiary companies have lesser interest and also the practice of taking away a high growth potential product line from the subsidiaries to itself. It is really normal for the minority shareholders to be angry since that could have doubled or even tripled their income but since the parent corporation took it away, as well as charging them with insanely high fees.
If I were a senior manager of the Telefonica South America, I would of course listen to their complaints first. I’d study their complaints very well and I’d look if there is any validity to their complaints. If I do find that what they are complaining to me about is really valid, then I’d assess what I could be able to do to help them. First, I’d look at their major complaint: the exorbitantly high management fees. What is the basis for the parent corporation to charge really high fees on the minority shareholders? If I could see that they are rendering good management services from the parent corporation, then I can see no reason for their complaints on the fees charged to them. Giving out good service is well worth a high price any day. But if I can see that the parent corporation is charging insanely high fees for no good reason at all, then I would recommend to the CEO that they should lessen the fees charged to the subsidiaries, since charging them with really high fees could lessen their revenues. It would be bad for the subsidiaries and for the parent company in the long run. They might lose their grip on the South American markets. Since there will be other investors coming into the South American markets, they might find themselves losing their minority shareholders to other foreign investors that offer a better deal for the shareholders. It would also not be good for the image of the company if they would wish to venture to other countries besides South American countries because their reputation might precede them.
Next, I would try to view the other complaint posed by the minority shareholders: the high growth potential product lines and the practice of the parent company of transferring them from the subsidiaries to itself. I can really say that this is really an unfair practice because one can clearly see that the parent company is taking what should be for the subsidiary. I would recommend to the CEO that this practice should be stopped and that a chance should be given to the subsidiaries in order for them to increase their inputs through these product lines. As was said in the case study, the Telefonica South America subsidiaries’ value of shares stagnated for two years, even though the shares of the parent company continued to do well. The product lines should be returned to them in order for the value of their shares to go up.
The parent company should take good notice of these complaints posed by the Telefonica South America subsidiaries and also of the people who subscribe to them. Since in the long run, it would wholly damage, not only the reputation of the company but also the chances that they may be able to expand into other parts of the world. They should rid themselves of this negative image and should start giving high value services not only to the subsidiaries but also to the subscribers. And since other international companies are taking interest in taking the South American markets for themselves and being a threat to the Telefonica South America, the Telefonica SA should start with the reforms right away. Even as early as 1999 it was force to $8 million in refunds to Sao Paolo customers because of poor service. They should start minding the fact that we are entering the 21st century and that the people now immune to the marketing strategies of the olden times. The strategies of the past no longer work on the people of today so they should start thinking of a new strategy or just reform itself for the betterment of its service to the people and the subsidiaries.
Case Question 4
Many South American countries are in the process of deregulating their telephone industries. How should Telefonica respond to increased likelihood of new entrants into its formerly protected markets?
Before we delve into the issue of the deregulation of South American telephone industries and its effects on Telefonica, let us first examine what deregulation really is and its effects on countries that choose to deregulate any service or infrastructure it owns.
Deregulation is the process wherein reforms are conducted on government control over business. Reforms on government control includes the
loosening or even withdrawal of interference with business behaviors. Parts of reforms also are liberalization of market entry and, in most nations, the privatization of state assets. The deregulation of telecommunications is very important in the aspect of globalization since it facilitates the integration of communication throughout countries thus making it easier for countries to do business in the international scale. ( 1998. Deregulation as a Political Process)
Deregulation may also bring competition from other countries since it is open to other countries that choose to bring business to that country. It may pose a threat to already existing businesses but it may bring about a great positive outcome for the locales who wish for a high value service but for a cheaper price. It may even come to a war of who could give a cheaper price to the customers. It really is greatly beneficial to the customers since they would have more choices than before.
Deregulation has reached the South American shores and they are now in the process of deregulating their formerly state owned telephone monopolies. This now poses a great threat to the “New Conquistador”. They may have stiff competition since the South American Markets are now open to other foreign countries as well. As was mentioned, Telefonica South America already has existing competitors since its success in the South American markets. BellSouth in 1999 signed up one million cellular phone subscribers in Sao Paolo, capturing half of the existing subscribers in that market alone. That could pose a really great threat to Telefonica and since the other countries are starting to deregulate their telephone monopolies, that may only be the beginning of their problems. And due to their poor service, in due time, they may even loose their grip on the South American markets to other foreign companies who offer better services at a cheaper price.
Telefonica South America, in my opinion, should start giving out customer oriented services. I have read once before that the customers of today no longer fall for the marketing strategies of the olden days. They already know the pro’s and cons of the service that is being offered. They are really getting smarter on the aspect of marketing strategies and other such things. The marketing strategists of Telefonica South America should think of a better plan on hauling in the customers and keeping them subscribing to them. It may be easy to reel in customers but the really tough job is to keep them, especially with all the competition around. They should start reforming on their Customer Care and quality service aspect, if they intend to keep the South American markets under their reigns. They should also renew good relation with their minority stock holders because if they choose to withdraw their shares and invest in the new foreign companies, that would totally jeopardize the operations of Telefonica in the South American markets and their vision of being the 5th largest telephone operations company would, all go down the drain.
Therefore, they should really pay more attention to the greatest aspects of the business that they are totally ignoring: the minority shareholders and the customers. If those two aspects chose to go to other foreign companies, that would spell disaster for Telefonica. They should maintain good relationship with the minority shareholders and the customers because in the long run, the parent company would still benefit greatly from this union. Not only will they ensure that they would have their customers and investors firmly in place, they can also be assured that their grip on the South American markets will remain as strong as it was and that no foreign competitor can ever take its place.
Question 3. Case Question 1
Describe the fundamental issues in foreign market analysis for a firm like Heineken.
In the year 1864, Gerald Heineken founded Heineken, the world’s third largest beer producer, in Amsterdam. From the start of the firm, it has been marked with success; it was already exporting beer to France, Italy, Spain, Germany, and even the Far East. In 1914, Heineken decided to start exporting beers to the United States. Gerald Heineken’s son, Henri, who ran the firm at that time sailed to the United States to set-up the operation. While on the ship, he met a man named Leo Van Munching, who had impressive knowledge on beer. Heineken then contracted him to import and distribute Heineken’s products in the North America under the name of Van Munching and Company.
From there, Heineken’s success would be ever so great. It is now currently exporting in 170 countries worldwide.
An increasingly complex structure would probably best describe the make up of this industry. As the time demands constant change, the brewing industry players have innovated on all the aspects of their business, in production, and other aspects of business to cope up with the demands of an increasingly growing and demanding market worldwide. Innovations happen within the ongoing brewery industry, and the continuous decentralization of management structures and the strategy of diversification of output helped the industry in fostering a strong front in the face of economic crises. With the evolution of the manufacture of beer come sizeable changes in how the industry is run. As Heineken chose to venture into the international market, it was faced with a lot of challenges, including competition and the need to invest in newer facilities. Though change for this kind of industry was inevitable, it still retained much of itself and has not allowed itself to be changed for the worse. As of now, Heineken continues to on top of its game in every aspect concerning its business.
Transitions in the manufacturer’s sourcing strategies exhibit the industry’s tendency toward diversification. Though Heineken has given its license to countries that chose to reproduce it locally, it still has not, in any way, lost its flair as a world-class beer.
Heineken, before investing in another country should check the stability of the currency in the country into which it chooses to invest in. Let us take note of what happened to Telefonica South America in Brazil on 1998. Telefonica South America was forced to take $300 million write-off for currency loses after Brazil devalued its currency in 1998. Telefonica had a significant loss in Brazil due to the devaluation of its currency.
Though exportation continues to grow, Heineken seems to continue reaping benefits from it. Exporting to other countries could mean the doubling of its profits and potential buyers could be added to its already existing list. It can open doors for the licensee and even for itself in its quest to conquer Europe and other countries as well.
International licensing may or may not help the exporting country, it is worth a risk. The parent company should just take precautions for it. Though licensing the product may mean a risk involving the perception of the consumers and even risking the value of the product, it may still pose a great opportunity for the exporting country.
On the whole, Heineken may seem to continue having good stroke of business on the international scale. As long as it maintains its strategic moves and that it continues to invest wisely, the business is going to enjoy continuous success both locally and abroad.
Case Question 2
Discuss the advantages and disadvantages of Heineken’s exporting its beer from one country to another.
Heineken, as was said, is the third largest beer producer after Anheuser Busch and SABMiller. It’s established marketing dominance in Europe by buying out breweries to help facilitate its distribution throughout Europe. Not only does it distribute products in Europe, but in Asia, the United States and Africa and South America as well. They had boldly ventured into international business, knowing that they may face a lot of ups and downs in the international market.
There are advantages and disadvantages occurring as Heineken exports beer from a country to another. Let us first examine the disadvantages.
First, Heineken has no total control over the price it can put on the beer it exports to another country. Take for example its distributing arm in the United States. Heineken rejoiced when it was able to purchase Van Munching & Company because as they acquired Van Munching that meant that the price Van Munching charged for every bottle of beer would remain the same and that would be added to the profit they make.
Another disadvantage is that they had to pay additional costs in exporting their products to other countries. Let us again take the Van Munching case as an example. Before they acquired Van Munching & Company, they had to pay other additional fees so they can export their product in the United States. Additional costs meant that the payments for the costs would come from the profit. That would also mean that they had lesser profit from every bottle they sell. Lesser profit means lesser input.
But still, there are advantages on exporting to another country.
First, they could sell in the global market. Beer is famous worldwide. It is very widely appreciated, especially among the male audience. And if the beer being sold is really world-class, that would mean that your business venture is a total success. And that is just what Heineken did. They sold their product in the international market, thus, their venture became a wide success.
Another is that, culture-wise, you could also bring new tastes to other parts of the world. You can help other people from different countries know about how delicious the beer from your country tastes like. You might even be helping the foreign exchange sector by introducing your product to the world.
You might not know it, but the product you export can bring great help to the economy of your country and not to mention, it would even add to your profits. Economy of a country also depends on the export and import rate that it acquires. By exporting to another country, you may help your homeland in developing a stable economy. You may also stumble upon a great appreciative audience from another country that may become potential buyers of your product.
Also, you can help establish and strengthen economic and international ties. By becoming a bridge between two countries, one can help bring understanding between the two and eventually establish ties that may be beneficial to both countries.
And lastly, one may be able to find more potential business partners in exporting to other countries. One may find a business partner that is willing to cater to and audience of Heineken’s beer from another country.
All said, though there are certain disadvantages, the advantages are numerous. One can expect great things from exporting. Though it may cost a bit and it may take a while before the realization of a great company may occur, one must have great patience and have a great marketing and strategy planning mind as Heineken’s.
Case Question 3
What are the key issues facing Heineken in so far as international licensing is concerned?
Before we venture into the issues faced by Heineken on international licensing, let us first examine and understand what international licensing is.
International licensing occurs when one firm leases the right to use its intellectual property to another firm. Basically it’s like allowing another firm (the licensee) to recreate the product of another firm in its country (the licensee’s country) upon a mutually agreed fee. So the licensee bought the rights to recreate and distribute the product of another firm in its country, but is under some restrictions and constraints.
Heineken has boldly ventured into international markets and so far has been a big success. It has made the right decisions so far and has gone on to be the third largest beer producer. Not only is it a big market seller in Europe, but also in Asia, North America and South America, and Africa as well. Though it still is very successful it still has a lot of major issues to face regarding international licensing and exporting.
The key issues facing Heineken regarding international licensing is the fact that people may no longer find the Heineken beer as it was before. People’s perception can be a very important factor in the success or flop of an international product that is brewed locally. Though they know that the product is still made by the same company, if they knew it was locally produced, that would spell out a great disaster for the international company. Take for example the Miller case. It bought the rights to reproduce the Lowenbrau beer in Texas because it found it hard to keep up with the demands for the beer. When the consumers found out, sales for the beer dropped, partly because it was now locally brewed and was no longer imported and that it was perceived to have lost its “Bavarian” flavor. But the only actual difference is that is it was locally produced. It still had the same flavor and was brewed the same way. There we can clearly see the part perception plays in the success of an international licensed product.
Another key issue Heineken might eventually face is that the original flavor of the brew might be mixed with a flavor from the locality, thus, losing its original, imported taste. It’s not about perception. That can really happen because the locality might greatly influence the taste and flavor of the locally produced beer.
If that happens, sales might drop. But it can also go another way and the sales might go up. It all depends on how the people react to the change. If they loved the original flavor, they might react to the new flavor the beer has. But it is really difficult to anticipate the reaction of the audience since the audience is varied.
All Heineken can do is to take measures in case these things do happen. Heineken must be able to prepare itself. But before Heineken chooses to give out its license to a local company, it must be able to do this things first.
Heineken must be able to know which company it should give its license to since the success of his business venture in that country solely depends on its distributing company. The licensee must be able to know the backstreets of the business in order to keep the distribution in a good shape.
Also, the licensee should be able to keep the demands for the product as high as possible, so as to keep the profit on a high state. The licensee must be able to keep the consumers demanding for more numbers of the product. It must be able to put up a lot of advertisements for the product so that the demand would not just be maintained but it would be kept in a very good state.
Heineken is that it must be shrewd enough to choose the business partner that has the lowest demand. The licensee must agree on a high value of fees the parent company would charge on every bottle of beer it could sell. It is only a matter of choosing the most potentially profitable partner. That would greatly determine their profit from that country. If one could find a distributor that agrees on selling the product in a virtually profitable price, then that would be the perfect partner.
Also, Heineken must keep track of its inputs and outputs in order to regulate the licensee’s operations.
All in all, Heineken will be at no loss if it chooses to give out international license for its products. Since international businesses grow fast, it won’t take long for it to have its investment back. It’s only a matter of making the right business moves.