International Economics Nestle Purina Petcare Term Paper

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3. Domestic Environment

The domestic environment encompasses all forces within the territory of the home country and which forces influence the actions and results of the Nestle Purina PetCare Company. These national and uncontrollable forces refer to the consumption behavior of clients within the United States, the weakening of the U.S. dollar, increased taxes, a large national debt and the real-estate crisis which makes it more difficult for companies to receive loans from banking institutions.

Other domestic forces refer to the laws and regulations promulgated by the U.S. Government, laws which regulate the activity of manufacturers and national companies. The Commercial Law is the most relevant one and deals with most corporative operations, including capital, personnel or sales operations. In addition, the domestic environment is also marked by a skilled and populated labor market.

4. Foreign Environment

The foreign environment is composed from those forces outside the home country, but which affect the company's actions. In the case of Nestle Purina PetCare Company, these forces refer to the strengthening of the European currency, increased competition on the international market, the multitude of regulations adherent to each of the 38 countries in which Purina conducts corporate actions, increased focus on preserving the environment and reducing waste and pollution, behavior of international consumers and the multitude of technological advancements.

5. International Environment

The forces of the international environment are a combination of domestic and foreign forces and refer to macroeconomic issues such as the fluctuations of international currencies, market liberalization or globalization and a wide series of international regulations and governing institutions. The laws and regulation are "intended to protect the public health and the environment, including air and water quality, underground fuel storage tanks and waste handling and disposal" (Securities Information, 1995). All international subsidies of Purina are organized under the law of the hosting countries.

6. Decision Making Core Complex

Purina executives have to decide on two major issues in regard to the company's international operations: opening a new subsidy abroad or intensifying the sales within a foreign country.

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When opening a new subsidy, Purina executives consider the need for that subsidy, the national regulations within that country, the costs and qualifications of the labor force and any cultural barriers which might affect corporate activities. For instance, they will not open a manufacturing subsidy which produces pet food out of beef in India.

7. Seven Global Dimensions

The management at Nestle Purina PetCare Company approaches the standardization of the seven dimensions of globalization as follows:

Products: increased level of standardization, same products, minimal price variations

Markets: medium levels of standardization as Purina tries to adapt to the unique requirements of each international market, such as increased demand for parrot food or no beef-based pet food in India

Promotion: reduced level of standardization, same commercials in all countries, only translated in the national languages

Value added to the product: reduced level of standardization, products are similar in all destinations

Competitive strategy: medium levels of standardization as the competitive strategies are based on the core competencies of Purina products, but are also based on the actions implemented by the primary competitors on each market

Non-home country personnel: Purina employs large numbers of locals in their international subsidies

Global ownership in Purina: the petcare company is entirely owned by Nestle, a food company based in Switzerland.

These levels of standardization reveal a strong company which is capable of adapting to the unique requirements of each market.

List of references:

2008, Official Website of Nestle Purina PetCare Company, http://www.purina.com/,last accessed on January 21, 2008

2008, Nestle Purina PetCare Company, Hoovers, a D&B Company, http://www.hoovers.com/nestl%C3%A9-purina-petcare/--ID__104717 -- /free-co-factsheet.xhtml, last accessed on January, 21, 2008

1995, Ralston Purina, Securities Information, http://www.secinfo.com/d2FU1.a24.htm, last accessed on January 21, 2008

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