Final answer:
The correct answer is option 1) greater; greater. This reflects that a higher level of product environmental sensitivity requires more consideration of country-specific environmental conditions by managers. Despite the cost of environmental regulations, other factors like labor costs and infrastructure quality often weigh more heavily in business decisions concerning factory locations.
Step-by-step explanation:
The question addresses the relationship between environmental sensitivity of a product and the necessity for managers to consider various environmental conditions when making business decisions. The correct answer to the question "The _________ the level of environmental sensitivity for a given product, the _________ the need for managers to address country-specific economic, regulatory, technological, social and cultural environmental conditions." is: 1) greater; greater.
It implies that as the environmental sensitivity of a product increases, there is a heightened necessity for management to pay attention to specific environmental conditions within each country. This takes into consideration various factors that influence factory location decisions, such as labor costs, capital costs, proximity to suppliers and customers, quality of infrastructure, taxation level, and government efficiency and integrity. Notably, environmental regulation costs, although present, are relatively minor compared to these other factors, generally constituting only 1 to 2% of an industrial plant's total costs.
Therefore, management cannot rely solely on lenient environmental policies to determine factory locations, as the overall economic and operational context of the country remains paramount. The mistaken assumption that businesses primarily migrate production to exploit weaker environmental standards, known as the 'race-to-the-bottom', does not align with empirical data and the broad scope of aspects that businesses prioritize when establishing new facilities.