May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Chapter 4 Managing in a Global Environment... May not be scanned, copied or dupl
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Chapter 4 Managing in a Global Environment
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A Borderless World
Organizations and managers are not isolated from international forces
Trade barriers have fallen
Communication is faster, cheaper
Consumer tastes converge
Organizations address the needs and desires that transcend national
boundries
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4.1 Ranking of Six Countries
on the Globalization Index
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Global Mindset
Ability of managers to appreciate and influence individuals, groups,
organizations, and systems that represent:
Different social, cultural, political, institutional, intellectual, and
psychological characteristics
Develop by engaging with people from different cultures
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4.2 The Dimensions of a Global Mindset
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Changing International Landscape
China Inc.
China manufactures many products for U.S companies
China is also a growing consumer market
Regulations and government policies make doing business in China a challenge
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Changing International Landscape
India is a service giant, growing in software design and engineering
Brazil is a country that is gaining the attention of American managers
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The Impact of Multinational Corporations (MNC)
The size and volume of international business is LARGE
Companies have revenue = GDP of small country
Move assets from country to country
25% or more of its profit comes from outside parent country
MNC is managed as an integrated whole
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The Impact of Multinational Corporations (MNC)
Controlled by one management authority
MNC managers must have a global perspective
Ethnocentric companies – place emphasis on their home countries
Polycentric companies – oriented toward the markets of individual foreign host countries
Geocentric companies – world oriented and favor no specific country
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The Globalization Backlash
68% of Americans say other countries benefit the most from free trade
53% believe free trade has hurt U.S.
The United States’ primary concern is the loss of jobs
Another trouble spot is how overseas contractors and suppliers treat
employees
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The Globalization Backlash
Business leaders insist that economic benefits flow back to the U.S
economy
Lower prices and expanded markets
Increased profits and funds for innovation
But American shoppers say they would pay higher prices to keep
down foreign competition
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Serving the Bottom
of the Pyramid (BOP)
An approach for multinationals to do good
Corporations can alleviate problems and make large profits by selling
to the world’s poor
There are more than 4 billion people at the lowest level of the
economic pyramid
Many companies are adopting BOP strategies
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4.3 Str ategies for Entering the International
Arena
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International Market Strategies
Exporting – transferring products for sale to foreign countries
Outsourcing – also called offshoring, work activities are done in
countries with cheap labor
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International Market Strategies
Licensing – enabling a company to produce and market a product in
Joint venture and other types of partnerships are common – wholly owned
subsidiary, greenfield venture
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The International Business Environment
Planning, organizing, leading, and controlling in multiple countries can be
challenging
It took McDonald’s a year to figure out that Hindus in India do not eat beef
In Africa, the labels on bottles include pictures to aid illiterate consumers
Managers must be mindful in the global marketplace
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4.4 Key Factors in
International Environment
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The Economic Environment
Economic development – Countries are categorized as either
developed or developing based on per capita income
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4.4 Country Competitiveness Comparison 2011–2012
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Economic Environment
Economic interdependence
The current economic crisis has highlighted how interconnected
economies are around the world
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4.6 How Countries are Bearing
the Economic Crisis
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The Legal-Political Environment
Political risk is defined as the risk of lost assets, earning power, or
managerial control
Political instability includes riots, revolutions, civil disorders, and
frequent changes in government
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The Sociocultural Environment
The values and behaviors that govern U.S business do not always
translate
Social values
Communication differences
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Hofstede’s Value Dimensions
Power distance
Uncertainty avoidance
Individualism and collectivism
Masculinity and femininity
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4.7 Rank Orderings of Ten Countries Along Four Dimensions
of National Value Systems
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GLOBE Project Value Dimensions
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4.8 Examples of Country Rankings on Selected GLOBE Value Dimensions
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4.9 High-Context and
Low-Context Cultures
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International Trade Alliances
General Agreement on Tariff and Trade (GATT)
23 nations in 1947, a set of rules for fair trade
World Trade Organization (WTO)
Maturation of GATT into permanent global institute
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International Trade Alliances
European Union
1957 alliance to improve economic and social conditions among members; evolved to 28-nation European Union
North American Free Trade Agreement (NAFTA)
Merged the United States, Canada, and Mexico into a single market
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4.10 The Nations of the
European Union
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