Part II Planning Chapter 4 The Global Environment

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Part II PlanningChapter 4 The Global
Environment
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Learning Objectives

• After studying the chapter, you should be able
  to
• 1.Explain why the global environment is becoming
  more open and why barriers to the global transfer
  of goods and services are falling, increasing the
  opportunities, complexities, and challenges that
  managers face.
• 2.Identify each of the forces in the global task
  environment, and explain why they create
  opportunities and threats for global managers.

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Learning Objectives (contd)

• 3.Describe the way in which political and legal,
  economic, and sociocultural forces in the general
  environment can affect managers and the way in
  which global organizations operate.
• 4.List the impediments to the development of a
  more open global environment.

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Chapter Outline
I. The Changing Global Environment
II. The Global Task Environment
International Management
III. The Global General Environment
IV. Choosing a Way to Expand
Internationally

• Impediments to an Open Global Environment

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I. The Changing Global Environment

• Global Organization
• An organization that operates and competes in
  more than one country
• The Challenges of Global Competition
• Establishing operations in a foreign country
• Obtaining inputs from foreign suppliers
• Managing in a foreign culture
• The global environment is open
• Managers need to learn to compete globally.

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The Global Environment
Figure 6.1
Source
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1. Declining Barriers to Trade and
Investment(?????????)

• 1.1 Tariff (??)
• A tax that government imposes on imported or,
  occasionally, exported goods.
• Intended to protect domestic industry and jobs
  from foreign competition
• Other countries usually retaliate their own
  tariffs, actions that eventually reduce the
  overall amount of trade and impedes economic
  growth.
• GATT, WTO

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1. Declining Barriers to Trade and Investment

• 1.2 Free-Trade Doctrine(????)
• The idea that if each country specializes in the
  production of the goods and services that it can
  produce most efficiently, this will make the best
  use of global resources
• If India is more efficient in making textiles,
  and the United States is more efficient in making
  computer software, then each country should focus
  on their respective strengths and trade for the
  others goods.

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2. Declining Barriers of Distance and
Culture(?????????)

• Distance (??)
• Markets were essentially closed because of the
  slowness of communications over long distances.
• Culture (??)
• Language barriers and cultural practices made
  managing overseas businesses difficult
• Changes in Distance and Communication
• (????????)
• Improvement in transportation technology and
  fast, secure communications have greatly reduced
  the barriers of physical and cultural distances.

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3. Effects of Free Trade on Managers
(???????????)

• 3.1 Declining Trade Barriers (???????)
• Opened enormous opportunities for managers to
  expand the market for their goods and services.
• Allowed managers to now both buy and sell goods
  and services globally.
• Increased intensity of global competition such
  that managers now have a more dynamic and
  exciting job of managing.

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3. Effects of Free Trade on Managers

• 3.2 North American Free Trade Agreement (NAFTA)
  (????????)
• Abolishes 99 of tariffs on goods traded between
  Mexico, Canada and the United States
• Unrestricted cross-border flows of resources
• Increased investment by U.S. firms in Mexican
  manufacturing facilities due lower wage costs in
  Mexico
• Opportunities and Threats
• The opportunity to serve more markets
• Increased competition from NAFTA competitors

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II. The Global Task Environment (??????)

• 1. Suppliers and Distributors
• 2. Customers and Competitors

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Forces in the Global Task Environment
Figure 6.2
Source
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? 4.1 ??????????
???

????? ????? ?????
???
???
??
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The Global Task Environment

• 1. Suppliers and Distributors (???????)
• 1.1 Suppliers
• Managers buy products from global suppliers or
  make items abroad and supply themselves.
• A common problem is developing a network of
  global suppliers to keep costs down and quality
  high.
• Global outsourcing
• The purchase of inputs from foreign suppliers, or
  the production of inputs abroad, to lower costs
  and improve product quality or design the
  finished goods become global products.

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• 1. Suppliers and Distributors (???????)
• 1.2 Distributors
• Each country often has a unique system of
  distribution with custom and legal restraints.
• Managers must identify the hidden threats and
  problems in foreign distribution systems before
  attempting to compete in those markets.

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2. Customers and Competitors (??????)

• 2.1 Customers
• National markets are now merging into a huge
  global market with the same basic consumer and
  business goods.
• Creates large opportunities for expansion
• Products must be customized to fit different
  cultures
• 2.2 Competitors
• Global competitors present new threats
• Increased competition abroad as well as at home.
• Strong local competitors
• Entry of foreign competitors into home markets

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III. The Global General Environment??????

• 1. Political and Legal Forces
• 2. Economic Forces
• 3. Changes in Political and Legal and Economic
  Forces
• 4. Sociocultural Forces

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Forces in the Global General Environment
Figure 6.3
Source
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? 4.2 ????????????
??? ????
????? ????? ??????
??? ???
?? ??
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1. Political and Legal Forces

• 1.1 Representative Democracy (?????)
• A political system in which representatives
  elected by citizens and legally accountable to
  the electorate form a government whose function
  is to make decisions on behalf of the electorate
• Usually has a number of safeguards such as
  freedom of expression, a fair court system,
  regular elections, and limited terms for
  officials.
• Possesses a well-defined legal system and
  economic freedom.

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1. Political and Legal Forces

• 1.2 Totalitarian Regimes (????)
• A political system in which a single party,
  individual, or group holds all political power
  and neither recognizes nor permits opposition
• Most safeguards found in a democracy do not
  exist.
• These regimes are difficult to do business with
  given their lack of political, legal, and
  economic freedoms.
• Human rights issues also cause managers to avoid
  dealing with these countries.

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2. Economic Forces

• 2.1 Free Market Economy (??????)
• Private enterprise controls production of goods
  and services.
• Supply and demand determines production and the
  prices consumers pay.
• 2.2 Command Economy (????)
• The government controls all factors of production
  (private enterprise is forbidden) and it decides
  what to produce, how much, and sets prices.
• Many countries are moving away from their failed
  command economies to a free-market orientation.

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2. Economic Forces

• 2.3 Mixed Economy (????)
• Certain economic sectors controlled by private
  business, others are government controlled.
• Many mixed countries are shifting toward
  free-market systems.

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3. Changes in Political and Legal and Economic
Forces

• 3.1 A worldwide shift from totalitarian regimes
  toward representative democracies.
• 3.2 A strong movement from command and mixed
  economies toward free market systems.
• Opened significant expansion opportunities for
  global business with many Western businesses
  investing millions in the formerly totalitarian
  countries of the now-defunct Soviet bloc and
  China.

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Changes in Political and Economic Forces
Figure 6.4
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? 4.3 ????????????
?? 1990
?? 2000
??
??? 2000
??? 2000
????
??? 1990
?? 2000
??? 1990
?? 1990
??
????
??????
?????
????
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4. Sociocultural Forces

• 4.1 National culture (????)
• The set of values, norms, knowledge, beliefs,
  and other practices that unite the citizens of a
  country.
• 4.2 Values (???)
• Ideas about what a society believes to be good,
  desirable and beautiful.
• Provides conceptual support for democracy, truth,
  appropriate roles for men, and women.
• Usually not static but very slow to change.

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4. Sociocultural Forces

• 4.3 Norms (??)
• Unwritten rules and codes of conduct that
  prescribe how people should act in particular
  situations.
• Folkwaysroutine social conventions of daily life
  (e.g., dress codes and social manners)
• Moresbehavioral norms that are considered
  central to functioning of society and much more
  significant than folkways (e.g., theft and
  adultery), and they are often enacted into law.
• Norms vary from country to country.

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5.National Culture and Global Management

• Management practices that are effective in one
  culture often will not work as well in another
  culture.
• Culture Shock ????
• The feelings of surprise and disorientation that
  people experience when they do not understand the
  values, folkways, and mores that guide behavior
  in a culture.
• Expatriate Managers ?????
• Managers who go abroad to work for a global
  organization.

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IV. Choosing a Way to Expand Internationally
Four Ways of Expanding Internationally
Figure 6.6
Source
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? 4.5 ????
???? ????
??? ??
????
???? ? ????

?
?
?????????????????
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IV. Choosing a Way to Expand Internationally

• 1. Importing and Exporting ?????
• The least risky and least complex of global
  operations
• Exportingmaking products at home and selling
  them abroad
• Importingselling products at home that are made
  abroad.

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IV. Choosing a Way to Expand Internationally

• 2. Licensing ????
• Allowing a foreign organization to take charge of
  manufacturing and distributing a product in its
  country or world region in return for a fee.
• Home firm does not have the risk involved with
  investing in production and distribution
  facilities.
• The home firm risks exposing its technological
  know-how to its foreign partner.

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IV. Choosing a Way to Expand Internationally

• 3. Franchising ????
• Selling to a foreign organization the rights to
  use a brand name and operating know-how in return
  for a lump-sum payment and a share of the
  profits.
• Franchiser does not have to bear any development
  costs or deal with any problems associated with
  foreign market development
• Danger to the franchiser is loss of reputation if
  the franchisee fails to operate properly or to
  produce quality products.

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IV. Choosing a Way to Expand Internationally

• 4. Strategic Alliances ????
• Agreements in which managers pool or share their
  organizations resources and know-how with a
  foreign company and both organizations share the
  rewards and risks of the new venture.
• Allows firm to maintain control which is a basic
  problem with exporting, licensing, and
  franchising.
• Joint venture
• A strategic alliance among two or more companies
  that agree to jointly establish and share the
  ownership of an new business.

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IV. Choosing a Way to Expand Internationally

• 5. Wholly-Owned Foreign Subsidiary
• ???????
• Production operations established in a foreign
  country independent of any local direct
  involvement
• Requires a high level of investment
• Higher degree of operational control lowers risk
  of investment
• Offers the potential for high returns on the
  investment
• Protects the firms technology and know-how

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V.Impediments to an Open Global Environment

• 1. Government Imposed Impediments ????
• Administrative barriers (nontariff barriers)the
  use of policies and regulations to impede or
  block foreign competitors entry into the home
  markets of competitors.
• 2. Self-Imposed Ethical Impediments??????
• Reasons for not trading
• Respect for workers rights
• Respect for the environment