Chapter 04 Managing in a Global Environment

1
Managing in a Global Environment
2
Four Stages of Globalization

• Domestic stage
• market potential is limited to the home country.
• production and marketing facilities located at
  home.
• International stage
• exports increase.
• company usually adopts a multi-domestic approach.
• Multinational stage
• marketing and production facilities located in
  many countries.
• more than 1/3 of its sales outside the home
  country.
• Global (or stateless) stage
• making sales and acquiring resources in whatever
  country offers the best deal.
• ownership, control, and top management tend to be
  dispersed.

3
Why the Need for a Global Strategy

• Business is becoming a unified global field.
• For many, domestic markets are saturated.

4
Principles of International Business

• Always show respect and listen, dont be in a
  hurry.
• Try to gain an appreciation for the differences
  between Hofsedes masculine and feminine
  cultures.
• Do not feel your way is the best way.
• Emphasize points of agreement.
• Discern the perceived definitions of words.
• Save face as well as giving face.
• Dont embarrass anyone in front of others
• Know or take someone who knows the culture.
• Understand that leadership may mean different
  things to different countries.
• Dont lose your temper.
• Avoid clique-building.
• Always show respect.
• Leave the American task oriented, fast paced
  style at home
• Eliminate stereotypes.
• Be sensitive to the difference between low
  context culture and high context cultures
• Learn to tolerate a high degree of
  unpredictability.

5

• Legal-Political
• Political risk
• Laws, restrictions
• Government takeovers
• Tariffs, quotas, taxes
• Terrorism, political instability

Key Factors in the International Environment

• Economic
• Economic development
• Resource product markets
• Per capita income
• Infrastructure
• Exchange rates
• Economic conditions

Organization

• Sociocultural
• Social values, beliefs
• Language
• Religion (objects, taboos, holidays)
• Kinship patterns
• Formal education, literacy
• Time orientation

6
The Economic Environment

• Includes such factors as
• economic development.
• Infrastructure.
• resource and product markets.
• exchange rates.
• inflation, interest rates, and economic growth.

7
Legal-Political Environment

• Political Risk
• risk of loss of assets, earning power, or
  managerial control.
• Political Instability
• includes government takeovers, civil disorders.
• Laws and Regulations
• laws and regulations differ from country to
  country.
• most visible changes in legal-political factors
  grow out of international trade agreements (GATT,
  EU, NAFTA).

8
GATT

• General Agreement on Tariffs and Trade (GATT)
• Signed by 23 nations in 1947 as a set or rules.
• Ensured nondiscrimination, clear procedures,
  negotiation of disputes, and participation of
  lesser developed countries in international
  trade.
• Today, 100 member countries abide by the rules.
• Primary tools GATT successor, WTO.
• tariff concessions, countries agree to limit
  level of tariffs on imports from other members.
• most favored nation clause.
• Overall goal
• closer relationships among member nations.
• help operate the global marketplace more
  efficiently.

9
European Union

• European Union (EU)
• Formed in 1958 to improve economic and social
  conditions.
• Has 15-nation alliance.
• EUs monetary revolution, introduction of the
  Euro.
• Euro is the single European currency that
  replaced 11 national currencies.

10
Fifteen Nations Within the EU
11
North AmericanFree Trade Agreement

• North American Free Trade Agreement (NAFTA)
• went into effect on January 1, 1994.
• merged the United States, Canada, and Mexico with
  more that 360 million consumers.
• breaks down tariffs and trade restrictions on
  most agriculture and manufactured products.
• August 12, 1992 agreements in number of key areas
  include agriculture and manufactured products.

12
Trade AlliancesPromise or Pitfall?
Will trade blocs evolve into three powerful
trading blocs?
Will trade blocs lead to economic warfare?
Only the future will answer these questions.
Will stateless corporations bypass trading zones?
13
Sociocultural Environment

• Includes shared
• knowledge.
• beliefs
• values
• common modes of behavior
• common ways of thinking

14
Dimensions ofSocial Value Systems

• Power distance.
• Uncertainty avoidance.
• Individualism collectivism.
• Masculinity/femininity.
• Long term versus short term orientation.

15
Additional Cultural Influences for International
Organizations Consideration

• Language
• Religion
• Attitudes
• Social organization
• Education

16
Strategies for EnteringInternational Markets
High
Greenfield Venture
Acquisition
Joint Venture
Ownership of Foreign Operations
Franchising
Licensing
Exporting
Low
High
Low
Cost to Enter Foreign Operations
17
Managing Cross Culturally

• Managers must be sensitive to cultural subtleties
  in
• leadership
• decision making
• motivation
• control
• must be culturally flexible and easily adapt to
  new situations
• cannot be ethnocentric
• Culture Shock may lead to frustration and anxiety

18
Two Keys WhenOperating Internationally

• Personal learning.
• Personal growth.