CORPORATE MANAGEMENT in ACTION Session 1. Impact of International Business Environment on Global Organizations CORPORATE MANAGEMENT IN ACTION - CMA 1

Chapter Objectives Session 1. Impact of Int’l Bus. Environ. On Global Orgs. CORPORATE MANAGEMENT IN ACTION - CMA Understand the variables shaping International Business and impacting Global Organizations Evaluate expert-based international business forecasts Realize Opportunities arising in International Business settings Research Forms of Economic Integration and study practical examples: (WTO, EU, NAFTA, OPEC, …) 2

What Is a Global Organization ? Global Organization An organization that operates across borders, in different countries, or even continents International Business Environment Business environment shaped by different factors (social, political, economical, etc…) that make it more complicated for global companies to operate, as opposed to local firms. CORPORATE MANAGEMENT IN ACTION - CMA 3

International Business Environment: Factors of Change Factors of Change: 1.Political Factors: power, dominance, … 2.Economical: resources, capital markets, etc… 3.Socio-cultural: social habits, cultural differences 4.Technological: Communication, Innovation 5.Environmental: ozone depletion, recycling, green tech CORPORATE MANAGEMENT IN ACTION - CMA 4

A. Political Factors  International trade activity now affects domestic policy more than ever.  Governments need to coordinate policies that affect the international business environment.  Policymakers need a better understanding of the nature of international trade issues.  Globalization is shaping new political coalitions and breaking old ones. CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: Factors of Change 5

i. International Finance: o Debt constraints and low commodity prices impose slow growth prospects for developing countries. o Developed nations have an incentive to help debtor nations. ii. Planned vs. Market Economies: o The distinction between developed and less-developed countries: unlikely to change. o Environmental protection: a major force in economic growth. o Growth of the global economy: fueled by the emerging markets of the Asia Pacific region. B. Economical Factors CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: Factors of Change 6

i. Population Growth: o Has become a primary concern o Population shifts due to migration: an on-going challenge. ii. Cultural Values: o Different nations  Different Cultures  different values, priorities, habits o Global organizations need flexibility to adapt to different cultural settings. C. Socio-cultural Factors CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: Factors of Change 7

i. communication: o Modern communication systems: fast exchange of data. o Being part of the global business world: easier for all sizes of firms. ii. Distribution: o Innovation in logistics and distribution methods: easy global product coverage o Global media: additional support for global coverage D. Technological Factors CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: Factors of Change 8

o Increasing global environmental awareness o Adoption of greener technologies o Green technology: product differentiation. o Emerging global policies: determination for environmentally-friendly processes. o Sustainability: basis for modern competition. E. Environmental Factors CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: Factors of Change 9

 Higher competition within global landscape  Exchange rates: affect competitiveness  Formation of multinational coalitions: governments and private sectors  Sustainability implications  Globalized approach: common language, compatible systems.  Mass production: to respond to global demand CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: Implication on Organizations 10

 Ease of communication and transport: quick business  Global landscape: abundant opportunities for innovation  High profits due to high demand  Better opportunities for women in the global setting  Variety of opportunities due to socio- cultural variance CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: Opportunities 11

1.Bilateral : two countries (tariff reduction) 1.Regional : group of countries within same geographical area (example: EU) 1.Global : worldwide cooperation (example: WTO) CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: ECONOMIC INTEGRATION Forms of Economic Integration 12

 Mostly by two adjacent countries  In the form of free trade and custom exemption  Targets improvement of trade relations and economic growth of both countries  Example: US-Canada bilateral cooperation (largest trade volume) CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: ECONOMIC INTEGRATION Bilateral Integration 13

 Geographical area: important factor  Free trade between the group  Unified technical codes  Possible monetary union (EU)  Examples:  EU: European Union  NAFTA: North American Free Trade Agreement, US, Canada, Mexico (cheap labor)  APEC: Asia Pacific Economic Cooperation  OPEC: Organization of Petroleum Exporting Countries  Others… CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: ECONOMIC INTEGRATION Regional Integration 14

 Worldwide Integration  Enhances regional and bilateral forms of cooperation / integration  Sets standards that become international  WTO: World Trade Organization CORPORATE MANAGEMENT IN ACTION - CMA International Business Environment: ECONOMIC INTEGRATION Global Integration 15