Managing the Global Arena 5 Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Objectives 1. An understanding of international management and its importance to modern managers 2. An understanding of what constitutes a multinational corporation 3. Insights concerning the risk involved in investing in international operations 4. Insights into those who work in multinational corporations 5. Knowledge about managing multinational corporations 6. Knowledge about managing multinational organizations versus transnational organizations 7. An understanding of how ethics and the preparation of expatriates relate to managing internationally Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Managing Across the Globe Global Management Skill: The ability to manage global factors as components of organizational operations. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Managing Across the Globe: Why? - Great opportunities in the international marketplace today - U.S. population growth slow but steady - Other countries having population explosions (China, India, Indonesia – 2 billion by 1990) - Strong profit potential has serious risk Some challenges are: Cultural differences Different technology levels Laws and political systems Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Fundamentals of International Management International Management: The performance of management activities accross national borders. It entails reaching of organizational objectives by extending management activities to include an emphasis on organisations in foreign countries. Q?: for most firms is not whether to globalize? BUT HOW and HOW FAST to do so and HOW to measure it? Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Fundamentals of International Management Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organizations by International Involvement Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organizations by International Involvement Domestic Organizations: operate within a single country. Both acquire and sell their goods/services within that same country. Majority of their operations are where they are based. Most are small organizations. International Organizations: Based primarily within a single country but have continuing, meaningful international transactions. E.g. Making sales, purchasing materials… Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organizations by International Involvement Multinational Organizations/ The Multinational Corporation (MNC): Company that has significant operations in more than one country. Essentially, MNC is and organization that is involved in doing business at the international level. It carries out its activities on an international scale that disregard national boundaries, and it is guided by common strategy from corporation center. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organizations by International Involvement Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

It takes 25 years to build the management team with requisite skills, experiences and abilities to mold and organization into a highly developed MNC. (Dupont, GE, Lockheed) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organization by International Involvement Complexities of Managing the Multinational Corporation (it differs from domestic management because;) 1. Within different national sovereignties 2. Under widely disparate economic conditions 3. Among people living within different value systems and institutions 4. In places experiencing the industrial revolution at different times 5. Often over greater geographical distance 6. In national markets varying greatly in population and area Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organization by International Involvement Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organizations by International Involvement Risk and the Multinational Corporation (as it requires substantial investments) 1. Reduce or eliminate high transportation costs 2. Allow participation in the rapid expansion of a market abroad 3. Provide foreign technical, design, and marketing skills 4. Earn higher profits But sometimes they may not see/calculate risks correctly, contracts are very important to eliminate some of the risks. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organizations by International Involvement The Workforce of Multinational Corporations As organisations becomes more global, they become more diverse. Managers have continual challenges of Building a competitive business team made up of people of different races who speak different languages and come different parts of the world. Types of Organization Members Found in Multinational Corporations Expatriates Host-Country Nationals Third-Country Nationals Workforce Adjustments Adjusting to a New Culture Repatriation Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Categorizing Organizations by International Involvement Workforce Adjustments (below adjustments are the most difficult challenges for MNC workforce) Adjusting to a New Culture - Experience confusion, anxiety and stress related to the need to make cultural adjustments. (food, weather, language, driving, traffic, etc.) Difficult attitudes and perceptions: Japanese are renowned for their hard-driving work ethics, Americans take a slightly more relaxed attitude toward work, America: working past quitting time is exemplary, Japan: working past quitting time is critized. Repatriation: Bringing individuals back to their home country and reintegrating them into the organisation’s home-country operations. It has its own adjustment problems, (disaapointment, getting used to lifestyles at overseas) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall