Prepared by Management Department | | G LOBAL M ANAGEMENT : M ANAGING ACROSS BORDERS Week 3

Globalization: the collapse of time & distance G LOBALIZATION... the trend of the world economy toward becoming a more interdependent system

Globalization: as reflected in three important developments I NTEGRATING E FFICIENCY & E FFECTIVENESS T HE RISE OF THE “ GLOBAL VILAGE ” & E - COMMERCE # 1 From transportation to communication, the Net, the Web, & the World O NE BIG WORLD MARKET : T HE GLOBAL ECONOMY # 2 Giving positive & negative effects C ROSS BORDER BUSINESS # 3 The rise of both Megamergers & Minifirms Worldwide

“ THE WORLD IS SMALLER ”

U SING THE W EB

S CHWAB ’ S C HINESE - LANGUAGE W EB SITE

“ ONE BIG WORLD MARKET ”

M C D ONALD ’ S IN J APAN & C HINA

C ROSS BORDER BUSINESS : THE RISE OF M EGAMERGERS OPERATING WORLDWIDE 2. M INIFIRMS OPERATING WORLDWIDE H AS TWO IMPORTANT RESULTS : Small Companies Can Get Started More Easily Small Companies Can Maneuver Faster

P IXAR A NIMATION S TUDIAS : S MALL C OMPANIES C AN M ANEUVER F ASTER

W HY LEARN ABOUT INTERNATIONAL MANAGEMENT ? International managers oversee the conduct of operations in, or with organizations in foreign countries multinational corporations multinational organizations

1. Y OU MAY DEAL WITH FOREIGN CUSTOMER OR PARTNERS 3. Y OU MAY WORK FOR A FOREIGN FIRM IN I NDONESIA T HE SITUATIONS THAT MANAGER MUST BE CONSIDER : 2. Y OU MAY DEAL WITH FOREIGN SUPPLIERS 4. Y OU MAY WORK FOR AN A MERICAN FIRM OUTSIDE I NDONESIA

The Successful International Manager E TNOCENTRIC M ANAGERS “W E KNOW BEST ” P OLYENTRIC M ANAGERS “T HEY KNOW BEST ” G OECENTRIC M ANAGERS “W HAT ’ S BEST IS WHAT EFFECTIVE, REGARDLESS OF ORIGIN ”

1. A VAILABILITY OF SUPPLIES W HY COMPANIES EXPAND INTERNATIONALLY : 3. L OWER LABOR COSTS 2. N EW MARKETS 4. A CCESS TO FINANCE CAPITAL 5. A VOIDANCE OF TARIFFS & IMPORT QUOTAS

H OW COMPANIES EXPAND INTERNATIONALLY : L OWEST RISK & INVESTMENT H IGHEST RISK & INVESTMENT L ICENSING & FRANCISING J OINT VENTURES W HOLLY - OWNED SUBSIDIARIES I MPORTING, EXPORTING, & COUNTERTRADING G LOBAL OUTSOURCING

E CONOMIC D IFFERENCES : A DJUSTING TO O THER C OUNTRIES ’ ECONOMIES P RINCIPAL E CONOMIC S YSTEMS : 3. M IXED ECONOMY 2. C OMMAND ECONOMY 1. F REE - MARKET ECONOMY

D EVELOPED VERSUS LESS - DEVELOPED COUNTRIES Developed Countries Less-Developed Countries Infrastructure & Resources Currency Exchange Rates

F IRST W ORLD OR T HIRD W ORLD ? U NITED C OLORS OF B ENETTO N

“O H, SAME OLD THING.”

P OLITICAL -L EGAL D IFFERENCES : A DJUSTING TO O THER C OUNTRIES ’ S G OVERNMENTS & L AWS Governmental Systems: Political Risk Laws & Regulations Totalitarian Governments Democratic Governments

B ARRIERS TO I NTERNATIONAL T RADE 1. TARIFFS 2. I MPORT QUOTAS 3. E MBARGOES

Organizations Promoting International Trade IMF WTO WORLD BANK … and many more

EU NAFTA Mercosur APEC The Four Major Trading Blocs

The Importance of National Culture C ULTURE.... the shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people. C ULTURAL D IMENSIONS.... Low-Context Culture, in which shared meanings are primarily derived from written and spoken words. High-Context Culture, in which people rely heavily on situational cues for meaning when communicating with others.

H OFSTEDE ’ S DIMENSIONS OF NATIONAL CULTURE. Source: Schermerhorn, Management, Figure 05-04

O THER C ULTURAL V ARIATIONS : 1. L ANGUAGE 2. I NTERPERSONAL S PACE 3. T IME O RIENTATION

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