1. Management Practices Lecture-29 1

2. Recap Social Responsibility – Obligation to Responsiveness – Factors That Affect Employee Ethics – Stages of Moral Development 2

3. Today’s Lecture Managing in a Global Environment Four key questions : I.Global Perspectives II.Different Types of International Organizations III.How organizations go global (Important) IV.Managing in a global environment 3

4. 4–4 Q1: What’s your global perspective? I’m not going to work for a large corporation. Why should I care about the ins and outs of managing globally?

5. 4–5 Three global attitudes Ethnocentric Attitude Polycentric Attitude Geocentric Attitude

6. 4–6 Three global attitudes Ethnocentric Attitude – The best work approaches and practices are those of the home country. Polycentric Attitude – The host country know the best work approaches and practices for running their business. Geocentric Attitude – A world-oriented view that focuses on using the best approaches and people from around the globe.

7. 4–7 Key Information About Three Global Attitudes

8. 4–8 The world today is a much smaller place. “If you are not thinking international, you are not thinking business management. ” Global mindset: “ Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one corner of the earth all one’s lifetime” -- --Mark Twain Adopting a Global Perspective

9. 4–9 Reasons for engaging in international business: – Profits – Customers – Suppliers – Capital – Labor

10. 4–10 The Global Marketplace Opportunities and Challenges – Coping with the sudden appearance of new competitors – Acknowledging cultural, political, and economic differences – Dealing with increased uncertainty, fear, and anxiety – Adapting to changes in the global environment

11. 4–11 Regional Trading Agreements The European Union (EU) North American Free Trade Agreement (NAFTA) U.S.-Central America Free Trade Agreement (CAFTA) Free Trade Area of the Americas

12. 4–12 The World Trade Organization (WTO) Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995. Functions as the only global organization dealing with the rules of trade among nations. Has 149 member nations and 32 observer governments. Monitors and promotes world trade.

13. 4–13 Q2: What are different Types of International Organizations ?

14. 4–14 Different Types of International Organizations Multinational Corporation (MNC) – Maintains operations in multiple countries What’s the difference? Multidomestic Corporation Global Company Transnational Corporation (Borderless Organization) Born Globals/International New Ventures (INVs)

15. 4–15 Different Types of International Organizations Multidomestic Corporation – Decentralizes management and other decisions to the local country. – Gives foreign operations more freedom to operate as separate entities Global Company – Centralizes its management and other decisions in the home country. – Seeks total integration of global operations

16. 4–16 Different Types of International Organizations (cont’d) Transnational Corporation (Borderless Organization) – Eliminated structural divisions that impose artificial geographic barriers and is organized along business lines that reflect a geocentric attitude. Born Globals/International New Ventures (INVs) – Commit resources upfront (material, people, financing) to doing business in more than one country.

17. 4–17 Alternative multinational structures for global operations. Schermerhorn/Management, 7e Chapter 5, Figure 05-05

18. 4–18 Q3: How organizations go global?

19. 4–19 How Organizations Go Global

20. 4–20 Common forms of international business–from market entry to direct investment strategies. Schermerhorn/Management, 7e Chapter 5, Figure 05-02

21. 4–21  Market entry strategies involve the sale of goods or services to foreign markets but do not require expensive investments.  Types of market entry strategies: – Global sourcing – Exporting – Importing – Licensing agreement – Franchising

22. 4–22  Direct investment strategies require major capital commitments but create rights of ownership and control over foreign operations.  Types of direct investment strategies: – Joint ventures – Wholly owned subsidiaries

23. Summary Managing in a Global Environment Four key questions : I.Global Perspectives II.Different Types of International Organizations III.How organizations go global (Important) IV.Managing in a global environment 23

24. Next Lecture Global outsourcing Exporting and importing Licensing and Franchising Foreign subsidiary Managing in A Global Environment 24