1. Global Performance Strategies

2. Multi-National Objectives
Sales
R&D
Competitive Information Gathering
Corporate Image Presence
Foreign Acquisitions
Access to Resources
Control of Logistics Hubs
Satisfy Corporate Ego
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3. Benefits of Worldwide Presence
Increased Market Size
Sales growth
Increased recognition
Higher profits
Access to Resources
Raw materials, finished goods
Technologies, licenses
Qualified or unskilled staff
Diversification
Competitiveness
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4. Benefits of Worldwide Presence
Increased Market Size
Access to Resources
Diversification
Move obsolete products
Compensate for cycle sales
Broaden product range
Competitiveness
Gain advance insight on new market developments/trends
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5. Management Factors Domestic Management Good Citizenship Finance
Production
Marketing
Human
Resource
Developmt.
Sales
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6. Management Factors Multi- National Management Monetary/ Political
Local Laws
Climate
Environmt.
Competition
Economy
Socio-/Cult.
Norms
Labor
System
Technology
Multi-
National
Management
Good
Citizenship
Finance
Production
Marketing
Human
Resource
Developmt.
Sales
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7. New Zealand as a Business Base
English Language
Telephone Direct Dial Anywhere
Cheap Fax/Internet/IntraNet/
Available Air Travel Worldwide
Effective Local Support through NZ Consulates/Embassies
Marginal location/distance from world centers
Small, fragmented Market
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8. Gold Standard Sir Isaac Newton sets British Gold Standard in 1717 Gold
Reserves
Gold
Reserves
Currency
Currency
Country A
Strong
Currency
Country B
Weak
Currency
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9. Foreign Investments Portfolio Investment Foreign Firm US Firm
Little/no management participation
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10. Foreign Investments Foreign Direct Investment Foreign Firm US Firm
Substantial Management Participation
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11. Non-Investment Activities
Exporting
Importing
Licensing
Granting the right to foreign firms to produce/sell under license.
Sale of Technology/Know-How
Sale of non-tangible assets which enable others to use advantageous production techniques.
Turn-Key Product Sale
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12. Non-Investment Activities
Exporting
Importing
Licensing
Sale of Technology/Know-How
Turn-Key Product Sale
Complete production of a project which is then transferred to the owners for future management.
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13. Money Flow Patterns North - North North-South West-East
Flow from one industrialized country to another (75%).
North-South
Flow into less developed countries (25%).
West-East
Flow from western countries into former socialist countries.
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14. International Product Cycle
Phase I
US dominant in production of new product
Large homogeneous market
Affluence
Credit
Phase II
Phase III
Phase IV
US Revenue Share
Phase I
Phase III
Phase II
Phase IV
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15. International Product Cycle
Phase I
Phase II
Local markets allow entry of competitors
Active Demand
Local support
Phase III
Phase IV
US Revenue Share
Phase I
Phase III
Phase II
Phase IV
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16. International Product Cycle
Phase I
Phase II
Phase III
Foreign competitors export their goods
More efficient
Updated designs
Phase IV
US Revenue Share
Phase I
Phase III
Phase II
Phase IV
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17. International Product Cycle
Phase I
Phase II
Phase III
Phase IV
Competition reaches the US
Image advanages
Newer product
Origin subsidies
US Revenue Share
Phase I
Phase III
Phase II
Phase IV
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18. Relationship of Nations
Independence
Limited availability of goods
Outside events have/little impact
No advantages from competitive buying
No political/economic compromises needed to maintain a relationship
Interdependence
Dependence
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19. Relationship of Nations
Independence
Interdependence
One or more countries depend heavily on each other
Outside events have major impacts on the local economy
Political/economic compromises are required to maintain the relationship
Dependence
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20. Relationship of Nations
Independence
Interdependence
Dependence
Wide range of goods available
Strong dependency on few partners
Major political/economic compromises required
Less developed countries are often more dependent than others
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21. Currency Equilibrium Country A Country B Money Flow Trade Deficit
Buys goods
Sells goods
Trade Deficit
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22. Currency Equilibrium Country A Country B Country A Country B
Money Flow
Country A
Country B
Buys goods
Sells goods
Trade Deficit
Country A
Country B
Prices Fall
Prices Rise
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23. Currency Equilibrium Country A Country B Country A Country B Country A
Money Flow
Country A
Country B
Buys goods
Sells goods
Trade Deficit
Country A
Country B
Prices Fall
Prices Rise
Trade Deficit
Country A
Country B
Sells Goods
Buys goods
Money Flow
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24. Currency Equilibrium Country A Country B Country A Country B Country A
Money Flow
Country A
Country B
Buys goods
Sells goods
Trade Deficit
Country A
Country B
Prices Fall
Prices Rise
Trade Deficit
Country A
Country B
Sells Goods
Buys goods
Money Flow
Country A
Country B
Prices Rise
Prices Fall
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25. World Trade Organization
Formerly GATT (General Agreement on Tariffs and Trade)
New organization with membership of all important trading nations
Judicial body for resolution of trade disputes (banana war, meat quotas, etc.)
Questionable effectiveness in forcing countries to comply with WTO agreements
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26. Foreign Legal Constraints
Taxation
High Tax Countries (Western Europe, Australia, New Zealand, Japan)
Low Tax Countries (US, HongKong, Switzerland)
No Tax Countries (tax haven countries, off-shore countries)
Anti-Trust/Restrictive Trade
Tariffs/Quotas
Ownership
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27. Matching of Priorities
Home Country
Host Country
Value/Belief System
Communication
Work as Part of Life
Family/Relationships
Value/Belief System
Communication
Work as Part of Life
Family/Relationships
Corporate
Culture
Profit Motivation
Short-Term Results
Money = Success
Sense of Urgency
Separation of Firm
and Individual
Headquarters/Boss
makes Decision
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28. Cultural Elements Language Organization Spoken Unspoken Expected
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29. Socio-/Behavioral Variables
Physical Appearance (size, height, weight, hair/skin color, clothing preference, etc.)
Cultural factors (beliefs, rules, techniques, institutions, lifestyle patterns, morals, etc.)
Group membership
Direct/Indirect communication
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30. Religious Tensions
Religions that govern conduct during non-religious activities
Religions with direct influence/control of politics, laws, duties
Religions with massive followings in given countries
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31. Etiquette Factors Greetings: Ego involved?
Sebenius, HBR March 2002
Greetings: Ego involved?
Formality: Dress and language?
Gift Giving: Expected? Traps?
Touching: Taboos?
Eye Contact: Domination?
Deportment: Who is in charge?
Emotions: Personal v Professional Life?
Silence: Argumentative?
Eating: Which custom counts?
Body Language: It’s there!
Punctuality: How to show respect?
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32. Education as a Location Factor
Are literacy rates and school demographics valid location criteria?
Management training outside the US varies in content, style and objective.
Who compensates countries for brain drain (professionals, management, technology)?
Reverse brain drain programs organized by several countries.
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33. Polycentrism Highly decentralized control
Adaptation to local business needs
excessive polycentrism may impact parent organization
Can global firms be polycentric without losing their corporate identity?
Why does McDonalds serve wine in France and beer in Germany?
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34. Ethnocentrism Superiority of the mainstream corporate system
Use cookie-cutter models to do business worldwide
No learning curve needed
Total control over corporate identity worldwide
Will a bull in the china shop behave ethnocentric or polycentric?
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35. Government Relations There are always mutual benefits
Highest government officials are always available for personal meetings
Need protection and leverage against competition, local and foreign
Use relationships with one government to establish connections with others
Prioritization and adaptation of goals consistent with country objectives
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36. Conflict Situations Terrorism Human Rights Politics
Questionable Payments
Marketing Allowances
Labor Relations
Environment Tolerable
Liberal Finance and Economic Systems
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37. Managing Exchange Risks
Forward hedging
Currency option contracts
Change of settlement dates
Inter-corporate foreign currency management
Exposure netting
Price adjustments floating with exchange rates
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38. Poor Customers Counter-Purchase Compensation with products
Barter trade/multi-way switch trade
Local purchase demands as off-set
Clearing accounts for long-term settlement of foreign receivables
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39. Exports Payment Options
Cash in advance
Open account (who bears the risk?)
Consignment
Letter of Credit (irrevocable)
Documentary Drafts (revocable)
Compensatory trade
Commercial bank loans/factoring
Government guarantees/subsidies
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40. Export Documentation Shipping documents Export licenses
Insurance Certificates
Basic named perils
Broad named perils
All risks
Collection Documents
Commercial Invoice
Certificate of Origin
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41. Barriers for Women Culture Education Legal
Traditional role differentiation
Males usually attributed dominance
Religious beliefs constrain women in many situations
Education
Women generally under-represented in worldwide business schools
Legal
Switzerland: Voting since 1972
UK: Anti-discrimination laws 1976
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42. Women in Parliament Source: DER SPIEGEL, 12/99
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43. Example New Zealand Frmr Prime Minister: Helen Clark
Frmr Prime Minister: Jenny Shipley
Frmr Gov General: Dame Cartright
Chief Justice: Dame Elias
Frmr Attorney General: Margaret Wilson
Frmr Speaker: Margaret Wilson
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44. Pressing Worldwide Problems
War
Poverty
War
Poverty 42 35 18 27
Poverty
War
Poverty
Crime 21 26 18 17
Ecology
Ecology
Ecology
War 11 10 8 12
Bosnia
Crime
Bosnia
Drugs 10 7 8 7
Germany
Britain
Japan US
Source: DER SPIEGEL, April 1994
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45. The “Top Issues” List A commitment to education?
Are government regulations simple and supportive of business interests?
Is there a policy to balance the need to protect the unemployed with the need to encourage self-sufficiency?
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46. The “Top Issues” List
Is the population without large demographic gaps?
Does the country actively promote female participation in business?
Is there a commercialization of technologies?
Is the inevitability of business failures accepted?
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47. The “Top Issues” List Are markets open and can competition emerge?
Are social/cultural norms oppressive?
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