1. CHAPTER 18 INTERNATIONAL MANAGEMENT
Chapter 18 starts Part 6 of the text - the international setting: chapters on International Management and The Regional Context..
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

2. LECTURE OUTLINE Nature of international management
Assessing the international environment
Gauging international strategic issues
Organising international business
Adapting to cultural differences
Social responsibility and ethical issues
The slightly more detailed Chapter summary is on 688. Learning objectives are on Page 689.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

3. NATURE OF INTERNATIONAL MANAGEMENT
International business
Profit-related activities conducted across international boundaries.
International management
Process of planning, leading, organising and controlling in organisations engaged in international business.
These initial definitions are on Page 692.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

4. NATURE OF INTERNATIONAL MANAGEMENT
MULTINATIONAL CORPORATION (MNC)
Organisations engaging in international management vary in size and the extent that their business activities cross international boundaries.
It is argued that organisations must adopt a global view of planning and other activities. By viewing the whole world as their operating area, managers can tap into world-wide markets and be active where conditions support organisational goals. This means managers must grasp international management issues firmly.
The text indicates that an arbitrary percentage (25% of sales or income from foreign sources) distinguishes MNCs from other business types.
Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

5. NATURE OF INTERNATIONAL MANAGEMENT
Orientations towards international management
Ethnocentric
Polycentric
Regiocentric
Geocentric
Organisations engaging in international management vary in size and extent that their business activities cross national boundaries. Multinational corporations (MNC) engage in production or service activities through affiliates in other countries, controlling their policies and managing from a global perspective. With this perspective, top managers allocate resources and coordinate activities to take the best advantage of business conditions.
The orientations towards international management are: (also presented in the next slide) -
Ethnocentric; Home country
Polycentric: Host country
Regiocentric: Geographic region
Geocentric: Global view
Further discussion can be found on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

6. NATURE OF INTERNATIONAL MANAGEMENT
Ethnocentric
(home-country)
orientation
Polycentric
(host-country)
orientation
Regiocentric
(regional)
orientation
Geocentric
(world)
orientation
From the previous slide… Top-level managers in firms expanding internationally (particularly in MNC’s) take one of four orientations about how much operating methods are influenced by headquarters or by members in other parts of the world. The home country is where an organisation’s headquarters are located and a host country is a foreign country that the home country does business in.
Further discussion can be found on pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

7. ASSESSING THE INTERNATIONAL ENVIRONMENT
Environmental elements
Economic
Legal-political
Sociocultural
Technological
While international management opens great opportunities, the challenge becomes trying to understand a broader set of environmental factors than met in a strictly domestic business.
The idea of a general environment helps us to understand the nature of international management.
Further and more detailed discussion can be found on Pages of the text. However, the four environmnetal elements listed above are discussed separately in following slides.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

8. ASSESSING THE INTERNATIONAL ENVIRONMENT
Economic element:
Developed countries
High economic and industrial development
Less developed countries (LDCs)
Low economic, industrial development
Newly industrialised countries
Emerging LDCs
Balance of trade
Exchange rate
MNC’s do not necessarily operate across the world. In fact about 95% of MNC’s are based in developed countries, with about 75% of foreign investment channelled back to developed countries. However, the rising prosperity of LDC’s has great potential for market expansion.
These concepts will be familiar to economics students - they are not covered in detail here, but merely give the general background which needs to be considered when doing business internationally. This continues in the next slide.
Further discussion can be found on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

9. ASSESSING THE INTERNATIONAL ENVIRONMENT
Less developed
countries (LDCs)
Developed countries
Newly industrialised
countries (NICs)
Exchange
rate
Economic
element
Follows on from the previous slide. Pages
Infrastructure
Balance of
trade
Balance of
payments
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

10. ASSESSING THE INTERNATIONAL ENVIRONMENT
Legal-political element:
Political risk
Expropriation
Indigenisation laws
Tariffs
Import quotas
Administrative protections
Both legal and political conditions affect a firm’s ability to conduct business in other countries. Considerations include level of political risk of operating in a country, and governmental trade barriers. Therefore corporations must assess the political risk of setting up in a given country.
Also continues on the next slide.
Further discussion can be found on Page 696.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

11. ASSESSING THE INTERNATIONAL ENVIRONMENT
Expropriation
Political risk
Legal-political
element
Indigenisation
laws
Page 696.
Tariffs
Administrative
protections
Import
quotas
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

12. ASSESSING THE INTERNATIONAL ENVIRONMENT
Sociocultural element:
Power distance
Uncertainty avoidance
Individualism–collectivism
Achievement–nurturing orientation
Long-term orientation
Short-term orientation
The sociocultural element includes attitudes, values, norms, beliefs, behaviours and associated demographic trends characteristic of a geographic area. Comparing people in different nations, it is common to speak of cultural differences.
Again, the following slide allows brief discussion of the listed aspects one by one.
Further discussion can be found on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

13. ASSESSING THE INTERNATIONAL ENVIRONMENT
Power distance
Cultural differences
Sociocultural
element
Individualism–
collectivism
Achievement–
nurturing
orientation
Pages
Short-term
orientation
Long-term
orientation
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

14. ASSESSING THE INTERNATIONAL ENVIRONMENT
Technological element:
Technological transfer
Transmission of technology from those who possess it to those who do not.
The technological element is important in the international environment as technology levels in various countries affect market nature and companies’ ability to do business. In fact much technology transfer takes place during international business. Technology can be goods or processes such as components or machinery, or intangible know-how, such as advanced road-building techniques.
Further discussion can be found on Page 697.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

15. COMPETITIVE ADVANTAGE OF NATIONS
Concept that environmental elements within a nation can foster innovation in certain industries, thereby increasing prospects for the success of home-based companies operating internationally.
(Prof. Michael Porter, 1990)
In considering the impact of environmental forces on organisations,Professor Michael E. Porter (1990) developed the idea of the competitive advantage of nations. Firms that gain a competitive edge provide positive national prosperity consequences as well. Also, innovation’s incidence among companies in particular industries is influenced by national characteristics where they are based.
The “diamond of national advantage” will be discussed in the next two slides.
Further discussion can be found on Page 698 of text.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

16. COMPETITIVE ADVANTAGE OF NATIONS
Diamond of national advantage:
Factor conditions
Demand conditions
Related and supporting industries
Firm strategy, structure & rivalry
To explain why some firms consistently innovate, Professor Michael Porter identifies four national attributes which alone and together set the “diamond of national advantage”.
This continued in the next slide as a graphic.
Further discussion can be found on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

17. COMPETITIVE ADVANTAGE OF NATIONS
Firm strategy,
structure and
rivalry
Factor
conditions
Demand
conditions
Figure 18.1 on Page 699.
Porter’s Determinants of national competitive advantage.
Factor conditions - necessary production components… labour supply, infrastructure.
Demand conditions - domestic demand characteristics.
Related and supporting industries - suppliers
Firm structure etc. - major national conditions on how firms are created and run.
Related and
supporting
industries
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

18. GAUGING STRATEGIC ISSUES
Methods of international entry
Exporting
Licensing
Strategic alliances
Wholly-owned subsidiaries
Multinational corporation strategies
World-wide integration
National responsiveness
Regional responsiveness
Multifocal emphasis
While most international business firms use long-range planning, initial efforts at operating in other countries focus on narrower goals than becoming a fully-fledged MNC. To match these initial efforts, a variety of methods of international entry are utilised. The methods of national entry listed are in increasing order of level of commitment or serieousness of international involvement.
Further discussion can be found on Pages
As firms expand internationally they must develop suitable strategies. MNC’s, and to a lesser extent other companies operating internationally, must weigh two factors: the need to make optimum global economic decisions, and the need to be responsive to host-country differences. Thus MNC’s have four strategy options.
The strategies are covered in more detail on Page 702.
The listed methods and strategies are set out graphically in the next slide to allow more detailed discussion.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

19. GAUGING STRATEGIC ISSUES
Globalisation
Exporting
Multinational corporation strategies
Methods of
international
entry
National
responsiveness
Licensing
Strategic
alliance
Regional
responsiveness
Methods: Pages
Strategies: Page 702.
Wholly-
owned
subsidiary
Multifocal
emphasis
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

20. ORGANISING INTERNATIONAL BUSINESS
World-wide functional divisions
World-wide product divisions
International divisions
Geographic regions
Global matrix
Networked structure
As well as strategic issues, managers in international business must choose an organisation structure appropriate to the firm’s global pursuits. The tendency is to adopt one of five structure types.
Students are reminded of the general discussions of types of organisational structure in Chapter 9, and strategic organisation design in Chapter 10. We now relate those concepts to the international context.
Further discussion can be found beginning on Page 703.
The text also has some generic organisation charts (Figures , 18.4 and 18.5) on Pages to show how functional, product division, international division and geographic region structures could work internationally. A global matrix structure is shown in Figure 18.6 on Page 706.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

21. ADAPTING TO CULTURAL DIFFERENCES
Managing international HRM:
Assignment policies
Recruitment
Selection and training
Repatriation
Adjusting leadership styles
To fit cultural factors in other countries
Power-distance differences
Structural issues are important. However, another effective international management element is adapting to different cultures.
Issues include international HRM and leadership adjustment. Researchers in international management argue that firms operating internationally must emphasise strategic HRM for a competitive international edge.
Further of discussion of assignment policies can be found on Pages
Leadership styles for operating internationally are discussed on Pages
The next slide presents the above concepts in a graphic to allow further discussion.
A detailed discussion of how Maori culture influences business and government activities in New Zealand is given in Pages
Note: Hofstede’s dimensions of national culture are discussed only very briefly on Page 710, but they can provide a useful framework for thinking about differences between cultures in various countries.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

22. ADAPTING TO CULTURAL DIFFERENCES
Assignment policies
Managing
international
human
resources
Recruitment
Repatriation
Adjusting
leadership
styles
See notes on previous slide.
Pages
Selection & training
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

23. SOCIAL RESPONSIBILITY & ETHICAL ISSUES
International social responsibility
Benefit versus harm of MNC’s in LDC’s
Questionable payments issue
Business payments raising significant ethical questions of right and wrong either in the host country or in other nations
Students are reminded or our coverage of social responsibility issues in Chapter 4.
Many social responsibility issues compound when a company has much international business. This is because of increased social stakeholders (customers and communities in different countries) especially if a business uses subsidiaries in other countries.
A pervasive international ethical issue involves questionable payments. These may take the form of political payments, extortion, commissions or bribes (set out in more detail in the next slide).
Further discussion can be found on Page 714.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

24. SOCIAL RESPONSIBILITY & ETHICAL ISSUES
political
payments
Questionable payment
issues
bribes
extortion
International
social
responsibility
sales
commissions
Follows on from previous slide.
Page 714.
expediting
payments
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

25. LECTURE SUMMARY Nature of international management
Orientations: ethnocentric, polycentric, geocentric, regiocentric
Assessing the international environment
Environmental elements
Competitive advantage of nations
Gauging strategic issues
Methods of international entry: exporting, licensing, strategic alliances, subsidiaries
Multinational strategies: world-wide integration, national or regional responsiveness, multifocal.
The detailed Chapter summary is on Page 717.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

26. LECTURE SUMMARY Organising international business
Divisions: functional, product, international
geographic, global matrix, network structure
MNCs becoming smaller as more firms enter international business
Adapting to cultural differences
International human resource management
Adjusting leadership styles - different cultures
Social responsibility and ethical issues
International social responsibility - value conflicts
Questionable payments
Page 717.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)