1. Managing in a Global Environment
Chapter 3

2. A Borderless World
Organizations and managers are not isolated from international forces:
Trade barriers have fallen
Communication is faster, cheaper
Consumer tastes converge
The difficulties and risks of a borderless world are matched by benefits and opportunities

3. Ranking of Countries on the Globalization Index

4. Four Stages of Globalization

5. Getting Started Internationally
Global Outsourcing – also called offshoring, work activities are done in countries with cheap labor
Exporting – transferring products for sale to foreign countries, called a market entry strategy
May choose licensing or direct investing

6. Strategies for Entering International Markets

7. Many companies are going to China and India,
China Inc.
Many companies are going to China and India,
business is booming
China manufactures an ever-growing percentage of U.S. products
China represents a major market although doing business there is not easy
India is growing in software design, services & engineering
Brazil is another country gaining manager’s attention, the economy is projected to grow 6% in 2010 and there is a young vibrant population

8. The International Business Environment
Planning, organizing, leading and controlling in multiple countries can be challenging
It took McDonalds a year to figure that Hindus in India do not eat beef
In Africa, the baby food includes pictures to aid illiterate consumers
Managers must be aware to operate in the highly competitive global environment

9. Key Factors in International Environment

10. The Economic Environment
Economic Development
Countries are either developed or developing
Resource and Product Markets
Companies must evaluate the market demand for their products
Economic Interdependence
It has become more obvious that countries are connected by events across the globe

11. World Economic Forum Global Competitiveness

12. Bearing the Economic Crisis (Misery Index)

13. The Legal-Political Environment
Political risk is defined as the risk of lost assets, earning power, or managerial control. Managers must be concerned with the political instability of global markets.

14. The Sociocultural Environment
The values and behaviors that govern U.S. business do not always translate
Social Values
Communication Differences
Other Cultural Characteristics
Language, religion, social organization, education and attitudes

15. Hofstede’s Value Dimensions
Power Distance
Uncertainty Avoidance
Individualism and Collectivism
Masculinity and Femininity

16. Countries and Values

17. GLOBE Project Value Dimensions
Assertiveness
Future orientation
Uncertainty avoidance
Gender differentiation
Power distance
Social collectivism
Individual collectivism
Performance orientation
Humane orientation

18. Country Ranking on Selected GLOBE Value Dimensions

19. High-Context and Low-Context Cultures

20. Other Cultural Characteristics
Language
Religion
Social Organization
Education
Attitudes
Ethnocentrism – a tendency to regard your own culture as superior

21. Developing Cultural Intelligence
Cultural intelligence – ability to use reasoning and observation skills
Culturally flexible
Adapt to new situations
Cognitive, emotional and physical intelligence
Managers must study the language and learn

22. International Trade Alliances
General Agreement on Tariffs and Trade (GATT)
23 nations in 1947, a set of rules for fair trade
World Trade Organization (WTO)
Maturation of GATT into permanent global institute
European Union
1957 Alliance to improve economic and social conditions among members; evolved to 27-nation European Union
North American Free Trade Agreement (NAFTA)
Merged the United States, Canada and Mexico into trading bloc

23. European Union

24. China and Southeast Asia Nations

25. Serving the Bottom of the Pyramid (BOP)
Corporations can alleviate poverty and social ills by selling to the world’s poorest people
More than 4 billion people who are the lowest on the economic “pyramid”
These people have not traditionally been served
Many companies are adopting BOP strategies

26. The Globalization Backlash
53% of American believe free trade has hurt the United States
The United States’ primary concern is the loss of jobs
Business leaders insist that economic benefits flow back to the U.S. economy
Lower prices
Expanded markets
Increased profits and funds for innovation

27. An Asian View of Cultural Difference