1. Managing in a Global Environment
Chapter 4
Managing in a Global Environment

2. A Borderless World
Organizations and managers are not isolated from international forces
Trade barriers have fallen
Communication is faster, cheaper
Consumer tastes converge
Organizations address the needs and desires that transcend national boundries

3. 4.1 Ranking of Six Countries on the Globalization Index

4. Global Mindset
Ability of managers to appreciate and influence individuals, groups, organizations, and systems that represent:
Different social, cultural, political, institutional, intellectual, and psychological characteristics
Develop by engaging with people from different cultures

5. 4.2 The Dimensions of a Global Mindset

6. Changing International Landscape
China Inc.
China manufactures many products for U.S. companies
China is also a growing consumer market
Regulations and government policies make doing business in China a challenge

7. Changing International Landscape
India is a service giant, growing in software design and engineering
Brazil is a country that is gaining the attention of American managers

8. The Impact of Multinational Corporations (MNC)
The size and volume of international business is LARGE
Companies have revenue = GDP of small country
Move assets from country to country
25% or more of its profit comes from outside parent country
MNC is managed as an integrated whole

9. The Impact of Multinational Corporations (MNC)
Controlled by one management authority
MNC managers must have a global perspective
Ethnocentric companies – place emphasis on their home countries
Polycentric companies – oriented toward the markets of individual foreign host countries
Geocentric companies – world oriented and favor no specific country

10. The Globalization Backlash
68% of Americans say other countries benefit the most from free trade
53% believe free trade has hurt U.S.
The United States’ primary concern is the loss of jobs
Another trouble spot is how overseas contractors and suppliers treat employees

11. The Globalization Backlash
Business leaders insist that economic benefits flow back to the U.S. economy
Lower prices and expanded markets
Increased profits and funds for innovation
But American shoppers say they would pay higher prices to keep down foreign competition

12. Serving the Bottom of the Pyramid (BOP)
An approach for multinationals to do good
Corporations can alleviate problems and make large profits by selling to the world’s poor
There are more than 4 billion people at the lowest level of the economic pyramid
Many companies are adopting BOP strategies

13. 4.3 Strategies for Entering the International Arena

14. International Market Strategies
Exporting – transferring products for sale to foreign countries
Outsourcing – also called offshoring, work activities are done in countries with cheap labor

15. International Market Strategies
Licensing – enabling a company to produce and market a product in another country
Franchising is licensing that provides a complete package of materials and services
Direct investing – high level of involvement, company manages and controls assets
Joint venture and other types of partnerships are common – wholly owned subsidiary, greenfield venture

16. The International Business Environment
Planning, organizing, leading, and controlling in multiple countries can be challenging
It took McDonald’s a year to figure out that Hindus in India do not eat beef
In Africa, the labels on bottles include pictures to aid illiterate consumers
Managers must be mindful in the global marketplace

17. 4.4 Key Factors in International Environment

18. The Economic Environment
Economic development – Countries are categorized as either developed or developing based on per capita income
Government policies
Market size
Financial markets
Infrastructure

19. 4.4 Country Competitiveness Comparison 2011–2012

20. Economic Environment Economic interdependence
The current economic crisis has highlighted how interconnected economies are around the world

21. 4.6 How Countries are Bearing the Economic Crisis

22. The Legal-Political Environment
Political risk is defined as the risk of lost assets, earning power, or managerial control
Political instability includes riots, revolutions, civil disorders, and frequent changes in government

23. The Sociocultural Environment
The values and behaviors that govern U.S. business do not always translate
Social values
Communication differences

24. Hofstede’s Value Dimensions
Power distance
Uncertainty avoidance
Individualism and collectivism
Masculinity and femininity

25. 4.7 Rank Orderings of Ten Countries Along Four Dimensions of National Value Systems

26. GLOBE Project Value Dimensions
Assertiveness
Future orientation
Gender differentiation
Performance orientation
Humane orientation

27. 4.8 Examples of Country Rankings on Selected GLOBE Value Dimensions

28. 4.9 High-Context and Low-Context Cultures

29. International Trade Alliances
General Agreement on Tariff 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

30. International Trade Alliances
European Union
1957 alliance to improve economic and social conditions among members; evolved to 28-nation European Union
North American Free Trade Agreement (NAFTA)
Merged the United States, Canada, and Mexico into a single market

31. 4.10 The Nations of the European Union