1. Management 11e Griffin
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PowerPoint Presentation by Charlie Cook The University of West Alabama
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2. Management 11e Griffin
Describe the nature of international business, including its meaning, recent trends, management of globalization, and competition in a global market.
Discuss the structure of the global economy and describe the GATT and the WTO.
Identify and discuss the environmental challenges inherent in international management.
Describe the basic issues involved in competing in a global economy, including organization size and the management challenges in a global economy.
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3. The Nature of International Business
Management 11e Griffin
The Nature of International Business
Globalization means:
Everyone is part of the global village.
All organizations are affected by competition in the global economy.
Firms are reshaping themselves for international competition and discovering new ways to exploit markets.
Failure to take a global perspective is one of the biggest mistakes managers can make.
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4. 5.1 Levels of International Business Activity
Management 11e Griffin
5.1 Levels of International Business Activity
Domestic Business
International Business
Multinational Business
Global Business
Level of International Activity
Lowest
Highest
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5. The Meaning of International Business
Management 11e Griffin
The Meaning of International Business
Domestic Business
acquires all of its resources and sells all of its products or services within a single country.
International Business
is based in a single country yet acquires a meaningful share of its resources and/or revenues from other countries.
Multinational Business
transcends national boundaries and buys raw materials, borrows money, and manufactures and sells its products in a world-wide marketplace.
Global Business
transcends national boundaries and is not committed to a single home country.
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6. Trends in International Business
Management 11e Griffin
Trends in International Business
Decreasing Isolation from Competition
Increasing Globalization of Markets
Economic Recovery and Development
Trends in International Business
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7. Managing the Process of Globalization
Management 11e Griffin
Managing the Process of Globalization
Exporting and Importing
Licensing
Strategic Alliance and Joint Venture
Direct Investment
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8. Management 11e Griffin
5.1 Advantages and Disadvantages of Different Approaches to Internationalization
Approach to Internationalization
Advantages
Disadvantages
Importing or Exporting
Small cash outlay
Little risk
No adaptation necessary
Tariffs and taxes
High transportation costs
Government restrictions
Licensing
Increased profitability
Extended profitability
Inflexibility
Competition
Strategic Alliances and Joint Ventures
Quick market entry
Access to materials and technology
Shared ownership (limits control and profits)
Direct Investment
Enhanced control
Existing infrastructure
Complexity
Greater economic and political risk
Greater uncertainty
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9. The Structure of the Global Economy
Management 11e Griffin
The Structure of the Global Economy
Mature Market Economies and Systems
Employ market factors in allocating resources.
Are based on the private ownership of business
Well-developed infrastructures and individual wealth.
Trade Agreements
North American Free Trade Agreement (NAFTA) covering the United States, Mexico, and Canada.
European Union (EU) of western European countries.
Pacific Asia countries in Southeast Asia.
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10. 5.2 The Global Economy Management 11e Griffin
The global economy is dominated by three relatively mature market systems
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11. Market Economies and Systems
Management 11e Griffin
Market Economies and Systems
High Potential or High Growth Economies
Underdeveloped and immature markets with a weak industrial base, weak currency, and poor consumers
People’s Republic of China, India, Vietnam, Brazil, Russia
Challenges to market development:
Lack of consumers with personal wealth
Underdeveloped infrastructure for support operations
Unfamiliarity with market economy mechanisms
The need for large investments in distribution systems
Unfavorable policy changes distorting value of investments
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12. Market Economies and Systems (cont’d)
Management 11e Griffin
Market Economies and Systems (cont’d)
Other Economies
Defy classification due to their possession of critical and valuable resources or other social or political factors which distort their internal economies and markets.
Challenges of other economies
Political instability
Cultural differences
Ethnic violence
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13. The Role of the GATT and the WTO
Management 11e Griffin
The Role of the GATT and the WTO
General Agreement on Tariffs and Trade (GATT)
Promoted international trade by reducing trade barriers and making it easier for all nations to compete.
Most Favored Nation (MFN) principle
The World Trade Organization (WTO)
Organization (replaced GATT) with the goals of:
Promoting trade flows by encouraging nations to adopt nondiscriminatory and predictable trade policies
Reducing trade barriers through multilateral negotiations
Establishing impartial procedures for resolving trade disputes among its members
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14. 5.3 Environmental Challenges of International Management
Management 11e Griffin
5.3 Environmental Challenges of International Management
Economic Environment
Economic system Natural resources Infrastructure
Political and Legal Environment
Government stability Property rights Trade incentives, relations, and controls
Cultural Environment
Values, symbols, beliefs, language, individual behaviors
International Management Functions
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15. Controls on International Trade
Management 11e Griffin
Controls on International Trade
Tariffs
Export restraint agreements
Quotas
Subsidies and “buy national”
Key Trade Control Concepts
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16. Domestic Controls on International Trade
Management 11e Griffin
Domestic Controls on International Trade
Key Concepts
Tariffs
Taxes on goods shipped across national boundaries.
Quotas
Limits on the number or value of goods that can be traded as exports or imports.
Export Restraint Agreements
Voluntary limits on the volume or value of goods exported to or imported from another country.
Subsidies and “Buy National” Laws
Protection for domestic businesses from foreign competition.
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17. The Cultural Environment
Management 11e Griffin
The Cultural Environment
Individual differences across cultures:
Social orientation
A person’s beliefs about the relative importance of the individual versus groups to which that person belongs.
Power orientation
The beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations.
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18. 5.4a Individual Differences Across Cultures
Management 11e Griffin
5.4a Individual Differences Across Cultures
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19. 5.4b Individual Differences Across Cultures
Management 11e Griffin
5.4b Individual Differences Across Cultures
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20. 5.4c Individual Differences Across Cultures
Management 11e Griffin
5.4c Individual Differences Across Cultures
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21. Competing in a Global Economy
Management 11e Griffin
Competing in a Global Economy
Globalization and Organization Size
Multinational Corporations (MNCs)
Adopt a global perspective and compete in the global marketplace.
Medium-Size Businesses
Remain primarily domestic organizations that may buy and sell abroad through trade specialists and compete with foreign companies in local markets.
Small Businesses
Participate in global markets when they serve as local suppliers for MNCs.
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22. Management Challenges in a Global Economy
Management 11e Griffin
Management Challenges in a Global Economy
Planning
Understanding of both environmental issues and competitive issues.
Organizing
Addressing issues of creating and managing operations on a world-wide scale.
Leading
Learning to interact with and motivate persons of different cultural, social, and economics backgrounds.
Controlling
Integrating operations across time-zones, cultural factors, and varying communication methods.
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