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2. The International Business Environment
International management, management of business operations in more than one country
The fundamental tasks of business management do not change
The basic management functions are the same
Greater difficulties and risks when performing these management functions 4

3. Four Stages of Globalization
Domestic stage:
market potential is limited to the home country
production and marketing facilities located at home
International stage:
exports increase
company usually adopts a multi-domestic approach
Multinational stage:
marketing and production facilities located in many countries
more than 1/3 of its sales outside the home country
Global (or stateless) stage:
making sales and acquiring resources in whatever country offers the best deal
ownership, control, and top management tend to be dispersed

4. Stage of Globalization
1. Domestic
2. International
3. Multinational
4. Global
Strategic Orientation
Domestically Oriented
Export- Oriented multi-domestic
Multinational
Global
Stage of Development
Initial foreign involvement
Competitive positioning
Explosion of international operations
Global
Cultural Sensitivity
Of little importance
Very important
Somewhat important
Critically important
Manager Assumptions
“One best way”
“Many good ways”
“The least-cost way”
“Many good ways”
SOURCE: Based on Nancy J. Adler, International Dimensions of Organizational Behavior, 4th ed. (Cincinnati, Ohio: South-Western, 2002), 8-9.

5. Economic Environment Issues
Economic development
Infrastructure
Resource and product markets
Exchange rates
Inflation
Interest rates
Economic growth

6. Economic Development
Countries can be categorized as either “developing” or “developed”
Criterion used to classify is per capita income
Developing countries have low per capita incomes
LDCs are generally located in Asia, Africa, and South America
Developed countries include North America, Europe, and Japan
Driving global growth is Asia, Eastern Europe, and Latin America

7. The Legal-Political Concerns
Political Risk
Loss of assets
Loss of earning power
Loss of managerial control
Government takeovers
Acts of violence
Laws and Regulations
Libel statues
Consumer protection
Information and labeling
Employment
safety
Wages
International
Organization
Political Instability
Riots
Revolutions
Civil disorders
Changes in government

8. International Trade Agreements
Most visible changes in legal-political factors grow out of international trade agreements:
GATT
WTO EU
NAFTA
“The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The goal is to help producers of goods and services, exporters, and importers conduct their business.”

9. International Environment
General Agreement on Tariffs and Trade (GATT)
Signed by 23 nations in 1947 as a set or rules
Ensured nondiscrimination, clear procedures, negotiation of disputes, and participation of lesser developed countries in international trade
Today, 100 member countries abide by the rules
Primary tools GATT uses on tariff concessions, countries agree to limit level of tariffs on imports from other GATT members
Most favored nation clause

10. WTO
Goal, is to guide and sometimes urge the nations of the world toward free trade and open markets
Encompasses GATT and all of its agreements
Has legal authority to arbitrate disputes on 400 trade issues
Partly responsible for backlash against global trade

11. European Union
Formed in 1958 to improve economic and social conditions
Has 15-nation alliance
Initiative Europe ’92 called for creation of open markets for Europe’s 340 million consumers
Observers fear that the EU will become a trade barrier
EU’s monetary revolution, introduction of the Euro
Euro is the single European currency that replaced 11 national currencies
Eventually replace up to 15 domestic currencies

12. Fifteen Nations of The EU

13. North American Free Trade Agreement
Went into effect on January 1, 1994
Merged the United States, Canada, and Mexico with more that 360 million consumers
Breaks down tariffs and trade restrictions on most agriculture and manufactured products
August 12, 1992 agreements in number of key areas include: agriculture, autos, transport, & intellectual property

14. Four Dimensions of National Value System

15. International Cultural Influences
Language
Religion
Attitudes
Social Organization
Education

16. Strategies for Entering International Markets
High
Greenfield
Venture
Acquisition
Joint Venture
Ownership of Foreign Operations
Franchising
Licensing
Exporting
Low
Low
Cost to Enter Foreign Operations
High

17. Managing in a Global Environment
Managers must be sensitive to cultural subtleties in:
leadership
decision making
motivation
control
must be culturally flexible and easily adapt to new situations
cannot be ethnocentric
Culture Shock may lead to frustration and anxiety