1. Managing in a
Global Environment

2. 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.

3. Why the Need for a Global Strategy
Business is becoming a unified global field.
For many, domestic markets are saturated. 4

4. Principles of International Business
Always show respect and listen, don’t be in a hurry.
Try to gain an appreciation for the differences between Hofsede’s “masculine” and “feminine” cultures.
Do not feel your way is the best way.
Emphasize points of agreement.
Discern the perceived definitions of words.
Save face as well as giving face.
Don’t embarrass anyone in front of others
Know or take someone who knows the culture.
Understand that leadership may mean different things to different countries.
Don’t lose your temper.
Avoid clique-building.
Always show respect.
Leave the American task oriented, fast paced style at home
Eliminate stereotypes.
Be sensitive to the difference between low context culture and high context cultures
Learn to tolerate a high degree of unpredictability.

5. Key Factors in the International Environment
Legal-Political
Political risk
Laws, restrictions
Government takeovers
Tariffs, quotas, taxes
Terrorism, political instability
Key Factors in the International Environment
Economic
Economic development
Resource & product markets
Per capita income
Infrastructure
Exchange rates
Economic conditions
Organization
Sociocultural
Social values, beliefs
Language
Religion (objects, taboos, holidays)
Kinship patterns
Formal education, literacy
Time orientation

6. The Economic Environment
Includes such factors as:
economic development.
Infrastructure.
resource and product markets.
exchange rates.
inflation, interest rates, and economic growth.

7. Legal-Political Environment
Political Risk
risk of loss of assets, earning power, or managerial control.
Political Instability
includes government takeovers, civil disorders.
Laws and Regulations
laws and regulations differ from country to country.
most visible changes in legal-political factors grow out of international trade agreements (GATT, EU, NAFTA).

8. GATT 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 successor, WTO.
tariff concessions, countries agree to limit level of tariffs on imports from other members.
most favored nation clause.
Overall goal:
closer relationships among member nations.
help operate the global marketplace more efficiently.

9. European Union European Union (EU)
Formed in 1958 to improve economic and social conditions.
Has 15-nation alliance.
EU’s monetary revolution, introduction of the Euro.
Euro is the single European currency that replaced 11 national currencies.

10. Fifteen Nations Within the EU

11. North American Free Trade Agreement
North American Free Trade Agreement (NAFTA)
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 and manufactured products.

12. Trade Alliances: Promise or Pitfall?
Will trade blocs evolve into three powerful trading blocs?
Will trade blocs lead to economic warfare?
Only the future will answer these questions.
Will stateless corporations bypass trading zones?

13. Sociocultural Environment
Includes shared:
knowledge.
beliefs
values
common modes of behavior
common ways of thinking

14. Dimensions of Social Value Systems
Power distance.
Uncertainty avoidance.
Individualism & collectivism.
Masculinity/femininity.
Long term versus short term orientation.

15. Additional Cultural Influences for International Organizations Consideration
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 Cross Culturally
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

18. Two Keys When Operating Internationally
Personal learning.
Personal growth.