1. GLOBAL MANAGEMENT Chapter 6 MGMT 370

2. GLOBAL ENVIRONMENT The global economy is dominated by countries in three regions: North America, Western Europe, and Asia. The global economy is dominated by countries in three regions: North America, Western Europe, and Asia. Other developing countries and regions represent important areas for economic growth Other developing countries and regions represent important areas for economic growth

3. GLOBAL ECONOMY

4. GLOBAL MANAGEMENT Global economy and globalization Global economy and globalization International management International management Global managers Global managers

5. International Business Forms Market Entry Strategies Market Entry Strategies Global sourcingGlobal sourcing OffshoringOffshoring Exporting and ImportingExporting and Importing Licensing agreementLicensing agreement FranchisingFranchising

6. International Business Forms Direct Investment Strategies Direct Investment Strategies Joint venturesJoint ventures Foreign subsidiaryForeign subsidiary

7. Organizational Models

8. Multinational model Multinational model consists of the subsidiaries in each country in which a company does business, with ultimate control exercised by the parent company.consists of the subsidiaries in each country in which a company does business, with ultimate control exercised by the parent company. Global model Global model consisting of a company’s overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operationsconsisting of a company’s overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations

9. Managing Across Borders Expatriates Expatriates Parent-company nationals who are sent to work at a foreign subsidiaryParent-company nationals who are sent to work at a foreign subsidiary Host-country nationals Host-country nationals Natives of the country where an overseas subsidiary is locatedNatives of the country where an overseas subsidiary is located Third-country nationals Third-country nationals Natives of a country other than the home country or the host country of an overseas subsidiary.Natives of a country other than the home country or the host country of an overseas subsidiary.

10. Managing Globally 15% of all employee transfers are to international locations 15% of all employee transfers are to international locations Failure rate ranges from 20%-70% Failure rate ranges from 20%-70% Failure rate Failure rate the number of expatriate managers of an overseas operation who come home earlythe number of expatriate managers of an overseas operation who come home early Communication is key to reducing the failure rateCommunication is key to reducing the failure rate

11. Identifying International Executives

12. How to Prevent Failed Global Assignments

13. Organizational Models Transnational model Transnational model characterized by centralizing certain functions in locations that best achieve cost economiescharacterized by centralizing certain functions in locations that best achieve cost economies basing other functions in the company’s national subsidiaries to facilitate greater local responsivenessbasing other functions in the company’s national subsidiaries to facilitate greater local responsiveness fostering communication among subsidiaries to permit transfer of technological expertise and skills.fostering communication among subsidiaries to permit transfer of technological expertise and skills.

14. Comparison of Entry Modes

15. Advantages of exporting: Provides scale economies by avoiding the costs of manufacturing in other countries Provides scale economies by avoiding the costs of manufacturing in other countries Consistent with a pure global strategy Consistent with a pure global strategy

16. Organizational Models International licensing International licensing an arrangement by which a licensee in another country buys the rights to manufacture a company’s product in its own country for a negotiated fee (typically, royalty payments on the number of units sold).an arrangement by which a licensee in another country buys the rights to manufacture a company’s product in its own country for a negotiated fee (typically, royalty payments on the number of units sold).

17. Global Organizations Ethical Issues Ethical Issues CorruptionCorruption SweatshopsSweatshops Child laborChild labor SustainabilitySustainability

18. Regional Economic Alliances European Union European Union Europe is integrating economically to form the biggest market in the worldEurope is integrating economically to form the biggest market in the world Certain structural issues within Europe need to be corrected for the EU to function effectively.Certain structural issues within Europe need to be corrected for the EU to function effectively. North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA) An economic pact that combined the economies of the United States, Canada, and Mexico into one of the world’s largest trading blocAn economic pact that combined the economies of the United States, Canada, and Mexico into one of the world’s largest trading bloc

19. U.S. Trading Partners Based on Total Imports and Exports

20. GLOBAL ENVIRONMENT Legal Environment Legal Environment World Trade Organization (WTO)World Trade Organization (WTO) Most favored nationMost favored nation ProtectionismProtectionism

21. CONSEQUENCES OF A GLOBAL ECONOMY 1. Expansion of international trade 2. Foreign direct investment (FDI) is playing an ever-increasing role in the global economy 3. Imports are penetrating deeper into the world’s largest economies 4. Companies are finding their home markets under attack from foreign competitors

22. Growing Proportion of Goods Being Exported

23. Consequences of a Global Economy Opportunities are greater Opportunities are greater Environment is more complex and competitive Environment is more complex and competitive

24. Relative Growth in World Merchandise Trade

25. Culture and Global Diversity Ethnocentrism Ethnocentrism Culture shock Culture shock Cultural Intelligence Cultural Intelligence Culture types Culture types Low-context vs. high-contextLow-context vs. high-context Monochronic vs. polychronicMonochronic vs. polychronic ProxemicsProxemics

26. Values and Societal Cultures Power distance Power distance Uncertainty avoidance Uncertainty avoidance Individualism vs. Collectivism Individualism vs. Collectivism Masculinity vs. Femininity Masculinity vs. Femininity Short vs. Long-term Focus Short vs. Long-term Focus

27. PROJECT GLOBE ON CULTURE Power distance Power distance Uncertainty avoidance Uncertainty avoidance Gender egalitarianism Gender egalitarianism Future orientation Future orientation Institutional collectivism Institutional collectivism In-group collectivism In-group collectivism Assertiveness Assertiveness Performance orientation Performance orientation Humane orientation Humane orientation

28. Understanding Cultural Issues Inpatriate Inpatriate A foreign national brought in to work at the parent company.A foreign national brought in to work at the parent company. Regardless of nationality or religion, most people embrace a set of five core values: compassion, fairness, honesty, responsibility, and respect for others. Regardless of nationality or religion, most people embrace a set of five core values: compassion, fairness, honesty, responsibility, and respect for others. These values lie at the heart of human rights issues and seem to transcend other differences among Americans, Europeans, and AsiansThese values lie at the heart of human rights issues and seem to transcend other differences among Americans, Europeans, and Asians

29. MANAGING ACROSS CULTURES Comparative management Comparative management Hofstede studies Hofstede studies Are management theories universal?Are management theories universal? Global organizational learningGlobal organizational learning