1. Management, by Williams South-Western College Publishing Copyright © 2000 Chapter 8 Global Management

2. Management, by Williams South-Western College Publishing Copyright © 2000 2 What Would You Do? McDonald’s Expanding into Eastern Europe 4Relatively poor countries 4Poor-quality produce 4Will employees work hard? 4Which country should they enter first? 4Joint ventures?

3. Management, by Williams South-Western College Publishing Copyright © 2000 3 After discussing this section, you should be able to: Learning Objectives What is Global Business? ¬describe the impact of global business on the U.S. ­discuss the trade rules and agreements that govern global trade.

4. Management, by Williams South-Western College Publishing Copyright © 2000 4 Impact of Global Business “Foreigners” Buying up American Companies American Companies are not Competitive in the World Market Americans Buying American Products

5. Management, by Williams South-Western College Publishing Copyright © 2000 5 Buying American 4Americans say they want to “Buy American” 4Country of manufacture Twhere the product is made 4Country of origin Tcompany’s home country

6. Management, by Williams South-Western College Publishing Copyright © 2000 6 Trade Rules and Agreements Tariffs & Trade Barriers Global & Regional Trade Agreements Consumer Response to Trade Barriers & Agreements

7. Management, by Williams South-Western College Publishing Copyright © 2000 7 Trade Barriers 4Tariff 4Nontariff barriers TQuotas TVoluntary export restraints TSubsidies

8. Management, by Williams South-Western College Publishing Copyright © 2000 8 Trade Agreements 4General Agreement on Tariffs & Trade (GATT) 4Regional Trading Zones TMaastricht Treaty of Europe TNAFTA TFTAA TASEAN & APEC

9. Management, by Williams South-Western College Publishing Copyright © 2000 9 GATT 4Worldwide trade agreement 4Designed to reduce and eliminate tariffs and subsidies 4Protect intellectual property

10. Management, by Williams South-Western College Publishing Copyright © 2000 10 Maastricht Treaty of Europe 4Originally, 12 (now 15) European countries 4Transform these different countries into the European Union 4Open up trade among member nations 4Create the “Euro” currency

11. Management, by Williams South-Western College Publishing Copyright © 2000 11 North American Free Trade Agreement - NAFTA 4Canada, United States, & Mexico 4Liberalizes trade among these three nations 4Eliminate tariffs and barriers

12. Management, by Williams South-Western College Publishing Copyright © 2000 12 Free Trade Area of the Americas 4Proposed agreement 4Unite 36 countries in North & South America

13. Management, by Williams South-Western College Publishing Copyright © 2000 13 Association of South East Nations Asia-Pacific Economic Cooperation 4ASEAN TIndonesia, Thailand, Philippines, Malaysia, Singapore, & Brunei 4APEC TU.S., Canada, Japan, South Korea, Australia, New Zealand, China, Hong Kong, & ASEAN members

14. Management, by Williams South-Western College Publishing Copyright © 2000 14 Consumers, Trade Barriers, & Trade Agreements 4American annual income less than many countries 4Cost of living, however, is also less here 4Open trade gives American consumers many choices

15. Management, by Williams South-Western College Publishing Copyright © 2000 15 After discussing this section, you should be able to: Learning Objectives How to Go Global? ®explain why companies choose to standardize or adapt their business procedures. ¯explain the different ways that companies can organize to do business globally.

16. Management, by Williams South-Western College Publishing Copyright © 2000 16 Consistency or Adaptation? Global consistency Local adaptation

17. Management, by Williams South-Western College Publishing Copyright © 2000 17 Back to the Future Back to the Future A Global “Walk Down the Hallway” 4Conducting global business via teleconferencing Tcheaper and less jet-lag Tcan be done via the Internet

18. Management, by Williams South-Western College Publishing Copyright © 2000 18 Forms for Global Business Exporting Cooperative Contract licensing franchise Strategic Alliances - Joint Ventures Wholly Owned Affiliates Global New Ventures

19. Management, by Williams South-Western College Publishing Copyright © 2000 19 After discussing this section, you should be able to: Learning Objectives Where to Go Global? °explain how to find a favorable business climate. ±discuss the importance of identifying and adapting to cultural differences. ²explain how to successfully prepare workers for international assignments.

20. Management, by Williams South-Western College Publishing Copyright © 2000 20 Finding the Best Business Climate Growing Markets Choosing an Office/ Manufacturing Location Minimizing Political Risk

21. Management, by Williams South-Western College Publishing Copyright © 2000 21 Growing Markets 4Purchasing Power Tcomparison of a standard set of goods and services in different countries Tmore means greater growth potential 4Degree of Global Competition Tthe number & quality of companies already in the market Tmore means less growth potential

22. Management, by Williams South-Western College Publishing Copyright © 2000 22 Choosing an Office/Manufacturing Location 4Quantity factors Twork force quality Tcompany strategy 4Quality factors Tcosts and barriers

23. Management, by Williams South-Western College Publishing Copyright © 2000 23 Minimizing Political Risks 4Political uncertainty Trisk of major changes in political regimes 4Policy uncertainty Trisk associated with changes in laws and government policies directed at businesses 4Strategies Tavoidance Tcontrol Tavoidance

24. Management, by Williams South-Western College Publishing Copyright © 2000 24 Becoming Aware of Cultural Differences - Geert Hofstede 4Power distance 4Individualism 4Short-term/Long-term orientation 4Masculinity v. femininity 4Uncertainty avoidance

25. Management, by Williams South-Western College Publishing Copyright © 2000 25 Preparing for an International Assignment Language and Cross-Cultural Training Spouse, Family, and Dual-Career Issues

26. Management, by Williams South-Western College Publishing Copyright © 2000 26 What Really Works? Cross-Cultural Training Psychological Well-Being & Self-Development 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fostering Relationships with Native Citizens 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 79% Probability of success74%

27. Management, by Williams South-Western College Publishing Copyright © 2000 27 What Really Works? (Cont’d.) Accurate Cultural Perceptions 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Rapid Adjustment to Foreign Cultures & Countries 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 74% Probability of success 74%

28. Management, by Williams South-Western College Publishing Copyright © 2000 28 What Really Works? (Cont’d.) On-the-Job Performance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 71%

29. Management, by Williams South-Western College Publishing Copyright © 2000 29 What Really Happened? What Really Happened? McDonald’s in Eastern Europe 4Buys local produce, when available 4Native workers are being trained to run the stores 4Hungary, Poland and the Czech Republic are the first countries to receive stores