Chapter 4 Managing in a Global Environment 2016

A Borderless World Organizations and managers are not isolated from international forces v. Trade barriers have fallen v. Communication is faster, cheaper v. Consumer tastes converge Organizations address the needs and desires that transcend national boundries © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2

4. 1 Ranking of Six Countries on the Globalization Index © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3

Global Mindset v Ability of managers to appreciate and influence individuals, groups, organizations, and systems that represent: v. Different social, cultural, political, institutional, intellectual, and psychological characteristics v Develop by engaging with people from different cultures © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4

4. 2 The Dimensions of a Global Mindset © 2016 Cengage Learning. All Rights

Changing International Landscape v China Inc. v. China manufactures many products for U. S. companies v. China is also a growing consumer market v. Regulations and government policies make doing business in China a challenge © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6

Changing International Landscape v India is a service giant, growing in software design and engineering v Brazil is a country that is gaining the attention of American managers © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7

The Impact of Multinational Corporations (MNC) v The size and volume of international business is LARGE v. Companies have revenue = GDP of small country v. Move assets from country to country v 25% or more of its profit comes from outside parent country v MNC is managed as an integrated whole © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8

The Impact of Multinational Corporations (MNC) v v v Controlled by one management authority MNC managers must have a global perspective Ethnocentric companies – place emphasis on their home countries Polycentric companies – oriented toward the markets of individual foreign host countries Geocentric companies – world oriented and favor no specific country © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9

The Globalization Backlash v 68% of Americans say other countries benefit the most from free trade v 53% believe free trade has hurt U. S. v The United States’ primary concern is the loss of jobs v Another trouble spot is how overseas contractors and suppliers treat employees © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10

The Globalization Backlash v Business leaders insist that economic benefits flow back to the U. S. economy v. Lower prices and expanded markets v. Increased profits and funds for innovation v But American shoppers say they would pay higher prices to keep down foreign competition © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11

Serving the Bottom of the Pyramid (BOP) v An approach for multinationals to do good v Corporations can alleviate problems and make large profits by selling to the world’s poor v There are more than 4 billion people at the lowest level of the economic pyramid v Many companies are adopting BOP strategies © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12

4. 3 Strategies for Entering the International Arena © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13

International Market Strategies v Exporting – transferring products for sale to foreign countries v Outsourcing – also called offshoring, work activities are done in countries with cheap labor © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14

International Market Strategies v Licensing – enabling a company to produce and market a product in another country v Franchising is licensing that provides a complete package of materials and services v Direct investing – high level of involvement, company manages and controls assets v Joint venture and other types of partnerships are common – wholly owned subsidiary, greenfield venture © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15

The International Business Environment v Planning, organizing, leading, and controlling in multiple countries can be challenging v. It took Mc. Donald’s a year to figure out that Hindus in India do not eat beef v. In Africa, the labels on bottles include pictures to aid illiterate consumers v Managers must be mindful in the global marketplace © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16

4. 4 Key Factors in International Environment © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17

The Economic Environment v Economic development – Countries are categorized as either developed or developing based on per capita income v. Government policies v. Market size v. Financial markets v. Infrastructure © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18

4. 4 Country Competitiveness Comparison 2011– 2012 © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19

Economic Environment v Economic interdependence The current economic crisis has highlighted how interconnected economies are around the world © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20

4. 6 How Countries are Bearing the Economic Crisis © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21

The Legal-Political Environment Political risk is defined as the risk of lost assets, earning power, or managerial control v Political instability includes riots, revolutions, civil disorders, and frequent changes in government v © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22

The Sociocultural Environment The values and behaviors that govern U. S. business do not always translate v Social values v Communication differences © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23

Hofstede’s Value Dimensions ü Power distance ü Uncertainty avoidance ü Individualism and collectivism ü Masculinity and femininity © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24

4. 7 Rank Orderings of Ten Countries Along Four Dimensions of National Value Systems © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25

GLOBE Project Value Dimensions v v v Assertiveness Future orientation Gender differentiation Performance orientation Humane orientation © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26

4. 8 Examples of Country Rankings on Selected GLOBE Value Dimensions © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27

4. 9 High-Context and Low-Context Cultures © 2016 Cengage Learning. All Rights Reserved. May

International Trade Alliances v General Agreement on Tariff and Trade (GATT) v 23 nations in 1947, a set of rules for fair trade v World Trade Organization (WTO) v. Maturation of GATT into permanent global institute © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29

International Trade Alliances v European Union v 1957 alliance to improve economic and social conditions among members; evolved to 28 -nation European Union v North American Free Trade Agreement (NAFTA) v. Merged the United States, Canada, and Mexico into a single market © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30