1. Chapter 3 Managing in a Global Environment

2. The International Business Environment u Greater difficulties and risks when performing management functions - due to differences in culture, language, economies, laws, political stability, etc.

3. Multinational/Global Corporations are criticized for: Excessive profits Lack of technology transfer Lack of respect for local culture Interference with governments complain about host countries: Profit limitations Overpriced resources Foreign exchange restrictions Failure to meet contract obligations

4. 1 Getting Started Internationally u Importing/ Outsourcing (e.g., Nike) u Exporting (e.g., L.L. Bean) u Licensing (e.g., Lowenbrau) u Franchising (e.g., McDonald’s) u Direct Investing –Joint Venture (e.g., Toyota and GM have made cars jointly) –Wholly Owned Foreign Affiliates F Acquisition (e.g.,BP purchasing AMOCO) F Greenfield Venture (e.g., Toyota making cars in Kentucky)

5. 1 Chapter 3 Hofstede’s Dimensions of Culture (National Social Values) u Power Distance u Uncertainty Avoidance u Individualism/Collectivism u Masculinity/Femininity u Time Orientation

6. 1 Chapter 3 Power Distance High power distance means people accept inequality in power among institutions, organizations, and people Uncertainty Avoidance High uncertainty avoidance means that members of a society feel uncomfortable with uncertainty and ambiguity

7. 1 Chapter 3 Individualism & Collectivism u Individualism reflects a value for a loosely knit social framework in which individuals are expected to take care of themselves u Collectivism is a preference for a tightly knit social framework in which individuals look after one another

8. 1 Chapter 3 Masculinity/Femininity (Toughness/Tenderness) (Achievement/Nurturing) u Masculine cultures stress the importance of achievement, heroism, assertiveness, and material success u Feminine cultures value relationships, modesty, caring for the weak, and quality of life

9. 1 Chapter 3 Time Orientation u Short-Term Orientation means that people expect fairly rapid feedback from decisions, expect quick profits, frequent job evaluations and promotions, etc.

10. 1 Chapter 3 Other Cultural Characteristics u Language u Religion u Space u Time Orientation (monochronic vs. polychronic)

11. 1 Chapter 3 Managing Cross-Culturally u Must be culturally flexible and easily adapt to new situations and ways of doing things u Cannot be ethnocentric u Culture Shock = frustration and anxiety from different culture u Motivating - Must fit the incentives with the culture Must fit the incentives with the culture u Controlling- Often are unable to fire unproductive employees and must find creative ways of dealing with them.

12. 1 World Trade Organization World Trade Organization  WTO replaced GATT ( General Agreement on Tariffs and Trade ) in 1995  157 Members as of February 2012  About 25 nations are candidates or “observers”  Iran is the largest candidate in economic power  WTO More Power than GATT  Enforcing rulings on trade disputes  Monitoring trade policies u GATT: Most Favored Nation (MFN) = members granted reduced tariffs, etc. u WTO: MFN status now called Normal Trade Relations (NTR)

13. European Union (EU) u Formed in 1958 to improve economic and social conditions among its members u 27 nation alliance is an open market for Europe's 400+ million consumers. u Moving toward one economy and one currency (Euro)

14. Advantages of the EU u Increased competition and economies of scale will enable companies to grow large and efficient u Will become more competitive in the United States and other world markets.

15. North American Free Trade Agreement (NAFTA) 1994 u Canada, Mexico, and U.S. u Alliance including approximately 400 million consumers u To spur growth and investment, increase exports, and expand jobs in all three nations

16. Opposition to NAFTA u Many opposed the agreement due to fear of job losses to Mexico u Others fear weakened pollution standards and toxic dumping.