1. 1

2. MULTINATIONAL MANAGEMENT
CHAPTER 1
MULTINATIONAL MANAGEMENT
IN A CHANGING WORLD 1

3. MULTINATIONAL MANAGEMENT
The formulation of strategies and the design of management systems to take advantage of international opportunities and respond to international threats 8

4. THE MULTINATIONAL COMPANY
Any company that engages in business functions beyond its domestic borders
Includes both large and small companies 14

5. Exhibit 1.1 (in Text) Lists The Top Multinational Corporations Ranked By Sales Revenue.15

6. WHY IS MULTINATIONAL MANAGEMENT IMPORTANT?
Businesses increasingly look to other countries
to seek global opportunities
to keep an eye on global competition 4

7. GLOBALIZATION
The worldwide trend of businesses expanding beyond their domestic boundaries 5

8. SEVEN KEY FORCES ARE GLOBALIZING THE WORLD ECONOMY
1. Disintegrating borders
2. Growing cross-border trade and investment
3. The rise of global products and global customers
4. Privatizations 17

9. 5. New competitors in the world market
6. The rise of global standards of quality and production
7. The Internet and information technology

11. THE
GLOBAL
1. Falling Borders
ECONOMY

12. BORDERS ARE FALLING Free trade areas and the world trade organization
By 2000, the number of regional trade agreements reached 139, more than double the number existing in 1992 28

13. TRADE AGREEMENTS Reduce tariffs and restrictions
The three largest groups --EU, NAFTA, and APEC
World Trade Organization 29

14. THE
2. Growing Trade
GLOBAL
and Investment
ECONOMY

15. SELL ANYWHERE, LOCATE ANYWHERE
World trade growth: average of 6.5% per year 1990 to 2000
Nearly half of the over $5 trillion in world trade is among the European union, the U.S., and Japan -- the TRIAD 35

16. Exhibits 1.4 and 1.5 (in text) show the leading countries in terms of import and export size and growth. 36

17. FOREIGN DIRECT INVESTMENT (FDI)
A company from one country has an ownership position in an organization from another country - See Ex 1.6 for top 30
FDI in the developed countries approximately $899 billion 37

18. EXHIBIT 1.6 TOP FOREIGN ASSET COMPANIES
1. General Electric: USA
2. General Motors: USA
3. Royal Dutch Shell: UK/Netherlands
4. Ford: USA
5. Exxon: USA
6. Toyota: Japan 39

19. EXHIBIT 1.9 RISK RATINGS FOR SELECTED COUNTRIES (100 = Lowest Risk)

20. THE
3. Global Products/
GLOBAL
Customers
ECONOMY

21. THE RISE OF GLOBAL PRODUCTS AND GLOBAL CUSTOMERS
The needs of customers growing more similar
Global customers search the world for their supplies without regard for national boundaries 47

22. THE
GLOBAL
4. Privatizations
ECONOMY

23. PRIVATIZATION
Privatization is the sale of government owned businesses to private investors

24. Privatization, continued
The developing countries and transition economies use privatization to become capitalistic economies 49

25. BENEFITS FOR MULTINATIONAL COMPANIES
Opportunities for bargain basement investments
An easy way to gain access
often with local government incentives such as several years of tax free operations 50

26. THE
GLOBAL
5. New Competitors
ECONOMY 51

27. EXHIBIT 1.10: TOP EMERGING MARKET COMPANIES
1. China Telecom: Hong Kong
2. Taiwan Semiconductor: Taiwan
3. Samsung Electronics: Korea
4. Telefonos de Mexico (Telmex): Mexico 51

28. THE
6. Rise of Global
GLOBAL
Standards
ECONOMY 54

29. GLOBAL OR REGIONAL PRODUCT STANDARDS
Companies can make one or only a few versions of a product for the world market
Cheaper than versions for different countries 55

30. CONSISTENCY AND PREDICTABILITY IN QUALITY
The international organization for standardization (ISO) in Geneva, Switzerland - ISO 9000:2000 56

31. THE
7. IT and the
GLOBAL
Internet
ECONOMY

32. THE INTERNET AND INFORMATION TECHNOLOGY
Allows easy worldwide communication and economic transactions
Small companies have more computer power
Poorer nations can have technology 57

33. THE NEXT GENERATION OF MULTINATIONAL MANAGERS
A global mindset
The ability to work with diverse people
A long range perspective
The ability to manager change and transition 60

34. The next generation of multinational managers, continued
The ability to create systems for a learning and changing organizations
The talent to motivate all employees to achieve excellence
Accomplished negotiation skills 61

35. The next generation of multinational managers, continued
A willingness to seek and succeed in overseas assignments
An understanding of national cultures 62

36. MULTINATIONAL MANAGEMENT: A STRATEGIC APPROACH
The strategic approach to multinational management considers how managers formulate and implement strategies to compete successfully in the global economy 64

37. STRATEGY
The maneuvers or activities that managers use to sustain and increase organizational performance 65

38. MULTINATIONAL STRATEGY FORMULATION
The process of choosing or crafting a strategy
challenge of dealing with opportunities and competitors located anywhere in the world 68

39. MULTINATIONAL STRATEGY IMPLEMENTATION
Includes all the activities necessary to achieve strategic objectives
requires complex management systems to carry out the strategies that reach beyond domestic boundaries 69

40. A FUNDAMENTAL ASSUMPTION OF THE BOOK
“When you understand your competitors and yourself, you will always win," Sun Tzu, The art of war 70

41. CONCLUSIONS Multinational management and the multinational company
Forces that drive globalization
Key characteristics of successful multinational managers
The strategic approach to multinational management