Globalization Unit 6 http://www. youtube. com/watch Business Analysis

Globalization: The tendencies of the world’s economies to act as a single interdependent system.

Today Businesses that once thought they were too small to expand outside their city have learned it’s possible Overnight delivery Email Conference calls E-Commerce Internet

Why: What benefits would companies have from conducting business in a global economy? Generate increased sales Produce operational efficiencies – save $$ Exposure to new technologies Provide greater consumer choice

Why Nations Trade Increases a nation’s total output Offers lower prices & greater variety Allows companies to expand their markets and to achieve cost, production and distribution efficiencies.

What to Make? What to Trade? Absolute Advantage A nation’s ability to produce a particular item more efficiently than all other nations. ExAmples: Saudi Arabia & oil *Comparative Advantage *Opportunity Cost Although a nation can produce many items, they should produce those items that it produces more efficiently or at a lower cost and trade for the others.

Measuring International Trade Balance of Trade – The total value of the products a nation exports minus the total value of the products it imports over some period of time.

Why Not? The Challenges Cultural Differences Laws Consumer Preferences Ethical Standards Labor Skills Politics and Economics

More on Cultural Differences: Social Values Business Customs Language Ideas of Status Decision making habits Use of Time Use of Space Eating Habits, etc. Gift Giving Business Attire Greetings Views on Competition Politeness/Truthfulness What is “taboo”? Dealing with invitations Eye contact, gestures,

Step 1 To Going Global: Learning a country’s business customs and cultural differences! Best done well in advance Learn everything you can, including non-business information What are some things you learned during your research?

Learn about the country History Religion Politics Customs/Traditions

Tips for Success W/ International Communication:* Be alert to other people’s customs Deal with the Individual Clarify your intent and meaning Adapt your style to meet their style Expect differences in values, beliefs, expectations and mannerisms DON’T stereotype, look at the person as an individual first! Use examples and repetition don’t assume you know how to read their body language Show Respect—Know their expectation

Legal Differences in Global Business U S Laws International Laws Country-Specific Laws

Legal Differences in the Global Business Environment In addition to understanding and obeying foreign laws, all companies doing international business must also comply with the 1978 Foreign Corrupt Practice Act.

The 1978 Foreign Corrupt Practices Act Outlaws actions such as bribing government officials in other nations to approve deals. It does allow small payments to officials for expediting routine government actions. Not all agree with this!

What Level of Involvement? Once a company decides to operate in the global marketplace, it must decide on the level of involvement it is willing to undertake. The company must also develop strategies for marketing its products internationally

Five Common International Market-Entry Strategies.

Forms of International Business Activity Purchasing goods and services from another county and bringing them into one’s own country : Selling goods or services to another country, Are the definitions of what?

International Licensing Patents, trademarks, brand names, copyrights or trade secrets. In return for a rolayty A license that entitles one company to use all or some of another companies intellectual property in exchange for a fee.

International Franchising Fastest growing form of international activity. The person who buys the franchise gets the right to duplicate a specific product or service. Easy way to enter foreign markets minimizing costs & risks and bypassing some trade regulations

International Strategic Alliances/ Joint Ventures A long term partnership between two or more companies to jointly develop, produce or sell products in the global marketplace. They share ideas, expertise, resources, risks, management & profits (Oneworld) Joint Venture – Two or more firms that join together to create a new business entity that is legally separate from the parent companies. Yet, another way to expand one’s business globally

Foreign Direct Investment Ownership and control of assets in foreign countries without working with locals. Multinational Corporations (MNCs) corporations with a physical presence in numerous countries.

Challenges U.S. and European senior executives say they face when managing across different countries: Changing individual behavior Culture differences Business practice differences Headquarters are too remote Labor law differences Accounting and tax differences

Guided Practice On the internet please find an example of each of the types of companies going global. No McDonald’s Explain the difficulties the company has faced with working across cultures in your own words. Type written to be handed in. Completed Individually