Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Chapter 11 Global / International Issues Strategic Management: Concepts & Cases 13 th Edition Fred David

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 11 -2

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Global Issues Global considerations impact virtually all strategic decisions A world market has emerged It is difficult for a firm to survive relying solely on domestic markets

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Multinational Organizations International firms or multinational corporations face many complex variables:  Social  Cultural  Demographic  Environmental  Political  Governmental  Legal  Technological  Competitive opportunities and threats

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Potential Advantages of International Operations Gain new customers Absorb excess capacity, reduce unit costs, and spread economic risks Allow firms to establish low-cost production facilities Competition may be less intense

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Potential Advantages of International Operations (continued) Reduced tariffs, lower taxes, and favorable political treatment Joint ventures can enable firms to learn new technology, culture, and business practices Economies of scale Power and prestige in domestic markets may be significantly enhanced

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Potential Disadvantages of International Operations Foreign operations could be seized Different and often little-understood social, cultural, demographic, environmental, political, governmental, legal, technological, economic, and competitive forces Weakness of competitors overestimated Different language, culture, and value systems Understanding of regional organizations needed Dealing with two or money systems

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Reasons for Global Expansion Advancements in telecommunications Growth in demand for goods and services outside the U.S. is considerably higher than inside 95% of the world's population lives outside the U.S.

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Globalization Globalization:  The process of doing business worldwide Global strategy includes considering global needs during  Design  Production  Marketing

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Cultural Differences Time Space Family roles Religious factors Family time Values Eating Rules of etiquette Importance of relationships

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch European Business Cultures Participatory management Most workers are unionized More frequent vacations and holidays Guaranteed permanent employment common Workers often resent pay for performance, commissions, and objective measurement and reward systems

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Asian Business Cultures First names are not generally used in business Extended periods of silence are important A sale is the beginning, not the end of a relationship Resting, listening, meditating, and thinking are considered productive

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Mexican Business Culture Low tolerance for adversarial relations or friction at work Employers are paternalistic Workers do not expect self-expression or initiative at work Businesses stress collectivism, continuity, cooperation, belongingness, formality, and doing exactly what you are told Rarely entertain business associates at homes

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Mexican Business Culture (continued) Preserving one’s honor, saving face, and looking important are valued Opinions expressed by employees are often regarded as back talk Supervisors are viewed as weak if they explain the rationale for their orders to workers Mexicans often do not follow rules Life is slower in Mexico, tardiness is common

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Japanese Business Culture Importance of group loyalty and consensus called “Wa” Constant discussion and compromise Silence is a plus in formal meetings When confronted with disturbing questions, managers often remain silent Managers are reserved, quiet, distant, introspective, and other oriented

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Communication Differences Across Cultures Italians, Germans, and French do not soften up executives with praise before a criticism Israelis are accustomed to fast paced meetings British executives complain that Americans chatter too much Europeans feel that they are being treated like children when asked to wear nametags

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Communication Differences Across Cultures (continued) Executives in India are used to interrupting each other In Malaysia and Japan periods of silence are appropriate, no silence is needed in Israel “How was your weekend?” is considered intrusive by many business people

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Worldwide Tax Rates US and Japan 38% Asia-Pacific Region 30% Germany 30% Great Britain 28% France 27% Europe 26% Ireland near 0% Former Soviet-Bloc nations near 0%