International Management Chapter Six Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

6-2 Learning Objectives LO1 Discuss what integration of the global economy means for individual companies and their managers LO2 Describe how the world economy is becoming more integrated than ever before LO3 Define the strategies organizations use to compete in the global marketplace LO4 Compare the various entry modes organizations use to enter overseas markets

6-3 Learning Objectives (cont.) LO5 Explain how companies can approach the task of staffing overseas operations LO6 Summarize the skills and knowledge managers need to manage globally. LO7 Identify ways in which cultural differences across countries influence management

6-4 U.S. Exports as a Share of U.S. Output Figure 6.1

6-5 Implications of a Flat World  Opportunities are greater  Environment is more complex and competitive

6-6 The Role of Outsourcing  Outsourcing  Contracting with an outside provider to produce one or more of an organization’s goods or services.  Offshoring  Moving work to other countries.

6-7 European Unification  Europe is integrating economically to form the biggest market in the world  Certain structural issues within Europe need to be corrected for the EU to function effectively.

6-8 The Americas  North American Free Trade Agreement (NAFTA)  An economic pact that combined the economies of the United States, Canada, and Mexico into one of the world’s largest trading blocs

6-9 Organizational Models Figure 6.5

6-10 Choosing a Global Strategy  International model  composed of a company’s overseas subsidiaries and characterized by greater control by the parent company over the research function and local product and marketing strategies than in the multinational model.

6-11 Choosing a Global Strategy  Global model  consists of a company’s overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations

6-12 Choosing a Global Strategy  Transnational model  characterized by centralizing certain functions in locations that best achieve cost economies  basing other functions in the company’s national subsidiaries to facilitate greater local responsiveness  fostering communication among subsidiaries to permit transfer of technological expertise and skills.

6-13 Comparison of Entry Modes Table 6.2

6-14 Managing across Borders  Expatriates  Parent-company nationals who are sent to work at a foreign subsidiary

6-15 Understanding Cultural Issues  Inpatriate  A foreign national brought in to work at the parent company.