Doing Business Globally Chapter Two

Global Village A boundary less world A boundary less world Goods and services are marketed all over the world Goods and services are marketed all over the world Cultures, systems and methods different from our own Cultures, systems and methods different from our own

Domestic Business All resources are obtained and All resources are obtained and products/services sold within one products/services sold within one country country Types of International Organizations

Multinational Corporations Refers to any and all types of companies that maintain operations in multiple countries but manages them from a base in the home country. Refers to any and all types of companies that maintain operations in multiple countries but manages them from a base in the home country.

Multidomestic Corporations Operates businesses in a number of countries at the same time Operates businesses in a number of countries at the same time May produce different products in each country; matches the company’s products to its consumers May produce different products in each country; matches the company’s products to its consumers Decision making made at the local level (known as decentralized decision making) Decision making made at the local level (known as decentralized decision making) Example: Frito-Lay Example: Frito-Lay

Global Companies Also maintains international operations, however decisions are made from headquarters in home country (known as centralized decision making) Also maintains international operations, however decisions are made from headquarters in home country (known as centralized decision making) Example: Bombardier Example: Bombardier

Strategic Alliance A domestic and a foreign company will A domestic and a foreign company will share the cost of developing new products or building production facilities in a foreign country. share the cost of developing new products or building production facilities in a foreign country.

Global Sourcing The first step in going global, allows companies to take advantage of lower costs in order to be more competitive The first step in going global, allows companies to take advantage of lower costs in order to be more competitive Involves purchasing materials or labour around the world, wherever is cheapest Involves purchasing materials or labour around the world, wherever is cheapest Example: Bell Canada contracted with Sitel India to provide customer care to Canadian customers Example: Bell Canada contracted with Sitel India to provide customer care to Canadian customers

Stages of Going Global 1. Passive Response - exporting to foreign countries; making products at home and selling them abroad 2. Initial Overt Entry - hiring foreign representation - contacting foreign manufacturers

3. Established International Operations - Licensing/Franchising: Manufacturers give another organization to use their brand name, technology or sell its product Ex. McDonalds - Joint Ventures: Partners agree to form a separate, independent organization for some business purpose Ex. Hewitt Packard - Foreign Subsidiary: A direct investment in a foreign country by setting up a separate and independent office Ex. GM Canada