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Organizations and managers are not isolated from international forces  Trade barriers have fallen  Communication is faster, cheaper  Consumer tastes converge The difficulties and risks of a borderless world are matched by benefits and opportunities 2

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3

 Ability of managers to appreciate and influence individuals, groups, organizations, and systems that represent:  Different social, cultural, political, institutional, intellectual, and psychological characteristics  Develop by engaging with people from different cultures 4

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  The size and volume of international business is LARGE  Companies have revenue = GDP of small country  Move assets from country to country  25% or more of its profit comes from outside parent country  MNC is managed as an integrated whole 5

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Controlled by one management authority  MNC managers must have a global perspective  Ethnocentric companies – place emphasis on their home countries  Polycentric companies – oriented toward the markets of individual foreign host countries  Geocentric companies – world oriented and favor no specific country 6

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  68% of Americans say other countries benefit the most from free trade  53% believe free trade has hurt U.S.  The United States’ primary concern is the loss of jobs 7

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Business leaders insist that economic benefits flow back to the U.S. economy  Lower prices and expanded markets  Increased profits and funds for innovation  But American shoppers say they would pay higher prices to keep down foreign competition 8

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  An approach for multinationals to do good  Corporations can alleviate problems and make large profits by selling to the world’s poor  There are more than 4 billion people at the lowest level of the economic pyramid  Many companies are adopting BOP strategies 9

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Exporting – transferring products for sale to foreign countries  Outsourcing – also called offshoring, work activities are done in countries with cheap labor 11

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Licensing – enabling a company to produce and market a product in another country  Franchising is licensing that provides a complete package of materials and services  Direct investing – high level of involvement, company manages and controls assets  Joint venture and other types of partnerships are common 12

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Planning, organizing, leading, and controlling in multiple countries can be challenging  It took McDonald’s a year to figure out that Hindus in India do not eat beef  In Africa, the labels on bottles include pictures to aid illiterate consumers  Managers must be mindful in the global marketplace 13

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Economic development – Countries are categorized as either developed or developing based on per capita income  Government policies  Market size  Financial markets  Infrastructure 15

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Economic interdependence The current economic crisis has highlighted how interconnected economies are around the world 17

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Political risk is defined as the risk of lost assets, earning power, or managerial control  Political instability includes riots, revolutions, civil disorders, and frequent changes in government 19

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The values and behaviors that govern U.S. business do not always translate  Social values  Communication differences 20

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Power distance Uncertainty avoidance Individualism and collectivism Masculinity and femininity 21

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Assertiveness  Future orientation  Gender differentiation  Performance orientation  Humane orientation 23

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  China Inc.  China manufactures many products for U.S. companies  China is also a growing consumer market  Regulations and government policies make doing business in China a challenge 26

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  India is a service giant, growing in software design and engineering  Brazil is a country that is gaining the attention of American managers 27

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  General Agreement on Tariff and Trade (GATT)  23 nations in 1947, a set of rules for fair trade  World Trade Organization (WTO)  Maturation of GATT into permanent global institute 28

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  European Union  1957 alliance to improve economic and social conditions among members; evolved to 27-nation European Union  North American Free Trade Agreement (NAFTA)  Merged the United States, Canada, and Mexico into a single market 29

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30