12-1 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Chapter 12 International management

12-2 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Lecture outline Nature of international management Assessing the international environment Gauging international strategic issues Organising international business Managing diversity: Adapting to cultural differences Handling social responsibility and ethical issues

12-3 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Nature of international management International business Profit-related activities conducted across national boundaries. International management Process of planning, leading, organising and controlling in organisations engaged in international business.

12-4 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Nature of international management Organisations engaging in international management vary in size and the extent that their business activities across national boundaries. MULTINATIONAL CORPORATION (MNC)

12-5 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Nature of international management Orientations towards international management –Ethnocentric –Polycentric –Regiocentric –Geocentric

12-6 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Nature of international management Ethnocentric (home-country) orientation Ethnocentric (home-country) orientation Geocentric (world) orientation Geocentric (world) orientation Regiocentric (regional) orientation Regiocentric (regional) orientation Polycentric (host-country) orientation Polycentric (host-country) orientation

12-7 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Assessing the international environment Environmental elements –Economic –Legal-political –Sociocultural –Technological

12-8 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Assessing the international environment Economic element: Developed countries Group of countries that is characterised by High level of economic and industrial development Less developed countries (LDCs) Low economic or industrial development Newly industrialised countries Emerging LDCs—major exporters of manufactured goods. Balance of trade Exchange rate

12-9 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Assessing the international environment Economic element Less developed countries (LDCs) Developed countries Newly industrialised countries (NICs) Infrastructure Balance of payments Balance of trade Exchange rate

12-10 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Assessing the international environment Legal-political element: Political risk Expropriation Indigenisation laws Tariffs Import quotas Administrative protections

12-11 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Assessing the international environment Legal-political element Expropriation Political risk Indigenisation laws Tariffs Administrative protections Import quotas

12-12 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Assessing the international environment Sociocultural element: Attitudes, values, norms, beliefs Behaviours Demographic trends

12-13 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Hofstede’s national cultural dimensions Power distance Uncertainty avoidance Individualism-collectivism Achievement-nurturing orientation Long-term, short-term orientation

12-14 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Assessing the international environment Technological element: Technological transfer Transmission of technology from those who possess it to those who do not.

12-15 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Competitive advantage of nations Concept that environmental elements within a nation can foster innovation in certain industries, thereby increasing prospects for the success of home-based companies operating internationally. (Michael E. Porter, 1990)

12-16 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Competitive advantage of nations Diamond of national advantage: Factor conditions Demand conditions Related and supporting industries Firm strategy, structure & rivalry

12-17 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Competitive advantage of nations Firm strategy, structure and rivalry Related and supporting industries Factor conditions Demand conditions

12-18 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Gauging strategic issues Methods of international entry –Exporting –Licensing –Strategic alliances –Wholly-owned subsidiaries Multinational corporation strategies –World-wide integration –National responsiveness –Regional responsiveness –Multifocal emphasis

12-19 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Gauging strategic issues Methods of international entry Exporting Licensing Strategic alliance Wholly- owned subsidiary Multinational corporation strategies Globalisation National responsiveness Regional responsiveness Multifocal emphasis

12-20 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Organising international business World-wide functional divisions World-wide product divisions International divisions Geographic regions Global matrix Networked structure

12-21 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Adapting to cultural differences Managing international human resources: Assignment policies Recruitment Selection and training Repatriation Adjusting leadership styles

12-22 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Adapting to cultural differences Managing international human resources Assignment policies Repatriation Selection & training Recruitment Adjusting leadership styles

12-23 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Social responsibility and ethical issues International social responsibility Benefit versus harm of MNC’s in LDC’s Ethical issue of ‘questionable payments’ Business payments raising significant ethical questions of right or wrong either in the host country or in other nations

12-24 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Social responsibility and ethical issues political payments bribes extortion sales commissions Questionable payment issues expediting payments International social responsibility

12-25 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Lecture summary Nature of international management Orientations: ethnocentric, polycentric, geocentric, egocentric Assessing the international environment –Environmental elements –Competitive advantage of nations Gauging strategic issues –Methods of international entry: exporting, licensing, strategic alliances, wholly owned subsidiaries –Multinational strategies: world-wide integration, national or regional responsiveness, multifocal.

12-26 © 2008 McGraw-Hill Australia Pty Ltd. Power Points t/a Management Foundations: A Pacific Rim Focus 2e by Bartol et al Slides prepared by Rob Lawrence, Victoria University (Australia) and Dr Raveendra Nayak, University of Ballarat Lecture summary Organising international business Divisions: functional, product, international, geographic, global matrix, network structure Adapting to cultural differences –International human resource management –Adjusting leadership styles in different national cultures Social responsibility and ethical issues –International social responsibility - value conflicts –Questionable payments