Management, by Williams South-Western College Publishing Copyright © 2000 Chapter 8 Global Management

Management, by Williams South-Western College Publishing Copyright © What Would You Do? McDonald’s Expanding into Eastern Europe 4Relatively poor countries 4Poor-quality produce 4Will employees work hard? 4Which country should they enter first? 4Joint ventures?

Management, by Williams South-Western College Publishing Copyright © After discussing this section, you should be able to: Learning Objectives What is Global Business? ¬describe the impact of global business on the U.S. ­discuss the trade rules and agreements that govern global trade.

Management, by Williams South-Western College Publishing Copyright © Impact of Global Business “Foreigners” Buying up American Companies American Companies are not Competitive in the World Market Americans Buying American Products

Management, by Williams South-Western College Publishing Copyright © Buying American 4Americans say they want to “Buy American” 4Country of manufacture Twhere the product is made 4Country of origin Tcompany’s home country

Management, by Williams South-Western College Publishing Copyright © Trade Rules and Agreements Tariffs & Trade Barriers Global & Regional Trade Agreements Consumer Response to Trade Barriers & Agreements

Management, by Williams South-Western College Publishing Copyright © Trade Barriers 4Tariff 4Nontariff barriers TQuotas TVoluntary export restraints TSubsidies

Management, by Williams South-Western College Publishing Copyright © Trade Agreements 4General Agreement on Tariffs & Trade (GATT) 4Regional Trading Zones TMaastricht Treaty of Europe TNAFTA TFTAA TASEAN & APEC

Management, by Williams South-Western College Publishing Copyright © GATT 4Worldwide trade agreement 4Designed to reduce and eliminate tariffs and subsidies 4Protect intellectual property

Management, by Williams South-Western College Publishing Copyright © Maastricht Treaty of Europe 4Originally, 12 (now 15) European countries 4Transform these different countries into the European Union 4Open up trade among member nations 4Create the “Euro” currency

Management, by Williams South-Western College Publishing Copyright © North American Free Trade Agreement - NAFTA 4Canada, United States, & Mexico 4Liberalizes trade among these three nations 4Eliminate tariffs and barriers

Management, by Williams South-Western College Publishing Copyright © Free Trade Area of the Americas 4Proposed agreement 4Unite 36 countries in North & South America

Management, by Williams South-Western College Publishing Copyright © Association of South East Nations Asia-Pacific Economic Cooperation 4ASEAN TIndonesia, Thailand, Philippines, Malaysia, Singapore, & Brunei 4APEC TU.S., Canada, Japan, South Korea, Australia, New Zealand, China, Hong Kong, & ASEAN members

Management, by Williams South-Western College Publishing Copyright © Consumers, Trade Barriers, & Trade Agreements 4American annual income less than many countries 4Cost of living, however, is also less here 4Open trade gives American consumers many choices

Management, by Williams South-Western College Publishing Copyright © After discussing this section, you should be able to: Learning Objectives How to Go Global? ®explain why companies choose to standardize or adapt their business procedures. ¯explain the different ways that companies can organize to do business globally.

Management, by Williams South-Western College Publishing Copyright © Consistency or Adaptation? Global consistency Local adaptation

Management, by Williams South-Western College Publishing Copyright © Back to the Future Back to the Future A Global “Walk Down the Hallway” 4Conducting global business via teleconferencing Tcheaper and less jet-lag Tcan be done via the Internet

Management, by Williams South-Western College Publishing Copyright © Forms for Global Business Exporting Cooperative Contract licensing franchise Strategic Alliances - Joint Ventures Wholly Owned Affiliates Global New Ventures

Management, by Williams South-Western College Publishing Copyright © After discussing this section, you should be able to: Learning Objectives Where to Go Global? °explain how to find a favorable business climate. ±discuss the importance of identifying and adapting to cultural differences. ²explain how to successfully prepare workers for international assignments.

Management, by Williams South-Western College Publishing Copyright © Finding the Best Business Climate Growing Markets Choosing an Office/ Manufacturing Location Minimizing Political Risk

Management, by Williams South-Western College Publishing Copyright © Growing Markets 4Purchasing Power Tcomparison of a standard set of goods and services in different countries Tmore means greater growth potential 4Degree of Global Competition Tthe number & quality of companies already in the market Tmore means less growth potential

Management, by Williams South-Western College Publishing Copyright © Choosing an Office/Manufacturing Location 4Quantity factors Twork force quality Tcompany strategy 4Quality factors Tcosts and barriers

Management, by Williams South-Western College Publishing Copyright © Minimizing Political Risks 4Political uncertainty Trisk of major changes in political regimes 4Policy uncertainty Trisk associated with changes in laws and government policies directed at businesses 4Strategies Tavoidance Tcontrol Tavoidance

Management, by Williams South-Western College Publishing Copyright © Becoming Aware of Cultural Differences - Geert Hofstede 4Power distance 4Individualism 4Short-term/Long-term orientation 4Masculinity v. femininity 4Uncertainty avoidance

Management, by Williams South-Western College Publishing Copyright © Preparing for an International Assignment Language and Cross-Cultural Training Spouse, Family, and Dual-Career Issues

Management, by Williams South-Western College Publishing Copyright © What Really Works? Cross-Cultural Training Psychological Well-Being & Self-Development 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fostering Relationships with Native Citizens 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 79% Probability of success74%

Management, by Williams South-Western College Publishing Copyright © What Really Works? (Cont’d.) Accurate Cultural Perceptions 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Rapid Adjustment to Foreign Cultures & Countries 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 74% Probability of success 74%

Management, by Williams South-Western College Publishing Copyright © What Really Works? (Cont’d.) On-the-Job Performance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 71%

Management, by Williams South-Western College Publishing Copyright © What Really Happened? What Really Happened? McDonald’s in Eastern Europe 4Buys local produce, when available 4Native workers are being trained to run the stores 4Hungary, Poland and the Czech Republic are the first countries to receive stores