1. CHAPTER 17 INTERNATIONAL MANAGEMENT
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

2. LECTURE OUTLINE Nature of international management
Assessing the international environment
Gauging strategic issues
Organising international business
Adapting to cultural differences
Social responsibility & ethical issues
Page 614
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

3. NATURE OF INTERNATIONAL MANAGEMENT
MULTINATIONAL CORPORATION (MNC)
Organisations engaging in international management vary in size and the extent that their business activities cross international boundaries.
It is argued that organisations must adopt a global view of planning and other activities. By viewing the whole world as their operating area, managers can tap into world-wide markets and be active where conditions support organisational goals. This means managers must grasp international management issues firmly.
Further discussion can be found on page 616.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

4. NATURE OF INTERNATIONAL MANAGEMENT
International business
Profit-related activities conducted across international boundaries.
International management
Process of planning, leading, organising and controlling in organisations engaged in international business.
Page 616
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

5. NATURE OF INTERNATIONAL MANAGEMENT
Organisations engaging in international management
Multinational corporation (MNC)
Orientations towards international management
Ethnocentric
Polycentric
Regiocentric
Geocentric
Organisations engaging in international management vary in size and extent that their business activities cross national boundaries. Multinational corporations (MNC) engage in production or service activities through affiliates in other countries, controlling their policies and managing from a global perspective. With this perspective, top managers allocate resources and coordinate activities to take the best advantage of business conditions.
Further discussion can be found on pages
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

6. NATURE OF INTERNATIONAL MANAGEMENT
Ethnocentric
(home-country)
orientation
Polycentric
(host-country)
orientation
Regiocentric
(regional)
orientation
Geocentric
(world)
orientation
Top-level managers in firms expanding internationally (particularly in MNC’s) take one of four orientations about how much operating methods are influenced by headquarters or by members in other parts of the world. The home country is where an organisation’s headquarters are located and a host country is a foreign country that the home country does business in.
Further discussion can be found on pages
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

7. ASSESSING THE INTERNATIONAL ENVIRONMENT
Environmental elements
Economic
Legal-political
Sociocultural
Technological
While international management opens great opportunities, the challenge becomes trying to understand a broader set of environmental factors than met in a strictly domestic business.
The idea of a general environment helps us to understand the nature of international management.
Further discussion can be found on page 619 of text.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

8. ASSESSING THE INTERNATIONAL ENVIRONMENT
Economic element:
Developed countries
High economic, industrial development
Less developed countries (LDCs)
Low economic, industrial development
Newly industrialised countries
Emerging LDCs
Balance of trade
Exchange rate
MNC’s do not necessarily operate across the world. In fact about 95% of MNC’s are based in developed countries, with about 75% of foreign investment channelled back to developed countries. However, the rising prosperity of LDC’s has great potential for market expansion.
Further discussion can be found on page 619.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

9. ASSESSING THE INTERNATIONAL ENVIRONMENT
Less developed
countries (LDCs)
Developed countries
Newly industrialised
countries (NICs)
Exchange
rate
Economic
element
Page 619
Infrastructure
Balance of
trade
Balance of
payments
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

10. ASSESSING THE INTERNATIONAL ENVIRONMENT
Legal-political element:
Political risk
Expropriation
Indigenisation laws
Tariffs
Import quotas
Administrative protections
Both legal and political conditions affect a firm’s ability to conduct business in other countries. Considerations include level of political risk of operating in a country, and governmental trade barriers. Therefore corporations must assess the political risk of setting up in a given country.
Further discussion can be found on page 620.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

11. ASSESSING THE INTERNATIONAL ENVIRONMENT
Expropriation
Political risk
Legal-political
element
Indigenisation
laws
Page 620
Tariffs
Administrative
protections
Import
quotas
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

12. ASSESSING THE INTERNATIONAL ENVIRONMENT
Sociocultural element:
Power distance
Uncertainty avoidance
Individualism–collectivism
Achievement–nurturing orientation
Long-term orientation
Short-term orientation
The sociocultural element includes attitudes, values, norms, beliefs, behaviours and associated demographic trends characteristic of a geographic area. Comparing people in different nations, it is common to speak of cultural differences.
Further discussion can be found on pages
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

13. ASSESSING THE INTERNATIONAL ENVIRONMENT
Power distance
Cultural differences
Sociocultural
element
Individualism–
collectivism
Achievement–
nurturing
orientation
Pages
Short-term
orientation
Long-term
orientation
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

14. ASSESSING THE INTERNATIONAL ENVIRONMENT
Technological element:
Technological transfer
Transmission of technology from those who possess it to those who do not.
The technological element is important in the international environment as technology levels in various countries affect market nature and companies’ ability to do business. In fact much technology transfer takes place during international business. Technology can be goods or processes such as components or machinery, or intangible know-how, such as advanced road-building techniques.
Further discussion can be found on page 622.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

15. ASSESSING THE INTERNATIONAL ENVIRONMENT
Technological
element
Technological
transfer
Page 621
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

16. 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.
Diamond of national advantage
In considering the impact of environmental forces on organisations, Michael E. Porter developed the idea of the competitive advantage of nations. Firms that gain a competitive edge provide positive national prosperity consequences as well. Also, innovation’s incidence among companies in particular industries is influenced by national characteristics where they are based.
Further discussion can be found on page 622 of text.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

17. COMPETITIVE ADVANTAGE OF NATIONS
Diamond of national advantage:
Factor conditions
Demand conditions
Related & supporting industries
Firm strategy, structure & rivalry
To explain why some firms consistently innovate, Porter identifies four national attributes which alone and together set the diamond of national advantage.
Further discussion can be found on pages
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

18. COMPETITIVE ADVANTAGE OF NATIONS
Firm strategy,
structure &
rivalry
Factor
conditions
Demand
conditions
Page 623
Related &
supporting
industries
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

19. 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
While most international business firms use long-range planning, initial efforts at operating in other countries focus on narrower goals than becoming a fully-fledged MNC. To match these initial efforts, a variety of methods of international entry are utilised.
Further discussion can be found on pages
As firms expand internationally they must develop suitable strategies. MNC’s, and to a lesser extent other companies operating internationally, must weigh two factors: the need to make optimum global economic decisions, and the need to be responsive to host-country differences. Thus MNC’s have four strategy options.
Further discussion can be found on page 627 of text.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

20. GAUGING STRATEGIC ISSUES
Globalisation
Exporting
Multinational corporation strategies
Methods of
international
entry
National
responsiveness
Licensing
Strategic
alliance
Regional
responsiveness
Pages
Wholly-
owned
subsidiary
Multifocal
emphasis
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

21. ORGANISING INTERNATIONAL BUSINESS
World-wide functional divisions
World-wide product divisions
International divisions
Geographic regions
Global matrix
(Networked structure)
As well as strategic issues, managers in international business must choose an organisation structure appropriate to the firm’s global pursuits. The tendency is to adopt one of five structure types.
Further discussion can be found on page 628ff.
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

22. ADAPTING TO CULTURAL DIFFERENCES
Managing international HRM:
Assignment policies
Recruitment
Selection & training
Repatriation
Adjusting leadership styles
To fit cultural factors in other countries
Power-distance differences
Structural issues are important, however another effective international management element is adapting to different cultures.
Issues include international HRM and leadership adjustment. Researchers in international management argue that firms operating internationally must emphasise strategic HRM for a competitive international edge.
Further discussion can be found on pages
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

23. ADAPTING TO CULTURAL DIFFERENCES
Assignment policies
Managing
international
human
resources
Recruitment
Repatriation
Adjusting
leadership
styles
Pages
Selection & training
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

24. SOCIAL RESPONSIBILITY & ETHICAL ISSUES
International social responsibility
Benefit versus harm of MNC’s in LDC’s
Questionable payments issue
Business payments raising significant ethical questions of right and wrong either in the host country or in other nations
Many social responsibility issues compound when a company has much international business. This is because of increased social stakeholders (customers and communities in different countries) especially if a business uses subsidiaries in other countries.
A pervasive international ethical issue involves questionable payments. These may take the form of: political payments, extortion, commissions or bribes.
Further discussion can be found on pages
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

25. SOCIAL RESPONSIBILITY & ETHICAL ISSUES
political
payments
Questionable payment
issues
bribes
extortion
International
social
responsibility
sales
commissions
Page 638
expediting
payments
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

26. LECTURE SUMMARY Nature of international management Orientations:
ethnocentric, polycentric, geocentric, regiocentric
Assessing the international environment
Environmental elements
Competitive advantage of nations
Gauging strategic issues
Methods of international entry
Multinational strategies
Page 642
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin

27. LECTURE SUMMARY Organising international business
Divisions: functional, product, international
geographic, global matrix, network structure
Adapting to cultural differences
International human resources
Adjusting leadership style
Social responsibility & ethical issues
International social responsibility
Questionable payments
Page 642
Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin