1. Chapter 11 Global / International Issues
Strategic Management: Concepts & Cases
13th Edition
Fred David
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2. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

3. Global/International Issues
“Sad but true, U.S. businesspeople have the lowest foreign language proficiency of any major trading nation. U.S. business schools do not emphasize foreign languages, and students traditionally avoid them.”
- Ronald Dulek
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4. Global Issues
Global considerations impact virtually all strategic decisions
A world market has emerged
It is difficult for a firm to survive relying solely on domestic markets
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5. Multinational Organizations
International firms or multinational corporations face many complex variables:
Social
Cultural
Demographic
Environmental
Political
Governmental
Legal
Technological
Competitive opportunities and threats
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6. Potential Advantages of International Operations
Gain new customers
Absorb excess capacity, reduce unit costs, and spread economic risks
Allow firms to establish low-cost production facilities
Competition may be less intense
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7. Potential Advantages of International Operations continued
Reduced tariffs, lower taxes, and favorable political treatment
Joint ventures can enable firms to learn new technology, culture, and business practices
Economies of scale
Power and prestige in domestic markets may be significantly enhanced
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8. Potential Disadvantages of International Operations
Foreign operations could be seized
Different and often little-understood social, cultural, demographic, environmental, political, governmental, legal, technological, economic, and competitive forces
Weakness of competitors overestimated
Different language, culture, and value systems
Understanding of regional organizations needed
Dealing with two or money systems
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9. How to gain and maintain exports to other nations
The Global Challenge
How to gain and maintain exports to other nations
How to defend domestic markets against imported goods
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10. Changes in the Global Economy
Corporations are obtaining customers globally
Markets are shifting rapidly and converging in tastes, trends, and prices
Innovative transport systems are accelerating transfer of technology
Nature and location of production systems are shifting
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11. Protectionism
Countries imposing tariffs, taxes, and regulations on firms outside the country to favor their own companies and people
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12. Reasons for Global Expansion
Advancements in telecommunications
Growth in demand for goods and services outside the U.S. is considerably higher than inside
95% of the world's population lives outside the U.S.
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13. Globalization Globalization:
The process of doing business worldwide
Global strategy includes considering global needs during
Design
Production
Marketing
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14. A Weak Economy Recession
Two consecutive quarters of a decline in real gross domestic product
Many countries have recently experienced a recession
Unemployment rates are high across the U.S. and around the world
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15. Cultural Differences Time Space Family roles Religious factors
Family time
Values
Eating
Rules of etiquette
Importance of relationships
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16. European Business Cultures
Participatory management
Most workers are unionized
More frequent vacations and holidays
Guaranteed permanent employment common
Workers often resent pay for performance, commissions, and objective measurement and reward systems
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17. Asian Business Cultures
First names are not generally used in business
Extended periods of silence are important
A sale is the beginning, not the end of a relationship
Resting, listening, meditating, and thinking are considered productive
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18. Mexican Business Culture
Low tolerance for adversarial relations or friction at work
Employers are paternalistic
Workers do not expect self-expression or initiative at work
Businesses stress collectivism, continuity, cooperation, belongingness, formality, and doing exactly what you are told
Rarely entertain business associates at homes
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19. Mexican Business Culture continued
Preserving one’s honor, saving face, and looking important are valued
Opinions expressed by employees are often regarded as back talk
Supervisors are viewed as weak if they explain the rationale for their orders to workers
Mexicans often do not follow rules
Life is slower in Mexico, tardiness is common
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20. Japanese Business Culture
Importance of group loyalty and consensus called “Wa”
Constant discussion and compromise
Silence is a plus in formal meetings
When confronted with disturbing questions, managers often remain silent
Managers are reserved, quiet, distant, introspective, and other oriented
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21. Communication Differences Across Cultures
Italians, Germans, and French do not soften up executives with praise before a criticism
Israelis are accustomed to fast paced meetings
British executives complain that Americans chatter too much
Europeans feel that they are being treated like children when asked to wear nametags
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22. Communication Differences Across Cultures continued
Executives in India are used to interrupting each other
In Malaysia and Japan periods of silence are appropriate, no silence is needed in Israel
“How was your weekend?” is considered intrusive by many business people
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23. Worldwide Tax Rates US and Japan 38% Asia-Pacific Region 30%
Germany 30%
Great Britain 28%
France 27%
Europe 26%
Ireland near 0%
Former Soviet-Bloc nations near 0%
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24. India Debt is 80% of GDP Gap between rich and poor widening
Middle class is growing
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25. Joint Ventures in India
Joint ventures are mandatory for foreign companies doing business in India
Foreign firms restricted to 74% ownership of India-based firms
Most joint ventures in India fail
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