1. Managing in a Global Environment
Chapter 3
Managing in a Global Environment

2. A Borderless World
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

3. 3.1 - Ranking of Six Countries
on the Globalization Index

4. Global Mindset
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

5. The Impact of Multinational Corporations (MNC)
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

6. The Impact of Multinational Corporations (MNC)
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

7. The Globalization Backlash
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

8. The Globalization Backlash
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

9. Serving the Bottom of the Pyramid (BOP)
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

10. 3.2 - Strategies for Entering
the International Arena

11. Getting Started Internationally
Exporting – transferring products for sale to foreign countries
Outsourcing – also called offshoring, work activities are done in countries with cheap labor

12. Getting Started Internationally
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

13. The International Business Environment
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

14. 3.3 - Key Factors in
International Environment

15. The Economic Environment
Economic development – Countries are categorized as either developed or developing based on per capita income
Government policies
Market size
Financial markets
Infrastructure

16. 3.4 - Country Competitiveness
Comparison

17. Economic Environment Economic interdependence
The current economic crisis has highlighted how interconnected economies are around the world

18. 3.5 - How Countries are Bearing
the Economic Crisis

19. The Legal-Political Environment
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

20. The Sociocultural Environment
The values and behaviors that govern U.S. business do not always translate
Social values
Communication differences

21. Hofstede’s Value Dimensions
Power distance
Uncertainty avoidance
Individualism and collectivism
Masculinity and femininity

22. 3.6 - Rank Orderings of Ten
Countries Along Four Dimensions of
National Value Systems

23. GLOBE Project Value Dimensions Assertiveness Future orientation
Gender differentiation
Performance orientation
Humane orientation

24. 3.7 - Examples of Country Rankings
on Selected GLOBE Value
Dimensions

25. 3.8 - High-Context and
Low-Context Cultures

26. Changing International Landscape
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

27. Changing International Landscape
India is a service giant, growing in software design and engineering
Brazil is a country that is gaining the attention of American managers

28. International Trade Alliances
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

29. International Trade Alliances
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

30. 3.9 - The Nations of the
European Union