1. Managing in a Global Environment
Chapter 4
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
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3. International Market Strategies
Exporting
Outsourcing
Licensing
Direct Investing
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4. International Management
Management of business operations conducted in more than one country.
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5. The International Business Environment
Planning, organizing, leading, and controlling in multiple countries can be challenging
It took McDonalds a year to figure out that Hindus in India do not eat beef
In Africa, the baby food includes pictures to aid illiterate consumers
Managers must be mindful in the global market place.
When they are comparing one country with another, the economic,legal-political and socio cultural sectors present greatest difficulties.
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6. 4.4 Key Factors in International Environment
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7. The Economic Environment
Economic Development - Countries are categorized as either developed or developing based on per capita income
Developed countries
Developing countries
Resource and Product Markets
When operating in another country, managers must evaluate market demand for their products and services
ECONOMIC INTERDEPENDANCE-
The current economic crisis has highlighted how interconnected economies are around the world
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8. The Legal-Political Environment
Business must deal with unfamiliar political systems when they go international.
Issues faced:
Political risk is defined as the risk of lost assets, earning power, or managerial control
Managers must be concerned with the political instability of global markets.
Political instability includes riots ,revolutions, civil disorders and frequent changes in government.
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9. The Sociocultural Environment
One way managers can get a handle on local cultures is to understand differences in social values.
Social Values
Communication Differences
Other Cultural Characteristics
Language
Religion
Social organization
Education
Attitudes
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10. Hofstede’s Value Dimensions
Power Distance
Uncertainty Avoidance
Individualism and Collectivism
Masculinity and Felinity
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11. Developing Cultural Intelligence
Managers working internationally need cultural intelligence.
Cultural intelligence – ability to use reasoning and observation skills to interpret unfamiliar situations and devise appropriate behavioral response
Culturally flexible
Adapt to new situations
Managers must study the language and learn
Cultural Intelligence includes three components.
Cognitive, emotional, and physical intelligence
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12. 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
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 trading bloc
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13. China-ASEAN Free Trade Area
Trading alliance of ten countries
World’s third largest free-trade area
1.9 billion people and $45 trillion in trade
Remove all tariffs between China and ASEAN countries by 2015
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14. 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
Controlled by one management authority
MNC managers must have a global perspective
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15. 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
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