Chapter 8 Gobal Management
description
Transcript of Chapter 8 Gobal Management
1
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Chapter 8
Prepared byDeborah Baker
Texas Christian University
Management4th Edition
Chuck Williams
GlobalManagement
2
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
What Would You Do?
MTV and VH1 revolutionized the music business and pioneered some of the first reality shows
But, MTV is not successful internationally—competition is intense, revenues are low and costs are high
However, with population growth and increased TV purchases, there are tremendous opportunities
MTV International Headquarters, London, England.
How should MTV expand internationally?
3
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
What Is Global Business?
After reading this section, you should be able to:
1. discuss the impact of global business and the trade rules and agreements that govern it.
4
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
What Is Global Business?
11
Global Business
The buying and selling of goods andservices by people from different countries.
5
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
The Impact of Global Business
1.11.1
Multinational Corporation
A corporation that owns businesses intwo or more countries.
Direct Foreign Investment
A method of investment in which a company builds a new business or buys an existing business in a foreign country.
6
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Foreign Investment in the U.S.
1.11.1
7
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Foreign Investment in the U.S.
Adapted from Exhibit 8.1
1.11.1
Investment coming into the U.S., like this Honda Motor plant in Ohio, totaled $106 billion in 2004.
8
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
U.S. Foreign Investment Abroad
Adapted from Exhibit 8.2
1.11.1
9
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Trade Barriers
Nontariff Barriers
Nontariff Barriers
TariffTariff
Voluntary export restraintsVoluntary export restraints
Government import standards Government import standards
Customs Valuation / ClassificationCustoms Valuation / Classification
QuotasQuotas
Government SubsidiesGovernment Subsidies
1.21.2
10
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Trade Agreements
Regional Trading Zones
Regional Trading Zones
General Agreementon Tariffs and Trade
General Agreementon Tariffs and Trade
Maastricht Treaty of EuropeMaastricht Treaty of Europe
NAFTA and CAFTA NAFTA and CAFTA
ASEAN and APECASEAN and APEC
FTAAFTAA
1.31.3
11
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
GATT
GATT made it easier and cheaper for consumers in all countries to buy foreign products.
Tariffs were cut 40 percent on average worldwide by 2005
Tariffs were eliminated in 10 specific industries Stricter limits were put on government subsidies GATT established protections for intellectual property Trade disputes between countries now are fully settled
by arbitration panels from the WTO
1.31.3
12
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
World Trade Organization
Location: Location: Geneva, SwitzerlandGeneva, SwitzerlandEstablished: Established: 1 January 19951 January 1995Created by: Created by: Uruguay Round Uruguay Round negotiations (1986-1994)negotiations (1986-1994)Membership:Membership: 148 countries 148 countries (as of 13 October 2004)(as of 13 October 2004)Budget: Budget: 169 million Swiss francs169 million Swiss francsfor 2005for 2005Secretariat staff: Secretariat staff: 630630Head: Head: Supachai Panitchpakdi Supachai Panitchpakdi (director-general(director-general
Functions:Functions: Administering WTO trade Administering WTO trade
agreementsagreements Forum for trade negotiationsForum for trade negotiations Handling trade disputesHandling trade disputes Monitoring national trade Monitoring national trade
policiespolicies Technical assistance and Technical assistance and
training for developing training for developing countriescountries
Cooperation with other Cooperation with other international organizationsinternational organizations
Adapted from Exhibit 8.3
1.31.3 http://www.wto.orgWeb Link
13
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Maastricht Treaty of Europe
Formed in 1992 with 12 European countries
Total membership is now 25 countries
Transformed these countries into the European Union, forming one economic market and one common currency (the Euro)
Opened up and simplified trade among member nations
1.31.3 http://europa.eu.int/Web Link
14
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
NAFTA
North American Free Trade Agreement between Canada, United States, & Mexico
Liberalizes trade among these three nations
Eliminates most tariffs and barriers
1.31.3 http://www.mac.doc.gov/nafta/Web Link
15
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
FTAA
Free Trade of the Americas
Proposed agreement to establish a free trade zone throughout the Western Hemisphere Remove nontariff barriers Reduce tariffs to zero Standardize financial markets Establish process for handling trade disputes
1.31.3 http://www.ftaa-alca.orgWeb Link
16
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
ASEAN and APEC
ASEAN Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand, and Vietnam
APEC Australia, Canada, Chile, China, Hong Kong, Japan,
Mexico, New Zealand, Papua New Guinea, Peru, Russia, South Korea, Taiwan, United States, and ASEAN members (except Cambodia, Laos, and Myanmar)
1.31.3http://www.aseansec.org
http://www.apecsec.org.sgWeb Link
17
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Consumers, Trade Barriers, and Trade Agreements
American consumers get more for their moneythan most other consumers in the worldbecause:
1.41.4
U.S. marketplace is easiest for foreign companies to enter ANDCompetitive market between domestic and foreign companies keeps prices low
18
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Consumers, Trade Barriers, and Trade Agreements
1.41.4
Decrease price of:food
clothingnecessities
luxuries
Decrease price of:food
clothingnecessities
luxuries
Increase:choices
competitionpurchasing power
Increase:choices
competitionpurchasing power
Free Trade Free Trade AgreementsAgreementsFree Trade Free Trade AgreementsAgreements
19
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
How to Go Global?
After reading these sections, you should be able to:
2. describe why companies choose to standardizeor adapt their business procedures.
3. explain the different ways that companiescan organize to do business globally.
20
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Consistency or Adaptation?
GlobalConsistency
GlobalConsistency
When a multinational company has offices/plants indifferent countries anduses the same rules, guidelines,policies, and procedures
When a multinational company has offices/plants indifferent countries anduses the same rules, guidelines,policies, and procedures
Local Adaptation
Local Adaptation
When a multinational company modifies its rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies
When a multinational company modifies its rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies
22
21
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Consistency or Adaptation
A blend of consistency and adaptation makes the “Pop Idol” TV show format successful around the world
Deutschland sucht den SuperStar
22
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Doing the Right Thing
Fair and Safe Working Conditions in Foreign Factories
Make sure there is no forced labor or child labor
Provide a safe and healthy working environment
Respect the right of employees to freedom of association and collective bargaining
Provide legally required benefits
Fair and Safe Working Conditions in Foreign Factories
Make sure there is no forced labor or child labor
Provide a safe and healthy working environment
Respect the right of employees to freedom of association and collective bargaining
Provide legally required benefits
23
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Forms for Global Business
CooperativeContracts
StrategicAlliances
Exporting
Wholly OwnedAffiliates
GlobalNew
Ventures
33
24
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Exporting
Less dependence on home market sales
Greater degree of control over research, design, and production decisions
Less dependence on home market sales
Greater degree of control over research, design, and production decisions
Advantages
3.13.1
25
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Exporting
Many exports are subject to tariff and nontariff barriers
Transportation costs can increase price
Companies may depend on foreignimporters for product distribution
Many exports are subject to tariff and nontariff barriers
Transportation costs can increase price
Companies may depend on foreignimporters for product distribution
Disadvantages
3.13.1
26
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Cooperative Contracts
LicensingLicensing
A domestic company receives royaltypayments for allowing another company to produce its product, sella service, or use its brand name in aspecified foreign market
A domestic company receives royaltypayments for allowing another company to produce its product, sella service, or use its brand name in aspecified foreign market
FranchisingFranchising
A collection of networked firms in which the manufacturer or marketer ofa product/service licenses the entirebusiness to another person or organization
A collection of networked firms in which the manufacturer or marketer ofa product/service licenses the entirebusiness to another person or organization
3.23.2
27
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Licensing
Allows companies to earn profits withoutinvesting more money
The licensor invests in production equipment and facilities
Helps companies avoid tariff and nontariff barriers
Allows companies to earn profits withoutinvesting more money
The licensor invests in production equipment and facilities
Helps companies avoid tariff and nontariff barriers
Advantages
3.23.2
28
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Licensing
Licensor gives up control over quality of the product or service sold by the foreign licensee
Licensees can eventually become competitors
Licensor gives up control over quality of the product or service sold by the foreign licensee
Licensees can eventually become competitors
Disadvantages
3.23.2
29
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Franchising
Fast way to enter foreign markets
Good strategy when a company’sdomestic sales have slowed
Fast way to enter foreign markets
Good strategy when a company’sdomestic sales have slowed
Advantages
3.23.2
30
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Franchising
Franchisors face a loss of control
Franchising success may be culture-bound
Franchisors face a loss of control
Franchising success may be culture-bound
Disadvantages
3.23.2
31
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Strategic Alliances
StrategicAlliance
StrategicAlliance
An agreement in which companies combine key resources, costs, risk, technology, and people
An agreement in which companies combine key resources, costs, risk, technology, and people
Joint VentureJoint VentureA strategic alliance in which twoexisting companies collaborate toform a third, independent company
A strategic alliance in which twoexisting companies collaborate toform a third, independent company
3.33.3
32
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Joint Ventures
Help companies avoid tariff and nontariff barriers to entry
Participating companies bear only partof the costs and risks
Advantageous to smaller local partners
Help companies avoid tariff and nontariff barriers to entry
Participating companies bear only partof the costs and risks
Advantageous to smaller local partners
Advantages
3.33.3
33
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Joint Ventures
Companies must share profits
Joint venture represent a merging offour cultures
With equal ownership, power struggles and a lack of leadership may occur
Companies must share profits
Joint venture represent a merging offour cultures
With equal ownership, power struggles and a lack of leadership may occur
Disadvantages
3.33.3
34
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Wholly Owned Affiliates (Build or Buy)
Parent company receives all of the profits and has complete control
Parent company receives all of the profits and has complete control
Advantages
Expense of building new operationsor buying existing business
Losses can be immense if the venture fails
Expense of building new operationsor buying existing business
Losses can be immense if the venture fails
Disadvantages
3.43.4
35
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Global New Ventures
Quick, reliable air travelQuick, reliable air travel
Low-cost communication technologiesLow-cost communication technologies
Critical mass of experienced businesspeopleCritical mass of experienced businesspeople
3.53.5
36
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Common Factors of Global New Ventures
Global vision is developed and communicatedGlobal vision is developed and communicated
Several foreign markets are entered at the same time
Several foreign markets are entered at the same time
3.53.5
37
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Where to Go Global?
After reading these sections, you should be able to:
4. explain how to find a favorable business climate.
5. discuss the importance of identifying andadapting to cultural differences.
6. explain how to successfully prepare workersfor international assignments.
38
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Finding the Best Business Climate
Access toGrowingMarkets
Access toGrowingMarkets
Location to
Build
Location to
BuildMinimalPolitical
Risk
MinimalPolitical
Risk
44
39
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Growing Markets
Purchasing Power comparison of a standard set of goods and
services in different countries more means greater growth potential
Degree of Global Competition the number and quality of companies already
in the market
4.14.1
40
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Choosing an Office/Manufacturing Location
Qualitative factors work force quality company strategy
Quantitative factors kind of facility tariff and nontariff barriers exchange rates transportation and labor
costs4.24.2
41
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Choosing an Office/Manufacturing Location
4.24.2Exhibit 8.6
42
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
World’s Best Cities for Business
United States1. New York City2. Chicago3. Toronto4. Atlanta5. Los Angeles
Latin America1. Santiago2. Miami3. Sao Paulo4. Monterrey5. Mexico City
Asia Pacific1. Shanghai2. Beijing3. New Delhi4. Hong Kong5. Mumbai
Europe1. London2. Paris3. Frankfurt4. Brussels5. Amsterdam
Adapted from Exhibit 8.7
4.24.2
43
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Minimizing Political Risk
Political uncertainty risk of major changes in political regimes
Policy uncertainty risk associated with changes in laws and
government policies directed at businesses
Strategies avoidance control cooperation
4.34.3
44
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Long-Term Political Risk in the Middle East
Adapted from Exhibit 8.8
4.34.3
45
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Becoming Aware of Cultural Differences
55
National Culture
The set of shared values and beliefs that affects the perceptions, decisions, and behavior of the people from a particular country.
46
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Becoming Aware of Cultural Differences
In Saudi Arabia, store mannequins must not have heads or limbs that would indicate gender.
55
47
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Becoming Aware of Cultural Differences
Cultural Dimensions (Geert Hofstede)
Power distance Individualism Masculinity and femininity Uncertainty avoidance Short-term/long-term orientation
55
48
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Hofstede’s Five Cultural Dimensions
55
49
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Cultural Differences
Recognize cultural differences
Decide how to adapt your company to those differences
Do not base adaptations on outdated and incorrect assumptions about a company’s culture
55
50
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Preparing for an International Assignment
66
Expatriate
Someone who lives and works outside his or her native country.
51
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Preparing for an International Assignment
Language andCross-Cultural Training
Language andCross-Cultural Training
Considerationof Spouse, Family,
and Dual-Career Issues
Considerationof Spouse, Family,
and Dual-Career Issues
66
52
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Language and Cross-Cultural Training
Documentary TrainingDocumentary Training
Cultural SimulationCultural Simulation
Field ExperiencesField Experiences
6.16.1
53
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Spouse, Family, and Dual-Career Issues
Adaptability ScreeningAdaptability Screening
Intercultural TrainingIntercultural Training
6.26.2
54
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
What Really Works:Cross-Cultural Training
Psychological Well-Being & Self Development10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 79%
Self-Development
Fostering Relationships with Native Citizens10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 74%
Fostering Relationships
6.26.2
55
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
What Really Works
Accurate Cultural Perceptions10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 74%
Accurate Perceptions of Culture
Rapid Adjustment to Foreign Cultures and Countries10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 74%
Rapid Adjustment
6.26.2
56
Chapter 8Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
What Really Works
On-the-Job Performance10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 71%
Job Performance
6.26.2