Management & Organization Behavior class Three different Discussions
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IPPTChap006.pptxInternational Management
Chapter Six
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Learning Objectives
LO1 Discuss what integration of the global economy means for individual companies and their managers
LO2 Describe how the world economy is becoming more integrated than ever before
LO3 Define the strategies organizations use to compete in the global marketplace
LO4 Compare the various entry modes organizations use to enter overseas markets
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Learning Objectives (cont.)
LO5 Explain how companies can approach the task of staffing overseas operations
LO6 Summarize the skills and knowledge managers need to manage globally.
LO7 Identify ways in which cultural differences across countries influence management
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Implications of a Flat World
Expansion of international trade
Foreign direct investment (FDI) is playing an ever-increasing role in the global economy
Imports are penetrating deeper into the world’s largest economies
Companies are finding their home markets under attack from foreign competitors
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U.S. Exports as a Share of U.S. Output
Figure 6.1
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Implications of a Flat World
Opportunities are greater
Environment is more complex and competitive
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Relative Growth in World Merchandise Exports by Major Product Group
Figure 6.2
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The Role of Outsourcing
Outsourcing
Contracting with an outside provider to produce one or more of an organization’s goods or services.
Offshoring
Moving work to other countries.
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Factors to Consider for Offshoring
What is the competitive advantage of the products they offer?
Is the business in its early stages?
Can production savings be achieved locally?
Can the entire supply chain be improved?
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The Global Environment
The global economy is dominated by countries in three regions: North America, Western Europe, and Asia
Other developing countries and regions represent important areas for economic growth
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Key Issues of the Global Environment
Table 6.1
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European Unification
Europe is integrating economically to form the biggest market in the world
Certain structural issues within Europe need to be corrected for the EU to function effectively.
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Top U.S. Trading Partners Based on Total Imports and Exports
Figure 6.4
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Question
What economic pact that combined the economies of the United States, Canada, and Mexico?
HAFTA
NAFTA
EU
South American FTA
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The correct answer is b - NAFTA. See next slide.
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The Americas
North American Free Trade Agreement (NAFTA)
An economic pact that combined the economies of the United States, Canada, and Mexico into one of the world’s largest trading blocs
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Organizational Models
Figure 6.5
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Choosing a Global Strategy
International model
composed of a company’s overseas subsidiaries and characterized by greater control by the parent company over the research function and local product and marketing strategies than in the multinational model.
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Choosing a Global Strategy
Multinational model
consists of the subsidiaries in each country in which a company does business and provides a great deal of discretion to those subsidiaries to respond to local conditions
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Choosing a Global Strategy
Global model
consists of a company’s overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations
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typically adopted by organizations that base their global competitive strategy on cost considerations.
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Choosing a Global Strategy
Transnational model
characterized by centralizing certain functions in locations that best achieve cost economies
basing other functions in the company’s national subsidiaries to facilitate greater local responsiveness
fostering communication among subsidiaries to permit transfer of technological expertise and skills.
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Comparison of Entry Modes
Table 6.2
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Exporting
Advantages of exporting:
Provides scale economies by avoiding the costs of manufacturing in other countries
Consistent with a pure global strategy
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Licensing
International licensing
an arrangement by which a licensee in another country buys the rights to manufacture a company’s product in its own country for a negotiated fee (typically, royalty payments on the number of units sold)
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Franchising
Franchising
the company sells limited rights to use its brand name to franchisees in return for a lump-sum payment and a share of the franchisee’s profits.
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Joint Ventures
Joint ventures benefit a company through:
the local partner’s knowledge of the host country’s competitive conditions, culture, language, political systems, and business systems
the sharing of development costs and/or risks with the local partner.
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Managing across Borders
Expatriates
Parent-company nationals who are sent to work at a foreign subsidiary
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Managing across Borders
Host-country nationals
Natives of the country where an overseas subsidiary is located
Third-country nationals
Natives of a country other than the home country or the host country of an overseas subsidiary.
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Stressors and Coping Responses in the Developmental Stages of Expatriate Executives
Table 6.3
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Skills of the Global Manager
15% of all employee transfers are to international locations
Failure rate ranges from 20%-70%
Failure rate
the number of expatriate managers of an overseas operation who come home early
communication is key to reducing the failure rate
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Identifying International Executives
Table 6.4
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How to Prevent Failed Global Assignments
Table 6.5
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Understanding Cultural Issues
Ethnocentrism
The tendency to judge others by the standards of one’s group or culture, which are seen as superior
Culture shock
The disorientation and stress associated with being in a foreign environment.
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Understanding Cultural Issues
Power distance
the extent to which a society accepts the fact that power in organizations is distributed unequally
Individualism/ collectivism
the extent to which people act on their own or as a part of a group.
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Understanding Cultural Issues
Uncertainty avoidance
the extent to which people in a society feel threatened by uncertain and ambiguous situations.
Masculinity/ femininity
the extent to which a society values quantity of life over quality of life
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Positions of 40 Countries on the Power Distance and Individualism Scales
Figure 6.6
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Question
What is a foreign national brought in to work at the parent company?
Expatriate
Non-patriate
Inpatriate
Unpatriate
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The correct answer is c – inpatriate. See next slide.
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Understanding Cultural Issues
Inpatriate
A foreign national brought in to work at the parent company.
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Understanding Cultural Issues
Americans tend to have specific views about the purpose of meetings and how much time can be spent.
International workers may have different preconceptions about the nature and length of meetings, and managers should make sure foreign nationals are comfortable with the American approach.
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Understanding Cultural Issues
Workers from other countries can work long hours but, in countries with strong labor organizations, often get many more weeks of vacation than American workers.
Europeans in particular may balk at working on weekends.
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Video: Wal-Mart - Push into Africa
What are some advantages of entering a foreign market via an acquisition.?
Do you see any drawbacks to Wal-Mart’s recent decision to acquire the Mass Mart chain in South Africa?
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