CURRENT TOPICS IN

MANAGEMENT
MODULE 7

INTRODUCTION TO MANAGEMENT

What Is Global Business?

Global Business
The buying and selling of goods and
services by people from different
countries.

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

The Impact of Global Business

Multinational Corporation
A corporation that owns businesses in
two 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.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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)
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

Choosing an Office/Manufacturing
Location
Qualitative factors
work force quality
company strategy

Quantitative factors
kind of facility
exchange rates
transportation and labor
costs
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

Worlds Best Cities for Business

United States
1. New York City
2. Chicago
3. Toronto
4. Atlanta
5. Los Angeles

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Latin America
1. Santiago
2. Miami
3. Sao Paulo
4. Monterrey
5. Mexico City

Europe
1. London
2. Paris
3. Frankfurt
4. Brussels
5. Amsterdam

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

Asia Pacific
1. Shanghai
2. Beijing
3. New Delhi
4. Hong Kong
5. Mumbai

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

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

Becoming Aware of
Cultural Differences
National Culture
The set of shared values and beliefs
that affects the perceptions, decisions,
and behavior of the people from a
particular country.

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Do not base adaptations on outdated and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 companys culture

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

The Global Environment

In the past, managers have viewed the global
sector as closed.
Each country or market was assumed to be
isolated from others.
Firms did not consider global competition,
exports.
Todays environment is very different.
Managers need to view it as an open market.
Organizations buy and sell around the world.
Managers need to learn to compete globally.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Tariff Barriers
A tariff is a barriers to trade.
Tariffs are taxes levied upon imports.
These seek to protect jobs in the home country.
Other countries usually retaliate.
Free trade: in a free trade agreement, each country
seeks to specialize in things they make most
efficiently.
If India is more efficient in making textiles, and the
USA in making computer software, then each
country should focus on these.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Effects on Managers
Declining barriers have opened great opportunities for
managers.
Managers can not only sell goods and services but
also buy resources and components globally.
Managers now face a more dynamic and exciting job
due to global competition.

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Free Trade
NAFTA: North American Free Trade Agreement.
Abolishes most tariffs on goods traded between
Mexico, Canada and the U.S.
Allows unrestricted cross-border flows of
resources.
Many U.S. firms have now invested in Mexico.
This is a manufacturing opportunity.
Wage costs are lower in Mexico.
Can serve Mexico with a plant in Mexico and
reduce freight.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Global Task Environment

Suppliers

Competitors

Forces yielding
Opportunities
and threats

Distributors

Customers
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PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Suppliers & Distributors

Managers buy products from global suppliers or make
items abroad and supply themselves.
Key is to keep quality high and costs low.
Global outsourcing: firms buy inputs from
throughout the world.
GM might build engines in Mexico, transmissions
in Korea, and seats in the U.S.
Finished goods become global products.
Distributors: each country often has a unique system
of distribution.
Managers must identify all the issues.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Customers & Competitors

Formerly distinct national markets are merging into a
huge global market.
True for both consumer and business goods.
Creates large opportunities.
Still, managers often must customize products to fit
the culture.
McDonald's sells a local soft drink in Brazil.
Global competitors present new threats.
Increases competition abroad as well as at home.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Long-Term and Short-Term

Outlook
Long-term outlook is based on values of saving, and
persistence.
Taiwan and Hong Kong are cultures that are long term in outlook.
Short-term outlook seeks the maintenance of personal
stability or happiness right now.
France and the U. S. are examples of this approach.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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International Expansion
Importing and Exporting: the least complex method of
expansion.
Exporting: firm makes products and sells abroad.
Importing: firm sells products made abroad.
Licensing: firm allows foreign organization to make and
distribute goods for a fee.
Helps the home firm since it does not have to set up a
complete production and distribution network.
Franchising: company sells a foreign organization the
rights to use brand name and know-how in return for
payment and profit percentage.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Ethics, Social
Responsibility,
and Diversity
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Ethics and Stakeholders

Stakeholders: people or groups that have an interest
in the organization.
Stakeholders include employees, customers,
shareholders, suppliers, and others.
Stakeholders often want different outcomes and
managers must work to satisfy as many as
possible.
Ethics: a set of beliefs about right and wrong.
Ethics guide people in dealings with stakeholders
and others, to determine appropriate actions.
Managers often must choose between the
conflicting interest of stakeholders.
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Ethics
It is difficult to know when a decision is ethical. Here
is a good test:
Managerial Ethics:
If a manager makes a decision falling within usual
standards, is willing to personally communicate the
decision to stakeholders, and believes friends would
approve, then it is likely an ethical decision.

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Ethical Model
Social Ethics:
Legal rules, customs

Organizations
Code of Ethics

Professional Ethics:
Values in workplace
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Individual Ethics:
Family influence

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Ethical Origins
Societal Ethics: standards that members of society
use when dealing with each other.
Based on values and standards found in
societys legal rules, norms, etc.
Societal ethics vary based on a given society.
Strong beliefs in one country may differ
elsewhere.
Example: bribes are an accepted business practice
in some countries.

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Ethical Origins
Professional ethics: values and standards used by
groups of managers in the workplace.
Applied when decisions are not clear-cut ethically.
Example: physicians and lawyers have professional
associations that enforce these.
Individual ethics: values of an individual resulting
from their family& upbringing.
If behavior is not illegal, people will often disagree
on if it is ethical.
Ethics of top managers set the tone for firms.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Ethical Decisions
A key ethical issue is how to disperse harm and benefits
among stakeholders.
If a firm is very profitable for two years, who should
receive the profits? Employees, managers and
stockholders all want a share.
Should we keep the cash for future slowdowns?
What is the ethical decision?
What about the reverse, when firms must layoff
workers.
Final point: stockholders are the legal owners of the
firm!
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Ethical Decisions
Some other issues managers must consider.
Should you hold payment to suppliers as long as
possible to benefit your firm?
This will harm your supplier who is a
stakeholder.
Should you pay severance pay to laid off workers?
This may decrease the stockholder's return.
Should you buy goods from overseas firms that
hire children?
If you dont the children might not earn enough
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money to eat.

Social Responsibility
Social Responsibility: the managers duty to nurture,
protect and enhance the welfare of stakeholders.
There are many ways managers respond to this duty:

Obstructionist response: managers choose not to be

socially responsible.
Managers behave illegally and unethically.
They hide and cover-up problems.
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PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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 Defensive response: managers stay within the law but

make no attempt to exercise additional social
responsibility.
Put shareholder interest above all other stakeholders.
Managers say society should make laws if change is
needed.
Accommodative response: managers realize the need
for social responsibility.
Try to balance the interests of all stakeholders.
Proactive response: managers actively embrace social
responsibility.
Go out of their way to learn about and help
stakeholders.
MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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Levels of Responsibility

Obstruction
response

Low

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Defensive
response

Accommodative
response

Social responsibility

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

Proactive
response

High

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How to Manage Diversity

Increase diversity awareness: managers need to
become aware of their own bias.
Understand cultural differences and their impact on
working styles.
Practice effective communication with diverse
groups.
Be sure top management is committed to diversity.

MGT 301

PREPARED & PRESENTED BY:

ALI RASHID CHEEMA

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