Chapter 4

Managing in a Global Environment

 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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4.2 Four Stages of Globalization

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 International Market Strategies

• Exporting – transferring products for sale to foreign

countries
• Outsourcing – also called off shoring, work activities are
done in countries with cheap labor
• 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

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4.3 Strategies for Entering the
International Arena

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 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

marketplace

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 4.4 Key Factors in
International Environment

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 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
• Resource and Product Markets
– Companies must evaluate market demand
The current economic crisis has highlighted how interconnected
economies are around the world

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 The Legal-Political Environment

• 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

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 The Sociocultural Environment

The values and behaviors that govern U.S.

business do not always translate
– Social Values
– Communication Differences
– Other Cultural Characteristics
→ Language
→ Religion
→ Social organization
→ Education
→ Attitudes
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 Hofstede’s Value Dimensions

 Power Distance
 Uncertainty Avoidance
 Individualism and Collectivism
 Masculinity and Felinity

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 4.9 High-Context and
Low-Context Cultures

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 Developing Cultural Intelligence

• Cultural intelligence – ability to use reasoning

and observation skills
– Culturally flexible
– Adapt to new situations

• Managers must study the language and learn

• Cognitive, emotional, and physical intelligence

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 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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