Managing in A Global Environment

Managing in a
Global Environment
Developed by Cool Pictures & MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning. All rights reserved.
Four Stages of Globalization
Domestic stage:
 market potential is limited to the home country.
 production and marketing facilities located at home.
International stage:
 exports increase.
 company usually adopts a multi-domestic approach.
Multinational stage:
 marketing and production facilities located in many countries.
 more than 1/3 of its sales outside the home country.
Global (or stateless) stage:
 making sales and acquiring resources in whatever country offers the best deal.
 ownership, control, and top management tend to be dispersed.
Why the Need for a
Global Strategy
• Business is becoming a unified global field.

• For many, domestic markets are saturated.
Principles of
International Business
1. Always show respect and listen, don’t be in a hurry.

2. Try to gain an appreciation for the differences between Hofsede’s “masculine” and “feminine”
cultures.
3. Do not feel your way is the best way.
4. Emphasize points of agreement.
5. Discern the perceived definitions of words.
6. Save face as well as giving face.
7. Don’t embarrass anyone in front of others
8. Know or take someone who knows the culture.
9. Understand that leadership may mean different things to different countries.
10. Don’t lose your temper.
11. Avoid clique-building.
12. Always show respect.
13. Leave the American task oriented, fast paced style at home
14. Eliminate stereotypes.
15. Be sensitive to the difference between low context culture and high context cultures
16. Learn to tolerate a high degree of unpredictability.
Legal-Political
Key Factors in the •Political risk
Economic •Laws, restrictions

International •Economic development •Government takeovers
Environment •Resource & product markets •Tariffs, quotas, taxes

•Terrorism, political instability
•Per capita income
•Infrastructure
•Exchange rates
•Economic conditions Organization
Sociocultural
•Social values, beliefs
•Language
•Religion (objects, taboos, holidays)
•Kinship patterns
•Formal education, literacy
•Time orientation
The Economic Environment
Includes such factors as:

 economic development.
 Infrastructure.
 resource and product markets.
 exchange rates.
 inflation, interest rates, and economic growth.
Legal-Political Environment
 Political Risk
• risk of loss of assets, earning power, or managerial control.
 Political Instability
• includes government takeovers, civil disorders.
 Laws and Regulations
• laws and regulations differ from country to country.
• most visible changes in legal-political factors grow out of
international trade agreements (GATT, EU, NAFTA).
GATT
 General Agreement on Tariffs and Trade (GATT)

 Signed by 23 nations in 1947 as a set or rules.
 Ensured nondiscrimination, clear procedures, negotiation of disputes, and
participation of lesser developed countries in international trade.
 Today, 100 member countries abide by the rules.
 Primary tools GATT successor, WTO.
 tariff concessions, countries agree to limit level of tariffs on imports
from other members.
 most favored nation clause.
 Overall goal:
 closer relationships among member nations.
 help operate the global marketplace more efficiently.
European Union
 European Union (EU)

• Formed in 1958 to improve economic and social
conditions.
• Has 15-nation alliance.
• EU’s monetary revolution, introduction of the Euro.
• Euro is the single European currency that replaced
11 national currencies.
Fifteen Nations Within the EU
North American
Free Trade Agreement
North American Free Trade Agreement (NAFTA)

 went into effect on January 1, 1994.
 merged the United States, Canada, and Mexico with
more that 360 million consumers.
 breaks down tariffs and trade restrictions on most
agriculture and manufactured products.
 August 12, 1992 agreements in number of key areas
include: agriculture and manufactured products.
Trade Alliances:
Promise or Pitfall?
Will trade blocs evolve

into three powerful
Will trade blocs lead to
trading blocs?
economic warfare?
Only the future

will answer these
questions.
Will stateless
corporations
bypass trading
zones?
Sociocultural Environment
• Includes shared:
 knowledge.
 beliefs
 values
 common modes of behavior
 common ways of thinking
Dimensions of
Social Value Systems
 Power distance.
 Uncertainty avoidance.
 Individualism & collectivism.
 Masculinity/femininity.
 Long term versus short term orientation.
Additional Cultural Influences for
International Organizations Consideration
• Language
• Religion
• Attitudes
• Social organization
• Education
Strategies for Entering
International Markets
High
Ownership of Foreign Operations
Greenfield Venture
Acquisition
Joint Venture
Franchising
Licensing
Exporting
Low
Low Cost to Enter Foreign Operations High
Managing Cross Culturally
Managers must be sensitive to cultural subtleties in:

 leadership
 decision making
 motivation
 control
 must be culturally flexible and easily adapt to new
situations
 cannot be ethnocentric
 Culture Shock may lead to frustration and anxiety
Two Keys When
Operating Internationally
 Personal learning.
 Personal growth.

Managing in A Global Environment

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Managing in A Global Environment

Uploaded by

Copyright:

Available Formats

Managing in a

• Business is becoming a unified global field.

1. Always show respect and listen, don’t be in a hurry.

Key Factors in the •Political risk

Economic •Laws, restrictions

Environment •Resource & product markets •Tariffs, quotas, taxes

Includes such factors as:

 General Agreement on Tariffs and Trade (GATT)

 European Union (EU)

North American Free Trade Agreement (NAFTA)

Will trade blocs evolve

Only the future

Managers must be sensitive to cultural subtleties in:

You might also like