School of Business

Department of Management and International Management

Introduction to Business Management

Chapter 5

International Management
Fall
2021 - 2022
Course code - Chapter 5
Objective 5.1: Management &Globalization Page
108
Key Takeaways:
What are the management challenges of globalization?

• Management and Globalization

• Global management
• International Business

BMGT200- CHAPTER 1
 Management and Globalization

Global economy
◦ Resources, markets, and competition are worldwide in
scope

Globalization
◦ The process of growing interdependence among
elements in the global economy

World 3.0
◦ Nations cooperate while respecting different national
characters and interests

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 Management and Globalization

Global management
◦ Managing business and organizations with business interests in
more than one country

Global manager
◦ Is culturally aware and informed on international affairs

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 Management and Globalization

International businesses
◦ Conducting for-profit transactions of goods and services
across national boundaries

Reasons why businesses go global:

Profits Customers Suppliers Capital Labor Risk

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Objective 5.1: Management &Globalization Page
108
Key Takeaways:
What are global businesses and how do they work?

 How companies go global. Page110

BMGT200- CHAPTER 1
 Management and Globalization

Market entry strategies

◦ involve the sale of goods or services to foreign markets
but do not require expensive investments

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 Management and Globalization

Types of market entry strategies:

◦ Global sourcing
◦ Exporting
◦ Importing
◦ Licensing agreement
◦ Franchising

Types of direct investment strategies:

◦ Joint venture
◦ Strategic alliance
◦ Owned subsidiary
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 Figure 5.1 Common forms of global business—
from market entry to direct investment strategies

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 Management and Globalization

• the process of purchasing materials or

Global sourcing services around the world for local use

• selling locally made products in foreign

Exporting markets

• buying foreign-made products and selling

Importing them domestically

Licensing • one firm pays fee for rights to make or sell

agreement another company’s products

• a fee is paid for rights to use another firm’s

Franchising name and operating methods

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 Management and Globalization

Insourcing refers to local job

creation that results from foreign
direct investment

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 Management and Globalization

Types of insourcing:

Strategic Foreign
Joint ventures
alliances subsidiaries
a partnership in
operates in a
which foreign
foreign country local operation
and domestic
through co- completely
firms share
ownership by owned by a
resources and
foreign and foreign firm
knowledge for
local partners
mutual gains

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Management and Globalization

Criteria for choosing a joint venture partner:

• Familiarity with your firm’s major business

• Strong local workforce
• Future expansion possibilities
• Values its customers
• Strong local market for partner’s own products
• Good profit potential
• Sound financial standing

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Objective 5.2: Global Businesses P117

Key Takeaways:
What are global businesses and how do they work?

 Types of global businesses

BMGT200- CHAPTER 1
 Global Businesses

Types of global businesses:

◦ Global corporation
◦ MNE (multinational enterprise) or MNC (multinational
corporation) with extensive business operations in more
than one foreign country
◦ Transnational corporation
◦ A global corporation that operates worldwide on a
borderless basis

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 Global Businesses

Mutual benefits for host country and global

corporation or MNC:
◦ Shared growth opportunities
◦ Shared income opportunities
◦ Shared learning opportunities
◦ Shared development opportunities

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Figure 5.2 What should go right and what
can go wrong in global corporation and
host-country relationships

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 Global Businesses

Host country complaints about MNCs:

◦ Excessive profits
◦ Domination of local economy
◦ Interference with local government
◦ Hiring the best local talent
◦ Limited technology transfer
◦ Disrespect for local customs

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 Global Businesses

MNC complaints about host countries:

◦ Profit limitations
◦ Overpriced resources
◦ Exploitative rules
◦ Foreign exchange restrictions
◦ Failure to uphold contracts

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 s;lsdka;dlk;dlk
Summary
• The forces of globalization create international business
opportunities to pursue profits, customers , capital, and low-
cost suppliers and labor in different countries.
• Market entry strategies for international business include
global sourcing, exporting and importing, and licensing and
franchising.
• A global corporation is a multinational enterprise or
multinational corporation with extensive operations in multiple
foreign countries.
• Global corporations can benefit host countries by offering
broader tax bases, new technologies, and employment
opportunities. COPYRIGHT ©2015 JOHN WILEY & SONS, INC.