ba 351 managing organizations
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BA 351 Managing Organizations. Managing in a Global Environment. Clicker Buttons. Directional buttons : navigate menu options. Menu : press and hold to power on/off. Clear : erase an entry. Send or “enter” button to submit a selection. Change Session ID : >> Menu - PowerPoint PPT PresentationTRANSCRIPT
BA 351Managing Organizations
Managing in a Global Environment
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True or False
China and India are the worlds fastest growing economies?
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The Changing Pattern of International Business
Changing world output and world trade pictureThe U.S. no longer dominates the world economy
Large U.S. multinationals no longer dominate international business
The centrally planned communist economies that made up roughly half the world suddenly become accessible to Western businesses
The global economy has become more knowledge-intensive
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The Changing Pattern of International Business (continued)
Lowered trade barriers General Agreement on Tariffs and
Trade (GATT) World Trade Organization (WTO)
Integrated Economic Markets The European Union (EU) The North American Free Trade Act
(NAFTA) Central American-Dominican Republic
Free Trade Agreement (CAFTA) The Association of Southeast Asian
Nations (ASEAN) The Asia Pacific Economic
Cooperation (APEC)
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The Changing Pattern of International Business (continued)
Global consumer preferencesTastes and preferences are converging
Presence of mass media, exposure to goods from various countries, and standardized products
Globalized productionCost efficiency
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Example of Globalized Production
Of the $20,000 sticker price of a General Motors Automobile LeMans: $6,000 goes to South Korea, where the car was
assembled $3,000 goes to Japan for sophisticated high-tech
parts (engines, transaxles, electronics) $800 goes to Taiwan, Singapore, and Japan for
small parts $500 goes to Great Britain for advertising and
marketing services $1,000 goes to Ireland for data processing $7,600 goes to GM and its external professional
firms in the United States 7
The Changing Pattern of International Business (continued)
Technological innovations Advances in communications,
information processing, and transportation technology
Fiber optics, wireless technology, the Internet and World Wide Web, and satellite technology
Management across cultures Adaptation to business strategies,
structures, operational policies, and human resource programs
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Major Factors Affecting International Business
General business environmentLegal system
Common lawCivil lawMuslim law
Economic environmentCultural environment
Culture shock9
Dimensions of CulturePower Distance
Individualism
Uncertainty Avoidance
Masculinity / Femininity
Long-term/ Short-term Orientation
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Video Cirque de Soleil
Answer these Qs:1. How has the “global shift”
contributed to the success of Cirque de Soleil? Why was this critical in the company’s beginning? What about now?
2. How does management across cultures affect Cirque de Soleil? 11
To succeed, Cirque makes special accommodations for cultural differences among its workers. ___________ can occur when a person is exposed to a new culture with different norms, customs, and expectations and has difficulty adjusting.
A) Culture ShockB) IndividualismC) Uncertainty AvoidanceD) Power Distance
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Entry Strategy and Strategic Alliances
Four key decisions of a firm contemplating foreign expansion:Which countries to enterWhen to enterScale of involvementHow to enter
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Choosing Foreign CountriesThe appeal of a particular country is likely to be greater when:
The size of the domestic market is largeThe present wealth of consumers in that
market is high and projected to grow in the future
The needed resources are readily availableThe firm’s product offerings are suitable to
a particular marketA positive business environment exists
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When to Enter Foreign Countries and Scale of Involvement
When to EnterFirst-mover advantagesPioneering costs
Scale of InvolvementLowest if the firm simply decides to export its products to the foreign location
Highest if the firm decides to have a wholly owned subsidiary in the foreign country
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Modes of EntryExporting
Turnkey Project
Licensing
Franchising
Strategic Alliance
Joint VentureWholly Owned
Subsidiary
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Modes of EntryExporting – entering new markets by
sending products to other countries, still maintaining production facilities within the domestic borders
Turnkey projects – specialized type of exporting, where the firm handles the startup of the company and a local client is then handed the key
Licensing – entering new markets by transferring the rights to produce and sell products overseas to a foreign firm
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Modes of EntryFranchising – entering new markets in
which the franchise pays a fee for using the brand name and agrees to follow the standards and rules
Joint venture – means of entering new markets where two or more independent firms agree to establish a separate firm
Strategic alliance – cooperative arrangements between competitors or potential competitors from different countries
Wholly owned subsidiary – entering new markets in which a firm fully owns its subsidiary in foreign countries
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I wouldn’t suggest this mode of Entry
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Various Modes of Entry Choices
Loss of competitive advantagePotential quality control problemsLimited ability to use profits in one country to increase competition in another country
Quick expansionLower development costs and risksLower political risk
Franchising
Loss of competitive advantageLimited ability to use profits in one country to increase competition in another country
Quick expansionLower expenses and risksLower political risk
Licensing
Competition from local clientLoss of competitive advantage
Access to closed marketsTurnkey Project
No low cost salesHigh transportation costs Potential tariffs
Economies of scaleLower foreign expenses
Exporting
DisadvantagesAdvantagesMode of Entry
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Various Modes of Entry Choices (continued)
Loss of competitive advantagePotential overestimation of partner’s capabilities
Access to closed marketsPooled resources increase partner’s capabilitiesComplementary skills & assets
Strategic Alliance
Large capital outlayLack of local knowledgeIncreased risk
Maximum control over proprietary knowledge/ technologyGreater strategic flexibilityEfficiencies of global production system
Wholly Owned Subsidiary
Potential for conflict of interestLoss of competitive advantage
Knowledge of local marketsLower development costs and riskAccess to closed markets
Joint Venture
DisadvantagesAdvantagesMode of Entry
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Examples of Strategic AlliancesGeneral Electric – Snecma of France
Toshiba – IBMMitsui – General Electric
GM – DaewooTexas Instrument – Compel Communications
Canon – Hewlett-Packard
Mitsubishi – Caterpillar
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Take a look at China Brands
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Why International Assignments End in Failure
Career blockage – the feeling that working abroad has gotten their career sidetracked, while people back home are climbing the corporate ladder
Culture shock – the inability to adjust to a different cultural environment
Lack of pre-departure cross-cultural training – little if any is offered to expatriates before going to a different country.
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Why International Assignments End in Failure
Overemphasis on technical qualifications – the expatriate may lack cultural adaptability, even though they have the technical skills
Getting rid of a troublesome employee – provides the ability to solve interpersonal conflict, but at a huge expense to the company
Family problems – inability or unwillingness of the expatriate’s family to adapt to life in another country 25
Key HR Management Factors for Global Firms
SelectionSelection criterion should include cultural sensitivity
TrainingLength of assignment determines depth of training
Cross-cultural training is critical to success
Career DevelopmentInternational assignments should be part of career advancement plan
Compensation and BenefitsIncentives and quality-of-life concerns
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Ethics and Social Responsibility
Sweatshops
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Yes or No Do you think U.S. companies have
the moral responsibility to offer a so-called living wage and to fight exploitative practices in foreign countries, even if doing so means putting the company at a competitive disadvantage?
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Yes or No Do you think most consumers care
about potential abuses of overseas contractors? Would most consumers be willing to pay slightly higher prices to improve the standard of living of foreign workers?
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Yes or No Some believe that a company might
actually increase business by convincing customers that it is socially responsible and that it values human dignity more than making an extra buck. Do you agree?
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Flowchart For Problem Resolution
Don’t Mess With It!
YES NO
YES
YOU IDIOT!NO
Will it Blow UpIn Your Hands?
NO
Look The Other Way
Anyone ElseKnows? You’re SCREWED!
YESYES
NO
Hide ItCan You Blame Someone Else?
NO
NO PROBLEM!Yes
Is It Working?
Did You Mess With It?
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