global management chapter 5 mr. sherpinsky business management class council rock school district
TRANSCRIPT
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Global ManagementChapter 5
Mr. SherpinskyBusiness Management ClassCouncil Rock School District
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Goals & Objectives
1. Define global management
2. Compare and contrast importing and exporting
3. Explain the advantages and disadvantages of protectionism
4. Discuss the challenges of doing business globally
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Taco Barn
The World of WorkCustomer Service by Foreign Firms
Page 73 TextbookDiscuss Questions
1-4
Warm Up
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Do You Know?
Can you name some brand names owned by foreign
companies?
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Examples of Brand Names Owned by Foreign Companies
Brand Name Product Company Country
7-Eleven Convenience stores
Ito-Yokado Japan
Clearasil Skincare products
Reckitt Benckiser Group
United Kingdom
Dannon Yogurt Danone France
Firestone Tires Bridgestone Group
Japan
Frigidaire Home Appliances
AB Electrolux Sweden
Friskies Cat Food Nestle S.A. Switzerland
LensCrafters Eyeglasses Luxottica Group Italy
PlayStation Game console Sony Japan
Popsicle Frozen confection
Unilever United Kingdom
Right Guard Doedorant Henkel KGaA Germany
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Global Management
• International Trade– Exchange of goods and
services by different countries
• Extent of Trade– In a recent year, world trade in
goods exceeded $12 Trillion–Most trade occurs in
developed countries• Examples: Japan, China, North
America, and Western Europe
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International Trade
• Defined: Exchange of goods and services by different countries.– Today, world totally depends on
international trade• Necessary to maintain standard of living
– America sells autos, heavy machinery, clothing, and electronics abroad
– Argentine cattle ranchers ship beef to consumers in dozens of countries
– Saudi Arabian oil producers supply much of the world oil
• All these countries in return purchase goods and services from other countries
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U.S. Trading Partners
ExportsCanadaMexicoChinaJapanUKGermany
19.37%12.21%6.58%4.84%4.33%4.10%
ImportsChinaCanadaMexicoJapanGermany
19.30%14.24%11.12%6.14%4.53%
Source: CIA World Factbook
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Leading Exporters of Merchandise
(Billions of Dollars)Source: World Trade Organization
Rank Exporters Value Share
1 China $1,201.53 9.6%
2 Germany $1,126.38 9.0%
3 United States $1,056.04 8.5%
4 Japan $580.72 4.6%
5 Netherlands $498.33 4.0%
6 France $484.73 3.9%
7 Italy $405.78 3.2%
8 Belgium $369.85 3.0%
9 Korea $363.53 2.9%
10 United Kingdom $352.49 2.8%
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Leading Importers of Merchandise
(Billions of Dollars)Source: World Trade Organization
Rank Exporters Value Share
1 United States $1,605.30 12.7%
2 China $1,005.69 7.9%
3 Germany $938.30 7.4%
4 France $559.82 4.4%
5 Japan $551.96 4.4%
6 United Kingdom $481.71 3.8%
7 Netherlands $445.50 3.5%
8 Italy $412.72 3.3%
9 Hong Kong, China $352.24 2.8%
10 Belgium $351.95 2.8%
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Global Management
• Changes in global management– Society Union replaced by 15
independent republics– EU (European Union) trading
bloc– Southern Common markets• Brazil, Argentina, Paraguay, &
Uruguay
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Global Management
• Changes in global management-Continued– ASEAN (Association of Southeast Asia
Nations)– NAFTA (North American Free-Trade
Agreement)• U.S., Canada, and Mexico
– BRIC nations• Brazil, Russia, India, and China
– Future Economic Superpowers
• Management takes on new meaning
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Global Management
• Changes in global management-Continued– Opportunities come with risks
• Political instability• Erratic currency exchange rates• Global economic
interdependence– Ties once isolated countries more
closely than ever– Knowing your customer take on a new
meaning» Cultural impacts on business,
people, laws, and attitudes
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Global Management
• New Reality– Products made in one country• Purchased in another country
– Serviced in a third country
– Borders are NOW political not economic• Interdependent global economic systems
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Web Quest: Locate Products
• You must include:– Pictures of the product– Flag of the country of
origin– Name of the company
who makes it– Name of the company
who owns the company that makes it
• Categories– Car/Automobile– TV/Radio/PMD– Candy/Snack/Food– Article of Clothing– Household item– Beverage/Drink– Jewelry– Appliance
Using the Internet, you will find 5 common products (by categories below) that are
made in foreign countries
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Global Management
• Absolute advantage– Ability to produce more of a good than
another producer with the same quantity of inputs
– i.e., Jamaica’s sugar production
– Absolute advantage is when a country uses less resources to produce a good.• Country A can produce one widget using one
unit of labor.• Country B can produce one widget using two
units of labor.
– Country A has an absolute advantage over Country B in producing widgets.
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Global Management
• Comparative advantage– Producers should produce the goods
they are most efficient at producing, and import goods they are less efficient at producing• Comparative advantage speaks in terms
of opportunity costs. • A country has a comparative advantage
in the production of a good if it can do it at a LOWER opportunity cost than another country.
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Challenge: Advantage
• Complete the worksheet calculating advantage.– Use a calculator!
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Importing and Exporting
• Exports– Goods and
services produced at home and sold abroad
• Imports– Goods and
services that are produced overseas and purchased at home
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Importing and Exporting
• Identifying export markets– Analysis of
demographics, economic data, country reports, consumer tastes and competition
– Need to know what restrictions they face, such as packaging restrictions, labeling and product safety
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Importing and Exporting
• Why exporting?– 95% of all consumers
live outside US– Increased sales– Diversification– Engage in a variety of
operations so that sluggish sales in one market can be offset by high sales in another market
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Importing and Exporting
• Why importing?– Lower costs– Availability of
specialized goods or unique services
–Want
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Importing and Exporting
• Material importing– Importing raw materials needed
to produce a product– Perhaps not available or too
expensive in the home country
• Consumer goods importing– Some goods are also imported
as a complete product, which can also be sold in their own countries
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Importing and Exporting
• Balance of trade– Trade surplus
• Occurs when a country exports more than it imports
– Trade deficit• Occurs when a country imports
more than it exports
• Foreign exchange– Exchange rates are the value of
one currency in terms of another– Fluctuate from day to day– Can have an effect on profits
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Work Packet Time
• Use this time to complete your work packets for Chapter 5 Global Management
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Engaging in Foreign Trade
• Treaties on trade and investment–WTO (World Trade Organization)
creates and enforces the rules governing trade among countries• Treaties have led to cuts in tariffs
– Boosted exports and imports in 150 countries
– Trading Bloc: Two or more countries that agree to remove restrictions between themselves
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Protectionism
• The practice of trying to protect home markets from foreign competitors– Tariffs–Quotas– Embargoes–Dumping– Sanctions
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Protectionism
• Tariffs– A tax charged on a imported
good– Purpose is to raise the price
of foreign goods to allow domestic producers to compete
– Specific tariff is levied per unit
– Ad valorem tariff is levied as a percentage of the value of the goods
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Protectionism
• Quotas– A restriction on the
quantity of goods that can enter a country
• Embargos– A total pan on the
import of a good from a particular country
– Political reasons rather than economic
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Protectionism
• Dumping– Refers to the practice of
selling goods in foreign markets at below cost or below what it sells at home
• Sanctions– A mild form of embargo that
bans specific business ties with a foreign country• Example: Illegal to sell
nuclear technology to Pakistan, which tested atomic bombs in 1998.
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Protectionism
• Free Trade area– A region where trade restrictions
are reduced or eliminated
• NAFTA– Signed in 1994– USA, Mexico and Canada with
no major trade restrictions– Advantages and disadvantages
• Increased sales• Possible job losses as factories
have moved to Mexico
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Protectionism
• The EU– Signed in 1993– 27 European
countries– 22% of the world’s
GDP– 16 of the countries
have a single GDP
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Web Research: Challenge EU
• Complete the handout!– Using the Internet,
research the European Union (EU) and answer the questions on the handout.
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Doing Business Globally
• Foreign intermediaries– Wholesaler or agent that
markets products for companies wanting to do business abroad
• Licensing agreements– Agreement that permits one
company to sell another company’s products abroad in return for a percentage of revenues
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Doing Business Globally
• Strategic alliances– A pooling of resources and
skills to achieve common goals
• Multinational corporation– A business that maintains a
presence in two or more countries and has a considerable portion of assets invested in international activities
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Doing Business Globally
• Home Country– Country in which business has its
headquarters
• Host Country– Foreign location where business has
its facilities
• Parent Firm– Company headquarters
• Subsidiaries– Foreign branches, usually
independently registered as legal entity
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International Cultures
• Cultures– Must understand
foreign cultures and customs• Refers to
customs, values, beliefs, and patterns of behavior
– Dress, language and ways of doing things
– English is the language of business
High-context culturesCommunication through nonverbal signs/indirect suggestionsExamples: Japan, Saudi ArabiaLow-context culturesCommunication direct and explicitly suggestionsExamples: United States
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International Cultures
• Political changes– Political challenges caused by
governments or upheaval is a concern for international managers
• Nationalism• When the government takes
over or solely runs a business– US Postal Service– Amtrak
• Argentina, Nationalized Oil Companies in May 2012
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International Cultures
• Human rights and ethics– Norms of business ethics
vary greatly– Understanding human
rights laws and ethics is essential to the international manager
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Web Research: Impact of Culture on Business
Take a Trip!Today is your chance to explore a foreign land. You will have the chance to learn about the economy, the culture, the society, and the people of a far away land. Sound enchanting? I hope so!
1. Choose a country (MUST be approved by teacher)2. Using the Internet, research the required
information3. Load data into a PowerPoint 4. Add pictures, graphs, and other visual
components5. Be ready to present!
The reason that you are completing this project is so that you can see that not all countries are the same, which means they do not all do business the same way.
Each person will be responsible for presenting their country to the class.