globalizing business presentation

8/10/2019 Globalizing Business Presentation

1/30

Chapter1.

Globalizing Business

1


2/30

Learning Objectives

Explain the concepts of international business andglobal business

Give three reasons why it is important to study global

business

Articulate one most fundamental question and two

core perspectives in the study of global business

Understand the nature of the global economy and

the key forces that drive globalization Identify the characteristics of the next generation of

multinational managers

Cengage Learning


3/30

Globalization

Globalizationrefers to the shift toward a more

integrated and interdependent world economy.

Globalization has two facets:

1)the globalization of markets

2)the globalization of value-chain activities

Cengage Learning


4/30

The Rise of Global Products and

Global Customers The needs of customers for many products and

services are growing more similar (E.g.,

McDonalds, Boeing, Toyota.)

MNCs around the world becoming morevulnerable to competition in their home markets

Semiglobalization

Barriers to market integration at borders are highbut not high enough to completely insulate

countries from each other

Cengage Learning


5/30


6/30

Sell Anywhere, Locate

Anywhere

Foreign Direct Investment (FDI): occurs when

a multinational company from one country

has an ownership position located in another

country.

FDI increased by more than 36% between

1996 and 2000.

Cengage Learning


7/30

Foreign Direct Investment

Developed countries get the bulk of FDI (69%) while

developing countries get around 30%.

Least developed countries get minimal FDI.

Emerging markets will continue to attract FDI.

Developing countries provide opportunities and risks.

Implications for managers - significant opportunities

around the world. Multinational managers should look at risk rating of

countries.

Cengage Learning


8/30 Cengage Learning

Emerging Economies


9/30

The Internet and Information

Technology

Electronic Communication - E-mail, World Wide

Web, etc.

Allows multinationals to communicate with company

locations throughout the world.

Allows multinationals to monitor worldwide

operations.

Expands global reach of organizations.

Information technology is spurring a borderless

financial market.

Cengage Learning


10/30

New Competitors are Emerging

Global trade has two important effects in

developing new competitors:

When developing countries are used as low-wage

platforms for high-tech assembly, multinationalsfacilitate the transfer of technology. Assemblers

may become builders and creators of technology.

Aggressive multinationals from emerging marketsare also expanding beyond their own borders.

Cengage Learning


11/30

The Rise of Global Standards

Companies can make one or only a few versionsof a product for the world market.

This is cheaper than making different versions for

different countries. Drive to develop common standards to save

money.

International organization for standardization

(ISO) in Geneva, Switzerland Developed a set of technical standards (ISO 9001:2000

series).

Cengage Learning


12/30

Regional Trade Agreements

Regional Trade Agreements - agreements amongnations to reduce tariffs and develop similartechnical and economic standards.

3 largest agreements account for nearly half theworlds trade EU, NAFTA, APEC

European Union (EU) - includes 27 Europeancountries, with additional countries being

considered. Allows free movement of goods and services and a

common currency (EMU).

Cengage Learning


13/30

The North American Free Trade Agreement(NAFTA): links United States, Canada, andMexico in an economic bloc.

Allows freer exchange of goods and services

The Asia-Pacific-Economic Cooperation

(APEC): looser confederation of 19 Asiannations with less specific agreements on tradefacilitation.

Cengage Learning

Regional Trade Agreements


14/30

Countries of the World

Transition economies: countries that have

changed from mostly communist systems to

market/capitalistic systems

E.g., Czech Republic, Hungary, Poland.

Emerging markets: those countries that are

currently between developed and developingcountries and are rapidly growing

E.g., India, China, Brazil, and Russia (BRIC)

Cengage Learning


15/30

Countries of the World

Less developed countries (LDCs) have yet to

show much progress in the global economy

Most are located in Central and South America

and Africa.

Cengage Learning


16/30

The Benefits of Globalization

Resulting in lower prices in many countries asmultinationals are becoming more efficient.

Benefiting many emerging markets such as

India and China as these countries enjoygreater availability of jobs and better access totechnology.

Major reason why many new companies fromMexico, Brazil, China, India, and South Koreaare the new dominant global competitors.

Cengage Learning


17/30

Negatives of Globalization

Not all economies of the world are benefitingequally or participating equally in the process.

Terrorism, wars, and a worldwide economicstagnation have limited or reversed some aspectsof globalization.

Producing negative effects such as scarcity ofnatural resources, environmental pollution,negative social impacts, and increased

interdependence of the worlds economies. Widening the gap between rich and poor

countries.

Cengage Learning


18/30

Multinational Management

Formulation of strategies and management

systems to take advantage of international

opportunities and respond to international

threats

Any company that engages in business

functions beyond its domestic borders

Includes both large and small companies

Cengage Learning


19/30

Why Firms Seek Globalization?

Seek new markets

Exploit firm specific assets

Leverage economies of scale Access low cost factors

Lower risks

Secure key supplies

Follow competitors


20/30

Managing in the Global

Marketplace

Managing an international business differs from

managing a domestic business because:

Countries are different.

The range of problems confronted in aninternational business is wider and more complex.

Firms have to find ways to work within the limits

imposed by government intervention in theinternational trade.

International transactions involve converting money

into different currencies.


21/30

Multinational Management: A

Strategic Approach

Considers how managers formulate and implement

strategies to compete successfully in the global

economy.

Strategies are the maneuvers or activities used toincrease and sustain organizational performance.

Multinational strategies must include maneuvers

that deal with operating in more than one country

and culture.

Helps position yourself in evolving global economy.

Cengage Learning


22/30 Cengage Learning

A Strategic Approach


23/30

FIRST CORE PERSPECTIVE:

AN INSTITUTION-BASED VIEW

An institution-based view suggests that thesuccess and failure of firms are constrained byinstitutions

Formal rules- requirements that treat domestic andforeign firms as equals enhance the potential odds forforeign firms success or those that discriminate againstforeign firms, would undermine the chances for foreignentrants

Informal rules- cultures, ethics, and norms play animportant part in shaping the success and failure of firmsaround the globe

Cengage Learning


24/30

SECOND CORE PERSPECTIVE:

A RESOURCE-BASED VIEW

A resource-based view suggests that the success and

failure of firms are determined by firms ability to

develop resources and capabilities further core

competences.

liability of foreignness - inherent disadvantage that

foreign firms experience in host countries because oftheir nonnative status

Cengage Learning


25/30

Corporate Social Responsibility and

Business Ethics

Some MNCs are becoming more proactive in

responding to social and ethical issues that

arise from their overseas operations. Some issues are:

o Climate change

o

Environmental degradation and pollutiono Sweatshop conditions for labor

o Bribery

Cengage Learning


26/30

Next Generation of

Multinational Managers:

Characteristics

Global mindset

Emotional intelligence

Long-range perspective

Cengage Learning


27/30

Next Generation of

Multinational Managers:

Characteristics

Talent to motivate all employees to achieve

excellence Accomplished negotiation skills

Willingness to seek overseas assignments

Understanding of national cultures

Cengage Learning


28/30

Working in a Global Firm

expatriate manager

a manager who works abroad, or expat

international premiumsignificant compensation package whenworking overseas

? What are some of the benefits you might enjoy as anexpatriate manager?

Cengage Learning


29/30

Trends Shaping Future

Business Environment

Blurring of industry boundaries

Flexibility matters more than size

Focusing on niche

Hyper-competition

Emphasis on innovation and the learning

organization

Cengage Learning


30/30

Conclusion

Chapter provides key background information to

support study of multinational management.

Must be prepared to compete with firms from any

country.

Must be prepared to collaborate and align with firms

from any country.

Develop organizational strategies and skills tocompete in different nations in a global economy.

globalizing business presentation

Documents