View
217
Download
0
Category
Tags:
Preview:
Citation preview
Chapter #6 Learning Objectives
By the conclusion of this discussion you will understand: What the global environment is and
how and why it is changing. The different components of the
global task and general environment. The opportunities for international
expansion that exist as well as the limitations to global expansion.
The Global Environment
Global Organizations: operate and compete in more than one country
Different environment: open market buy and sell around the world compete globally
Declining Barriers
Tariff : taxes levied upon imports protect jobs in the
home country retaliation
Free trade: each country seeks to specialize in things they make most efficiently.
Declining Barriers
Distance & Culture Barriers: Distance closed markets Communications difficult Different languages and cultures
Advancements in communication and transportation technology have dramatically reduced these barriers.
Effects on Managers Great opportunities:
Buy resources and sell goods and services globally
Global customers/market Increased Threats
Global competition Regulations
NAFTA: North American Free Trade Agreement
Abolishes most tariffs on goods traded between Mexico, Canada and the U.S.
Allows unrestricted cross-border flows of resources.
Manufacturing opportunity Wage costs are lower in Mexico. Can serve Mexico with a plant in
Mexico and reduce freight.
Global Task Environment
SuppliersSuppliers
DistributorsDistributors
Customers
CompetitorsCompetitorsForces yieldingForces yieldingOpportunities Opportunities
and threatsand threats
Figure 4.2
Suppliers & Distributors
Managers buy products from global suppliers or make items abroad and supply themselves. Key is to keep quality high and costs
low. Global outsourcing: firms buy
inputs from throughout the world. Distributors: each country often has
a unique system of distribution.
Customers & Competitors
Formerly distinct national markets are merging into a huge global market.
Must customize products to fit the culture.
Global competitors present new threats. Increases competition abroad and at
home.
Forces in the Global General Environment
Political &Legal Systems
Economic system
SocioculturalSystem
Forces yieldingOpportunities
and threats
Figure 4.3
Political-Legal Forces
Diverse and changing nature of each countries’ political system.
Totalitarian regimes: a single political party or person monopolize power in a country.
Economic Systems
Free market economy: production of goods and services dictated by supply and demand.
Command economy: decisions on what to produce, how much, done by the government.
Mixed economy: certain economic sectors controlled by private business, others are government controlled.
Changing Political and Economic ForcesChanging Political and Economic Forces
Russia1985
Russia1995
Democratic
PoliticalFreedom
TotalitarianChina1985
China1995
Command MarketMixedEconomic Freedom
Britain1985
Britain1995
Hungary1985
Hungary1995
Figure 4.4
Sociocultural Forces
National culture: includes the values, norms, knowledge, beliefs, and other practices that unite a country.
Values: abstract ideas about what a society believes to be good, desirable and beautiful. Provides attitudes for democracy, truth,
appropriate roles for men, and women. Usually not static but very slow to change.
Hofstede’s Model of National CultureHofstede’s Model of National Culture
Individualism
Low PowerDistance
AchievementOriented
Low UncertaintyAvoidance
Short TermOrientation
Collectivism
High PowerDistance
NurturingOriented
High UncertaintyAvoidance
Long TermOrientation
Fig
ure
4.5
International Expansion
Importing and Exporting: the least complex Exporting: firm makes products and sells
abroad. Importing: firm sells products made abroad.
Licensing: firm allows foreign organization to make and distribute goods for a fee.
Franchising: company sells a foreign organization the rights to use brand name and know-how in return for payment and profit percentage.
International Options
Strategic Alliances: managers pool resources with a foreign firm and both organizations share the rewards and risks.
Wholly-owned foreign subsidiary: firm invests in production operations in a foreign country.
International ExpansionInternational Expansion
ImportingExporting
LicensingFranchising
Joint VenturesStrat. Alliances
Wholly-owned For. Subsidiary
Low HighLevel of Foreign involvement and investment needed by a global organization
Figure 4.6
Global Barriers
Government regulations with loopholes
Administrative barriers Ethical barriers
Human rights Health and safety issues Environmental protection
Conclusion
The global marketplace is where big business needs to be to maintain market share.
The decrease of trade barriers and the improvements in communication and technology have made the global marketplace possible.
The global marketplace brings both opportunities and threats and increased concern for ethical behavior.
Recommended