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GE’s Key Growth GE’s Key Growth InitiativeInitiative
Globalization is not only striving to grow revenues by selling goods and services in global markets. It also means globalizing every activity of the company, including the sourcing of raw materials, components, and products.
Globalization especially means finding and attracting the unlimited pool of intellectual capital - the very best people - from all around the globe. Web Link
What is What is MULTINATIONAL MULTINATIONAL MANAGEMENT ?MANAGEMENT ?
The formulation of strategies and the design of 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
THE MULTINATIONAL THE MULTINATIONAL COMPANYCOMPANY
Businesses increasingly look to other countries
– to seek global opportunities
– to keep an eye on global competition
WHY IS MULTINATIONAL WHY IS MULTINATIONAL MANAGEMENT MANAGEMENT
IMPORTANT?IMPORTANT?
GLOBALIZATIONGLOBALIZATION
The worldwide trend of businesses expanding beyond their domestic boundaries
SEVEN KEY FORCES ARE SEVEN KEY FORCES ARE GLOBALIZING THE WORLD GLOBALIZING THE WORLD
ECONOMYECONOMY
1. Disintegrating borders
2. Growing cross-border trade and investment
3. The rise of global products and global customers
4. Privatizations
5. New competitors in the world market
6. The rise of global standards of quality and production
7. The Internet and information technology
THEGLOBAL
ECONOMY
NewCompetiors
Rise of GlobalStandards
DisintegratingBorders
The Internet &InformationTechnology
Privatization
Growing Tradeand Investment
GlobalProducts/
Customers
Free trade areas and the world trade organization
By April 2003, the number of regional trade agreements reached 146, more than double the number existing in 1992
BORDERS ARE FALLINGBORDERS ARE FALLING
Reduce tariffs and restrictions
GATT negotiations begin in 1947
World Trade Organization
– Purpose?
– Is it working?
The three largest groups--EU, NAFTA, and APEC
TRADE AGREEMENTSTRADE AGREEMENTS
Ensure that trade flows as smoothly, predictably and freely as possible
Administering trade agreements, providing a forum for trade negotiations, settling disputes, monitoring national trade policies, assisting developing countries in trade policy, and cooperating with other international organizations
Decisions are made by consensus
What’s the purpose of the What’s the purpose of the WTO?WTO?
World trade growth: average of 6.5% per year 1990 to 2000, but slowed in 2001 (2%)
Nearly half of the over $5 trillion in world trade is among the European union, the U.S., and Japan -- the TRIAD
SELL ANYWHERE, LOCATE SELL ANYWHERE, LOCATE ANYWHEREANYWHERE
A company from one country has an ownership position in an organization from another country
FDI in the developed countries approximately $899 billion
FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTMENT (FDI)(FDI)
THE RISE OF GLOBAL THE RISE OF GLOBAL PRODUCTS AND GLOBAL PRODUCTS AND GLOBAL
CUSTOMERSCUSTOMERS
The needs of customers growing more similar
Global customers search the world for their supplies without regard for national boundaries
PRIVATIZATIONPRIVATIZATION
Privatization is the sale of government owned businesses to private investors
Privatization, continued
The developing countries and transition economies use privatization to become capitalistic economies. More specifically,
Why do developed countries use privatization?
Why do developing countries use privatization?
BENEFITS FOR BENEFITS FOR MULTINATIONAL MULTINATIONAL
COMPANIESCOMPANIES Opportunities for bargain basement
investments
An easy way to gain access
– often with local government incentives such as several years of tax free operations
GLOBAL OR REGIONAL GLOBAL OR REGIONAL PRODUCT STANDARDSPRODUCT STANDARDS
Companies can make one or only a few versions of a product for the world market
Cheaper than versions for different countries
CONSISTENCY AND CONSISTENCY AND PREDICTABILITY IN PREDICTABILITY IN
QUALITYQUALITY The international organization for
standardization (ISO) in Geneva, Switzerland - ISO 9000:2000
THE INTERNET AND THE INTERNET AND INFORMATION INFORMATION
TECHNOLOGYTECHNOLOGY Allows easy worldwide
communication and economic transactions
Small companies have more computer power
Poorer nations can have technology
THE NEXT GENERATION THE NEXT GENERATION OF MULTINATIONAL OF MULTINATIONAL
MANAGERSMANAGERS A global mindset The ability to work with diverse
people
A long range perspective
The ability to manager change and transition
The next generation of The next generation of multinational managers, multinational managers,
continuedcontinued
The ability to create systems for a learning and changing organizations
The talent to motivate all employees to achieve excellence
Accomplished negotiation skills
The next generation of The next generation of multinational managers, multinational managers,
continuedcontinued
A willingness to seek and succeed in overseas assignments
An understanding of national cultures
MULTINATIONAL MULTINATIONAL MANAGEMENT: A MANAGEMENT: A
STRATEGIC APPROACHSTRATEGIC APPROACH
The strategic approach to multinational management considers how managers formulate and implement strategies to compete successfully in the global economy
STRATEGYSTRATEGY
The maneuvers or activities that managers use to sustain and increase
organizational performance
MULTINATIONAL MULTINATIONAL
STRATEGY FORMULATIONSTRATEGY FORMULATION
The process of choosing or crafting a strategy
– challenge of dealing with opportunities and competitors located anywhere in the world
MULTINATIONAL MULTINATIONAL STRATEGY STRATEGY
IMPLEMENTATIONIMPLEMENTATION Includes all the activities necessary to achieve strategic objectives
– requires complex management systems to carry out the strategies that reach beyond domestic boundaries
A FUNDAMENTAL A FUNDAMENTAL ASSUMPTION OF THE ASSUMPTION OF THE
BOOKBOOK
“When you understand your competitors and yourself, you will always win," Sun Tzu, The art of war