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7/29/2019 Strategic Management Chapter 11
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Copyright 2011 Pearson Education, Inc.Publishing as Prentice Hall
Ch 11 -1
Chapter 11
Global / International Issues
Strategic Management:Concepts & Cases
13th Edition
Fred David
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Copyright 2011 Pearson Education, Inc.Publishing as Prentice Hall
Ch 11 -2
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Copyright 2011 Pearson Education, Inc.Publishing as Prentice Hall
Ch 11 -3
Global/International Issues
Sad but true, U.S. businesspeople
have the lowest foreign languageproficiency of any major trading nation.
U.S. business schools do not
emphasize foreign languages, andstudents traditionally avoid them.
- Ronald Dulek
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Ch 11 -4
Global Issues
Global considerations impact
virtually all strategic decisions A world market has emerged
It is difficult for a firm to survive
relying solely on domestic markets
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Copyright 2011 Pearson Education, Inc.Publishing as Prentice Hall
Ch 11 -5
Multinational Organizations International firms or multinational
corporations face many complex variables: Social
Cultural
Demographic Environmental
Political
Governmental
Legal Technological
Competitive opportunities and threats
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Ch 11 -6
Potential Advantages of InternationalOperations
Gain new customers
Absorb excess capacity, reduce unit
costs, and spread economic risks Allow firms to establish low-cost
production facilities
Competition may be less intense
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Ch 11 -7
Potential Advantages of InternationalOperations continued
Reduced tariffs, lower taxes, and
favorable political treatment
Joint ventures can enable firms to learnnew technology, culture, and business
practices
Economies of scale Power and prestige in domestic markets
may be significantly enhanced
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Ch 11 -8
Potential Disadvantages ofInternational Operations
Foreign operations could be seized
Different and often little-understood social,cultural, demographic, environmental, political,
governmental, legal, technological, economic,and competitive forces
Weakness of competitors overestimated
Different language, culture, and value systems Understanding of regional organizations needed
Dealing with two or money systems
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Ch 11 -9
The Global Challenge
How to gain and maintain
exports to other nations
How to defend domestic
markets against imported goods
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Copyright 2011 Pearson Education, Inc.Publishing as Prentice Hall
Ch 11 -10
Changes in the Global Economy
Corporations are obtaining customers
globally
Markets are shifting rapidly andconverging in tastes, trends, and prices
Innovative transport systems are
accelerating transfer of technology Nature and location of production
systems are shifting
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Ch 11 -11
Protectionism
Countries imposing tariffs, taxes,
and regulations on firms outside thecountry to favor their owncompanies and people
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Ch 11 -12
Reasons for Global Expansion
Advancements intelecommunications
Growth in demand for goods andservices outside the U.S. isconsiderably higher than inside
95% of the world's population livesoutside the U.S.
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Ch 11 -13
Globalization
Globalization: The process of doing business worldwide
Global strategy includesconsidering global needs during Design
Production
Marketing
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Copyright 2011 Pearson Education, Inc.Publishing as Prentice Hall
Ch 11 -14
A Weak Economy
Recession
Two consecutive quarters of a decline inreal gross domestic product
Many countries have recently
experienced a recession
Unemployment rates are high acrossthe U.S. and around the world
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Ch 11 -15
Cultural Differences
Time
Space
Family roles
Religious factors Family time
Values
Eating Rules of etiquette
Importance of relationships
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Ch 11 -16
European Business Cultures
Participatory management
Most workers are unionized
More frequent vacations and holidays Guaranteed permanent employment
common
Workers often resent pay for performance,commissions, and objective measurement
and reward systems
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Ch 11 -17
Asian Business Cultures
First names are not generally used in
business
Extended periods of silence areimportant
A sale is the beginning, not the end of a
relationship Resting, listening, meditating, and
thinking are considered productive
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Publishing as Prentice HallCh 11 -18
Mexican Business Culture
Low tolerance for adversarial relations or frictionat work
Employers are paternalistic
Workers do not expect self-expression orinitiative at work
Businesses stress collectivism, continuity,
cooperation, belongingness, formality, anddoing exactly what you are told
Rarely entertain business associates at homes
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Publishing as Prentice HallCh 11 -19
Mexican Business Culture continued
Preserving ones honor, saving face, andlooking important are valued
Opinions expressed by employees are often
regarded as back talk Supervisors are viewed as weak if they
explain the rationale for their orders toworkers
Mexicans often do not follow rules
Life is slower in Mexico, tardiness is common
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Copyright 2011 Pearson Education, Inc.
Publishing as Prentice HallCh 11 -20
Japanese Business Culture
Importance of group loyalty and consensuscalled Wa
Constant discussion and compromise
Silence is a plus in formal meetings
When confronted with disturbing questions,managers often remain silent
Managers are reserved, quiet, distant,introspective, and other oriented
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Publishing as Prentice HallCh 11 -21
Communication Differences AcrossCultures
Italians, Germans, and French do not softenup executives with praise before a criticism
Israelis are accustomed to fast paced
meetings
British executives complain that Americanschatter too much
Europeans feel that they are being treatedlike children when asked to wear nametags
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Publishing as Prentice HallCh 11 -22
Communication Differences AcrossCultures continued
Executives in India are used to
interrupting each other
In Malaysia and Japan periods of silenceare appropriate, no silence is needed in
Israel
How was your weekend? is consideredintrusive by many business people
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Publishing as Prentice HallCh 11 -23
Worldwide Tax Rates
US and Japan 38%
Asia-Pacific Region 30%
Germany 30%
Great Britain 28%
France 27%
Europe 26%
Ireland near 0%
Former Soviet-Bloc nations near 0%
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India
Debt is 80% of GDP
Gap between rich and poor
widening Middle class is growing
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Joint Ventures in India
Joint ventures are mandatory forforeign companies doing business
in India Foreign firms restricted to 74%
ownership of India-based firms
Most joint ventures in India fail
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All rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.