Doing Business Doing Business GloballyGlobally

Chapter TwoChapter Two

Global VillageGlobal Village

A boundary less worldA boundary less world

Goods and services are marketed all Goods and services are marketed all over the worldover the world

Cultures, systems and methods Cultures, systems and methods different from our owndifferent from our own

Domestic BusinessDomestic Business All resources are obtained and All resources are obtained and

products/services sold within products/services sold within oneone

countrycountry

Types of International Types of International OrganizationsOrganizations

Multinational Multinational CorporationsCorporations Refers to any and all types of Refers to any and all types of

companies that maintain companies that maintain operations in multiple operations in multiple countries but manages them countries but manages them from a base in the home from a base in the home country.country.

Multidomestic Multidomestic CorporationsCorporations Operates businesses in a number of Operates businesses in a number of

countries at the same timecountries at the same time May produce different products in May produce different products in

each country; matches the each country; matches the company’s products to its consumerscompany’s products to its consumers

Decision making made at the local Decision making made at the local level (known as level (known as decentralized decentralized decision making)decision making)

Example: Frito-LayExample: Frito-Lay

Global CompaniesGlobal Companies

Also maintains international Also maintains international operations, however decisions are operations, however decisions are made from headquarters in home made from headquarters in home country (known as country (known as centralizedcentralized decision making)decision making)

Example: BombardierExample: Bombardier

Strategic AllianceStrategic Alliance

A domestic and a foreign A domestic and a foreign company will company will

share the cost of developing new share the cost of developing new products or building production products or building production facilities in a foreign country.facilities in a foreign country.

Global SourcingGlobal Sourcing The first step in going global, allows The first step in going global, allows

companies to take advantage of companies to take advantage of lower costs in order to be more lower costs in order to be more competitivecompetitive

Involves purchasing materials or Involves purchasing materials or labour around the world, wherever is labour around the world, wherever is cheapestcheapest

Example: Bell Canada contracted Example: Bell Canada contracted with Sitel India to provide customer with Sitel India to provide customer care to Canadian customerscare to Canadian customers

Stages of Going GlobalStages of Going Global

1.1. Passive Response Passive Response - exporting to foreign countries; - exporting to foreign countries;

making products at home and selling making products at home and selling them abroadthem abroad

2.2. Initial Overt Entry Initial Overt Entry - hiring foreign representation- hiring foreign representation- contacting foreign - contacting foreign

manufacturers manufacturers

3.3. Established International OperationsEstablished International Operations

- - Licensing/Franchising:Licensing/Franchising: Manufacturers give another organization Manufacturers give another organization to use their brand name, technology or to use their brand name, technology or sell its product Ex. McDonaldssell its product Ex. McDonalds

- - Joint Ventures:Joint Ventures: Partners agree to Partners agree to form a separate, independent form a separate, independent organization for some business purpose organization for some business purpose Ex. Hewitt PackardEx. Hewitt Packard

- - Foreign Subsidiary:Foreign Subsidiary: A direct A direct investment in a foreign country by investment in a foreign country by setting up a separate and independent setting up a separate and independent office office

Ex. GM CanadaEx. GM Canada