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

GLOBALIZATIONGLOBALIZATION

What are the key trends affecting the global economy?

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

CONCLUSIONSCONCLUSIONS Multinational management and the

multinational company

Forces that drive globalization

Key characteristics of successful multinational managers

The strategic approach to multinational management