international management concerns lecture 22. global differences average paid vacation days per year...
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International International Management Management
ConcernsConcerns
Lecture 22Lecture 22
Global DifferencesGlobal Differences Average paid vacation days per yearAverage paid vacation days per year
Paid vacation days per year required Paid vacation days per year required by lawby law
Average paid vacation days Average paid vacation days per yearper year
Germany:Germany: 3030
Italy:Italy: 3030
France:France: 2525
Netherlands:Netherlands: 2525
Average paid vacation days Average paid vacation days per yearper year
Britain:Britain: 2525
Belgium:Belgium: 2424
Japan:Japan: 17.517.5
U.S.:U.S.: 10.210.2
Paid vacation days per year Paid vacation days per year required by lawrequired by law
France:France: 2525
Germany:Germany: 2424
Italy:Italy: 2020
Netherlands:Netherlands: 2020
Paid vacation days per year Paid vacation days per year required by lawrequired by law
Britain:Britain: 2020
Belgium:Belgium: 2020
Japan:Japan: 1010
U.S.:U.S.:
Labor CostsLabor Costs
Average production worker Average production worker compensation per hour compensation per hour
Labor Costs (2002)Labor Costs (2002)
U.S.U.S. $17.10$17.10
JapanJapan 21.42 21.42
GermanyGermany 27.31 27.31
MexicoMexico 1.38 1.38
Fastest Growing Auto Fastest Growing Auto Market?Market?
Total vehicle sales increase 75% Total vehicle sales increase 75% from 2002 to 2003.from 2002 to 2003.
Chinese consumption in ‘03Chinese consumption in ‘03
50% of world’s concrete output50% of world’s concrete output 33% of world’s steel output33% of world’s steel output 25% of world’s copper output25% of world’s copper output 20% of world’s aluminum output20% of world’s aluminum output
(Fortune, 6-8-(Fortune, 6-8-04)04)
Health Insurance Costs Per Health Insurance Costs Per CapitaCapita
UKUK $1400$1400 CanadaCanada $2300$2300 GermanyGermany $2400$2400 USUS $4200$4200
(2003, in US dollars)(2003, in US dollars)
CEO PayCEO Pay
Manufacturing SectorManufacturing Sector
CEO pay as a factor of average CEO pay as a factor of average worker payworker pay
(Business Week, May 6, 2002)(Business Week, May 6, 2002)
CEO PayCEO Pay
EnglandEngland 24x average worker’s pay24x average worker’s pay
GermanyGermany 15x average worker’s 15x average worker’s paypay
Sweden Sweden 13x average worker’s pay13x average worker’s pay
USUS ??
Global Pricing – Volkswagen Global Pricing – Volkswagen GolfGolf
Finland:Finland: $ 8,290 $ 8,290 France:France: 10,51010,510 Italy:Italy: 10,69010,690 Germany:Germany: 11,04011,040 Britain:Britain: 13,04013,040
(Year 2000)(Year 2000)
Economic Market Economic Market OrganizationsOrganizations
NAFTANAFTA
United StatesUnited States MexicoMexico CanadaCanada
European UnionEuropean Union
28 countries and counting 28 countries and counting (members & applicants)(members & applicants)
World Trade OrganizationWorld Trade Organization
146 Member Countries146 Member Countries
MercosurMercosur(Southern Common Market)(Southern Common Market)
ArgentinaArgentina BrazilBrazil ParaguayParaguay UruguayUruguay
MercosurMercosur(Southern Common Market)(Southern Common Market)
ChileChile BoliviaBolivia
PeruPeru (Venezuela)(Venezuela)
Andean Common MarketAndean Common Market
BoliviaBolivia ColumbiaColumbia EcuadorEcuador PeruPeru VenezuelaVenezuela
FTAA FTAA (Free Trade Area of the (Free Trade Area of the
Americas)Americas)Alliance of the AmericasAlliance of the Americas
From Alaska to ArgentinaFrom Alaska to Argentina
SAFTASAFTASouth Asian Free Trade AreaSouth Asian Free Trade Area
IndiaIndia PakistanPakistan Sri LankaSri Lanka BangladeshBangladesh NepalNepal BhutanBhutan MaldivesMaldives
2003 Top U.S. Trade 2003 Top U.S. Trade PartnersPartners
1.1.
2.2.
3.3. China China
4.4. Japan Japan
5.5. Germany Germany
2003 Top U.S. Trade 2003 Top U.S. Trade PartnersPartners
6.6. United KingdomUnited Kingdom
7.7. South KoreaSouth Korea
8.8. TaiwanTaiwan
9.9. FranceFrance
10.10. ItalyItaly
Global Business TermsGlobal Business Terms ExportingExporting
Licensing/FranchisingLicensing/Franchising
Joint VentureJoint Venture
Wholly Owned SubsidiaryWholly Owned Subsidiary
ExportingExporting Selling products or services produced Selling products or services produced
in one country to customers in in one country to customers in another countryanother country
ExportingExporting
Entry without ownership (EWO)Entry without ownership (EWO) Beware of tariffs (Hail Free Trade Beware of tariffs (Hail Free Trade
Zones!)Zones!) Intracorporate TransfersIntracorporate Transfers
– Ford plant in Mexico exports fuel tanks Ford plant in Mexico exports fuel tanks to Ford assembly plants in U.S.to Ford assembly plants in U.S.
ExportingExporting
Overseas DistributorsOverseas Distributors– Understand the marketUnderstand the market– Understand the cultureUnderstand the culture– Understand the product/serviceUnderstand the product/service
Licensing/FranchisingLicensing/Franchising
Using the Using the logo/system of logo/system of another companyanother company
LicensingLicensing
Selling the right to brand names, Selling the right to brand names, patents, manufacturing technology, patents, manufacturing technology, or intellectual propertyor intellectual property
EWOEWO Avoids high tariffsAvoids high tariffs
LicensingLicensing
Licensor gives up considerable Licensor gives up considerable controlcontrol
May be educating a potential rivalMay be educating a potential rival– Mitsubishi and HyundaiMitsubishi and Hyundai
Microsoft in the PRCMicrosoft in the PRC
FranchisingFranchising
Selling the contractual rights to Selling the contractual rights to methods, trademarks, products, methods, trademarks, products, procedures, and marketing strategiesprocedures, and marketing strategies
EWOEWO Allows quick expansion by franchiserAllows quick expansion by franchiser
Joint VentureJoint Venture A company from one country pools A company from one country pools
its resources with those of a foreign its resources with those of a foreign companycompany
Joint VenturesJoint Ventures
Shared ownership between Shared ownership between companiescompanies
Set up as a separate legal entitySet up as a separate legal entity
Joint VenturesJoint Ventures
Large MNC with a product design and Large MNC with a product design and technological expertise partners with technological expertise partners with local firm that offers marketing local firm that offers marketing expertise in that cultureexpertise in that culture
Joint VenturesJoint Ventures
Sharing of costs/risksSharing of costs/risks
Chrysler and BMW built a $500 Chrysler and BMW built a $500 million engine plant.million engine plant.
Joint VenturesJoint Ventures
Economies of scale required selling Economies of scale required selling 400,000 of those engines. Neither 400,000 of those engines. Neither Chrysler nor BMW thought they could Chrysler nor BMW thought they could sell that many engines alone. Win-sell that many engines alone. Win-Win.Win.
Wholly Owned SubsidiaryWholly Owned Subsidiary
An independent company owned by An independent company owned by the parent corporationthe parent corporation
Wholly Owned SubsidiariesWholly Owned Subsidiaries
OwnershipOwnership More ControlMore Control More closely coordinate worldwide More closely coordinate worldwide
opsops Greater expense and riskGreater expense and risk
Wholly Owned SubsidiariesWholly Owned Subsidiaries
Greenfield approachGreenfield approach– Time consuming and expensiveTime consuming and expensive
Acquisition approachAcquisition approach– Complicated negotiations and financial Complicated negotiations and financial
transactionstransactions