introduction to gbm
TRANSCRIPT
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8/4/2019 Introduction to GBM
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Managing in a
Global Business Environment
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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Objectives
Understand the landscape of the global market.
Develop an awareness for the role of culture in international
Business management.
Determine the best mode of entry into foreign markets giveneach firms unique characteristics.
Develop effective human resource practices for managing
international subsidiaries.
Become aware of ethical issues in international operations.
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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The Changing Pattern of InternationalBusiness
Changing world output and world trade
picture
The U.S. no longer dominates the world economy
Large U.S. multinationals no longer dominate
international business
The global economy has become more knowledge-
intensive
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The Changing Pattern of InternationalBusiness (continued)
Lowered trade barriers
General Agreement on Tariffs and Trade(GATT)
World Trade Organization (WTO)
Integrated Economic Markets
The European Union (EU)
The North American Free Trade Act
(NAFTA)
The Association of Southeast Asian Nations
(ASEAN)
The Asia Pacific Economic Cooperation
(APEC)McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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The Changing Pattern of InternationalBusiness(continued)
Global consumer preferences
Tastes and preferences are converging
Presence of mass media, exposure to
goods from various countries, and
standardized products
Globalized productionCost efficiency
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Example of Globalized Production
Of the $20,000 sticker price of a General MotorsAutomobiles:
$6,000 goes to South Korea, where the car was assembled
$3,000 goes to Japan for sophisticated high-tech parts(engines, transaxles, electronics)
$800 goes to Taiwan, Singapore, and Japan for smallparts
$500 goes to Great Britain for advertising and marketing
services$1,000 goes to Ireland for data processing
$7,600 goes to GM and its external professional firms inthe United States
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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The Changing Pattern of InternationalBusiness(continued)
Technological innovations
Advances in communications, information
processing, and transportation technology
Fiber optics, wireless technology, the Internet
and World Wide Web, and satellite technology
Management across cultures
Adaptation to business strategies, structures,
operational policies, and human resource
programs
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8/4/2019 Introduction to GBM
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Major Factors Affecting InternationalBusiness
General business environment
Political System
Government Policies
Government Ideology
Physical System Infrastructure Development
Natural Resource
Economic Environment
Economic resources
Economic growth
Cultural environment
Culture shock
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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8/4/2019 Introduction to GBM
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Entry Strategy and Strategic Alliances
Four key decisions of a firm contemplating foreign
expansion:
Which countries to enter
When to enterScale of involvement
How to enter
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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Choosing Foreign Countries
The appeal of a particular country is likely to begreater when:
The size of the domestic market is large
The present wealth of consumers in that market is high andprojected to grow in the future
The needed resources are readily available
The firms product offerings are suitable to a particular
market
A positive business environment exists
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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When to Enter Foreign Countriesand Scale of Involvement
When to Enter
First-mover advantages
Pioneering costs
Scale of Involvement
Lowest if the firm simply decides to export its products to the
foreign location
Highest if the firm decides to have a wholly ownedsubsidiary in the foreign country
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Modes of Entry
Exporting Turnkey Project
Licensing
Franchising
Merger
AcquisitionWholly Owned
Subsidiary
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Advantages and Disadvantages ofVarious Modes of Entry Choices
Loss of competitive advantage
Potential quality control problems
Quick expansion
Lower development costs and risks
Lower political risk
Franchising
Loss of competitive advantageQuick expansion
Lower expenses and risks
Lower political risk
Licensing
Competition from local client
Loss of competitive advantage
Access to closed marketsTurnkey Project
High transportation costs
Potential tariffs
Economies of scale
Lower foreign expenses
Exporting
DisadvantagesAdvantagesMode of Entry
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Advantages and Disadvantages of VariousModes of Entry Choices(continued)
Loss of competitive advantage
Potential overestimation of partners
capabilities
Access to closed markets
Pooled resources increase partners
capabilities
Complementary skills & assets
Strategic Alliance
Large capital outlay
Lack of local knowledge
Increased risk
Maximum control over proprietary
knowledge/ technology
Greater strategic flexibility
Efficiencies of global production system
Wholly Owned
Subsidiary
Potential for conflict of interest
Loss of competitive advantage
Knowledge of local markets
Lower development costs and risk
Access to closed markets
Joint Venture
DisadvantagesAdvantagesMode of Entry
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Examples of Strategic Alliances
General ElectricSnecma of
France
ToshibaIBM
MitsuiGeneral Electric
ToyotaGM, TRW
CanonHewlett-Packard
MitsubishiCaterpillar
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Basic Approaches to Managing anInternational Subsidiary
Ethnocentric Approach
Polycentric Approach
Geocentric Approach
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Why International Assignments End inFailure
Culture shock
Lack of pre-departure cross-cultural trainingOveremphasis on technical qualifications
Getting rid of a troublesome employee
Family problems
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Key Human Resource ManagementFactors for Global Firms
Selection
Selection criterion should include cultural sensitivity
Training
Length of assignment determines depth of training
Cross-cultural training is critical to success
Career Development
International assignments should be part of careeradvancement plan
Compensation and Benefits
Incentives and quality-of-life concerns
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Applications of ManagementPerspectives
For the Manager
Firms are prevented from capitalizing on business
opportunities overseas by a lack of awareness of:
How to enter foreign markets
How to operate in diverse national settings
By developing a better appreciation of the unique
challenges that may confront them, managers can
learn how to function well overseas.
Groom managers for their role in globalization.
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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Applications of ManagementPerspectives
For Managing TeamsMany firms are entering joint ventures with companies in
other countries.
Joint ventures usually require teams made up of employees
from different nations.
The ability of international teams to work together in aclimate of mutual respect is a key to success.
This requires:Cross-cultural sensitivity.
Understanding of the international context in which the firmoperates.
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Applications of ManagementPerspectivesFor Individuals
The career mobility of employees is likely to be
enhanced if they have international skills.
International savvy is increasingly valued.
Many firms require employees to have
international experience before they can move into
the upper management ranks.
McGraw-Hill 2004 The McGraw-Hill Com anies, Inc. All rights reserved.
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Thank You