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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Ch 11 -2


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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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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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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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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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Copyright 2011 Pearson Education, Inc.

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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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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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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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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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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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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