Chapter 6 - Managing a Global Business PDF

Introduction to Management 33:620:301 Chapter 6 Managing a Global Business Professor Hamilton  Summary y Part V...

Introduction to Management 33:620:301 Chapter 6 Managing a Global Business Professor Hamilton  Summary y Part V ar 12 m m Su er ad Le as t Manager er Part IV en Leader ag 11 an em As M ag an M ce an t rm en rfo m 10 Pe ge en t ga En em e ag ye an plo sM “Done Well” 9 Em ce Part III ur Where are We Now? so Re an n m sig 8 Hu De n tio s za es ni n hip ga si rs 7 Or Bu eu al en ob pr Gl tre a En in g nd ag ,a an ion 6 M nn ov at “The Right Work” ,I th t” ow i gh 5 Gr “R Part II t’s k” ha or W tW g in ig h Do 4 “R e th ing tify en t ” en 3 Id e m e ll ag e W an on M of kD n or u tio tW ol igh 2 Ev “R Part I “Intro” t: en em ag an 1 M Chapter 6 – Learning Goals LG 6-1 Identify and explain the key factors driving globalization of markets LG 6-2 Identify and describe the key elements of Political Economy LG 6-3 Identify and explain core strategies for conducting international business LG 6-4 Identify and explain the strategies for entering a foreign market Factors Driving Globalization LG 6-1 1. Declining Trade Barriers 2. Technology Enablement 3. Rise of Multinational Enterprises (MNEs) 4. Formation of Global Institutions Factors Driving Globalization LG 6-1 Reduction of tariffs 1. Declining Trade Barriers General recognition of the advantages of free-trade policies 2. Technology Enablement 3. Rise of Multinational Enterprises (MNEs) 4. Formation of Global Institutions Factors Driving Globalization LG 6-1 1. Declining Trade Barriers Air Travel 2. Technology Enablement Advanced Communications 3. Rise of Multinational Internet Commerce Enterprises (MNEs) 4. Formation of Global Institutions Factors Driving Globalization LG 6-1 1. Declining Trade Barriers 2. Technology Enablement More international trade 3. Rise of Multinational experience Enterprises (MNEs) More sharing of best practices and expertise 4. Formation of Global Institutions Factors Driving Globalization LG 6-1 1. Declining Trade Barriers 2. Technology Enablement 3. Rise of Multinational Enterprises (MNEs) WTO World Bank 4. Formation of Global Institutions Key Elements of Political Economy LG 6-2 1. Political Climate 2. Economic Conditions 3. Legal System Key Elements of Political Economy LG 6-2 1. Political Climate Government favors free-trade? 2. Economic Conditions Civil unrest/political upheaval or instability 3. Legal System Corruption/fraud Key Elements of Political Economy LG 6-2 1. Political Climate Stable economy 2. Economic Conditions Sufficient distributed wealth to generate sufficient demand 3. Legal System Inflation/exchange rates/tax policies Key Elements of Political Economy LG 6-2 1. Political Climate Laws and enforcement practices protect the assets, investments, and 2. Economic Conditions intellectual property of foreign entities 3. Legal System Contracts are recognized and enforceable Legal regulations are not overly restrictive Culture “Norms, beliefs, attitudes, mores, and values that are commonly shared by a large number of residents of a country” 1. Many countries are multi-cultural 2. Some cultures are not receptive to foreign businesses 3. Cultural differences (including language) need to be understood and considered in conducting business in a country Core Strategies for Conducting International Business LG 6-3 1. Global Standard 2. Local Customization 3. Combination Core Strategies for Conducting International Business LG 6-3 1. Global Standard Common product sold in all countries with minimal variation 2. Local Customization Chosen to optimize production and distribution efficiencies as well as 3. Combination to build global brands Core Strategies for Conducting International Business LG 6-3 1. Global Standard Products/Services are customized to meet the unique needs of each 2. Local Customization country in order to optimize customer acceptance and purchase 3. Combination Customization costs can be significant Core Strategies for Conducting International Business LG 6-3 Products are customized in some 1. Global Standard countries where the market size and unique requirements make it 2. Local Customization worthwhile All other countries are provided 3. Combination standard products Strategies for Entering a Foreign Market LG 6-4 1. Export 2. License 3. Franchise 4. Joint Venture 5. Strategic Alliance 6. Do it Yourself (DIY) How Do You Decide? LG 6-4 1. Management preferences regarding direct control 2. Availability of suitable business partners/acquisition targets 3. Legal factors favoring/disfavoring a particular option including foreign ownership restrictions 4. Nature of the products/services 5. Time required and risks involved to get a particular option operational Alex Gorsky on Global Leadership Chapter 6 – Learning Goals LG 6-1 Identify and explain the key factors driving globalization of markets LG 6-2 Identify and describe the key elements of Political Economy LG 6-3 Identify and explain core strategies for conducting international business LG 6-4 Identify and explain the strategies for entering a foreign market Introduction to Management 33:620:301 Chapter 6 Managing a Global Business Professor Hamilton