CH08

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CH08

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  1. Chapter 8Global Management

    Slide 1 - Chapter 8Global Management

    • © 2015 Cengage Learning
    • MGMT7
  2. © 2015 Cengage Learning

    Slide 2 - © 2015 Cengage Learning

    • 8-1 discuss the impact of global business and the trade rules and agreements that govern it
    • 8-2 explain why companies choose to standardize or adapt their business procedures
    • 8-3 explain the different ways that companies can organize to do business globally
    • 8-4 explain how to find a favorable business climate
    • 8-5 discuss the importance of identifying and adapting to cultural differences
    • 8-6 explain how to successfully prepare workers for international assignments
  3. The Impact of Global Business

    Slide 3 - The Impact of Global Business

    • Multinational corporations
    • Direct foreign investment
    • © 2015 Cengage Learning
    • 8-1
  4. Trade Barriers

    Slide 4 - Trade Barriers

    • Tariff – direct tax on imported goods
    • Nontariff barriers
    • quotas
    • voluntary export restraints
    • government import standards
    • subsidies
    • customs classification
    • © 2015 Cengage Learning
    • 8-1
  5. Trade Agreements

    Slide 5 - Trade Agreements

    • General Agreement on Tariffs and Trade (GATT)
    • Existed from 1947 to 1995
    • Agreement to regulate trade among more than 120 countries
    • “Substantial reduction of tariffs and other trade barriers and the elimination of tariffs.”
    • © 2015 Cengage Learning
    • 8-1
  6. World Trade Organization

    Slide 6 - World Trade Organization

    • © 2015 Cengage Learning
    • 8-1
  7. Regional Trading Zones

    Slide 7 - Regional Trading Zones

    • Maastricht Treaty of Europe
    • NAFTA
    • CAFTA-DR
    • UNASUR
    • ASEAN
    • APEC
    • © 2015 Cengage Learning
    • 8-1
  8. Consumers, Trade Barriers, and Trade Agreements

    Slide 8 - Consumers, Trade Barriers, and Trade Agreements

    • Trade agreements increase choices, competition, and purchase power…decrease prices.
    • Free trade agreements create new business opportunities…
    • …but also intensify competition.
    • © 2015 Cengage Learning
    • 8-1
  9. Consistency or Adaptation

    Slide 9 - Consistency or Adaptation

    • Global consistency
    • when a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures
    • Local adaptation
    • when a multinational company modifies its rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies
    • © 2015 Cengage Learning
    • 8-2
  10. Forms for Global Business

    Slide 10 - Forms for Global Business

    • 8-3
    • © 2015 Cengage Learning
    • Wholly owned affiliates
    • Strategic alliances
    • Cooperative contracts
    • Exporting
  11. Exporting

    Slide 11 - Exporting

    • Selling domestically made products to foreign markets
    • Advantages
    • makes company less dependent on domestic sales
    • gives company more control
    • Disadvantages
    • goods subject to trade barriers
    • transportation costs
    • © 2015 Cengage Learning
    • 8-3
  12. Cooperative Contracts

    Slide 12 - Cooperative Contracts

    • Licensing
    • a domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce its product, sell its service, or use its brand name in a particular foreign market.
    • Advantages
    • companies earn money without investing more money
    • companies can avoid trade barriers
    • Disadvantages
    • licensor gives up control over product quality
    • licensees can become competitors
    • © 2015 Cengage Learning
    • 8-3
  13. Cooperative Contracts

    Slide 13 - Cooperative Contracts

    • Franchise
    • a collection of networked firms in which the manufacturer or marketer of a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee.
    • Advantages
    • fast way to enter foreign markets
    • gives franchisor additional cash flow
    • Disadvantages
    • loss of control
    • culture bound
    • © 2015 Cengage Learning
    • 8-3
  14. Strategic Alliances

    Slide 14 - Strategic Alliances

    • When companies combine key resources, costs, risks, technology, and people. Most common form is joint ventures.
    • Advantages
    • companies avoid trade barriers
    • companies only bear part of the costs
    • partners can learn from each other
    • Disadvantages
    • Profits have to be shared
    • merging of cultures
    • © 2015 Cengage Learning
    • 8-3
  15. Wholly Owned Affiliates

    Slide 15 - Wholly Owned Affiliates

    • Foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company
    • Advantages
    • parent company receives all of the profits and has complete control
    • Disadvantages
    • losses for parent company can be enormous
    • © 2015 Cengage Learning
    • 8-3
  16. Global New Ventures

    Slide 16 - Global New Ventures

    • Companies founded with an active global strategy.
    • © 2015 Cengage Learning
    • 8-3
  17. Growing Markets

    Slide 17 - Growing Markets

    • Purchasing power
    • Growth potential
    • © 2015 Cengage Learning
    • 8-4
  18. 8-4

    Slide 18 - 8-4

    • How Consumption of Coca-Cola Varies with Purchasing Power around the World
    • © 2015 Cengage Learning
  19. Choosing a Location

    Slide 19 - Choosing a Location

    • Qualitative factors
    • workforce quality
    • company strategy
    • Quantitative factors
    • kind of facility being built
    • trade barriers
    • exchange rates
    • transportation and labor costs
    • © 2015 Cengage Learning
    • 8-4
  20. World’s Best Cities for Business

    Slide 20 - World’s Best Cities for Business

    • 8-4
    • © 2015 Cengage Learning
  21. Minimizing Political Risk

    Slide 21 - Minimizing Political Risk

    • Political uncertainty
    • Policy uncertainty
    • © 2015 Cengage Learning
    • 8-4
  22. Strategies for Dealing with Political Risk

    Slide 22 - Strategies for Dealing with Political Risk

    • Avoidance
    • divesting or selling business to avoid risk
    • Control
    • active strategy to prevent or reduce political risks
    • Cooperation
    • using joint ventures and collaborative contracts
    • © 2015 Cengage Learning
    • 8-4
  23. Overview of Political Risk in the Middle East

    Slide 23 - Overview of Political Risk in the Middle East

    • 8-4
    • © 2015 Cengage Learning
  24. Becoming Aware of Cultural Differences

    Slide 24 - Becoming Aware of Cultural Differences

    • Five Dimensions of Culture
    • Power distance
    • Individualism
    • Masculinity/femininity
    • Uncertainty avoidance
    • Short-term/long-term orientation
    • © 2015 Cengage Learning
    • 8-5
  25. Hofstede’s Five Cultural Dimensions

    Slide 25 - Hofstede’s Five Cultural Dimensions

    • 8-5
    • © 2015 Cengage Learning
  26. Language and Cross-Cultural Training

    Slide 26 - Language and Cross-Cultural Training

    • Documentary training
    • Cultural simulations
    • Field simulation training
    • © 2015 Cengage Learning
    • 8-6
  27. Spouse, Family, and Dual-Career Issues

    Slide 27 - Spouse, Family, and Dual-Career Issues

    • Adaptability screening
    • assesses how well managers and families are likely to adjust to a foreign culture
    • Language and cross-cultural training for the family is just as, if not more, important than training for employees.
    • © 2015 Cengage Learning
    • 8-6
  28. Holden Outerwear

    Slide 28 - Holden Outerwear

    • Which stage of globalization characterizes Holden Outerwear’s international involvement?
    • Identify Holden’s primary approach to entering the international market. What are the benefits of this entry strategy?
    • What are the challenges of international management for leaders at Holden?
  29. Holden Outerwear

    Slide 29 - Holden Outerwear