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Business environment objectives

Before we describe business environment


objectives, it is desirable to be clear about
vision, mission and objectives.
‡ Vision-a vision is broad explanation of what

the firm exists and where it is trying to lead. the vision provides the point of reference on the horizon a
beacon of light.

‡ Mission-a mission statement outlines the


fundamental purpose of the organization.
Objectives Of Global Business
Environment

‡ Profit

‡ Growth

‡ Power

‡ Employee satisfaction and development

‡ Quality products and services

‡ World market leadership

‡ Joy of creation

‡ Service to society

Global Business Strategy


Formulation
Why globalize?
± causes the flow of ideas, services, and capital
across the world
± offers consumers new choices
± permits the acquisition of a wider variety of
products
± facilitates the mobility of labor,
capital,
and technology
± provides challenging employment
opportunities
± reallocates resources, makes preferential choices, and shifts activities to a global level
Global Strategy Formulation
How Do Organizations Globalize?
‡ Stage one: Passive Response
Importing: firm makes products and sells abroad
Exporting: to foreign countries
‡ Stage Two: Initial Entry
Hiring foreign representation
Contracting with foreign manufacturers
‡ Stage Three: Fully-established operations
Licensing/Franchising
Foreign Direct Investment (FDI)
- Joint Ventures
-Foreign Subsidiary

GlobalEx
pansion ofBusiness
Importing
Exporting
Wholly- owned for. Subsidiary
Low
High Level of Foreign involvement and investment needed by a global organization
Global business Strategy
Formulation
‡ Exporting: selling abroad, either directly to target customers or indirectly by retaining foreign sales
agents and distributors
‡ Importing: selling other countries products in the home country, either directly to target customers
or indirectly
Adv: quick and relatively inexpensive test the waters and learn about customers
Disadvantages: high transportation costs tariffs and quotas danger of poor intermediary selection
‡ Licensing: an arrangement where a firm (licensor) grants a foreign firm the right to use intangible
(intellectual) property such as patents, copyrights, manufacturing processes, or trade names for
specified period of time, usually in return for a percentage of the earnings, called royalty .
Adv: small or insignificant investment
Disadv: loss of control.
‡ Franchising: an arrangement where a parent company (franchisor) grant s a foreign firm
(Franchisee) the right to do business in a prescribed manner. Usually involves a longer time commitment
by both parties than required under licensing agreements
Adv: small or insignificant investment
Disadv: loss of quality control
Foreign Direct Investment
‡ Strategic Alliance:
± a cooperative agreement between potential or actual competitors
± an agreement between firms that is of strategic importance to one or both firms; competitive viability
‡ Joint Venture:
± the participation of two or more companies jointly in an enterprise in which each party contributes
assets, owns the entity to some degree, and shares risk
‡ Wholly Owned Foreign Subsidiaries
± provide for tightest controls by foreign firms
± very costly but can yield high returns

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